Piper Sandler Companies · NYSE:PIPR
Piper Sandler Companies — Investor Presentation (February 2020)
41 slides from Piper Sandler Companies's investor presentation, February 2020
Slide 1: Investor Presentation
FEBRUARY 2020 Investor Presentation Piper Sandler Companies For more information, please contact Tim Carter, chief financial officer at 612 303-5607 or timothy.carter@psc.com Piper Sandler Companies (NYSE: PIPR) is a leading investment bank and institutional securities firm driven to help clients Re
Slide 2: Cautionary notice regarding forward-looking statements
INVESTOR PRESENTATION Cautionary notice regarding forward-looking statements This presentation contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements inv
Slide 3: We are a leading investment bank and institutional securities firm
Year Founded: 1895 NYSE: PIPR Headquarters: Minneapolis, MN Employees: 1,600 Offices: 53 We are a leading investment bank and INVESTMENT BANKING • M&A advisory institutional securities firm. • Capital markets • Debt and restructuring advisory We provide: INSTITUTIONAL EQUITIES • Institutional sales
Slide 4: Investor value proposition
PIPER SANDLER COMPANIES Investor value proposition Increasing share of revenue derived from high 25% margin, more predictable advisory services ADVISORY SERVICES REVENUE CAGR Strong, sustainable earnings growth 31% ADJUSTED DILUTED EPS* CAGR Disciplined operating management and 15.7% investing to dr
Slide 5: Rapidly expanding advisory platform
INVESTOR VALUE PROPOSITION Rapidly expanding advisory platform ADVISORY SERVICES REVENUES $ in millions CAGR: 25% Advisory Services Revenues Advisory as a % of Adjusted Net Revenues* $443 $441 $394 $305 54% 53% 53% $209 45% $198 36% 35% $86 $83 $74 20% 21% 19% 2011 2012 2013 2014 2015 2016 2017 2018
Slide 6: Continuously investing for growth
INVESTOR VALUE PROPOSITION Continuously investing for growth INVESTMENT BANKING PUBLIC FINANCE 122 MDs 72 MDs Announced the acquisition of Sandler O’Neill which Added 9 senior bankers during the year adds the leading financial services investment bank to 2019 expanding our presence in Nebraska, Colo
Slide 7: Business mix evolution
INVESTOR VALUE PROPOSITION Business mix evolution ADJUSTED NET REVENUE MIX BY BUSINESS ACTIVITY 9% Investment Banking 14% 11% 12% 20% 18% 17% 16% M&A Advisory 26% 11% 10% 11% Capital markets 13% 13% 15% 10% Debt and restructuring advisory 22% 12% 10% 24% 18% 16% 17% Public Finance 12% Municipal unde
Slide 8: Track record of profitable growth
INVESTOR VALUE PROPOSITION Track record of profitable growth ADJUSTED NET REVENUES* ADJUSTED EPS* & ADJUSTED ROE* $ in millions Adjusted Diluted EPS* Adjusted Rolling 12-Month ROE* $7.36 $818 $824 $6.68 $737 $682 $5.72 15.7% $592 $552 13.3% 12.7% $4.05 $420 $435 $367 $3.09 $3.18 $2.24 8.0% $2.03 6.4
Slide 9: Multiple levers to generate returns for shareholders
INVESTOR VALUE PROPOSITION Multiple levers to generate returns for shareholders SHARE REPURCHASES $507 million 25% Capital returned to Reduction in number of shareholders through common shares repurchases since 2011 outstanding1 since 2011 $106 MILLION 2019 ADJUSTED DIVIDENDS NET INCOME* $102 millio
Slide 10: Significantly undervalued advisory franchise
INVESTOR VALUE PROPOSITION Significantly undervalued advisory franchise MARKET CAP AND LTM REVENUE MULTIPLE Market Cap $ in millions Revenue Multiple: Market Cap / LTM Revenue 3.3x Average 3.1x Revenue $3,788 Multiple 1 2.9x 2.7x 2.7x $3,192 $2,329 1.6x $2,052 1.5x $1,787 Tangible Capital $1,213 $1,
Slide 11: Piper Jaffray and Sandler O'Neill merge
INVESTOR VALUE PROPOSITION Piper Jaffray and Sandler O’Neill merge ESTABLISHED 1895 + ESTABLISHED 1988 PIPER JAFFRAY SANDLER O’NEILL A leading investment bank and institutional securities A full-service investment banking firm and broker-dealer firm. Through a distinct combination of candid focused
Slide 12: Strategic rationale
COMBINES THE LEADING FINANCIAL SERVICES INVESTMENT BANK WITH OUR GROWING PLATFORM Strategic rationale Adds a large, durable, market- The leading financial services investment bank with approximately leading franchise to our platform $300M of annual revenues Increases scale and diversity Complements
