PIPR - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to the Piper Sandler Companies Third Quarter 2024 Earnings Conference Call. Today's call is being recorded and will include remarks by Piper Sandler management, followed by a question-and-answer session.

I'll begin by turning the call over to Kate Winslow. Please go ahead.

Kathy Winslow

Thank you, operator. you Earnings the Conference thank Third Sandler and XXXX Quarter Call. morning, for Piper joining Companies Good Hosting the Clune. Earlier call Sandler's available Abraham; issued our on today press Third are Chairman Deb a at results, and and Quarter Schoneman; our XXXX CFO, which announcing website Kate release this financial we President, morning, Piper CEO, is Chad pipersandler.com/earnings. is release. Today's press discussion the of complementary to the results available of at also the this later website replay A be today. call same will

on the remind current cause me involve identified may available on you about let SEC, uncertainties. could actual today's Factors and are begin, to made are or our website those call and forward-looking remarks in historical beliefs we at facts, that differ statements that Before inherent the reports risks materially pipersandler.com and company's contain that anticipated with which from statements and the not on are results financial file SEC and expectations, including website management be discussion statements meaningful also in believes measures includes at certain sec.gov. Today's a evaluating to the company's addition earnings non-GAAP performance. measures measures directly considered are is prepared of should financial The to with that GAAP not when the non-GAAP accordance A comparable of release our issued for these today. financial provided measures in in reconciliation measure non-GAAP substitute GAAP. performance most regarding on

Chad. to I over turn will call the now

Chad Abraham

to about our we adjusted year. XXXX quarter $XXX many adjusted Kate. It's expect October generating the with strong an last of of quarter and fourth businesses, everyone. strong be great and to morning, third Thank million, started to talk $X.XX. Good in We of EPS margin be year-over-year revenues you, delivered similar operating fourth to quarter results. net growth, strong XX.X% revenues of our has you

period Banking. Revenues during year. over increased quarter X% Investment the the Corporate million $XXX third last of same to Turning

last up million For Banking Investment revenues the $XXX from of months X XX% of year. first were XXXX, Corporate

equity had sector continues balanced advisory reflected earnings Banking and our six and activity debt calls, and generated have performance From our we capabilities be to past industry the made revenues, during highlighted and verticals have period. reach Investment the perspective, generated contributed to total we increase over results. M&A product in and Corporate our industry diversify we of XX% As of strong a teams, experiencing of across investments XX% restructuring revenues. seven financing XX%, prior significant growth our year with financings and

financial comprehensive on drive our to In to terms more growth our to revenues. over in providing half the of client performance. Activity of sponsors coverage, from solutions continues Investment focus contributed equity clients private Banking Corporate year-over-year

to quarter. services, during market-leading led were Advisory the our of was year-over-year, XXXX, million more tech during med by the third Performance up completed revenues $XXX as Advisory closed XX% XX transactions Specific transactions. quarter transactions. team healthcare, by significant completed We driven several

financial and different and each XXXX, industrials, services of power verticals the has in diversification our addition, sector all produced with In services, quarter. quarters. The consumer strong evident a performance platform leading been energy and

within reported which be services, debt for Advisory year. bright is Our agent as strong team to pace are spot and another advisory revenues, a the continue on

clients. resulted private that their debt We XXXX, without X the billion outsourcing capital. capabilities, first sponsors on in the with of outstanding our months basis using clients financial activity. Through advisory raised credit, have $X.X of for any growth agented assists of increased trend debt proceeds an has The an underwriting the team in raising over team has combined

significant services using from well our structuring debt as and solutions Our clients. tailored more as in repeat leveraging while needs to designing, has executing led to creative client deep financial expertise advisory business success sector sponsor clients

up and generated we from outperformed XX% approximately XX% the ago, up from in which year a was revenues, months, Advisory year. prior volume, $XXX million X U.S. Through transaction

forward, stay quarter. closing Advisory. expect fourth accommodative track, If Looking has conditions a and we market strong a October remain the in the to on year to contributed start strong good a finish to

