Q1 2022 Piper Sandler Companies Earnings Call

April 29, 2022

Good morning, and welcome to the Piper Sander Company's conference call to discuss the financial results for the first quarter of 2022.

During the question and answer session.

<unk> industry professionals may ask questions management.

The company has asked that I remind you that statements in this call are not historical or current facts, including statements about beliefs and expectations.

Forward looking statements.

That involve inherent risks and uncertainties.

Factors that could cause actual results to differ materially from those anticipated alright identified in the company's earnings release and reports.

On the file with the SEC.

Which are available on the company's website at Www dot.

Sandler and dotcom.

And on the SEC website at Www Dot <unk> Dot Gov.

This call will also include statements regarding certain non-GAAP financial measures.

The non-GAAP measures should be considered in addition to.

And not substitute for.

Measure yourself financial performance prepared in accordance with GAAP.

Please refer to the company's earnings release issued today for reconciliation of these non-GAAP financial measures to.

To the most directly comparable GAAP measure.

The earnings release is available on Investor Relations page of the company's web site pain at the SEC website.

As a reminder, this call is being recorded.

And now I'd like to turn the call over to Mr. Chad Abraham.

Mr. Abraham you may begin your call.

Good morning, and thank you for joining us I'm.

Im here with Deb, Schoneman, our president and Jim Carter our CFO .

We will go through our prepared remarks, and then open up the call for questions.

Financial markets experienced increased uncertainty during the quarter, including the war in Ukraine, persistent inflation and expectations for continued tightening of monetary policy.

Despite this quickly changing and challenging backdrop, our diversified and resilient business model continues to generate strong results.

While equity underwriting activity was soft across the industry.

Market conditions remain constructive across many of our industry and product verticals.

And our advisory business was a highlight during the quarter.

During the first quarter of 2022, we generated adjusted net revenues of $362 million.

28% operating margin and adjusted EPS of $3 12 times.

I am pleased to report that we delivered strong performances across our advisory debt financing and brokerage businesses.

Turning to corporate investment banking.

We generated total corporate investment banking revenues of $230 million during the first quarter of 2022.

Our results were driven by our M&A advisory business, which generated 74% of our investment banking revenues.

Our corporate debt business, which includes financing and debt advisory.

Had a successful quarter generating $55 million of revenue or 23% of total corporate investment banking revenues.

Clients were quick to execute that capital raises in anticipation of rising rates.

We completed 33 debt advisory and financing deals during the quarter raising over $5 billion of capital for our clients.

Turning to advisory services advise.

Advisory revenues of $211 million during the quarter increased 38% year over year and reflect strong absolute and relative performance.

The trend of advising on larger transactions and generating larger average fees continues to be a key driver to our advisory growth.

We completed 81 advisory transactions during the quarter with an aggregate transaction value of more than $26 billion.

Performance was led by our financial services group, which advised on four of the five largest U S Bank M&A transactions that closed during the quarter.

In addition, our healthcare diversified industrial and services.

Energy and power and chemicals industry verticals, all recorded year over year growth.

Our advisory pipelines with private equity clients continue to be robust.

We expect our sponsor activity to remain strong as PE firms and portfolio companies continue to engage in high levels of deal activity and maintained record amounts of capital to deploy.

An additional catalyst for growth as our market, leading energy and power franchise.

Oil and gas sectors are experiencing renewed interest and increased activity levels.

The team has persevered through the most recent down cycle and we believe they are well positioned to benefit from increasing activity in both traditional and new energy sectors.

Looking ahead M&A activity remained strong and pipelines are good across all of our industry verticals.

With this backdrop, we expect advisory revenues for the first half of this year to be similar to the first half of 2021.

And if market conditions remain supportive and we maintain a high close rate, we anticipate our pipelines could lead to increased revenues for the second half compared to the first half of this year.

Turning to corporate financing.

Market volatility a drop in valuations and a more cautious investor outlook.

Driven by economic concerns and geopolitical risks have largely shut down the equity capital markets.

After two years of unprecedented activity the pause was not unexpected.

During the first quarter of 2022, we generated $19 million of financing revenues, primarily debt financing for corporate clients.

