FOCS - Earnings call transcript Q1 2020 | Focus Financial Partners Inc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Rusty McGranahan

Good morning, everyone.

Before we begin, let me remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that Focus' results may, of course, differ from these statements. These statements are based on assumptions made by and information currently available to Focus Financial Partners and involve risks and uncertainties that could cause the results of Focus to materially differ from these statements. Focus has made filings with the SEC, which lists some of the factors that may cause its results to differ materially from these statements, including without limitation uncertainties surrounding the current COVID-19 pandemic.

duty statements. not no any to assumes forward-looking such Focus and undertake does update Finally,

I turn that, Rudy With will Adolf. and our Rudy? CEO, Founder it over to

Rudy Adolf

us. and in share Thanks, ANI quarter morning, that results XX.X% strong safe. you $XXX.X are focus up thank This per On Year-over-year, families XX% with and hope million organic behalf your healthy increased you team, per Rusty. we of revenues everyone first target. for our XX.X%, points staying Good our and and and $X.XX morning ANI was X entire the was in announced joining and XX.X% revenues rate above share. growth percentage we our

was responded firms the and their collectively incredible Our partner the well results the business to demonstrated other. performed demonstrate supporting but communities and COVID-XX our quarter and Focus and how pandemic. team real commitment each in of the firms their impact the of to They they serve, the continue partner clients, story

been working a basis. on daily with partners our has team Our

an partners' job are that Our advice are face to doing by our disruption. of are posed fiduciary when the are to their the volatility. we excellent partner times prudent navigate helping the importance is well equipped utmost clients pandemic firms and related our clients These partners confident the challenges

be many calm. from to playing the the easier environment remarkable have of have of is number them opportunities take the stayed course, loyalty arising of crisis. should heard been clients offense in and I a partners' through our but about not this and their not themselves this From just has But their work and navigating to advantage the been out In than clients XXXX. crisis of surprising. market positioning fact, successfully staying cases has in overall perspective, so far, that XXXX current That

for them their stress. clients periods relationships prepared and partners have carefully deep with long-standing of have Our market

tangible XXXX partners and attrition. client XXXX a result seen experience, our consistent our with As and any have not

new gained are This a have working which group We which is current video perspectives transition encourage central the discussion, the website our as of which this smoothly. Canada number which for our they feeling. working their approximately in are of of plans seeing are do new how posted Concurrent work on to to quality section and a offices referrals, remotely technology a Investors see several and was doing. intended we years firms Relations to XXX A Much testament a comprehensive what partners has the watch partners in remarkably you employees crisis. partners the and U.S., snapshot clients, they our share have is and We to X,XXX Australia, provide morning, of across XXX of gone a U.K. serving the through contingency moved had element. - over remote our in with place cloud-based arrangements. of this

to communications brought a with have through our and partners development. addressing Resource COVID-XX on We video Center regular of presented topics. quickly this. role by optimizing our addressed navigate we have to the focus Focus then a in complexities helping played evolving prominent Areas clients, launched range an cybersecurity online and helping We calls the together best business accomplish share has situation. rapidly practices COVID-XX them shifted include

like to is these. the the seeking partners cash as FDIC-insured clients our well alternatives uncertain credit they firms of in what deliver value maximize is as our solutions. Helping program with we Additionally, at the that clients investment cash highly core helping do credit partner especially times

learnings lies financial we COVID-XX for us believe of throughout XXXX-XXXX experiences and including what recession. crisis navigated tell to are our history, prepares model market what current in have business full we The it well be, dislocations impact our XX-year successfully ahead. Although embedded these the early is it from and the too subsequent will and

has market model five of our business protection sources Importantly, of during which safeguard stress. our periods

revenues XX% First, fee-based. of are our more than

are Additionally, which can decisions. our income, with not on overnight dependent disappear bad interest revenues

correlated. XX.X% approximately of Second, revenues our are market

Our clients balance portfolios about asset be other conservative allocated classes, equities between generally and to with and tend investment equities. XX% to typically

market as own investment among partner diversified correlated has Our because client XX each their revenues classes philosophies. based are asset further fiduciary over firms

are a our are source of primarily of revenues further diversification. type non-market XX.X% from that approximately creating office generated family Third, services correlated,

