Good morning, and welcome to the Piper Sandler Company's First Quarter 2026 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 First Quarter 2026 Earnings Conference Call. Hosting the call today are Chairman and CEO, Chad Abraham; our President, Deb Schoneman; and CFO, Kate Clune. Earlier this morning, we issued a press release announcing Piper Sandler's First Quarter 2026 financial results, which is available on our website at pipersandler.com/earnings. Today's discussion of the results is complementary to the press release. A replay of this call will also be available at that 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. Thank you for joining us. We posted a strong start to the year, generating first quarter adjusted net revenues of $470 million, our tenth consecutive quarter of year-over-year growth, a 20% operating margin and adjusted EPS of $1. Corporate Investment Banking achieved a first quarter record with revenues of $324 million, up 30% year-over-year due to robust corporate financing activity as well as solid contributions across advisory services. Our Healthcare franchise produced an exceptionally strong quarter, setting a new high watermark in terms of revenues. Results were driven by our medtech and biopharma teams as well as meaningful contributions from Healthcare IT and Services, two areas where we have invested in strengthening our capabilities. Within U.S. medtech M&A, we rank as the top adviser based on number of announced deals. Our Financial Services group also registered a strong quarter as they closed several significant bank M&A transactions. We ranked as the number one adviser in U.S. bank M&A based on deal value announced during the quarter. Our Insurance and Asset Management subsectors also contributed to the strong performance. Advisory revenues were a first quarter record of $251 million, up 16% year-over-year due to the strong performance from Healthcare and Financial Services, and contributions from our Services and Industrials and Energy teams. For the quarter, we ranked as the number two adviser in U.S. M&A based on announced deals under $2 billion and ranked number three based on announced deals under $5 billion. In addition, our non-M&A advisory teams remain active and are a growing component of our performance. Our Debt Capital Markets Advisory business recorded a strong start to the year and was a meaningful contributor to this growth. Our deep product expertise, trusted relationships with market participants and close collaboration with our industry teams continue to deliver consistent, high-quality execution for our clients. We are also seeing positive momentum within our Private Capital Advisory Group, where we are leveraging our sponsor relationships and sector expertise to grow market share. As market conditions evolve, we continue to benefit from our broad industry coverage and comprehensive product capabilities. Looking ahead, our industry and product teams are busy advising clients and pipelines remain strong. However, the timing of these transactions may be influenced by market conditions. We expect second quarter advisory revenues to be similar to the first quarter. Turning to Corporate Financing. The equity underwriting market was resilient during the quarter despite the volatility with the fee pool up 73% year-over-year, driven mainly by the Healthcare sector. Corporate Financing revenues for the quarter were $73 million, up 122% from the first quarter of last year. We completed 36 equity, debt and preferred financings raising $14 billion for corporate clients. Activity was led by our Healthcare team, which served as bookrunner on all 23 equity deals they priced during the quarter. Our absolute and relative outperformance was driven by strong equity issuance for biopharma companies. In this sector, we ranked as the number two investment bank based on the number of book-run deals. Over the last decade, we've built a scaled biopharma platform with deep expertise and products across banking, research, capital markets and sales, positioning us to capture share and drive strong results. As we look ahead, we expect second quarter corporate financing revenues to decline from a strong first quarter. Shifting to talent. We finished the quarter with 192 investment banking managing directors, the highest number in firm history. Development of our internal talent, along with identifying talented partners to join our platform, continues to be a priority as we strengthen our product and sector teams. During the quarter, we promoted six of our bankers to Managing Director, and we hired three MDs that strengthen our advisory capabilities in Healthcare, IT, European Life Sciences and Upstream Energy. Let me close with a few final points. While the near-term macroeconomic environment remains uncertain, our core strategy is unchanged. We remain focused on advising clients with deep expertise and providing a comprehensive suite of capital market solutions. We are committed to expanding our platform for continued growth while delivering strong margins to our shareholders. With that, I will turn the call over to Deb to discuss our Public Finance and Brokerage businesses.

