Piper Sandler Companies · NYSE:PIPR
Piper Sandler Companies — Piper Jaffray Companies — Investor Presentation (December 2015)
31 slides from Piper Sandler Companies's investor presentation, Dec 1, 2015
Slide 1: Caution Regarding Forward-Looking Statements
2 CAUTION 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. These forward-looking statements cover, among other things,
Slide 2: Table of Contents
3 TABLE OF CONTENTS Section I Company Overview Section II Investment Banking and Equities Section III Public Finance and Fixed Income Section IV Asset Management Section V Financial Information Reconciliation
Slide 3: Leading Investment Bank & Asset Management Firm
LEADING INVESTMENT BANK & ASSET MANAGEMENT FIRM Reputation for client-first approach and straightforward advice Deep expertise and market leadership in focused industry sectors Strategic advisory relationships and expert execution 120-year track record of delivering results Investment Banking and Eq
Slide 4: Investor Value Proposition
INVESTOR VALUE PROPOSITION 5 Consistent growth in annual earnings Return on Equity (ROE) on a path to exceed our cost of capital Increased mix of higher margin activities Business diversification to produce strong results across various market conditions Returning capital to our shareholders Solid t
Slide 5: Strategic Framework
STRATEGIC FRAMEWORK 6 In 2011, in the wake of the second wave of the financial crisis, we implemented a strategic framework to transform the value proposition for our investors Improve Operating Performance to Increase Earnings & ROE Increase Valuation and Share Price Invest in Growth Opportunities
Slide 6: Transformation Progress
TRANSFORMATION PROGRESS 7 1 See Slide 28, 29 & 30 for a reconciliation of non-GAAP financial measures Reduce Op Exp Increase Comp discipline Initial remix to higher margin (ARI Acq) Avg Revenue $450MM Reduce Intl Footprint Remix (Hires + Acq) Advisory - EV//Public Fin - SNW Increase Opr. leverage Av
Slide 7: Business Mix Evolution
BUSINESS MIX EVOLUTION 8 Strong execution on our strategic objectives of top line growth & remixing to higher quality earnings Designed to grow earnings and attract a higher multiple Since 2009, we have grown revenues by 50%, while tripling the contribution from Advisory & Asset Mgt With Simmons rev
Slide 8: Enhancing Shareholder Value
ENHANCING SHAREHOLDER VALUE Demonstrated strength in execution Grew revenues Maintained operating discipline Remixed the business Increased EPS and ROE Recent strategic initiatives to drive future growth Simmons & Co acquisition Expansion into FIG sector through organic hiring and the River Branch a
Slide 9: Operating Leverage = Improved Earnings
OPERATING LEVERAGE = IMPROVED EARNINGS 1 See Slide 29 & 30 for a reconciliation of non-GAAP financial measures 2 Non Comp ratio excludes $9.8MM legal settlement charge incurred in Q3 of 2015 Adjusted Revenue Trend Adjusted Non Comp Ratio Disciplined Growth In Headcount Revenue growth drivers Improve
Slide 10: Section II: Investment Banking and Equities
SECTION II Investment Banking and Equities
Slide 11: Leading Middle-Market Investment Bank
Leading Middle-Market Investment Bank Team of 434 investment banking, and sales, trading and research professionals Differentiated industry sector expertise Broad range of equity and equity-linked financing solutions Substantial merger and acquisition advisory practice with cross-border capabilities
Slide 12: Investments Driving IB Growth
13 INVESTMENTS DRIVING IB GROWTH Over the past two years, significant investment in the investment banking platform has driven meaningful growth – outpacing both our core and bulge bracket competitors Core Comparable Group Bulge 2013 – 2014 Investment banking revenue growth(1) Q1 2016 Acquisition of
Slide 13: Trajectory to a $500 Million Investment Banking Business
$300MM IB Business With HC Leadership + $100MM Leadership in Energy + $50MM Top 3 FIG MM IB +$ 50MM DCM Biotech M&A Industrials and Services Expansion HC IT and Services Revenue Synergies – Simmons TMT Market Share Gain $500 MM IB Diversified Practice MM Leadership 14 TRAJECTORY TO A $500 MILLION IN
Slide 14: Foundation Built on Market Leadership
15 FOUNDATION BUILT ON MARKET LEADERSHIP Source: Dealogic & Piper Jaffray ECM Data is from 1/1/2010 to 9/30/2015 Includes IPOs and FOs with deal values >$10MM and market caps <$1B Growth sectors include: Business Services, Clean Technology, Consumer, Health Care, and TMT Growth Sector IPOs and Follo
Slide 15: Executing on Advisory Growth
16 EXECUTING ON ADVISORY GROWTH Multi year focus on M&A is starting to pay dividends with record revenues in 2014 Recent investments have broadened and strengthened our footprint M&A “flywheel” is creating a virtuous cycle: increased idea generation for PE firms more mandates increased volume of ide
Slide 16: Expanded Research Product