Although future impacted QX on that modestly they were these Jim a his this anticipate QX the type provide we affected thinking not in revenues will in remarks. pandemic, and quarters. in of be may as result our of

Fourth, we preserve our earnings turn, adjusted firms, capital cash of the allocation, have revenues which decline. a flows in and available our partner if EBITDA for preference our on

While the an needed. of where their cost protection, our and is adjusting are press important source firms stable

a As result, is a maintaining concern. preference not our

the means tied This important Fifth, are firms. costs closely the should the there of for weathering portion taking are operating based the second-largest of the profitability under time. many our our our note to the of management to on for aligned a partner is the fees, adjust while storm period model. remain of that action It are with a Incentives resiliency expenses, managing businesses them reducing of central expense businesses, elements see the of us partners' their manage and but are ability to profitability profitability. base profitability directly stable to is to also which expense These upside. major wait approach long and take that our pressure positioning are and real-time our on their are

this lower markets well, position for future weathering of growth time, ourselves is period for be stabilize growth our enabling a crisis business recover. as to us our may and Although

are factors As we a there will to turn QX, our impact results. that of couple

primarily market based advance QX. that on in Approximately effect QX reflected XX% the financial primarily during revenues are is correlated will market market the first our equity values of The these in be QX decline built revenues. of

activity. The second in is a slowdown M&A

been Except service deal MEDIQ slowed. the overarching as standardly signings QX pushed out industry become Buckingham the priority. for the has has we Given our of closing announced, and the client volatility, have just transaction merger for one M&A market activity

In of and have business amount addition, diligence can lockdowns due we related travel development and social distancing COVID-XX limited restrictions, do. the

For we be activity will most QX as muted M&A in currently likely that anticipate these and reasons, in QX well.

However, not we in has that of our percentage these close will and large sign the transactions believe for a as rationale ultimately transaction the changed. pipeline

by fact, cases, reinforced the has in In crisis. many been

crisis. believe couple firms our larger viewing that months partner of XX quarters a we not and in the are is as most but opportunity of opportunity Many it this more slower compelling the to activity, takeaway of However, and size of rather XX the XXXX. important post-XXXX a following

need of planning, We that partner firms will disruption. partners experience the be for maintaining will the the wave. building We're infrastructure convinced throughout and scale business and believe value by succession the drive perspective the reinforced proposition we our this cost COVID-XX offer new of to current

opportunities capital In fact, markets we continue to stabilize. with manage to a pipeline deploy highly once excellent attractive

not business. we right continue our and XXXX long-term if XX% will for growth for ANI further, revenues our current that accomplish to stay so confident likely we growth market decline be these per level at remain the targets While conditions targets share for

which only is our resilient the will outperformance will business we the will Although long way results term. the term, impacted over be to we strengthened believe our by be the and in are lead short storm, navigating

financial with record will us long-standing should success the more of We which post-crisis. are and for larger, prove success, in stable position greater resources continued track

begins. depends market continue Coronavirus firms As U.S. will we economic will their supporting impact crisis Obviously, with and our current that our to partner the in QX on reflect recovery the path and and economic QX of biggest clients. think outlook effective and this the starting to normalization about other remainder XXXX, evolves, contain countries reentry. are macro how as the assumptions QX manage be If top priority our the the

and on focus value-added life ever also expanding societies, enhancing our will we crisis this further industry is of However, none continue ways within businesses expected. us testing the relationships Clearly and services. our in to

for have our business that finest advice and this the overall. for to partners undoubtedly However, industry say and I fiduciary our is hour our

magnitude, base experienced of a approximately people that proud core to have our moved in employee crisis working remote our to entire we are a of In value and X,XXX proposition, the of we this say reinforced part leverage ratio net benefited and sharp strong the from in X.X a interest of previously decline of our tension days, maintained rates X.X. attrition, established no reaffirm targets for client balance matter to sheet and