Slide 13: The leading financial services investment bank
ABOUT SANDLER O’NEILL The leading financial services investment bank Full service investment banking firm dedicated to providing comprehensive advisory and transaction execution services to a broad range of financial institutions and investors • Singular focus on financial services companies • Excep
Slide 14: Leading franchise with attractive financial profile
STRATEGIC RATIONALE Leading franchise with attractive financial profile SANDLER O’NEILL REVENUES BY BUSINESS ACTIVITY $ in millions M&A / Advisory Services Six consecutive years of Financing Fixed Income revenue growth driven by Equity Commissions $343 increasing market share $336 $17 $16 $300 $285
Slide 15: Shareholder value creation
COMBINATION ATTRIBUTES Shareholder value creation Meaningfully accretive Accretive to operating margin, ROE, EPS and employee acquisition productivity metrics Enhances scale, Increases revenue by 44% and adds a highly durability, and complementary, market-leading financial services industry diversit
Slide 16: Top performing stock over multi-year periods
OUR GROWTH, BUSINESS MIX AND DISCIPLINED USE OF CAPITAL DRIVING BEST-IN-CLASS RETURNS Top performing stock over multi-year periods $100 PIPR SHARE PRICE $85 $70 $55 $40 $25 $10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 TOTAL RETURN AS OF JANUARY 31, 20201 1-Year 3-Year 5-
Slide 17: A leading investment bank and institutional securities firm (pro forma metrics)
$1.1 Billion 75% 50%+ 17-19% Adjusted Net Investment Banking Advisory Services Targeted Operating Revenues1 Revenue Mix Revenue Mix Margin A LEADING INVESTMENT BANK AND INSTITUTIONAL SECURITES FIRM $150M+ 2.0 30%-50% <1x Annual Years Expected to Adjusted Net Income Leverage Cash Flow2 Pay off Acquis
Slide 18: Overview of business lines
PIPER SANDLER COMPANIES Overview of business lines
Slide 19: Investment banking
BUSINESS LINE OVERVIEW Investment banking Broad brand permission across sectors, products, Agriculture, Diversified transaction sizes and ownership structures (entrepreneur, Clean Tech & Consumer Industrials & Energy private equity, public, etc.) Renewables Services Comprehensive advisory services t
Slide 20: One of the fastest growing investment banks in the U.S.
BUSINESS LINE OVERVIEW One of the fastest growing investment banks in the U.S. GROWTH IN ADVISORY REVENUE1 455% 222% 148% 138% 122% 85% 62% 62% -2% PIPR RJF EVR HLI SF MC GHL GS MS Core Comparable Group Bulge Bracket Sector Expansion Adding Energy and FIG sectors increased our industry coverage to 8
Slide 21: Investment banking growth
BUSINESS LINE OVERVIEW Investment banking growth INVESTMENT BANKING REVENUE $1BB+ $ in millions ORGANIC GROWTH DRIVERS $750M • Market share gains • Consistently $742 winning larger $500M assignments in all industry groups $526 $528 • Disciplined MD $493 headcount growth – $325M destination of choice
Slide 22: Public finance
BUSINESS LINE OVERVIEW Public finance Leading middle-market tax-exempt underwriter SECTOR EXPERTISE Team of 300+ public finance and distribution professionals Government Success built on local market relationships and knowledge Local Municipalities amplified by the strength of substantial scale and
Slide 23: Longstanding public finance leadership
BUSINESS LINE OVERVIEW Longstanding public finance leadership National platform, local relationships Rank by negotiated par value $ in billions Periods of market instability create industry consolidation opportunities 1 BofA Securities $44.5 We are a destination of choice: we continually attract pro
Slide 24: Equity institutional brokerage
BUSINESS LINE OVERVIEW Equity institutional brokerage Research Equity sales and trading Expansion into FIG and energy – now represents Business impacted by low volatility and over 35% of our coverage active/passive trend Piper Sandler coverage includes most major Modest increase in market share driv
Slide 25: Acquisition of Weeden & Co.