Thanks, Chad. I'll begin with an update on our public finance business. We generated $24 million of Municipal Financing revenues for the quarter, down 9% year-over-year. Revenues were balanced between our governmental and specialty businesses. During the first quarter, we underwrote 98 municipal negotiated transactions, raising $3 billion of par value for our clients. As we look ahead, our pipelines are strong with clients looking to access the market. We anticipate that second quarter revenues will improve modestly from the first quarter, aligning with the typical seasonality of this business. Turning to our Equity Brokerage business, higher volatility drove increased trading volumes in response to geopolitical events, resulting in record first quarter revenues of $60 million, an 11% increase from the prior year. Performance was broad-based across our trading desks, including our derivatives desk as clients increase their hedging activity. Our platform offers clients many execution and payment channels to take advantage of our differentiated research and trading capabilities. Looking ahead, our results will continue to be correlated with market volatility and trading volumes. We expect our second quarter revenues to decline from the record first quarter levels. While volatility helped our Equity Brokerage business, it negatively impacted our fixed income business. As the quarter progressed, the day-to-day volatility during March significantly reduced our regular-way client activity. We were able to mitigate this reduction by completing balance sheet restructuring trades in conjunction with the closing of bank M&A transactions. We produced fixed income revenues of $50 million in the first quarter, up 6% from the prior year period. The diversification of our product capabilities and client relationships, coupled with our capital-light model, provided a level of resiliency to our results. The near-term fixed income outlook remains challenging. We've experienced a slow start to the second quarter as ongoing geopolitical developments are keeping many clients on the sidelines. Now I will turn the call over to Kate to review our financial results and provide an update on capital use.

Thanks, Deb. My comments will address our adjusted non-GAAP financial results which should be considered in addition to and not a substitute for the corresponding GAAP financial measures. As a reminder, we effected a 4-for-1 forward stock split of our common stock on March 23, and our common stock began trading on a split-adjusted basis at the start of trading on March 24. All share and per share amounts discussed on the call have been retrospectively adjusted to reflect the impact of the stock split. For the first quarter of 2026, we generated net revenues of $470 million, operating income of $94 million and an operating margin of 20%. Net income totaled $72 million and diluted EPS was $1. Net revenues for the first quarter of 2026 declined from the seasonally strong fourth quarter of 2025, but increased 22% over the first quarter of last year. The year-over-year growth was driven by a 30% increase in Corporate Investment Banking revenues. Advisory Services delivered the strongest first quarter on record and Corporate Financing activity was robust. In addition, our Equity Brokerage business achieved strong results. Margin expansion remains a strategic priority as we continue to scale our platform. Current quarter operating income grew 37% over the first quarter of 2025, outpacing our year-over-year revenue growth of 22%. Turning to expenses. We reported a compensation ratio of 61.6% for the quarter, an improvement of 90 basis points from the first quarter of last year, driven by increased net revenues. This improvement in our ratio reflects our continued commitment to exercising operating discipline, while balancing employee retention and investment opportunities. For the first quarter of 2026, non-compensation expenses were $86 million, up 15% over last year, in part due to an $8.5 million litigation-related expense taken during the quarter. This expense relates to the pending settlement of the California lawsuit originally filed in 2014, specific to variable rate demand notes within our Municipal Finance business. Excluding the $8.5 million litigation expense, non-compensation costs for the quarter increased 4% year-over-year driven by higher underwriting expenses associated with increased corporate financing activity and were 16.6% of net revenues. This ratio reflects an improvement of 300 basis points from the first quarter of last year as we continue to drive leverage from higher revenues. Moving to income tax expense. For the first quarter of 2026, our income tax expense was reduced by $7 million of tax benefits related to the vesting of restricted stock awards, which resulted in an income tax rate of 23.4%. Excluding these benefits, our effective tax rate was 30.8%. Now finishing with capital. Our consistent operating discipline and capital-light approach continued to result in strong cash generation to deploy in order to drive shareholder returns. During the first quarter, we returned an aggregate of $171 million to shareholders, which included dividends totaling $101 million or $1.45 per share paid to shareholders through our quarterly and special cash dividends. It also includes repurchases of approximately 884,000 shares of our common stock for $70 million, which offset a significant portion of the share count dilution from this year's annual grants. Lastly, I'm pleased to announce that effective today, the Board approved a quarterly cash dividend of $0.20 per share, a 14% increase from our previous quarterly cash dividend. The dividend will be paid on June 12 to shareholders of record as of the close of business on May 29. We are pleased with our start to 2026 and remain focused on driving long-term growth and further elevating the durability of the platform while generating best-in-class returns. With that, we can open the call up for questions.

We will now take our first question from James Yaro with Goldman Sachs.

Chad, I'd love to just get an update from you on whether the upward sloping trend of activity in bank M&A has slowed at all in your opinion or continues. And then maybe to the degree you could also comment on the recent rate volatility in the forward curve in particular and whether that should have an impact on the Bank Hedging business and Fixed Income?

