Piper Sandler Companies (PIPR) came out with quarterly earnings of $4.09 per share, beating the Zacks Consensus Estimate of $2.42 per share. This compares to earnings of $2.79 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 69.01%. A quarter ago, it was expected that this company would post earnings of $3.62 per share when it actually produced earnings of $4.80, delivering a surprise of 32.60%.Over the last four quarters, the ...

Piper Sandler Companies (PIPR) Q1 2025 Earnings Call May 02, 2025 08:00 AM ET Speaker0 Good morning, and welcome to the Piper Sandler Companies First Quarter twenty twenty five 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 will begin by turning the call over to Kate Winslow. Please go ahead. Speaker1 Thank you, operator. Good morning, and thank you for joining the Piper Sandler Company's first quarte ...

Financial Performance - Net revenues for Q1 2025 were $357 million, a decrease of 26% compared to Q4 2024 but an increase of 4% year-over-year[10]. - Net income attributable to Piper Sandler Companies was $65 million, a decrease of 6% from Q4 2024 but an increase of 53% compared to Q1 2024[17]. - Earnings per diluted common share for Q1 2025 were $3.65, down 5% from Q4 2024 but up 50% year-over-year[17]. - Total revenues for Piper Sandler Companies in Q1 2025 were $358.554 million, a decrease of 26.1% from $485.384 million in Q4 2024[40]. - Net income attributable to Piper Sandler Companies for Q1 2025 was $64,915,000, a decrease of 6.6% from $69,059,000 in Q4 2024 and an increase of 52.8% from $42,493,000 in Q1 2024[43]. - Adjusted net income for Q1 2025 was $73.495 million, a decrease of 15.2% from $86.756 million in Q4 2024[41]. - Adjusted earnings per diluted common share for Q1 2025 was $4.09, down 14.8% from $4.80 in Q4 2024 but up 46.5% from $2.79 in Q1 2024[43]. Revenue Breakdown - Advisory services revenues reached $217 million, accounting for approximately 60% of net revenues, and grew 38% year-over-year[5]. - Investment banking revenues totaled $278.9 million, a decrease of 25% from Q4 2024 but an increase of 21% year-over-year[10]. - Institutional brokerage revenues were $99 million, down 15% from Q4 2024 but up 9% compared to Q1 2024[11]. - Adjusted total revenues for Q1 2025 were $384.592 million, down 23.1% from $499.860 million in Q4 2024[41]. Operating Metrics - The pre-tax margin for Q1 2025 was 8.2%, down from 17.0% in Q4 2024 and 15.3% in Q1 2024[15]. - Adjusted operating income for Q1 2025 was $68.5 million, down 44% from Q4 2024 but up 23% from Q1 2024, with an adjusted operating margin of 17.9%[25]. - The adjusted operating margin for Q1 2025 was 17.9%, down from 24.4% in Q4 2024[41]. - Adjusted operating expenses for Q1 2025 were $314.8 million, a decrease of 17% from Q4 2024 and an increase of 13% from Q1 2024[24]. Shareholder Returns - The company returned an aggregate of $151 million to shareholders in Q1 2025, including $81 million in share repurchases and $70 million in dividends[5]. - The company declared a quarterly cash dividend of $0.65 per share, to be paid on June 13, 2025, and paid a special cash dividend of $3.00 per share during Q1 2025, totaling $70.3 million[30]. - Approximately 266,000 shares were repurchased during Q1 2025 for $80.6 million at an average price of $303.05 per share[31]. Tax and Compensation - The effective tax rate for Q1 2025 was negative 24.9%, influenced by $25.4 million in tax benefits related to restricted stock awards[16]. - The adjusted effective tax rate for Q1 2025 was negative 7.2%, significantly lower than the 28.5% in Q4 2024[26]. - The compensation ratio for Q1 2025 was 69.5%, an increase from Q4 2024, primarily due to lower net revenues and increased investment loss attributable to noncontrolling interests[19]. - Compensation and benefits expenses for Q1 2025 were $248.457 million, down 21.4% from $316.004 million in Q4 2024[40]. Employee Metrics - Full-time employees as of March 31, 2025, were 1,801, a slight decrease from 1,805 in Q4 2024[32]. - The company hired several managing directors to expand its investment banking capabilities in energy, healthcare, and fixed income sectors[5]. Non-GAAP Measures - The company emphasizes that non-GAAP measures are presented to provide a meaningful basis for comparison of operating results across periods[46].