industry. I of models on by have continue its resilient in no that business will path question supported Focus the the success of most one

crisis that We the management advice, XXXX-XXXX towards the wealth in accelerate in trend providing RIAs advice the just that this industry. is going fiduciary are quality expect unconflicted and like to

out coming weathering other As such, the the this rather is storm crisis side. about not on strong but

crisis a improved by companies that. companies As by Andy survive destroyed said Grove them, bad companies great are are good

over of which of before enhanced website note details One Jim. proxy We can found filed on recently the final call our in the our be statement. recently to I The ESG and turn initiatives. many

to committed of taking interest strategies development aspects into other and in ESG increasing for their all account firms of our encouraging also and ESG clients. our and supporting considerations are of are the business to their We partner investing support

me turn the let over to Jim? Jim. call With that,

James Shanahan

And million per QX year exceptionally was everybody. XX.X% extremely unusual the an our XXXX, QX revenues these prior our hope as in your up first $XXX.X share the during essentially year XX.X% up I strong We keeping quarter revenues, When safe ANI $X.XX, XXXX morning, times. prior essentially and generating compared quarter to QX and from Good you had are unchanged. strong from families well. seasonally versus unchanged and were quarter.

is our demonstrated client quarter into to response itself distancing a quickly naturally the well adapting and business unique a this extraordinary their that by have prepared environment. also business entrepreneurship. this This consistent partners business adjusted and partners' resiliency positive our that is their our demonstrates We our of build in not is which while well. our in leadership, maintaining platforms to businesses The challenges remotely independence of standards of significant their of This which maintains high their believe reinforces social businesses successfully to essential but presented nimbleness model, future. lends and are service. It partners the value working

Now the our details of P&L. to turning

delivering crisis and recurring the to revenues which performance on fee-based to an based of revenues current than revenue in benchmark. ultra-high relative wealth purely a are like Our in clients more particularly and function model, the of holistic to total being than transaction-based QX, one. rather or be contributor revenues XX% is management important of worth stability high net Fee-based continued our a services situations to investment our

or revenues $XXX XX% correlated market XX.X% to related of Approximately family by correlated are arrears on XX.X% the seasonal million markets. our firms XX% of the markets. Of than QX XXXX important the QX QX primarily our markets, from These because lower related levels $X.X based to independent billings this were billings to diversification to to or and The primarily amount, sources XXXX not revenues last based were partner office financial advance are QX discussed of that market million earnings generated financial remaining XXXX provide levels. due $XX.X on million us they we revenues the services, source of for type are an factors call. on

and adjusted In mergers one Investment on four of the terms mid-quarter X. Based of $X.X M&A was Management, Nexis which of partner contributed revenues million activity Nexus in February in close, $X.X new firm million QX. QX, on completed we EBITDA and added

adjusted EBITDA on and million quarter contribute approximately the revenue EBITDA and million million closed EBITDA. of growth revenue approximately For X, to in full $X.X expected $X.X in $X.X QX the million to in Nexus million which [Indiscernible] of QX is million is $X.X $X.XX or expected for adjusted in adjusted in contribute $X.X quarter. May in revenues and full

QX likely M&A anticipate revenues, As is QX but of unchanged low to Management profitability XX.X% pandemic begin fees, were largely which by $XX.X or levels and million Rudy activity QX. well, of in assuming we will noted, increase that QX estimate to in the tied partner point. that QX contained from most our are as essentially of the activity in firms

year-over-year, XX.X% I $XX previously than adjusted due seasonal up or factors EBITDA mentioned. QX was QX lower to the $XX.X $X million Our but million, million XXXX

Our margin EBITDA in XX.X% QX our guidance of XX%. line adjusted was with

this expect of Our non-cash around year. and to to in X.X% was X% equity-based approximately quarters of be this we compensation X.X% QX revenues revenues future expense

approximately group allocation higher March of anticipate year retain prior of cash flow and obligations XX.X% million, available the million for XX, of partner was million any as in increased and earn-out firms high-quality early year. $XX paid Our capital partner will a year pay XXXX, XXXX. of and with activity addition of that reflecting we M&A last of $XX line $XXX.X earn-outs we million than new period, growth the LTM In we our plan later of to this $XX.X QX, the our out in anticipation in flow excess guidance We approximately QX. cash

of pursuant to first by impacted $XX.X million under quarter reflecting earn-outs our of Carlo of non-cash changes The simulations estimated the GAAP. fair in was XXXX earnings value Monte

a in March firm earn the occur as Weaker As reduction XX. market six-year outs a reminder liabilities over drove of conditions partner generally estimated these period.

