Piper Jaffray Reports Q2 Earnings Far Below Consensus

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Piper Jaffray Companies (NYSE:PJC) released its latest quarterly earnings before opening bell this morning, greatly missing the expectations of analysts. The firm reported net income from continuing operations of 25 cents per diluted common share. It reported net income including continuing and discontinued operations of $2.5 million or 15 cents per diluted common share compared to net income of $6.9 million or 37 cents per diluted common share in the same quarter a year ago.

Piper Jaffray Companies

Piper Jaffray misses expectations

Net revenues for the second quarter of the year were $99.8 million, compared to $103.1 million in the same quarter a year ago and $109.5 million in the previous quarter. For Piper Jaffray Companies (NYSE:PJC)’s second quarter, analysts were expecting the firm to report earnings per share of 55 cents on $124 million in revenue for the second quarter.

In the second quarter of last year, the company reported earnings of 58 cents per share, although the company said last year’s results received a tax benefit due to the resolution of a state income tax issue. That benefit was worth 35 cents per share.

The company said its discontinued operations include results from its capital markets business in Hong Kong, which has been shut down, and FAMCO, a division of the company’s asset management segment. Piper Jaffray sold FAMCO as part of a previously announced agreement.

Piper Jaffray posts losses in capital markets

“We experienced extremely challenging conditions in the fixed income markets this quarter which adversely impacted out Fixed Income Brokerage business and our results for the quarter,” said Chairman and Chief Executive Officer Andrew S. Duff in a statement. “We made significant strategic progress during the quarter with our acquisitions of Seattle Northwest in public finance, and Edgeview Partners in M&A,  both of which closed in the past week.”

Piper Jaffray Companies (NYSE:PJC)’s Capital Markets division posted pre-tax operating losses of $2.1 million, compared to earnings of $1.8 million in the same quarter a year ago. Net revenue for the division fell 7 percent from last year’s result to $81.8 million. Advisory services revenue fell 36 percent year over year to $9.4 million, although the company’s equity financing and equity institutional brokerage revenues increased. Fixed income financing revenues remained roughly flat year over year.

Piper Jaffray  posts increases in asset management

At the end of the second quarter, the firm’s Asset Management division posted $5.5 million in pre-tax operating income, a 41 percent increase year over year. Net revenue for the division was $18 million, a 16 percent increase over last year’s results. Higher revenues in the division were driven by higher management fees because of increased assets under management as the market appreciated.

Piper Jaffray returns capital to shareholders

During the second quarter, Piper Jaffray Companies (NYSE:PJC) repurchased almost 800,000 shares of its common stock for a total of $25.7 million. The firm still has $69.7 million left on its share repurchase authorization, which is good until the end of September 2014.

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