EXPANDED RESEARCH PRODUCT 17 After FIG & Energy (Simmons) Expansion 842 Stocks Under Coverage 52 Senior Analysts Before FIG & Energy (Simmons) Expansion 34 Senior Analysts 594 Stocks Under Coverage Expansion into FIG & Energy increases Research product by 40+% PJC sector coverage will include most m
Slide 17: Section III: Public Finance and Fixed Income
SECTION III Public Finance and Fixed Income
Slide 18: Long Term Public Finance Leadership
LONG TERM PUBLIC FINANCE LEADERSHIP Leading Middle-Market Tax Exempt Underwriter Team of 294 public finance and distribution professionals Success built on local market relationships and knowledge benefitted by the strength of substantial scale and expertise Robust distribution capabilities Industry
Slide 19: Consistently Improving a Strong Franchise
20 Current Footprint 2007 Footprint Market share based on par value of long-term senior negotiated issuance CONSISTENTLY IMPROVING A STRONG FRANCHISE Periods of market instability create industry consolidation opportunities We represent an attractive destination for professionals or firms and their
Slide 20: Diversified Fixed Income Trading Business
21 DIVERSIFIED FIXED INCOME TRADING BUSINESS Scaled, multiproduct middle market business primarily focused on investment grade products Unique expertise in municipal bond markets Broad distribution capabilities to support public finance Supplemental services to support trading Strong capital base to
Slide 21: Fixed Income Capital Management
22 FIXED INCOME CAPITAL MANAGEMENT Overall goals reduce inventories, lower risk and improve ROC Increasing turnover and reducing aging to lower inventories Reducing VAR while maintaining revenue as we lower the risk profile of the business GKST acquisition represents a strategic step in achieving ou
Slide 22: Fixed Income Capital Management
FIXED INCOME CAPITAL MANAGEMENT Income Brokeragi snue and VA 3120 — S16 ‘Average Revenue of Ssouusincesor0 | $a 2 isk and si2 Overall goals > reduce inventories, lower a improve ROC $08 + Increasing tumover and reducing aging to lower inventories 06 a Reducing VAR while maintaining revenue as soa ‘w
Slide 23: Asset Management
24 ASSET MANAGEMENT High Quality, Multi-Product Asset Manager $9.4 billion in AUM Diverse set of investment strategies Multi-channel distribution Significant contributor to financial results Stable source of earnings Segment % of Total Adjusted Earnings Contribution- Continuing Operations 1 Segment
Slide 24: Asset Management - Business Evolution
25 ASSET MANAGEMENT - BUSINESS EVOLUTION Keys to growing asset management Competitive investment performance Effective distribution Capital flowing into our product areas Business Circa 2009 Two separate RIA’s with their own infrastructure Two major core product areas with US Value comprising 80% of
Slide 25: Asset Management Growth Model
ASSET MANAGEMENT GROWTH MODEL 26 Positioned for Growth Competitive Product Mix First Class Infrastructure Capacity to Integrate Additional Strategies Domestic Equity Capacity Constrained International & Global Equity Attractive Asset Class MLP Yield Products Alternatives Specialized Focus Areas Core
Slide 26: Section V: Financial Information Reconciliation
SECTION V Financial Information Reconciliation
Slide 27: ROE Reconciliation for Non-GAAP Measures
28 ROE RECONCILIATION FOR NON-GAAP MEASURES The following table sets forth a reconciliation of net income from operations and return on shareholders’ equity excluding the impact of the noted item in the relevant year. LTM September 30, For the year ended December 31, 2015 2014 2013 2012 2011 2010 20
Slide 28: Financial Trend Reconciliation for Non-GAAP Measures
29 FINANCIAL TREND RECONCILIATION FOR NON-GAAP MEASURES LTM September 30, For the year ended December 31, (Amounts in thousands, except per share data) 2015 2014 2013 2012 2011 2010 2009 Net revenues: Net revenues – U.S. GAAP basis $ 626,102 $ 648,138 $ 525,195 $ 488,952 $ 432,083 $ 479,934 $ 440,91
Slide 29: Financial Trend Reconciliation for Non-GAAP Measures (Contd.)
30 FINANCIAL TREND RECONCILIATION FOR NON-GAAP MEASURES (Contd.) LTM September 30, For the year ended December 31, (Amounts in thousands, except per share data) 2015 2014 2013 2012 2011 2010 2009 Net income from continuing operations applicable to Piper Jaffray Companies: Net income from continuing
Slide 30: Reconciliation for Asset Management Segment
31 RECONCILIATION FOR ASSET MANGEMENT SEGMENT Asset management segment adjusted revenue and adjusted margin LTM Q3 2015 2014 2013 2012 2011 2010 2009 Adjusted AM revenue $ 68,290 $ 80,347 $ 81,948 $ 64,754 $ 62,992 $ 56,325 $ 5,350 Investment income/(loss) (5,870) 683 2,794 733 (72) 377 233 Revenue
Slide 31: Reconciliation for Asset Management Segment
RECONCILIATION FOR ASSET MANGEMENT SEGMENT Asset management segment adjusted revenue and adjusted margin tmma32015 201420132012 201120102008 Adjusted AM revenue $68,290 § 80347 S 81948 S64 758 § 62992 5 56325 § 5350 Investment income/(l03s) (5,870) 683 2.794733 (yam 23 Revenue excluding inv income/(
Piper Jaffray Companies — Investor Presentation (December 2015) on 6ix