Piper Sandler Companies (PIPR) Q3 Earnings call transcript Oct 25, 2024
2min read In a recent earnings call, Piper Sandler Companies reported robust financial results for the third quarter of 2024, reflecting a year-over-year growth of 18.4% in operating margin and adjusted EPS of $2.57. The company's performance was driven by its Corporate Investment Banking and Advisory services, which recorded significant growth, especially in M&A and restructuring activity.
Corporate Investment Banking and Advisory Services Shine
Piper Sandler's Corporate Investment Banking division saw a 7% increase in revenues compared to the same period last year, reaching $206 million. The sector's growth was attributed to the company's strategic investments in diversifying its product capabilities and industry reach, with M&A and restructuring activities contributing to 68% of the total revenues. The company's equity financing and debt advisory and financings also contributed 18% and 14%, respectively.
The company's Advisory services also performed exceptionally well, with revenues up 22% year-over-year, totaling $188 million. The growth was driven by a higher number of completed transactions and the company's market-leading med tech team's success in closing significant deals. Healthcare and other sectors such as financial services, services and industrials, energy and power, and consumer verticals all experienced growth in the quarter.
Piper Sandler's debt advisory team, which operates under Advisory services, has been a standout performer, with revenues on track for another strong year. The team's success is attributed to its ability to design and execute creative solutions tailored to client needs, leveraging deep sector expertise. Through the first 9 months of 2024, the team has raised over $4.2 billion for its clients.
Public Finance and Brokerage Businesses See Improvement
Piper Sandler's Public Finance business reported a significant 78% increase in revenues compared to the previous year's third quarter, totaling $36 million. The growth was driven by strong investor demand and increased issuance in the municipal financing sector. The company's equity brokerage business also showed improvement, with revenues up 4% year-over-year, generating $52 million. The quality of the research product and trade execution have been instrumental in attracting clients and offsetting the impact of a declining market wallet.
Outlook for the Future
Looking forward, Piper Sandler remains optimistic about its prospects, with a strong start to the fourth quarter and expectations of a strong finish to the year. The company is well-positioned to continue its growth trajectory, with a focus on expanding capabilities, increasing productivity, and maintaining a strong market position.
Capital Allocation and Acquisitions
During the call, Chad Abraham, the company's CEO, discussed the company's capital allocation strategy, which includes returning capital to shareholders and pursuing strategic acquisitions. The acquisition of Aviditi Advisors in August 2024 has been a significant step in this regard, with plans to invest more in the business and accelerate its growth.
Conclusion
Piper Sandler's strong third-quarter performance is a testament to its strategic investments and the resilience of its business model. The company's focus on expanding capabilities, increasing productivity, and maintaining a strong market position is expected to continue driving its growth in the coming quarters. With a solid start to the fourth quarter and a positive outlook for 2025, Piper Sandler is well-positioned to capitalize on market opportunities and deliver value to its shareholders.