to million sequentially equity Revenues and quarter, Turning clients. and services the down were completed to raising raises for significantly, we completed XX Performance both led and We during outpaced meaningfully by a quarter, $XX on well year-over-year. be debt financing as sequential basis. expect in fourth billion October which capital estate revenues third third $XX was Corporate team, in our corporate has financial financing. the for corporate financings, real and entire depository as space the insurance. the activity quarter up

ended firm history. headcount. of have out banking Managing closed private MDs our to XXX the group. we form to August, continued Directors, Turning We advisory we added Director Aviditi XX the capital investment which Managing Throughout most Advisors, build In the with productivity sector continue quarter fintech, commercial third Directors our results and XXXX, focused coverage our Managing increasing our in and to We with MD services closing, solid. we on operating become to and long-term growth. In platform residential our constructive, third environment deliver strategy. expand on our positioning more in adds for capabilities, financial The continuing to quarter and were sponsors. remain acquisition has

I call turn and the our will finance over that, brokerage businesses. to discuss With to Deb public

Debbra Schoneman

increased public with Thanks, markedly demand. have update market and business, with improved investor Chad. where finance I'll our begin issuance an strong on conditions

and financing specialty clients. quarter revenues, third year quarter, raising over prior municipal transactions, of business. best from our performance up XXXX. value million by governmental of and the $X this XX% were quarter billion par the XXX generated underwrote We During our negotiated for Revenues both strong municipal quarter we driven $XX groups our since from

and in special local in through partnership higher-yielding months This XXXX. needs helped of public fund to out we national into our and have communities. years our the of group last district are recently state. of over infrastructure billion issuances for We in senior par built We've creating been lead capitalized our group growing estate financings our X footprint. the $X.X growing the #X developers to the raise business. school value And bankers seeing we Our in structures results added school financing our real business, specializes X investments. Within franchise governments Texas, demand in the capabilities first and those to districts and unique underwriter special on has with the build entering continue X Missouri from the new governmental geographies

Looking ahead, expect to finish the we a strong year. quarter

to quarter Turning We We to quality X% of we during the quarter behalf fourth generated offset up share trend. product of year expect billion business. research the shares brokerage to is year, traded The over last of of our equity our helping and the X,XXX follow market third quarter a $XX from million, unique be this the trade strongest revenues and tends and market declining clients. of year. winning from impact wallet. on X.X execution that The our

period. to from We sequentially income. ago the XX% turning year during up driving and of conditions Lastly, the revenues $XX generated million fixed XXXX, activity. quarter, increased XX% of improved the for quarter Market third client

rates and the hedging XX of to basis direction were points With the confidence interest their their well eager positions. clients interest on Fed as invest rates, more liquidity of adjust cutting as some

our significant with change in and to have of the advantage balance depository yield execute worked team many the curve our of analytics restructuring Additionally, clients sheet take trades.

markets, maintain which improvement the with fixed us With quarter. fourth lead we strategy approach to to continued income to allows advice, similar and quarter revenues. year is strong the to analytics fixed anticipate income in finish results capital-light the significantly even a Our third a with higher with

over Now capital will to our use. I review the on call an update results to financial turn Kate and provide

Kate Clune

Thanks, Deb.

substitute adjusted non-GAAP address quarter our a financial in my fixed income addition the quarter reminder, municipal the $XXX services net decline for in measures. considered be financial generated for in XXXX, corporate activity. not will a line as comments improvement and of the We As revenues which and million GAAP advisory financing, should the of corresponding in results, to financing the with third sequential offset

compared quarter the of the revenues quarter driven by last third Net of for year, across most higher to businesses. XX% revenues our increased

of as diversification revenues Banking, XX% client continues accommodative year. highlight For Investment The from drove across totaled up within financing over billion, and our share as year-over-year gains increased net revenues sector, the XXXX, $X our benefits income X months municipal services. fixed in revenue the market Corporate well growth last product net businesses. and More markets to first

operating margin. Turning and expenses to

of the first from was ratio the XX.X% and to for XXXX X down points compensation Our quarter for increased third XXXX months due revenues. the XX.X% basis of X-month XX period, net