BUSINESS LINE OVERVIEW Acquisition of Weeden & Co. FIRM OVERVIEW A highly recognized equities execution firm • 96-year-old firm with a strong culture, entrusted with trading since 1922 • Provides premier global trading solutions, specializing in best execution through the use of high-touch and progr
Slide 26: Fixed income institutional brokerage
BUSINESS LINE OVERVIEW Fixed income institutional brokerage Fixed income brokerage Scaled, multi-product business in the middle market primarily focused on investment grade products Overall Goals Unique expertise in municipal bond markets Strong capital base to pursue investment opportunities Reduce
Slide 27: Additional merger and strategic rationale information
PIPER JAFFRAY AND SANDLER O’NEILL MERGE Additional merger and strategic rationale information
Slide 28: Merger details
PIPER SANDLER COMPANIES Merger details TRANSACTION OVERVIEW Piper Jaffray Companies acquires 100% of Sandler O’Neill + Partners • Merged company named Piper Sandler Companies; closed January 3, 2020 • Combines two trusted and established firms with matching client-centric cultures • Brings together
Slide 29: Increases scale and diversity across industry sectors
STRATEGIC RATIONALE Increases scale and diversity across industry sectors 2018 Piper Standalone 2018 Pro Forma Investment Banking Revenues1 by Sector Investment Banking Revenues2 by Sector 90 51% 125+ MDs MDs increase in revenues $493M $742M Revenue Revenue Financial Services Healthcare Energy Consu
Slide 30: Elevates advisory platform within the middle market
STRATEGIC RATIONALE Elevates advisory platform within the middle market ADVISORY SERVICES REVENUES ADJUSTED NET REVENUES* $ in millions $ in millions CAGR: 29% CAGR: 15% Advisory Services Revenues Adjusted Net Revenues $1,124 Advisory as a % of Adjusted Net Revenues $573 $443 $818 $394 $737 $682 $30
Slide 31: Elevates capital raising platform within the middle market
STRATEGIC RATIONALE Elevates capital raising platform within the middle market 2018 Piper Standalone 2018 Pro Forma Capital Markets Revenues1 by Sector Capital Markets Revenues2 by Sector 57% $122M increase in $192M Revenue platform Revenue Financial Services Healthcare Other Combination adds a book
Slide 32: Adds an advice-driven, market-leading fixed income business
STRATEGIC RATIONALE Adds an advice-driven, market-leading fixed income business SANDLER O’NEILL FIXED INCOME GROUP Differentiated, advisory-based model that leverages the capabilities of the whole firm and drives Combination Attributes investment banking revenue • Significantly increases scale with
Slide 33: Enhances equities business through expanded resources
STRATEGIC RATIONALE Enhances equities business through expanded resources Piper Standalone Pro Forma Research Coverage1 Research Coverage2 650 31% 850 increase in Stocks coverage Stocks Financial Services Healthcare Energy Consumer Industrials & Business Services Technology Expands research and acco
Slide 34: Appendix
RECONCILIATION FOR NON-GAAP MEASURES Appendix
Slide 35: Return on equity
RECONCILIATION FOR NON-GAAP MEASURES Return on equity For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Average common shareholders' equity $ 677,412 $ 688,734 $ 766,128 $ 785,899 $ 808,551 $ 783,425 $ 728,187 $ 721,131 $ 834,594 Deduct: goodwill attributa
Slide 36: Financial trend
RECONCILIATION FOR NON-GAAP MEASURES Financial trend For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net revenues: Net revenues – U.S. GAAP basis $ 834,566 $ 740,953 $ 823,621 $ 693,214 $ 602,264 $ 567,841 $ 443,508 $ 424,135 $ 369,063 Adjustments: Reven
Slide 37: Financial trend – continued
RECONCILIATION FOR NON-GAAP MEASURES Financial trend – continued For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Income/(loss) from continuing operations before income tax expense/(benefit): Income/(loss) from continuing operations before income tax expe
Slide 38: Financial trend – continued
RECONCILIATION FOR NON-GAAP MEASURES Financial trend – continued For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net income/(loss) applicable to Piper Sandler Companies: Net income/(loss) applicable to Piper Sandler Companies – U.S. GAAP basis $ 111,711
Slide 39: Financial trend – continued
RECONCILIATION FOR NON-GAAP MEASURES Financial trend – continued For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net income/(loss) applicable to Piper Sandler Companies' common shareholders: Net income/(loss) applicable to Piper Sandler Companies' common
Slide 40: Financial trend – continued
RECONCILIATION FOR NON-GAAP MEASURES Financial trend – continued For the year ended December 31, ($ in thousands) 2019 2018 2017 2016 2015 2014 2013 2012 2011 Earnings/(loss) per diluted common share: Earnings per diluted common share – U.S. GAAP basis $ 7.69 $ 3.72 $ (4.99) $ (1.72) $ 3.34 $ 3.87 $
Slide 41: Annual cash flows and EBITDA
RECONCILIATION FOR NON-GAAP MEASURES Annual cash flows and EBITDA The following tables presents the components of 2018 Piper Standalone annual cash flows, and earnings before interest, taxes, depreciation, and amortization ("EBITDA") for the year ended December 31, 2018: Annual cash flows EBITDA ($
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