Piper Sandler Companies (PIPR) shares ended the last trading session 14% higher at $240.34. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 15.9% loss over the past four weeks.Piper Sandler shares rallied sharply, benefiting from broad market strength following President Donald Trump’s announcement of a 90-day suspension on tariffs for non-retaliating countries. The policy shift eased trade tensions and improved ma ...

Financial Performance - Total revenues for 2024 reached $1,531,595, an increase of 12.7% compared to $1,358,113 in 2023[324] - Net income attributable to Piper Sandler Companies for 2024 was $181,114, representing a significant increase of 111.9% from $85,491 in 2023[324] - Earnings per diluted share rose to $10.24 in 2024, up 106.3% from $4.96 in 2023[324] - Comprehensive income attributable to Piper Sandler Companies for 2024 was $180,829, a 107.5% increase from $87,096 in 2023[326] - Net income for the year ended December 31, 2024, was $157,440,000, an increase of 59% compared to $98,973,000 in 2023[331] Assets and Liabilities - Total assets increased to $2,255.9 million as of December 31, 2024, compared to $2,140.9 million in 2023, reflecting a growth of approximately 5.4%[322] - Total shareholders' equity grew to $1,415.8 million, up from $1,299.5 million, marking an increase of 8.9%[322] - The company's total liabilities remained relatively stable at $840.2 million, compared to $841.5 million in the previous year[322] - The company reported a net deferred income tax asset of $161.6 million, down from $179.2 million, reflecting a decrease of 9.8%[322] - Noncontrolling interests in investments decreased to $187.6 million from $211.1 million, a decline of 11.1%[322] Cash Flow and Investments - Cash and cash equivalents rose to $482.8 million, up from $383.1 million, representing a significant increase of 26.1% year-over-year[322] - Net cash provided by operating activities increased to $313,255,000 in 2024 from $275,629,000 in 2023, reflecting a growth of 13.6%[331] - The company reported a net cash used in investing activities of $31,766,000 in 2024, compared to $10,051,000 in 2023, indicating increased investment activity[331] - The Company’s investments at fair value decreased to $267.3 million in 2024 from $285.9 million in 2023[466] Expenses - Compensation and benefits expenses increased to $1,004,173 in 2024, a rise of 12% from $897,034 in 2023[324] - Total non-interest expenses for 2024 were $1,307,502, an increase of 6.7% compared to $1,225,381 in 2023[324] - Interest expense decreased to $5,681 in 2024, down 44.4% from $10,146 in 2023[324] - Payment of cash dividends decreased to $73,726,000 in 2024 from $84,444,000 in 2023, a decline of 12.6%[331] Acquisitions - The Company completed the acquisition of Aviditi Capital Advisors, LLC on August 23, 2024, adding private capital advisory capabilities to its platform[389] - The economic value of the acquisition on the date was $70 million, which included cash consideration, equity consideration, contingent consideration, and various compensation obligations[390] - The acquisition of DBO Partners was completed for a purchase price of $66.3 million, including $64.6 million in cash and $1.7 million in contingent consideration[401] - Goodwill from the DBO Partners acquisition was recorded at $57.3 million, expected to be tax-deductible, with identifiable intangible assets valued at $10.4 million[403] - The acquisition of Cornerstone Macro had a purchase price of $34.1 million, with goodwill recorded at $9.6 million and identifiable intangible assets valued at $19.0 million[415] Financial Instruments - Financial instruments and other inventory positions owned totaled $425.7 million, slightly down from $434.6 million, indicating a decrease of 2.1%[322] - The company recorded derivative contracts valued at $5,699,000 after netting effects, with a total liability of $76,982,000 for financial instruments sold but not yet purchased[441] - The total absolute notional contract amount of the Company's outstanding derivative instruments was $1.4 billion as of December 31, 2024, compared to $1.6 billion in 2023[462] Legal and Regulatory Matters - The Company is involved in various legal actions related to securities brokerage and investment banking activities, which could result in substantial damages[493]