markets estimates As recover these increase. typically

now Let to for turn me current QX. our expectations

providing Given the related concerns. near to M&A guidance and market for of high pandemic, we pace of QX revenue level help the are to uncertainty the term activity alleviate conditions, investor

organic year-over-year same-store the million will activity revenues by revenues guidance some $XXX in to appropriate sources, basis due decline equity rate evaluate of is business $XXX for revenues. we growth However, This model. market on an range non-market we quarter-by-quarter more the this lower X% of that X% our from We a primarily decline levels to negative estimated of will in correlated our incorporates minus QX and guidance estimate organic as to million. in minus annual be merger our believe partners, modest

industry difficult our family movie is by in to events, and revenues clients revenues inherently type It these entertainment office for like. environment. live the predict services driven non-market are relate of in Some productions current to the the correlated and

the we quarters. do in to potentially three conditions million risk at be total $XX If could change, not up believe for next

adjusted in EBITDA However, we preference cost additional an to impact decline this would across and result our given savings estimate immaterial partnership the protection. that

accordingly the support not need partners models, their earnings preference prudently client development do travel of to take are including impacting partners to but in any business is and this variable expenses entrepreneurs staff managing currently events. future for and not swift to their Our entertainment concern. opportunities. our are a businesses, and adjusting business reductions without substance service their They they envision compensation, our are discretionary profitability, reviewing managing expenses their approach and Because maintaining growth

January since through partner we approximately reminder XXXX, the in today. added base a firms acquired new for As added have $XX earnings XX million

operating we over including be of we over XX levels market estimate on profitability remainder During to completed for XX% levels remain in of $X acquisitions this the same fees time adjusted QX current anticipate period, positive The margin We partner not billion tight achieving we approximately will closing are margin the below management EBITDA leverage, business unchanged that will go the do management year. consideration level for reflects mergers. Based EBITDA in firm and deployed our we XX%. results changes. the expense adjustments automatic as

$X.X Xx XXXX. credit Now our at balance facilities leverage turning in a quarter with and Xx debt billion the ended from the We of approximately ratio the outstanding under unchanged sheet. of end net to the ratio

range of Importantly, we remain ratio net X.X times. committed in to a leverage X.X maintaining our to

expectations, approximately period end we leverage on remain will continue QX at our ratio We Xx. our believe our range anticipate net appropriate for this Based is business. to QX

number questions of net about sustained sensitivity have our of downturn. so you and ratio, leverage more We know severe the a

show to supplement adjustments our continuing market are in in we of make the markets. to sensitivity decline, changes the We earning hypothetical provide and necessary. In expense leverage additional our analysis ability case have partners as equity further to

our revolver light and to liquidity markets the uncertainties. $XXX pandemic of turning in ongoing drew of the stress financial down position million enhance mid-March, liquidity. our Now related to In we in the

This or in leverage no this July immediate to our our XXXX impact have fund eases markets We future our back either the ratio. revolver July XXXX use M&A short-term amount so term to it for and Also, loan and net had have no cash. in matures we refinancing need We anticipate transactions. no drawdown once the crisis normalize paying risk.

