Piper Sandler Companies

Good morning and welcome to the Piper Sandler Company's third quarter 2024 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'll begin by turning the call over to Kate Winslow. Please go ahead.

Thank you, operator. Good morning and thank you for joining the Piper Sandler Company's third quarter 2024 earnings conference call. Hosting the call today are Chairman and CEO Chad Abraham, our President Deb Shoneman, and CFO Kate Kloon. Earlier this morning, we issued a press release announcing Piper Sandler's third quarter 2024 financial results, which is available on our website at pipersandler.com slash earnings. Today's discussion of the results is complimentary to the press release. A replay of this call will also be available at the same website later today. Before we begin, let me remind you that remarks made on today's call may contain forward-looking statements that are not historical or current facts, including statements about beliefs and expectations and involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's reports on file with the SEC, which are available on our website at PiperSandler.com and on the SEC website at SEC.gov. Today's discussion also includes statements regarding certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance. The non-GAAP measures should be considered in addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in our earnings release issued today. I will now turn the call over to Chad.

Thank you, Kate. Good morning, everyone. It's great to be with you to talk about our third quarter 2024 results. We delivered strong year-over-year growth, generating adjusted net revenues of $352 million, an 18.4% operating margin, and adjusted EPS of $2.57. October has started strong in many of our businesses, and we expect fourth quarter revenues to be similar to the strong fourth quarter of last year. Turning to corporate investment banking, revenues of $206 million during the third quarter increased 7% over the same period last year. For the first nine months of 2024, corporate investment banking revenues of $650 million were up 24% from last year. As we have highlighted during past earnings calls, the investments we have made to increase and diversify our product capabilities and industry reach continues to be reflected in our results. M&A and restructuring activity generated 68% of total corporate investment banking revenues, equity financings contributed 18%, and debt advisory and financings generated 14% of revenues. From a sector perspective, we had strong and balanced performance across our industry teams with six of our seven verticals experiencing significant growth over the prior year period. In terms of client coverage, our focus on providing more comprehensive solutions to our private equity clients continues to drive performance. Activity from financial sponsors contributed to over half of the year-over-year growth in corporate investment banking revenues. Specific to advisory services, revenues were $188 million during the third quarter of 2024, up 22% year-over-year, driven by more completed transactions. We completed 71 advisory transactions during the quarter. Performance was led by healthcare, as our market-leading MedTech team closed several significant transactions. In addition, our financial services, services and industrials, energy and power, and consumer verticals all produce strong quarters. The diversification of the platform has been evident in 2024 with a different sector leading performance each quarter. Our agented debt advisory revenues, which are reported within advisory services, continue to be a bright spot as the team is on pace for another strong year. We have an outstanding debt advisory team that assists clients on an agented basis without using any underwriting capital. The growth in private credit, combined with the trend of financial sponsors outsourcing their debt raising capabilities, has resulted in increased activity. Through the first nine months of 2024, the team has raised over $4.2 billion of proceeds for our clients. Our success in designing, structuring, and executing creative solutions tailored to client needs while leveraging deep sector expertise has led to more clients using our debt advisory services, as well as significant repeat business from financial sponsor clients. Through nine months, we generated $529 million in advisory revenues, up 25% from a year ago, and outperformed U.S. transaction volume, which was up approximately 10% from the prior year. Looking forward, a strong October has contributed to a good start to the fourth quarter. If market conditions remain accommodative and closings stay on track, we expect a strong finish to the year in advisory. Turning to corporate financing, revenues were $18 million during the third quarter, down significantly both sequentially and year-over-year. We completed 17 equity and debt financings raising $10 billion for corporate clients. Performance was led by our financial services team, which completed capital raises in the depository space, as well as real estate and insurance. Corporate financing activity in October has outpaced the entire third quarter, and we expect revenues for the fourth quarter to be up meaningfully on a sequential basis. turning to investment banking managing director headcount. We ended the third quarter with 184 managing directors, the most MDs in our firm history. In August, we closed the acquisition of Avidity Advisors, which added 11 managing directors to form our private capital advisory group. Throughout 2024, we have continued to build out sector coverage with MD ads in FinTech, residential and commercial services, and financial sponsors. We remain focused on continuing to expand our capabilities, increasing productivity, and positioning our platform for long-term growth. In closing, our third quarter results were solid. The operating environment has become more constructive and we continue to deliver on our strategy. With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.