Turning to investment banking managing director head count.

We finished the quarter at 149, managing directors representing.

Representing our 10th consecutive quarter of MD head count growth on a net basis.

Our success and momentum continue to resonate in the marketplace.

Both our recruiting efforts and the development of our own talent continue to be priorities.

We continue to invest for long term growth and to strengthen our platform.

During the quarter, we closed on the acquisition of cornerstone and I'd like to welcome all of our New partners. We are excited to have you as part of the Piper Sandler team.

In addition, we expect the pending acquisition of Stanford to close in the second quarter of 2022.

We recognize that markets can ebb and flow, but we remain focused on elevating the earnings capacity of our platform across market environments.

And we see numerous opportunities to continue to grow market share and expand our platform capabilities.

With that I will turn the call over to Deb to discuss our public finance and brokerage businesses.

Thanks, Chad.

Give us an update on our public finance business.

We started the year with $27 million of municipal financing revenues flat compared to the first quarter of last year.

Market issuance during the quarter was 99 billion down approximately 12% from a year ago driven by fewer refinancings.

Higher nominal interest rate and increased interest rate volatility contributed to the year over year decline in issuance.

The diversification of our public finance business, both in the governmental space as.

As well as specialty sectors continues to drive benefits.

We were able to outperform the market by executing and specialty sector offerings during the quarter.

As an example of our expertise we raised $400 million, Great, Texas Hotel issuer partnering with a local governmental entity.

Our expertise in the hospitality sector combined with our distribution capabilities allowed us to underwrite a complex transaction in a more challenging market.

Highlighting our exceptional distribution capabilities for 2021, we ranked as the number one underwriter in the nation for non rated tax exempt debt.

Looking ahead, we expect the governmental issuance to continue to moderate from 2021 level.

Our backlog of specialty sector financing is very strong our execution of this backlog in 2022 will be dependent on market conditions.

Turning to equity brokerage.

Equity markets in the first quarter elevated volatility and volumes.

Our equity brokerage business generated record quarterly revenues of $50 million.

<unk> from the increased volume and the addition of cornerstone macro to our platform.

The acquisition of cornerstone macro closed on February 4th.

Cornerstone adds over 50 professionals, including 21 publishing research analysts specializing in producing high quality thought leading macro thematic and quantitative research.

In addition, cornerstone macros option strategy team provides derivative strategy advice and trading capabilities to institutional investors.

Integration of the team has gone well and feedback from clients has been fantastic.

With approximately 1700 combined clients on the platform, we see opportunities to cross sell across our franchise.

We traded $2 8 billion shares during the quarter on behalf of our clients as they reposition portfolios and sought our premier trade execution capabilities.

In periods of heightened volatility clients consistently trust, our high touch trading expertise to execute quickly and efficiently.

We continue to increase the number of clients transacting with us on a monthly basis and reached an all time high in March.

The breadth of our client base allows us to cross a significant portion of executed cash trade, resulting in no market impact for our clients a valuable differentiator.

Lastly, turning to our fixed income business for the first quarter of 2022, we.

<unk> fixed income revenues of $55 million up 9% compared to the fourth quarter of 2021.

The market experienced rising interest rates in the first quarter, which drove client activity.

The 10 year Treasury rate increased 55% from December 31 to March 31.

This increase in risk free treasury yield reflects market expectations of future inflation and further federal reserve tightening.

The work we have done over the last few years to significantly reduce our inventories and lead with advice versus capital has served us well through this period of interest rate volatility.

Client activity was strong as higher yields across product entice investors off the sidelines.

Clients invested in shorter dated securities and began the work of repositioning their portfolio in an effort to shorten duration in.

In addition, our bank clients increase their bond purchases as investments began to offer attractive yields relative to lending opportunities on a risk adjusted basis.

Our municipal centric clients took advantage of higher municipal rates and executed tax swap transactions.

Our near term outlook continues to remain constructive inflation and higher yields are driving increased client engagement and our capabilities position us to assist clients as they navigate a volatile environment.

Now I will turn the call over to Tim to review, our financial results and provide an update on capital use.