Core Viewpoint - Piper Sandler Companies (PIPR) has initiated a new share repurchase plan, allowing for the buyback of up to $150 million worth of shares, effective immediately until December 31, 2026 [1] Share Repurchase and Dividend Actions - The new buyback program follows a previous authorization from May 2022, which also allowed for the repurchase of up to $150 million worth of shares, set to expire on December 31, 2024 [1] - Piper Sandler has consistently raised dividends, increasing its dividend 11 times in the last five years, with the latest hike of 8.3% to 65 cents per share, resulting in a current dividend yield of 0.80% based on a closing price of $319.36 [2] Capital Distribution Policy - The company aims to return 30-50% of its annual adjusted net income to shareholders, regularly announcing special cash dividends, with the most recent being $3.65 per share, announced in January and payable in March [3] Strategic Growth Initiatives - Piper Sandler is expanding through strategic acquisitions, including the acquisition of Aviditi Advisors in August 2024, which enhances its private capital advisory capabilities [4] - The company has been diversifying its revenue base and expanding its market share through these strategic buyouts, enhancing its scale and capabilities [4] Financial Performance and Market Position - Supported by strong earnings and a solid balance sheet, Piper Sandler is expected to continue effective capital distribution activities, enhancing shareholder value [5] - Over the past year, PIPR shares have increased by 73.6%, outperforming the investment bank industry's rally of 55.9% [5]

Core Viewpoint - Piper Sandler Companies (PIPR) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which are crucial for stock price movements [1][3][10] Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6] - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to significant buying or selling activity that affects stock prices [4] Recent Performance and Projections - For the fiscal year ending December 2025, Piper Sandler is expected to earn $14.14 per share, reflecting an 11.4% increase from the previous year [8] - Over the past three months, the Zacks Consensus Estimate for Piper Sandler has increased by 5%, indicating a positive trend in earnings expectations [8] Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7] - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, highlighting their superior earnings estimate revision features [9][10]

Core Insights - Piper Sandler Companies (PIPR) reported quarterly earnings of $4.80 per share, exceeding the Zacks Consensus Estimate of $3.62 per share, and showing an increase from $4.03 per share a year ago, resulting in an earnings surprise of 32.60% [1] - The company achieved revenues of $498.58 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 14.57% and up from $471.85 million year-over-year [2] - Piper Sandler has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The sustainability of Piper Sandler's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3] - The current consensus EPS estimate for the upcoming quarter is $2.74 on revenues of $364.94 million, while for the current fiscal year, the estimate is $13.47 on revenues of $1.65 billion [7] Industry Context - The Financial - Investment Bank industry, to which Piper Sandler belongs, is currently ranked in the top 2% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Piper Sandler's stock performance [5]