Okay. Well, why don't I take the first question, James, and I'll let Deb take the second one. But on bank M&A, we had a good Q1 with a significant amount of closings. I would say on the announced bank M&A, I do think it's a little slower than we anticipated. We announced a couple more transactions this week. So I would say we're seeing decent volume on some of the smaller transactions, just haven't seen the pace we were seeing on a little bit of the larger transactions. Just as a reminder, that happened a little bit last year, and it picked up as well. So we'll have to see.

Yes. And then on your question relative to hedging activity with banks, our derivative desk has been incredibly busy relative to conversations. We've seen some increased actual activity of transactions being completed. But one of the things you see is when there's volatility, while you might naturally think there should be a lot of hedging, it also makes it challenging to determine how they want to position given that volatility. So definitely, a lot of activity going on there, but nothing that's necessarily outside of the norm.

That's super helpful. Maybe just on the equity capital market side. You talked about strength in Healthcare. That's obviously been one of the two sectors alongside Industrials that has performed very well so far this year. I'd love to just get your sense on based on your backlogs, how sustainable you think the equity capital markets activity could be? And specifically, as it relates to the Healthcare business, which is driving a lot of that, I believe?

Yes. So it was a good quarter for the market, but it was a particularly good quarter for us just with market share. That happens sometimes when we have a handful of larger fees. Obviously, we specifically said in the commentary we thought capital markets would be down. It's just hard for us to maintain that super outsized market share performance in Q2, but that market remains open and especially how biotech trades. Sometimes that market trades just differently than the overall market. So we feel pretty good about that backdrop, but do not think that first quarter market share is sustainable.

We'll next go to Steven Chubak with Wolfe Research.

Absolutely. Yes. So I wanted to start with unpacking some of the comments around the Advisory outlook. You mentioned Advisory fees should be down sequentially, not surprising given the choppy macro. I was hoping to get some perspective on which sectors you're seeing the biggest slowdown in deal activity. And based on your current visibility into the backlog, just how long do you expect this moderation or let's call it somewhat of an air pocket to persist?

Yes. So obviously, in our commentary, we said Advisory would be similar. I would say it sort of depends on the sector. We obviously talked about banks and with announcement volume down in Q1, that has some impact on the go forward. We had a spectacular Q1 in parts of Healthcare and Medtech that are sort of hard to repeat. So some of that is just relative to our own performance. But I would say, in the overall market, especially on the sponsor side, while I think sponsors' pitch activity has been good, the question is how quickly do they launch and do they transact? And so while I don't think there's any real panic, there's also not tremendous urgency. So I think the market is fine. I don't think it's accelerating. And those three combinations of things probably drove our commentary.

Understood. I mean with regard to sponsors, it certainly feels like Waiting for Godot. Maybe just to switch gears and focus on the Software side, just given Technology has been a meaningful contributor to your M&A business historically, we're all hearing of emerging concerns on AI disruption, the 'SaaSpocalypse' was referenced, and it would be good to hear your outlook for Software M&A and the willingness of these corporates to consider inorganic growth or even consolidation amidst some of the growing AI fears?

Yes. So obviously, for us, Technology is one of the areas we've been investing heavily in, but on a historic basis, it's one of our smaller industry teams. So I think on a relative basis, we will be impacted less. But no question, we will be impacted. We actually had a decent Q1 in Technology up from last year. And what I would say with the Software transactions is the market's slowly figuring out where the real disruption is going to be, where the data and vertical expertise really find their way through in the new tech market. There is no question that, especially on the larger deal side, things are going to be slower, folks are going to be cautious, valuations are down and valuations are down versus prior financing levels, which makes it hard to transact. I do think that we've seen that in other tech cycles. We will see that work its way through the system. And then, as you said, with AI and technology shifts for the survivors, that will probably accelerate other activity. But that's going to take a while to work out. So I think our expectations are fairly cautious for our Tech and Software business this year.

We'll next go to Devin Ryan with Citizens Bank.

Want to stay on Advisory and maybe talk a little bit about some of the non-M&A businesses. Obviously, it sounds like private capital is continuing to gain steam. We're still hearing restructuring is relatively active. Can you talk about the contribution that you're seeing from non-M&A? And then just more broadly, how that impacts the outlook as you look out over the next year or even two?