Thanks Deb.

As a reminder, my comments will be focused on our adjusted non-GAAP financial results.

We generated net revenues of $362 million for the first quarter of 2022, driven by strong results from our advisory and brokerage businesses.

Net revenues decreased 43% from the record fourth quarter of 2021 and decreased 13% from the first quarter of last year, primarily due to historically low equity capital markets activity.

Despite the challenging equity capital raising environment, we delivered the second strongest first quarter in firm history, and we believe these results reflect a level of operating success, which highlights our diversified model.

Turning to operating expenses and margin.

Our compensation ratio was 62, 5% for the first quarter of 2022 compared to 60% for the full year of 2021, resulting from lower revenues and a shift in business mix.

We continue to expect our compensation ratio to be near 62% on a full year basis as we remain focused on investing for growth.

Non compensation expenses, excluding reimburse deal expenses for the first quarter of 2022 were $55 million at the low end of our guided range.

Non compensation costs, excluding deal expenses decreased 5% compared to the fourth quarter of 2021, which had included increased professional fees associated with business expansion as well as variable costs related to higher revenues and profitability.

Compared to the year ago quarter, non compensation expenses, excluding reimburse steel costs increased 24%, resulting from increased travel expense as well as the addition of cornerstone macro to our platform.

During the first quarter of 2022, we generated operating income of $75 million and an operating margin of 28%. This.

This represents the seventh consecutive quarter with an operating margin in excess of 20%.

Our adjusted tax rate was 23, 1% for the first quarter of 2022, which included a $4 6 million tax benefit related to restricted stock vesting at prices higher than the grant date price.

We continue to expect our full year adjusted tax rate will be within our targeted range of 26% to 28% excluding the impact from stock vesting.

During the first quarter of 2022, we generated net income of 57 million and diluted EPS was $3 12.

Let me finish with an update on capital.

We remain committed to returning capital to our shareholders to drive total returns.

During the first quarter of 2022, we returned an aggregate of $195 million to shareholders through buybacks and dividends paid.

We've repurchased approximately 789000 shares for $114 million of common stock, which more than offset the dilution from our annual stock grants and the acquisition of cornerstone.

This includes $93 million of common stock repurchased pursuant to our share repurchase authorization.

We will continue to be active repurchasing shares on an opportunistic basis.

We also paid an aggregate of $81 million or $5 10 per share to our shareholders through our quarterly and special dividends.

In addition today the board approved a quarterly cash dividend of <unk> 60 per share to be paid on June 10th to shareholders of record as of the close of business on may 27th.

Overall, we are pleased with our first quarter results. Our diversified business continues to be resilient and durable we continue to make progress on our long term growth strategy and remain confident in our ability to grow and deliver shareholder value over the long term.

Thanks, and we can now open up the call for questions.

At this time over the like to remind everyone in order to ask a question. Please press star one on your telephone keypad.

Again that a star one on your telephone keypad.

Your first question comes from the line of Devin Ryan from JMP Securities. Your line is open.

Hey, great. Good morning, everyone. How are you.

Kevin.

First question just want to dig in a little bit on the M&A advisory business.

I appreciate the outlook it doesn't sound like expectations for broad changed much which is great. Despite some of the market volatility. So just talk a little bit about that.

Our sponsors.

Slowing activity at all or kind of delaying making decisions or are you seeing kind of things continue kind of on pace.

Does that guide or just the expectation imply that debt.

Things kind of normalize or are you just not seeing kind of any pullback and then the last piece is from a sector perspective, you guys have nice.

Diversification and so I'm just curious are there any areas that have kind of maybe come on stronger as certain areas of kind of maybe slowed I'm, assuming maybe tackle other areas slowed with valuations on the other hand, maybe commodities or energy Youre doing better. So just curious kind of if any flavor for those items.

Yes, I would say thanks, Kevin I would say just.

To your first.

First question on advisory.

While we certainly have a handful of deals, especially the ones that are.

Impacted by public stock price that would that have gone away.

For the most part our sponsor business.

Is quite strong.

Relative to signing up new deals sort of in the first four months of this year, we feel really good about.

That pace.

