Q4 2020 JMP Group LLC Earnings Call

Welcome to JMP groups fourth quarter, 'twenty and 'twenty earnings Conference call.

Please note that today's call is being recorded.

You'd like to ask a question following their prepared remarks, please press the starkey and the number one and your telephone keypad.

I'll now turn the call over to Andrew Palmer, the company's head of Investor Relations.

Good morning.

And the line with me today are Joe Jolson, JMP groups, Chairman and Chief Executive.

<unk> Officer Ray Jackson, the company's Chief Financial Officer, and Mark Lehman CEO with JMP Securities.

Before we begin please note that some of this morning's comments may contain forward looking statements about future events that are out of Jmp's control.

Actual results may differ materially from those indicated or implied.

For a discussion of the uncertainties.

And that could affect the company's future performance. Please review the risk factors detailed in our most recent 10-K.

With that I'll turn things over to Jmp's, Chairman and CEO Joe Jolson.

Thanks, Andrew This is our first earnings call and a year and a half.

We paused. These calls mid 2019, as we started thinking through some strategic.

Changes for the company.

Much of that work is now behind us and we felt it was time to discuss the results of our efforts one of the key changes since our last conference call was the elevation of Mark Lehman and to the role of CEO of JMP Securities.

And that occurred this past summer when we also named Tom Wright Chief operating.

Chair of JMP Securities and maybe John Devore, and Gavin Slater co heads of our investment banking group and members of our Executive Committee.

In addition, we have simplified our balance sheet shedding noncore businesses, such as harvest capital Credit Corp, resulting in a simpler story to tell and it's simpler company.

Office and run once that deal closes and the second quarter.

We will continue to look to monetize our corporate investments and work aggressively to pay down long term debt. After just redeeming $10 million of our senior notes two weeks ago, leaving us with roughly $71 million of long term debt outstanding.

And in 'twenty.

Company, but when was that our back it was and unprecedented and challenging year in many respects, but amazingly we ended the year with record results.

Net revenues for the fourth quarter were $53 6 million up 125% from $23 8 million from the fourth quarter of 2019.

19th.

For the full year net revenues were 115, and a half million versus 100 million for 2019 operating earnings per share were 42 cents for the fourth quarter by far a record and 63 cents for the year also a record for the firm.

I'll.

20th Mark to add some thoughts about JMP securities before I finish up Mark.

Joe JMP Securities is one of the few remaining independent and equity capital markets platforms.

Yeah.

That said, we're firm believers and the full service model, which pairs capital markets expertise strategic advisor.

And I'll ask.

<unk>.

If completed.

And I competed successfully to establish.

And in the middle market and a more.

Our strategic advisory partner to growth companies.

And in 'twenty.

Total revenues of nearly $119 million.

68.

Sure.

From a banking.

At record levels for December for the fourth quarter and for the entire year, finishing 2020 at a $100 million.

53% from 2019.

60% of that amount came from public equity and debt capital raising and 40% from.

Advisory and private placements.

Markets revenues, which combined fees from equity and debt origination, but net brokerage.

Revenues were up 32% year over year to 79 million for 'twenty and 'twenty our net.

Brokerage revenues were also up 10% last year to $19 million.

Yeah.

Or co manager.

And one third of all U S Tech Ipos price last year compared to just 10% and 2014.

8% and 2007 at peak.

<unk>.

Cycles.

<unk> share at the same time some of the senior M&A professionals. We've hired recently proved to be our biggest producers in 2002.

20th contributing to record advisory fee of $40 million those fees accounted for over a third of JMP securities.

Compared to just 14% and 2015, we will look to add other M&A professionals to further expand this footprint.

Our pipeline and advisory is as strong as ever.

And we anticipate a you heard that could possibly outpace the one that we just have and 'twenty and 'twenty. We competed completed a total of 126 investment banking transactions and 'twenty and 'twenty with 45% of the fees from health care 35 per cent from tech and 20% from financial services and real.

And we're already in 'twenty and 'twenty, one JMP Securities has underwritten 15 equity offerings, including five Ipos and all we can.

22 investment banking transactions year to date last year, we invested and three growth initiatives that should have lasting impacts for our firm first we added two senior research.

Analysts and one senior investment banking to our already highly regarded life sciences practice, which should further enhance our competitive footprint and 2021 and beyond.

And we focus on being more active on the front end of specs, which we think will enhance our strategic advisory and private placement business going forward.

Lastly, we laid the foundation to enter the cannabis space initially with <unk>, and our financial services and real estate verticals, but allowing for financing for expansion into technology and health care is 'twenty 'twenty, one progresses and now back to you Joe.

Thanks, Mark and the past few years, we are proactively.

Spun out all asset management strategies that did not present synergies with JMP securities industry coverage.

As a result, we have completely exited the hedge fund business and narrowed our focus to venture and private capital strategies that leverage the domain expertise that exists across our firm we.

We also took steps last year to reduce our structural costs, which allow for highly positive operating margin leverage and the fourth quarter. Our objective is to sustain that top tier return on equity and our operating platforms through varying market cycles.

With our company more streamlined and ever before its.

And so value will hinge on the continued success of our investment banking platform and addition to a conservatively stated and growing book value per share.

We are optimistic about jmp's prospects for 'twenty and 'twenty one.

But we'll leave it to the market itself the judge with that operator, we'd be happy to try to answer any.

Future. Thank you.

Thank you once again to ask a question. Please press star followed by the number one key on your telephone keypad what price.

And just a moment to compile the Q&A roster.

Yeah.

Once again to ask a question. Please press star followed.

Question number one on your telephone keypad.

Yeah.

We have no question and thank you I'd like to turn the call back over to the presenters for any closing remarks, Joe I'll start and thanks all.

And by thanking them.

And at JMP, and most importantly to the.

Oh and by the almost 200 people, who through 2020 and all the personal and professional challenges that Covid has had his office and the hard work and dedication and loyalty are extraordinary and.

Most importantly, the health and safety of our employees is Paramount and I just want to thank everybody.

After that support for 'twenty, and 'twenty and I'll leave it to Joe for some concluding comments.

Well I was that's very well said, mark I'd reiterate that and.

Everyone's really busy here, we're working hard fully fully at capacity and we look forward to reporting our results to everybody and.

And leap.

April so and a couple of months. Thank you very much have a great day.

Yeah.

This concludes today's conference call you may now disconnect.

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