X% increased strong to expect for deal on discipline continue margin. outlook, while line expenses, the quarter and deal with to were quarter. a of costs, full excluding operating and balancing XXXX, compared quarter, this ago be We during ratio our to million, year the Based $XX expenses X% third decreased continue near opportunities we exercise to excluding our compensation basis in sequential the year retention, on near-term level. Non-compensation our guidance. and Non-compensation investment current costs employee reimbursed

year-to-date costs, On deal basis, a period per of excluding increased $XXX the were an X% XXXX. and million or non-compensation over of quarter, $XX average million reimbursed X-month expenses

expenses percentage Our compared with our down operating ratio driving managing actionable points the year. is leverage, on continued last focus X.X non-compensation to

margin third of up of quarter income an over of During the quarters. the both XXXX, of $XX comparable XX.X%, operating million and we operating generated

are year, net prior For operating period. $XXX in up XX%, the while X revenues resulted income Year-to-date, year this to the compared operating increased months which totaled profits margin. operating XX.X% a first of million, XX% our

third vesting the of XXXX to reduced tax months the Our XX.X% year-to-date Income income for stock of was was benefits period tax $XX for the the and X quarter awards. year. first expense tax million XX.X% of rate restricted for related of this by

XXXX, diluted of of of income quarter $X.XX. we generated net and $XX third the During million EPS

totaled the diluted of $X.XX. this and For was X net income months million, year, EPS first $XXX

a on the me of of Today, Board XX. share. be record of as XX The finish on close capital business dividend December on quarterly the an of dividend cash will November allocation. paid update approved per $X.XX to with Let shareholders

quarter of to an paid. third the million $XX of dividends shareholders, returned through XXXX, aggregate primarily we During

share year-to-date the dividend. or we our paid quarterly paid our $XXX of through aggregate to share For We million million returned dividends through $XX aggregate special and repurchases. cash per shareholders to an period, of and shareholders $X.XX an

approximately also than employee more restricted shares These offset of $XX awards. our We million repurchases repurchased the stock related on count to for stock XXX,XXX from stock grant. dilution withholding annual share vesting year's the common this of tax

strong and through shareholders revenues, strategy, execute to while margins our deliver returns continue capabilities. cycles our to growing We our on

the finish results the third to well our as peer months diversified year X the strong. are XXXX positioned first performance well to relative our strong benefit to platform as we quarter of Our of continue demonstrate and for and set,

up With that, we the can questions. call for open

Operator

Goldman And James comes first [Operator from Sachs. Instructions] Yaro our with question

James Yaro

So bit line. in the corporate you of sequentially I think slowdown a did a little finance see

a think talked And I bit industry IPO for little how you seen XQ stronger And think so for in and stronger Is some of think, far in business I trends then about to ECM outlook do into in XQ, your you next trajectory corporate we've XQ year? about ECM some DCM? the financing. trends. that Chad, reference the

Chad Abraham

Yes.

financing. for into October. DCM. expect market, the slow us. was had We started that us, think October larger very, yes, for just but some we very ECM. idiosyncratic was I QX real Obviously, of stronger on strong equity But be just also we for deals to of part our a it to obviously, QX slipped was few And corporate of that

I think financing we on on to DCM seeing also strong expect what commentary based the we're better. but for corporate be ECM, real most our of is

James Yaro

couple I one on share results. think to deliver from about business and just take Okay. equities could us the this grow maybe which just here continues think to help of you That's into to healthy continue develop ability business, the to Deb, Maybe years? next -- the helpful.

Debbra Schoneman

couple a of say things, I'd Yes, James.

the to First as in all, U.S. look this of the our we EU research into and well, to be out build sale about to we'll the build the continue out but world. rest U.K., talk able product more actually of as of and future

spending something to time. that's some out. So we're We've that build hired talent some

a U.S. that's share of where outside the it's So I gain think

time, and it but thing at is looking hired out strong with take Again, some talent also some client but build both electronics to will that other with looking there, our product itself. to continue the The additional just platform. just we're relationships,

are we where So tackling we always over the I'd X. the areas but year blocking growth just those in the X here U.S., the as accounts and us out for say areas for X of outside or next look those see with are

Operator

with O'Brien Brendan Our next comes question from Wolfe Research.