Financial Performance - Piper Sandler Companies reported net revenues of $484 million for Q4 2024, a 35% increase from Q3 2024 and a 3% increase from Q4 2023[2]. - For the full year 2024, net revenues reached $1.53 billion, reflecting a 13% increase compared to 2023[9]. - Total revenues for Q4 2024 reached $485.4 million, a 27.5% increase from $360.9 million in Q3 2024[46]. - Net income for 2024 was $181.1 million, or $10.24 per diluted common share, an increase compared to 2023[22]. - Net income attributable to Piper Sandler Companies for Q4 2024 was $69.1 million, compared to $34.8 million in Q3 2024, representing a 98.5% increase[46]. - Adjusted net revenues for Q4 2024 were $498.6 million, a 42% increase from Q3 2024 and a 9% increase from Q4 2023[27]. - Adjusted net revenues for 2024 were $1.54 billion, a 16% increase compared to the prior year[28]. - Adjusted net income for Q4 2024 was $86.8 million, translating to $4.80 per diluted share, driven by a higher adjusted operating margin[32]. - For 2024, adjusted net income reached $228.2 million, or $12.69 per diluted share, reflecting an increase compared to 2023[33]. Revenue Breakdown - Advisory services revenues for Q4 2024 were $280 million, marking the third strongest quarter on record, driven by contributions from various sectors[4]. - Investment banking revenues for 2024 reached $1.11 billion, a 20% increase compared to 2023[10]. - Advisory services revenues for Q4 2024 were $279.6 million, up 49% from Q3 2024, but flat compared to Q4 2023[10]. - Corporate financing revenues in Q4 2024 were $53 million, the highest since 2021, indicating strong market performance[4]. - Corporate financing revenues for Q4 2024 were $52.8 million, a 195% increase from Q3 2024 and a 75% increase from Q4 2023[10]. - Municipal financing revenues for Q4 2024 were $41.0 million, a 15% increase from Q3 2024 and a 40% increase from Q4 2023[11]. - Institutional brokerage revenues for Q4 2024 were $117.3 million, a 16% increase from Q3 2024 and a 14% increase from Q4 2023[12]. - Fixed income services revenues increased by 11% to $186 million in 2024, driven by increased activity among depository clients[4]. Expenses and Margins - Non-interest expenses for Q4 2024 were $402.0 million, a 32% increase from Q3 2024 and a 4% increase from Q4 2023[15]. - Piper Sandler's pre-tax margin for Q4 2024 was 17.0%, an increase of 1.5 percentage points from Q3 2024[2]. - Adjusted operating expenses for Q4 2024 were $377.2 million, a 31% increase from Q3 2024 and a 5% increase from Q4 2023[29]. - Adjusted operating income for Q4 2024 was $121.4 million, up 87% from Q3 2024 and 23% from Q4 2023[30]. - The adjusted operating margin for Q4 2024 was 24.4%, up from 18.4% in Q3 2024 and 21.7% in Q4 2023[30]. - Compensation and benefits expenses for Q4 2024 totaled $316.0 million, a 37% increase from $231.0 million in Q3 2024[46]. Shareholder Returns - Piper Sandler declared a special cash dividend of $3.00 per share and a quarterly dividend of $0.65 per share, totaling $5.50 per share for fiscal year 2024[4]. - The total dividend payout ratio for fiscal year 2024 was 43% of adjusted net income[4]. - The company returned an aggregate of $140 million to shareholders in 2024 through share repurchases and dividends[4]. - In Q4 2024, the company repurchased approximately 22,000 shares for $6.5 million at an average price of $294.08 per share[37]. - For 2024, the company repurchased approximately 347,000 shares for $66.4 million at an average price of $191.44 per share[38]. - The total dividend for fiscal year 2024 amounts to $5.50 per share, with a payout ratio of 43% of adjusted net income[34]. Tax and Adjustments - The adjusted effective tax rate for 2024 was 24.9%, an increase from 19.9% in the prior year due to a lower tax benefit related to restricted stock awards[31]. - Adjusted effective tax rate for Q4 2024 was 28.5%, slightly down from 28.6% in Q3 2024[47]. - The company reported an income tax expense of $29.6 million for Q4 2024, up from $15.2 million in Q3 2024, representing a 94.5% increase[49]. - Adjusted income tax expense for Q4 2024 was $34.7 million, compared to $18.5 million in Q3 2024, indicating an increase of 87.2%[49]. Employment - Full-time employees as of December 31, 2024, totaled 1,805, an increase from 1,725 a year earlier[39]. Financial Reporting Practices - The company presents selected summary financial information as non-GAAP measures to provide a meaningful basis for comparison of operating results across periods[1]. - Adjusted net income excludes compensation and non-compensation expenses from acquisition-related agreements, restructuring costs, and amortization of intangible assets[9]. - Adjusted operating income is represented as a percentage of adjusted net revenues, indicating operational efficiency[14]. - The company emphasizes the importance of adjusted measures to reflect true financial performance, excluding various one-time costs[6]. - The adjustments made in the financial reporting are aimed at providing stakeholders with a more accurate picture of the company's financial health[8].

