PIPER SANDLER COMPANIES Q3 FY2024 earnings call

• Chad Abraham discussed corporate investment banking growth, with revenues up 7% y-o-y in Q3 2024 and 24% for first nine months 2024. M&A and restructuring, equity and debt financing contributions to revenues. Advisory services saw $188 million in Q3 2024, up 22% y-o-y with 71 transactions. Debt advisory raised over $4.2 billion in proceeds. - Deb Schoneman talked about public finance with $36 million in Q3 2024, up 78% y-o-y, equity brokerage with $52 million in Q3 2024, up 4% y-o-y, and fixed income with $48 million in Q3 2024, up 22% sequentially and 20% y-o-y. - Kate Clune reviewed financial results, noting net revenues of $352 million in Q3 2024, 15% increase y-o-y, operating expenses and margins, and capital allocation including quarterly dividend approval.

Corporate Investment Banking: Revenues of $206 million in Q3 2024, up 7% y-o-y. First nine months of 2024: $650 million, up 24% y-o-y. M&A and restructuring generated 68% of total corporate investment banking revenues, equity financing 18%, debt advisory and financing 14%. Advisory services revenues: $188 million in Q3 2024, up 22% y-o-y, with 71 transactions completed. Debt advisory raised over $4.2 billion in proceeds through nine months 2024, advisory revenues $529 million, up 25% y-o-y. Corporate Financing: Revenues $18 million in Q3 2024, down sequentially and y-o-y. Public Finance: Revenues $36 million in Q3 2024, up 78% y-o-y, underwrote 157 municipal negotiated transactions raising over $5 billion par value. Equity Brokerage: Revenues $52 million in Q3 2024, up 4% y-o-y, traded 2.7 billion shares for over 1,200 clients. Fixed Income: Revenues $48 million in Q3 2024, up 22% sequentially and 20% y-o-y.

• Expect fourth quarter revenues similar to strong Q4 2023. - Advisory expected strong finish if market conditions accommodate. - Corporate financing expects Q4 to be up sequentially. - Public finance expects strong Q4 finish. - Equity brokerage expects strong Q4. - Fixed income anticipates strong finish with Q4 results similar to Q3.

Remarks made on the call may contain forward-looking statements involving 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. Non-GAAP financial measures should be considered in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP.

Q: Good morning and thanks for taking my question. So, I think you did see a little bit of a slowdown sequentially in the corporate finance line. I think so far in 4Q, we’ve seen some stronger industry IPO trends, and I think, Chad, you talked a little bit about some of the stronger 4Q trends for your business in corporate financing. Is that outlook for 4Q in reference to ECM and DCM, and then how do you think about the ECM trajectory next year?

A: Yeah. I think for us, obviously, Q3 was just real slow for corporate financing. Obviously, part of that was the market, but some of it was just idiosyncratic to us. But we had a few of our larger equity deals that slipped into October. We started October very, very strong on ECM, and yeah, we also expect Q4 to be stronger for DCM. I think most of our commentary on the real strong corporate financing is based on what we’re seeing for ECM, but we also expect DCM to be better.

Q: Good morning and thanks for taking my questions. I guess to start, I just wanted to touch on capital allocation and how you’re thinking about it at the moment, specifically whether you’re more inclined to do an acquisition versus returning capital to shareholders than you would be historically. Just given where you and your peers are trading today, it feels like there could be some interesting opportunities out there to leverage your multiple to do some accretive acquisitions. So, yeah, it would just be great to get your updated thoughts and how you’re thinking as a volunteer, if at all.

A: Yeah. I would say in the stack of returning capital, trying to add new teams and acquisitions is always at the top, Brendan, and a lot of that just has to do with over the last six years to seven years, we’ve gotten really good returns from the acquisitions we’ve done. Obviously we closed Aviditi this quarter. But I would say just in general, the acquisition activity has been a little slower because it’s just hard to normalize in terms of what, some of the folks we’re talking to, what the results are, historically through the slow period going forward. Some of that’s normalizing now, and yeah, I would say we’re quite active. And then, again, given that we’ve just had the string of success on the deals, that helps us with other people sort of calling and interesting -- interest -- being interested in partnering. So, yeah, we feel pretty good about the pipeline there.

Q: All right. Yeah. Thanks, Chad, Deb and Kate. How are you? First question, just on Aviditi, I know you guys are pretty optimistic about the potential from that transaction. And so with that deal closing recently, I’d love to just maybe get a little bit of a sense of how the integration has been going thus far and the outlook for that business. And really also, how much opportunity do you see to invest behind the business from here, whether that’s on the fundraising side or the secondaries advisory side? Just good to get an update on how that’s going so far.

A: Yeah. So we closed at the end of August, and obviously, we’ve done a lot of transactions, and some of them have been product-based like this. I would say I feel like relative to other transactions sort of the uptake of sort of inbound calls and a couple of sort of early joint pitches, the pace of sort of interest from our core banking team in this product has been very, very good. So, we’re excited about that. I think relative to investing, like you talked about, obviously, they had a secondary team, but we’re going to put a lot more investment behind that. We’re going to need more talent. That’s probably where there’s even more interest from the bankers. So, we’re hoping to accelerate that. Obviously, that will take us some time, but we are hoping we have all the right people next year and we can dramatically improve that business for them.

Q: Hey. Thanks, guys, and good morning. Deb, just -- what are you feeling about a fixed income outlook kind of for Q and over 2025?

A: Yeah. So, Q4, as we stated, feel like it’s going to look really similar to Q3. Part of that is we’ve seen some real strength in our depository clients, both just being more active day-to-day, but also, importantly, some of these restructuring trades that they’re doing as they look to shed some non-performing assets, take some losses, but really put that money to work in higher performing. We saw that activity in the end of Q3 and going into Q4 pick up as the Fed reduced rates and I think there’s a certain amount of let’s make sure we don’t miss out on this opportunity. But now as rates have gone back up a little bit, there’s just more measured approach to that. So, still a great environment for it. But with the election and all, that’s why we talk about Q3, Q4 looking very similar to Q3. And as we go into 2025, one of the things that’s overall important for the fixed income business is just an upward sloping yield curve. So, as we see that continue to become more normalized, that’ll be good for our fixed income business next year.