Piper Jaffray Cos Earnings Call NUGGETS: Expense Levels, Exiting of the Asia Biz

On Wednesday, Piper Jaffray Cos (NYSE:PJC) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Expense Levels

Joel Jeffrey – KBW: Just quickly, I mean, thanks for all the disclosure in terms of what the charges were, we’re just kind of struggling a little bit to get the kind of an operating EPS number. I mean, would say backing out all the after-tax impact, that’s sort of more in line with the $0.31 number or is it more – or is the $0.37 number appropriate?

Debbra L. Schoneman – CFO: The $0.31 is what we believe is appropriate from a continuing operations perspective.

Joel Jeffrey – KBW: Then so thinking about the expense levels going forward, I mean, can you give us any sort of thought on sort of maybe non-comp number we should be thinking about in the future quarters based on the absence of Asia and some of the other things you’ve done?

Debbra L. Schoneman – CFO: Yeah. So, given as you mentioned those two items – absence of Asia and the cost reduction initiatives that we’ve been working on. So, from a continuing operations perspective we believe that non-comps in the range of $30 million to $31 million are appropriate.

Andrew S. Duff – Chairman and CEO: Per quarter.

Debbra L. Schoneman – CFO: Per quarter, yeah.

Joel Jeffrey – KBW: Then think about very strong public finance quarter, I mean, is this kind of level sustainable going forward or was there something specific to this quarter in the market that just led to higher issuance levels?

Andrew S. Duff – Chairman and CEO: It was a very strong quarter both for (us) and issuance, and I would think of the back half looking very much like the first half of the year for us.

Joel Jeffrey – KBW: Okay, great, and then just lastly, in terms of the share repurchase, I think, you said you had reached your covenant level, so is there any way you can buyback additional shares, or are you sort of maxed out for the remainder of the year?

Debbra L. Schoneman – CFO: For the remainder of this year we are maxed out. Next year, then we have the ability to buy back shares to offset dilution again under our bank line of credit.

Exiting of the Asia Biz

Devin Ryan – Sandler O’Neill: Within the equity sales and trading business, were there any trading losses in that line or was the kind of softer quarter purely a function of just lower client volumes?

Andrew S. Duff – Chairman and CEO: It was largely volumes, there was a small loss.

Devin Ryan – Sandler O’Neill: In the asset management business, you guys highlighted some net cash outflows. What products were those in and what was the driver of the outflows?

Andrew S. Duff – Chairman and CEO: They were spread out across a number of the equity products, to some degree offset by our sole yield product, which is MLPs, which had modest inflows, so it wasn’t a very significant number in any given product. So, the driver for the quarter was the market valuation.

Devin Ryan – Sandler O’Neill: Okay. Then just on the exiting of the Asia business, to the extent you cease operations there versus an actual sale, should we expect further restructuring charges this quarter, do you have any estimation of what those would be at this point?

Debbra L. Schoneman – CFO: Yeah. So, if we do shutdown versus a sale again the range from the net cash proceeds, we believe is within that $13 million to $18 million range in either of those situations, but from our restructuring perspective, specifically with a shutdown it would be somewhere in the range of $8 million to $10 million is what we anticipate, which is already contemplated in that net cash proceed range, that of the $13 million to $18 million.