I think we certainly acknowledge if there is if this market volatility continues.

For a long time into this year it could ultimately affect those transactions.

But right now we're just not we're just not seeing much of that and frankly in our sponsor business across some of our sectors we're winning.

A larger and larger mandates which might even offset.

Slightly lower.

Deal count.

When it comes to.

Industry sectors, yes, we sort of talked.

In the script, obviously, our energy business was quite quite strong in Q1 that has been a tougher comp.

A couple of years, but both.

Both traditional and new energy.

It's great we had a very very strong.

Start to the year with financials I do think Thats, one area specifically with banks.

Some of the larger transactions.

Might get tougher towards the end of the year, but certainly just the pace of smaller transaction is still good for us and then like like last year.

Areas in asset management insurance, as we've really broadened our financials practice.

It continues to be quite strong and same with health care and consumer and I think you'd probably highlighted the other area. That's a little softer in advisory to start the year, which is technology and software and yes. Some of Thats, just valuations and tripling.

Over into the private markets as well.

Okay, great. Thanks, Chad.

Just one follow up here on capital for Tim.

The.

Stock's down over 30% year to date that's.

That's a market dynamic more than Piper dynamic but.

As you balance capital return through buybacks versus dividends and specials at the end of the year.

I guess.

And how should we think about kind of capacity for buybacks and kind of where we are on the calculation of <unk>.

Kind of the float in the stock relative to.

Maybe the attractiveness of now that the new stock price from a longer term perspective.

Okay I appreciate that there's not a ton of liquidity, but at the same time down 30, some percent when the long term business prospects haven't changed that much it seems like maybe an interesting opportunity.

Yes, Devin I think.

We've always talked about right offsetting our dilution, which we did here in the first quarter. So that was probably a little bit more.

Aggressive maybe then than we are.

Typically been.

As we've done that more over the course of the year, but I think our view is look.

We still think we want to be opportunistic on the buyback I mean, we've always.

Recognize sort of the float and liquidity piece, but that has improved over time. So I think it does give us more of an opportunity to continue to.

Buyback.

I think we're going to continue to be to be active on that front as we go forward.

Yes.

Based on capital generation I mean, obviously, we will continue to.

Followed with the dividend policy as we've set out 30% to 50% and it still gives us.

Capacity to be active on corporate development, but generally yes I think.

Our view.

At these levels it does give us more of an opportunity.

Buyback.

Okay great.

That's helpful I'll leave it there thanks, so much guys.

Thank you.

Yes.

Your next question comes from the line of Jean <unk> from Goldman Sachs. Your line is open.

Good morning, and thank you so much for taking my questions, maybe I could just start with the equity capital markets business, obviously down a lot across the industry, but maybe you could just touch on whether youre seeing any sort of green shoots in terms of willingness to try to get some deals done so far in the second quarter or is the level of market volatility.

Still too high and then when you think of some of the companies that need equity financing such as perhaps biotech is a good example, how long is it until you really need to come out and raise capital.

Yes.

Thanks, Jamie Yeah, I would say relative to the.

The overall ECM market.

Through the first month here in April we really haven't seen any pickup I would say.

First few weeks of April you were starting to see volatility sort of down and the VIX down at a level and obviously the last 10 days of April that's sort of spiked up again, so I would say, we're not anticipating some big.

Pickup in Q2.

But I would say, we've got a list of companies that when the market's willing and ready.

That want to finance.

And I would also say just relative to your.

Second comment.

We would agree relative to capital markets I mean, its pretty rare when we've seen periods last 345 quarters.

Of lowest low ECM, im not saying thats impossible or that couldnt happen, but in general when we see these pauses. They don't they don't really lasts more than a couple of quarters.

And who knows if that's the case this time, but we've got the backlog of companies that want to raise capital, but certainly we haven't seen a lot of renewed interest from investors yet. So I think it's too early to make that call that in the next couple of weeks that spec it is going to turn on.

Okay, that's very clear.

For my follow up I can just ask about the fixed income trading business, which can be from the recent past has been an area of counter cyclicality. When we have entered more economically trap troubled periods. So how do you think about the ability for fixed income to pick up even more if we did perhaps enter.

