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Piper Jaffray Companies Reports Operating Results (10-Q)

November 02, 2012 | About:
10qk

10qk

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Piper Jaffray Companies (PJC) filed Quarterly Report for the period ended 2012-09-30.

Piper Jaffray Cos has a market cap of $463.5 million; its shares were traded at around $27.04 with a P/E ratio of 17.8 and P/S ratio of 1.

Highlight of Business Operations:

For the three months ended September 30, 2012, net income applicable to Piper Jaffray Companies, including continuing and discontinued operations, was $19.7 million, or $1.11 per diluted common share, compared with a net loss of $3.6 million or $0.23 per common share for the year-ago period. Net income applicable to Piper Jaffray Companies from continuing operations for the third quarter of 2012 was $12.9 million, or $0.72 per diluted common share, compared with net income applicable to Piper Jaffray Companies from continuing operations of $3.6 million, or $0.22 per diluted common share, for the prior-year period. Net revenues from continuing operations for the three months ended September 30, 2012 were $133.0 million, an increase of 38.7 percent from $95.9 million reported in the year-ago period, driven primarily by increased fixed income institutional brokerage revenues particularly related to strategic trading of non-agency mortgage-backed securities. For the three months ended September 30, 2012, non-compensation expenses from continuing operations increased 4.2 percent to $31.5 million, compared to $30.2 million in the third quarter of 2011, due to an increase in legal fees and litigation-related expenses.

For the nine months ended September 30, 2012, net income applicable to Piper Jaffray Companies, including continuing and discontinued operations, was $29.4 million, or $1.60 per diluted common share, up from $14.3 million or $0.74 per diluted common share for the year-ago period. Net income applicable to Piper Jaffray Companies from continuing operations for the nine months ended September 30, 2012 was $29.5 million, or $1.60 per diluted common share, compared with net income applicable to Piper Jaffray Companies from continuing operations of $24.8 million, or $1.29 per diluted common share, for the prior-year period. Net revenues from continuing operations for the nine months ended September 30, 2012 were $352.3 million, up 2.4 percent from $344.0 million reported in the year-ago period. Higher fixed income institutional brokerage revenues were offset in part by lower gains recorded on our merchant banking activities. For the nine months ended September 30, 2012, non-compensation expenses from continuing operations decreased to $97.2 million, compared with $98.9 million for the nine months ended September 30, 2011.

quarter of 2012 and increased public finance underwriting revenues, offset in part by lower advisory service revenues. For the three months ended September 30, 2012, institutional brokerage revenues increased 104.7 percent to $58.7 million, compared with $28.7 million in the corresponding period of the prior year, driven by fixed income institutional brokerage revenues, particularly strategic trading of non-agency mortgage-backed securities. For the three months ended September 30, 2012, asset management fees increased 15.7 percent to $17.6 million, compared with $15.2 million in the third quarter of 2011, due to higher management fees and gains recorded on our investments in registered funds or partnerships that we manage. In the third quarter of 2012, net interest income was $5.3 million, a 14.3 percent decrease compared with $6.2 million in the prior-year period. The decrease primarily resulted from a strategy to further diversify away from overnight funding sources to more short term funding sources with extended terms. These short term funding sources with extended terms typically have higher interest costs than overnight financing obtained from repurchase obligations or overnight bank financing. The change in net interest income is also partly attributable to a decline of our average long inventory balances. For the three months ended September 30, 2012, other income was $0.2 million, compared with $1.7 million in the corresponding period of the prior year. The decline was due to lower investment gains recorded on our merchant banking activities. Non-interest expenses from continuing operations increased to $110.2 million for the three months ended September 30, 2012, from $90.7 million in the corresponding period of the prior year, primarily driven by an increase in compensation and benefits expenses, due to higher net revenues and operating profits.

In the third quarter of 2012, investment banking revenues increased 15.8 percent to $51.7 million compared with $44.6 million in the corresponding period of the prior year, driven by increased equity and debt financing revenues, partially offset by a decline in advisory services revenues. For the three months ended September 30, 2012, equity financing revenues increased to $18.8 million, compared with $6.6 million in the prior-year period as equity capital markets improved and volatility remained low resulting in an increase in capital raised and higher average revenue per transaction. During the third quarter of 2012, we completed 14 equity financings, raising $2.6 billion in capital, compared with 8 equity financings, raising $0.9 billion for the corresponding period in 2011. Debt financing revenues in the third quarter of 2012 increased 49.2 percent to $16.6 million, compared with $11.1 million in the third quarter of 2011, driven by higher average revenue per transaction. During the third quarter of 2012, we completed 113 public finance issues with a total par value of $2.3 billion, compared with 133 public finance issues with a total par value of $1.8 billion during the prior-year period. For the three months ended September 30, 2012, advisory services revenues decreased 39.5 percent to $16.3 million compared with a strong prior-year period. We completed 6 transactions with an aggregate enterprise value of $0.7 billion during the third quarter of 2012, compared with 12 transactions with an aggregate enterprise value of $1.9 billion in the third quarter of 2011.

2012, investment banking revenues were $148.5 million, compared with $151.8 million in the prior- year period. This decrease was attributable to lower advisory services and equity financing revenues, partially offset by higher debt financing revenues. For the nine months ended September 30, 2012, institutional brokerage revenues increased 19.9 percent to $134.0 million, compared with $111.7 million in the corresponding period in the prior year, driven by strong fixed income strategic trading revenues. For the nine months ended September 30, 2012, asset management fees were $52.9 million, essentially flat compared with the prior- year period. Net interest income for the first nine months of 2012 decreased 11.9 percent to $15.6 million, compared with $17.7 million for the first nine months of 2011. For the nine months ended September 30, 2012, other income was $1.2 million, compared with $10.0 million in the corresponding period in the prior year. In the nine months ended September 30, 2011, we recorded higher investment gains associated with our merchant banking activities. Non-interest expenses from continuing operations were $308.8 million for the nine months ended September 30, 2012, essentially flat compared to the prior year period.

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