Brendan O'Brien

be capital guess versus on I returning inclined you're whether just allocation start, you wanted capital at the I acquisition an about and thinking how than to to to do would to historically. shareholders moment, it you're touch specifically more

given Just out multiple, you acquisitions. to opportunities leverage trading some accretive like to do where be there and there your today, it some your feels are interesting peers could

be get your thinking your it would great here, at how if on all. yes, has just updated So to thoughts evolved

Chad Abraham

capital, in from has I acquisitions Aviditi the to top, new the add the that just last closed And say Brendan. would is stack always and to really teams at trying acquisitions do we've Obviously, X of of we returns a X over years, this done. with good quarter. returning the we've to gotten lot

say slow just some through would acquisition been slower normalize going of we're what I talking because little what the But general, just in are folks historically hard activity the a the in it's to, the has forward. results terms to period of

deals, just the had interesting yes, that I partnering. us interested say string in we're normalizing of And with calling again, quite success people we've other given helps of then, active. would of on that sort the being an -- Some And that's now.

So good about the there. pretty feel pipeline yes, we

Brendan O'Brien

then great. just my for to touch sponsor And want That's I follow-up, activity. on

normal. have to of trends is well we clearly the were in market that below running still relative While year, first of improved this area where clearly half the

transact a more had could sponsors any return just -- cut see aggressively. Fed to sense to impact on the begin whether and can to to get So of the want to recent I begin sponsors willingness market we we when has whether see to the as rate sponsors

Chad Abraham

the X financing we're of I some would usually quite same X processes have It's isn't but had theme improving, our sort end X. to right. we Yes. the X perfect. The last of quite slowly. definitely buyers, At with relative equity a heavy or And of price private the I've it's sponsors, isn't of handful where say or quarters. negotiating The

would better, so snapback. it quarter, not And I but it's again, say -- it's gets a every

of said, pitching being few private I the with we've new seen So weeks, lot that say equity. all last would a

that so accelerates, And private the our equity we'll think that improvement Whether gradual assuming I 'XX right continues. from continued But sort just sure. business. not we're I'm see improvement definitely improvement now, in of pace of

Operator

Ryan Our next Citizens question from JMP. Devin comes with

Devin Ryan

potential know question, guys I First Aviditi. pretty just about optimistic that are from transaction. you on the

I'd of And to that and just been And bit closing really get with that integration love deal how or that's so thus of recently, the far going has business. maybe sense a the little for outlook advisory from on see behind secondary Gap] the to side, far? going on the just how opportunity much you also, do how invest that's [Audio business here, so whether side fundraising the

Chad Abraham

product from of of of banking of interest uptake a closed of we done couple of obviously, of early end the space some say Yes, a like sort so good. of in been at August. would sort relative And of the other of this. feel pitches, I sort have sort calls very I inbound the pace and we've joint been product our very, and core to transactions, this team has like them transactions lot in

that. about excited we're So

about, that. interest to bankers. I put where but investment team, had we're That's to think talent. We're secondary going more a need investing, obviously, behind from more lot probably relative like a to you even there's they more going the talked

So we're them. us that. we're accelerate time, that can hoping for to we hoping year, business some have that will and next all dramatically take the Obviously, improve right we people but

Devin Ryan

the you're see horizon? where I'm on sectors want and maybe there All on comments seeing are broader just recovering engagement And your there to faster? just are to right. curious, back And that Great. maybe I catalysts sponsors come then and then the you are just that now. areas backdrop M&A certain right

just of Or But behind Financials seeing catalyst coming terms broad-based, in a potentially is would slow as soon perking potential the that election scenes Clearly, more kind I'm of it kind that's is seem are you're we change recovery? to that administration. there up into look maybe of faster? in are XXXX? certain what here. then areas to And curious, Republican the benefit one