A recessionary period, and then I would actually be really interested.

Here your thoughts on whether we entered a true recession with low interest rates versus more of a stagflationary environment with high interest rates.

Yes so.

One thing I would say is we do definitely see that our activity in our fixed income businesses.

Quite highly correlated to the level of interest rates.

Higher rates create a higher activity, we saw some of that in the quarter as we picked up from where we were at the end of last year.

Part of it though is also just the shape of the yield curve and interest rate volatility so.

Those factors are impacting the market is going to drive that level, meaning if.

If we can have a more slope to the curve and lower interest rate volatility that combined with higher interest rate is going to drive better fixed income business. So to your second point around sort of answers. Your second question I think about what happens if we actually enter into a situation, where we end up with low interest rates again.

One other thing I would say, though about our fixed income businesses. We have definitely moved it into more of a client advisory centric with a lot of financial.

Strategy work with our clients around it. So we are able to see some I would say more robust transactions with clients as they rebalanced portfolio. So I guess, that's the other aspect I would add.

For color on our fixed income business.

Okay, that's very clear thank you so much.

Yes. Thank you.

Your next question comes from the line of Steven <unk> from Wolfe Research. Your line is open.

Hi, good morning.

Good morning.

Wanted to start off with a question on the operating margin certainly nice to see the op margin above 20% and the challenging quarter.

You can give some context as to what you see is an achievable goal for this year given the visibility you have on the pipelines today and just the constructive outlook that you offered in terms of the advisory backdrop.

Yes I.

I'll take the first shot at that and then Tim can add anything obviously I think on the Q1 call. We certainly said the 27% margin we obtained in Q4 wasn't.

Sustainable, but I also think we feel like with the scale diversification all the industry groups all the products.

We even at somewhat depressed revenue levels felt like we could be nor.

North of 20% and I still think we feel like we can be in.

Low twenty's here.

Some so somewhere between where our peak was and where we were in Q1 makes sense.

Certainly if revenue is also scale into the back half of the year.

Yes, Steve maybe the only thing I would add to that I mean.

We've talked about in my comments.

Comp ratio.

62% for the full year, we were a little bit above that.

In Q1, given overall revenue levels and business mix, but I think.

We do feel like Theres some opportunities here to continue to invest in the business make some hires and so to have.

Our comp rate at 62, what could be even a little bit above that is not a bad spot for us, which obviously have some some impact.

On the margin, but being north of 20% close to 21 that at these revenue levels, we feel good about.

Okay. That's really helpful color and maybe just speaking about the recruiting environment. I know you guys had provided some long term targets our five year goals.

A big driver underpinning some of that growth is strong MDI and just wanted to get a sense as to what the recruiting pipeline is like just in terms of new MD talent your confidence level still granted it's early days in terms of your ability to sustain some of that revenue momentum that we've given.

Some of the hiring trends or the current hiring backdrop.

Yeah, I think maybe two fold obviously to hit our $5 six year targets of where we want to go we sort of said we have to do half of that through acquisitions Big team lifts and then organic hiring.

On the acquisition front, we've got a.

A smaller deal in Stanford that we're going to close in.

In Q2, but I would also say obviously, we've been quite active.

With boutiques and advisory and maybe not as active the last.

18 months and in some of that was just.

Prices in the things, we look at looked at and Couldnt get done I would say those conversations have picked up and I feel quite good about that in this environment and like we've shown in the past, we're not we're sort of not afraid to do those transactions for the long term in this environment. So we feel good about that aspect, but then.

The.

On the recruiting side I would say, we have seen some momentum there and some of the tougher spaces that we've been trying to add we've gotten a few of those hires done it and we will get some of those announcements out in Q2, So I think even in this difficult environment, we're going to stay committed to.

Growing that and yes, you are right for us to hit our long term targets.

Got it.

Add the teams do the acquisitions and continue to add the six to seven net Mds a year through external hiring so were staying on those targets.

That's great if I can just squeezing one more relating to the James' earlier question on fixed income brokerage completely understand that higher rates is going to be beneficial to that business at the same time.