Financial Performance - Total revenues for the three months ended September 30, 2024, increased to $360,928,000, up 23.5% from $292,031,000 in the same period last year[9]. - Net income attributable to Piper Sandler Companies for the three months ended September 30, 2024, was $34,789,000, compared to $3,878,000 in the prior year, representing a significant increase[9]. - Investment banking revenues rose to $241,470,000 for the three months ended September 30, 2024, compared to $211,666,000 in the same period last year, reflecting a growth of 14.1%[9]. - Institutional brokerage revenues increased to $100,934,000, up 11.9% from $90,493,000 year-over-year[9]. - Net income for the three months ended September 30, 2024, was $40,390,000, compared to a loss of $13,677,000 for the same period in 2023, representing a significant turnaround[10]. - Comprehensive income attributable to Piper Sandler Companies for the nine months ended September 30, 2024, was $114,511,000, up from $33,991,000 in the same period of 2023[10]. - The company reported a comprehensive income of $42,744,000 for the three months ended September 30, 2024, compared to a loss of $14,886,000 in the same period of 2023[10]. - The net income for the nine months ended September 30, 2024, was $104,938,000, compared to $34,400,000 for the same period in 2023, indicating strong growth[10]. - Net revenues for the three months ended September 30, 2024, were $359,572,000, representing a 24.2% increase from $289,485,000 in the same period of 2023[151]. - Adjusted net income attributable to Piper Sandler Companies for the three months ended September 30, 2024, was $46,262,000, a 47.0% increase from $31,477,000 in the prior year[151]. - Pre-tax income for the nine months ended September 30, 2024, was $136.3 million, compared to $36.7 million for the same period in 2023[100]. - The company reported a pre-tax margin of 15.5% for the three months ended September 30, 2024, compared to (1.2)% in the same period of 2023[151]. Assets and Liabilities - Total assets decreased to $2,032,127,000 as of September 30, 2024, down from $2,140,983,000 at the end of December 2023, a decline of 5.1%[8]. - Total liabilities decreased to $670,045,000 as of September 30, 2024, down from $841,510,000 at the end of December 2023, a reduction of 20.3%[8]. - The total shareholders' equity as of September 30, 2024, was $1,362,082,000, an increase from $1,299,473,000 at the end of 2023[11]. - The balance of retained earnings as of September 30, 2024, was $505,299,000, reflecting an increase from previous periods[11]. - Cash and cash equivalents at the end of the period were $350,185,000, compared to $51,875,000 at the beginning of the period[14]. - The company reported a total of $418.025 million in financial instruments and other inventory positions owned as of September 30, 2024, a decrease from $434.557 million at the end of 2023[59]. Dividends and Share Repurchases - The company declared dividends of $0.65 per common share for the three months ended September 30, 2024, compared to $0.60 in the same period last year[9]. - The company declared and paid total dividends of $61.1 million for the nine months ended September 30, 2024, including a special cash dividend of $1.00 per share[91]. - The company repurchased common stock from employees amounting to $8,889,000 during the three months ended September 30, 2024[11]. - The company repurchased common stock totaling $59,970,000 during the nine months ended September 30, 2024[14]. - The company has $138.2 million remaining authorization for share repurchases as of September 30, 2024[86]. Compensation and Expenses - Compensation and benefits expenses increased to $231,014,000 for the three months ended September 30, 2024, up from $207,282,000 in the prior year, reflecting a rise of 11.4%[9]. - Non-compensation expenses decreased by 14.8% to $72,943 million for the three months ended September 30, 2024, compared to $85,653 million in the prior year[151]. - Stock-based compensation increased to $71,111,000 for the nine months ended September 30, 2024, compared to $62,747,000 in the prior year[14]. - The company recorded $0.5 million in compensation expense related to the TRS Earnout for the nine months ended September 30, 2024[134]. Acquisitions - The company completed the acquisition of Aviditi Capital Advisors, LLC on August 23, 2024, enhancing its private capital advisory capabilities[150]. - The economic value of the acquisition of Aviditi Advisors on August 23, 2024, was $70 million, which included cash consideration of $23.8 million and equity consideration of $6.0 million[24][25]. - Integration costs incurred for the acquisition were $0.5 million for the three months ended September 30, 2024, and $1.8 million for the nine months ended September 30, 2024[31]. - The company assumed $17.3 million of short-term financing during the acquisition of Aviditi Advisors, which was fully repaid on August 23, 2024[84]. Market Conditions and Outlook - The financial services industry performance is highly correlated to macroeconomic conditions, financial market activity, and geopolitical events, which can impact profitability[154]. - Overall market conditions, including demand for investment banking services and market volatility, significantly influence the company's financial results[154]. - The company expects a strong finish to the year in advisory services and corporate financing, with October activity outpacing the entire third quarter[157][158].