Chad Abraham

us, for mean I it. Yes. talked about we

particularly of our of has the relative seven in strong. a over is X nicely of The been months. the But regulatory the a environment, one some frankly, healthcare healthcare. six healthcare tougher not environment. of been -- are pretty say some certain of teams I some think up bit else segments, I to it's our transactions, things, that's would industry with everything advisory

of new been kind recently Obviously, a is. been record how has -- across every year feel energy. But pretty really in good board, Advisory we about the broad

better I yes, about think depositories. to we're relative definitely feeling financials,

is catalyst. be a will more going matter. election, And like of But us the just happens, bit that what think said, obviously, of you what a having in behind to regardless I happens

because get but depositories then time takes to there's we it get slow a announced more there. them deals in to build transactions So to and takes while start definitely will it a see a the long closed,

Devin Ryan

Yes.

then Thanks, And I Okay. for Kate guess the here Chad. on That's probably great. one ratio. comp

saw third the a in there little You obviously bit of quarter. improvement

So just then comp fourth about of revenue comp and fourth for remind given level better quarter, as the for well? maybe into expectation should look should quarter we expect And we similar the be relationship just in how us ratio? as XXXX growth the ratio the the thinking a we a

Kate Clune

Sure. Thank question. you for the

the continue see as did discipline to we So demonstrate on compensation we side. leverage

expect little strong, are incremental and to the a We is if revenues bit environment fourth see leverage. quarter, the accommodative of the

things As more a guide normalizing, we XX.X% normalized to a as reminder, as about we range. think typically XX.X% being to

any absent Of course, investments. that's significant

holds things. next and both year. think of It's side side investment And the we I environment think the of And so again, I things. twofold. into going it's as And true that think about revenue the

leverage driving that So we where about certainly still I think and reasonable discipline maintaining as range but we is think XXXX, can.

Operator

from with next Our question comes Northland Instructions] Securities. Grondahl Mike [Operator

Mike Grondahl

over outlook XQ feeling about you income and fixed kind of 'XX? are what Deb, a

Debbra Schoneman

Yes.

they're Part it's some end losses, stated, they similar of QX to is trades work money QX. doing but saw depository look our in in more the to as and as we've that really but these in that both nonperforming the restructuring We reduced day-to-day QX going clients, performing. higher look strength QX, take of feel some shed rates. So assets, that being going up seen Fed importantly, put like really some that into active some to pick to as real activity of also we just

up rates And certain that. this just make now of as amount on miss to opportunity. measured we I back let's more a don't think little But there's approach gone bit, sure have out there's a

great we But the QX with looking all, about for it. QX. a still and environment QX election So -- that's similar why talk very to

we yield as XXXX, things one into go is fixed upward the the that's sloping curve. business just of And income important overall for an

So continue next more be year. fixed see as income business our to become that will for we that normalized, good

Mike Grondahl

provide Got it. prepared said other to you want look had And on to to Chad, going don't XQ your I remarks, know, that? 'XX was in XQ any similar you 'XX. insight

Chad Abraham

Yes.

people, going had I just we think XQ difficult a -- be to and strong a was just of always to a remind very knew we year, comp. relative it basis, on last

good similar of -- the and today I start feel start frankly, pretty year. to gives QX in the that market and confidence start on business Advisory match sit in here the close think then start October, a if in -- last really in good that us there's we've that and just won't some deals obviously, ECM lines in that some with that happen. and in the can 'XX, change as about result felt these we of dramatic having about we we But that, advisory all October conditions rate the the

Mike Grondahl

to Great hear.

Operator

for turn I you are Mr. closing no there questions Abraham, at time. conference it this additional further And appears the or any remarks. to back will

Chad Abraham

joined. that great everyone quarter look our We and on fourth results Have you updating operator, you, day. next forward year. to a Thank

Operator

you This call. participation. for your concludes Thank today's

You may now disconnect.

Piper Sandler Companies (PIPR) 25 Oct 242024 Q3 Earnings call transcript