What we've seen is the firms that have really strong bank depository franchise is in a period, where the fed has significantly inflated the balance sheet theres been this need to manage a lot of that excess liquidity thats, driven really strong activity with the fed and I expect it to drain significant amounts of liquidity from the system. Just curious how you expect.

That the impact.

The fixed income brokerage outlook.

Yes, I think you have that spot on and we could see that.

<unk>.

<unk> side of ours, which obviously is.

Meaning full part of our overall client base decline if those.

<unk> loan deposits pick up and we see less liquidity on the balance sheet. One of the things that we are very focused on is expanding the other client vertical so I would say in <unk>.

Strategy to get at that trend, which can definitely happen is too.

Find ways to further leverage some of our again I was mentioning earlier financial strategies group work and help those other business lines, but I do think you have a fair assessment.

Alright, Thats really helpful color. Thanks, so much for taking my questions.

<unk>.

Your next question comes from the line of Mike Grondahl from Northland Securities. Your line is open.

Hey, good morning, guys.

Two questions one.

Just related to the fixed income trading environment pick up there could you talk a little bit about how you are managing that on the balance sheet.

Just kind of remind us there and then secondly, just how many Mds you are picking up with Stanford if you could know that.

Yeah I'll take the first one there on our balance sheet and this is something we have been very focused on for a number of years now significant really significantly reducing the amount of risk that we take on our balance sheet and as we saw the scale of the business grow as we combined with <unk>.

Sandler by a couple of years ago now, we see a lot more flow within that business, helping us to reduce the need to focus on balance sheet yourself.

Thankfully that network, we're having to worry much less about that risk and our fixed income business, which historically may have drove more volatility than definitely it does today.

And Mike on the Stanford business, just a reminder that was <unk>.

Smaller acquisition in our consumer team in Europe , adding to our great sort of food and beverage practice, which for us is.

Also a little bit counter cyclical, but we're adding three net mds.

In Q2 from that.

Got it.

Thanks, a lot.

Thanks, Mike.

Again, if you would like to ask a question. Please press star one on your telephone keypad again that is star one on your telephone keypad.

Your next question comes from the line of Michael Brown from <unk>. Your line is open.

Great Hey, good morning, everyone.

Right.

So Chad I just wanted to start with advisory.

Obviously positive commentary on the health of the advisory business and the pipeline given the given that.

The current backdrop here.

Okay.

As you think about the strength of that pipeline, how does that compare to prior periods to help frame that.

The strength of that pipeline versus historical periods.

Yes, I would say I would say frankly, we looked at that and it looks it looks a lot like last year pretty balanced.

<unk> industry teams I would say if anything in the sponsor business in certain of our sectors. There's more larger deals the bigger we get the more round trips we get the more billion dollar sponsored deals.

We get.

If anything it might be a little more back half weighted I mean, just as a reminder, we had a we had an incredible Q2 with some very large transactions closing.

That's going to be a very difficult comp in Q2, but just in general that's kind of why I made the comments like.

We acknowledge the backdrop, we acknowledge things could get tougher the longer this volatility.

It's sustained but.

I also just think it's very hard to see.

Across most of our sponsor businesses.

And see much sort of slowdown a lot of those industry teams are running at the same pace with the sponsors.

Okay great.

And if you dive in a little bit deeper there within within advisory out a really strong contribution from financials this quarter.

Can you just give us a quick pulse check on the bank M&A environment, how does that.

Expect it to perform in this rising rising rate environment that we're in and certainly accelerating through and.

And then how has the regulatory scrutiny that continues to seemingly kind of tightened our non bank mergers how has that been impacting your business or is that really still more of a kind of large caps.

Headwind for bank M&A.

Yes, so I sort of touched on those comments.

Financials was by stroke by far the strongest advisory business.

In Q1, so I do think we feel like.

That will.

Slow a little bit in the second half and some of that is related to the.

We were on for the.

Five largest bank deals that closed in Q1, and we're definitely seeing some slowdown on the larger transactions, but in general.

We also have very very high market share in the smaller transactions and so we're we're still still seeing those transactions at a pretty good clip and then frankly have really augmented like I said in insurance and asset management in Fintech and some of those sectors and are still going at a good.