Yes. Sure. We had a good Q1 in non-M&A. Obviously, we've got the major pieces of that — DCM advisory, restructuring and then private capital advisory. For us, the real bright spot in Q1 is even after a good end of the year, our Debt Capital Markets Advisory business had a very good Q1. I would say restructuring and private capital were fine, but the outsized performance was driven by Debt Capital Markets. I do think relative to private capital advisory, now that we're kind of one and a half years into our acquisition, I'm pretty encouraged by what we're seeing on some of the continuation and other transactions as we've now closed a few, and we have — and frankly, we have a few more, and it's really across all of our industry teams, which is good for us to see. And over time, I think that's going to be more and more of a contributor for us.

Got it. Maybe one for Deb here. On fixed income revenues, you mentioned resiliency with balance sheet restructuring trades with the bank closings, but Q2 started slowly with clients on the sidelines. Can you just help us understand the moving parts of that? Is that bank M&A, was that interest rates, is that just market volatility? Just trying to think about what needs to change to bring people off the sidelines.

Yes. I think the biggest thing that needs to change is just volatility needs to come down. Some volatility is great for trading businesses, but it's been too extreme, and I think part of that's rate, part of that is the geopolitical environment. So I would say that's the biggest thing—we just need to see some sustained reduction in volatility in the marketplace. Relative to the bank restructurings, that's going to follow the closings of M&A transactions. So that's something to watch. As Chad talked about a little bit of a slowdown in some announcements, this is an industry-wide phenomenon. That ultimately impacts our opportunities in, say, the next quarter to have more of those. So those are the biggest components.

Yes. That's great. Maybe if I could just squeeze one in to get Kate involved. Just on the comp ratio and kind of the outlook, obviously, I appreciate the year is still somewhat uncertain, but you started the year with nice revenue growth and some comp leverage, down 90 basis points from the beginning of 2025. How are you thinking about the ability to continue to drive leverage from here off of a better jumping off point for 2026 relative to 2025?

Thanks, Devin. So we're now sort of consistently at the low end of the range that we had previously guided to, which was 61.5% to 62.5%. So we're pleased with that progress and also pleased with the leverage we were able to drive in the first quarter, given the improvement in the top line revenue number. That being said, we do have a highly variable comp model, which has allowed us to be as consistent as we have been through the cycle. So while we'll certainly look to drive leverage where opportunities present in certain parts of our comp expense base, that leverage could be a little more modest than perhaps you'd see elsewhere. And we're also always looking for additive investment opportunities. So it's a bit of a balance. But we intend to continue to operate within the low end of the range or just below, as we have for the first quarter, for the rest of the year.

We'll next go to Mike Grondahl with Northland Securities.

Chad, if we think about your Advisory pipeline, there's probably traditionally some activity as you go from winter to spring—some inflows, a little bit of outflows. Can you comment at all how winter to spring activity happened this year? Did it kind of stop recently with the war? I'm just trying to get a sense of how different the activity was this year versus more normal years?

Thanks, Grondy. What I would say is Q1 is always a challenge for us because it's just seasonally down. And then especially, we had such a strong Q4—last Q4 was really, really strong. So you never know exactly how that's going to impact Q1 pace. I think the fact that on a relative Q1 basis it was a record and it was so good, we were especially excited given that was off of a really strong quarter. I do think the combination of those two quarters is something you're always looking at—what you're adding and what you're taking. I think that drove some of our commentary about why we thought advisory would be similar in Q2. But other than that, nothing extraordinary to call out.

Okay. And then what do you think the markets need to see to kind of get back on an upward slope? Is it the Iran war? Is it lower oil prices? If you had to call out two or three things, what do you think it is?

It's hard to talk about the whole market. Each of our segments is driven by certain things. In our Energy business, things are active and there are a lot of interesting opportunities. In bank land, one important factor is the starting point of stock prices—they're down a little, and that's not a perfect time to transact. Relative to the sponsor business, I think it's going to be some stability. It's not like we're not transacting, but there are really three decision points for sponsors. April is always our heaviest pitch month, and that's true today. So we know what's coming, but then there's the decision point of whether you launch and then whether you transact. I think it's just certainty of close. Do we get some resolution on global macro and do people feel like they're going to hit their valuation points. We'll learn a lot in the next couple of months. The good part is I think people are confident enough in sponsor land to do the pitch and start the process, but there'll be another big decision point this summer about launch decisions.

At this time, we have no further questions. I would like to turn the call back over to Chad Abraham for closing remarks.

Thank you, Margo, and thanks to everyone that joined us this morning. We look forward to updating you on our second quarter results this summer. Have a great day.

This does conclude today's call. We thank you for your participation. You may now disconnect.