Good pace there so relative to your last question I definitely think the regulatory environment. All the transactions are taking quite a bit longer certainly management teams are noticing that I think on the larger transactions.

We will see a slowdown.

But in general the pace in total.

It's pretty good.

Okay, great. Thanks, Kevin if I can just squeeze a quick one for Tim.

Guidance.

For the non comps excluding the deal related costs for 2022 is $55 million to $57 million per quarter.

<unk> is on the rise here just wanted to confirm that's still there's still a right way to think about the quarterly cadence for the year.

Yes, Mike.

Based on what we see.

That's still the right level I think we.

We're close to maybe back to where those normal travel levels.

It would be so.

At the low end in Q1, but yes, I think that that's the right range going going forward for this year.

Okay, great. Thanks for taking my questions.

Thank you.

Thank you at this time there are no more phone.

Phone question.

Mr. Abraham you May continue.

Okay. Thank you operator, I'd like to close by saying that I'm very proud of how our team managed through difficult operating environment. During the quarter. Thank you everyone and we look forward to updating you on our second quarter results have a great day.

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

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Good morning, and welcome to the Piper Sander companies Conference call.

Discussing the financial results for the first quarter of 2022.

During the question and answer session.

Securities industry professionals may ask questions of management.

The company has asked that I remind you that statements on this call are not historical or current facts, including statements about beliefs and expectations.

Forward looking statements.

That involve inherent risks and uncertainties.

Factors that could cause actual results to differ materially from those anticipated alright notified in the company's earnings release and reports on file with the SEC.

We sure are available on the company's website.

Www dot.

Piper Sandler and dotcom.

And on the SEC website at Www Dot.

<unk> Dot Doc.

This call will also include statements regarding certain non-GAAP financial measures.

The non-GAAP measures should be considered in addition to.

And not substitute for.

Mr Yourself financial performance prepared in accordance with GAAP.

Please refer to the company's earnings release issued today for a conciliation of these non-GAAP financial measures to their most directly comparable GAAP measure.

The earnings release is available on Investor Relations page of the company's web site at the SEC website.

As a reminder, this call is being recorded.

And now I would like to turn the call over to Mr. Chad Abraham.

Mr. Abraham you may begin your call.

Good morning, and thank you for joining us I'm.

Im here with Deb, Schoneman, our president and Tim Carter our CFO .

We will go through our prepared remarks, and then open up the call for questions.

Financial markets experienced increased uncertainty during the quarter, including the war in Ukraine, persistent inflation and expectations for continued tightening of monetary policy.

Despite this quickly changing and challenging backdrop, our diversified and resilient business model continues to generate strong results.

While equity underwriting activity was soft across the industry.

Market conditions remain constructive across many of our industry and product verticals.

And our advisory business was a highlight during the quarter.

During the first quarter of 2022, we generated adjusted net revenues of $362 million.

28% operating margin and adjusted EPS of $3 12.

I am pleased to report that we delivered strong performances across our advisory debt financing and brokerage businesses.

Turning to corporate investment banking.

We generated total corporate investment banking revenues of $230 million during the first quarter of 2022.

Our results were driven by our M&A advisory business, which generated 74% of our investment banking revenues.

Our corporate debt business, which includes financing and debt advisory.

A successful quarter generating $55 million of revenues were 23% of total corporate investment banking revenues.

Clients were quick to execute that capital raises in anticipation of rising rates.

We completed 33 debt advisory and financing deals during the quarter raising over $5 billion of capital for our clients.

Turning to advisory services.

Advisory revenues of $211 million during the quarter increased 38% year over year and reflects strong absolute and relative performance.

The trend of advising on larger transactions and generating larger average fees continues to be a key driver to our advisory growth.

We completed 81 advisory transactions during the quarter with an aggregate transaction value of more than 26 billion.

Performance was led by our financial services group, which advised on four of the five largest U S Bank M&A transactions that closed during the quarter.

In addition, our healthcare diversified industrial and services energy and power and chemicals industry verticals, all recorded year over year growth.