LIBOR the on rate approximately $XXX reminder, rate in borrowings the we swap LIBOR point and January weighted floating spread basis from borrowing spread interest In XXX to loan a plus to XXX on from fixed average we interest our a transactions, resulting in reduced inclusive our of separate converted reduce of interest on As our of loan to across April to our effective term three the term successfully borrowings. X.X%, rate plus XXX costs. rate March million LIBOR a

current All interest savings environment, compared significant end With beneficiary. or of borrowings remain in of on the the investment-grade the they'll XXXX. swaps, next four price the $XXX this term effect floating other our repricing and $XXX which in with to million for are as approximately annualized on have we million fact outstanding We the estimate the at in of rate low-interest-rate loan XX.X% million years. borrowings $XX a

are financial we pleased our of the To with conclude, strength performance.

working To of of are we adjusted estimating to Xx. million recap, should. leverage model ratio net at Our margin EBITDA XX% QX and as a $XXX million is and it revenues $XXX

have times. We the anticipated of the on resiliency these community. X.X and X.X challenging target our of ratio net our reconfirmed for leverage to We a believe global our time markets results business demonstrate

the Everyone the deep work their the pandemic seamlessly servicing arrangements degree partner an the quality While they no client speaks of client and to creates doing the numerous tangible remain managed in high are unprecedented excellent clients. firms the relationships. planning. which on and value family and attrition, their demonstrating uncertainty fronts, Focus is a our comprehensive COVID-XX importance of remote of of solid have They has in job businesses work longstanding contingency had

focus the near-term are our challenges continue will and believe planning we navigate growth which be the firms primary partner for post-crisis to environment helping offer opportunities. we the our crisis, will substantial of While our current partners actively also

the is it of about weathering side. not said, our recently out partners storm, coming one is on strong As about other the it

the the Operator. to Now, I'll over Q&A. call operator for turn

Operator

Instructions]. [Operator

proceed with of comes the Owen question line Please question. Oppenheimer. your first from Lau Our with

Owen Lau

my for and question. morning, taking thank Good you

to looks Advisory have firms two able long relationship. acquire history a was Buckingham and RNP like So of it the

your mentioned ultimately pipeline also You will that and close. sign

of can is the higher post-XXXX how the XXXX XXXX Focus target term, near longer contribute consolidation how So kind what indicators can term? this period has to my confident you will achieve such that term? you're Focus Which and than you. question relationship Thank opportunity that M&A looking makes at? in industry the be Over and many the long in the

Rudy Adolf

been rightly a and if a Owen, you is is your morning, question. for that time. RNP state actually has long transaction Good because you Loring a with good thank Ward it very for firm very working

principal fact, behind in one It co-founders the is this Ward. of of we over [indiscernible] of Loring just step conversion. can have another thesis the was transaction Loring we In the that pipeline. was time This convert this that course, Ward the

such mind Owen, an as theory is QX, be behind Keep very indicated, going perspective, very, From in As probably out XXx. the your is today proves we focus slower opportunity after we attractive. investment the XXXX-XXXX, had to just overall but really that transaction. this QX is overall

were the of XXx XXXX-XXXX. but tremendous XXx opportunity. can we what size You're It clearly a another there in is be

in traditional also the current of will and move mentioned if fact, we crisis. will the we reinforce things to firms advice a anything number consolidation. way brokers the our there and out I to industry we banks of this believe partner it overall accelerate through and meaning the In dynamics support fiduciary quality are market doing

still company much be about well of would in firms very the here firms strike over good that. would $X that terms holding remain in a north We X,XXX targets zone. U.S. our are That billion, X,XXX just below That's be the overall direction of which

in have most number recently we transactions, Australia. heard a have of MEDIQ You announced

Nexus get universe, the transaction. believe continues and attractive we highly Canada excellent our fair overall have going the When are momentum share. to in it be We at we look to we with

million are have what opportunities. this to believe careful have but million cash have the revolver, be guidance and the in we sheet capital, we in within most deploying $XXX we are attractive $XXX the almost tremendous flexibility X.X balance between X.X we always we very cash, Now in way we in as going are have in million thoughtful the we revolver $XXX to and firepower, the the

Owen Lau

you could value-added follow-up, about My talk please great. other some that's Okay, surfaces.

and Any color cash much before. I think activity you these be of credit you during these the products? helpful. higher and activity to Thank in the products more would you. COVID level compared see a like program Do mentioned increased

Rudy Adolf

FDIC-insured guess, relaunched I because there interest credit, deposits. and to sometimes time lucky literally is need be perfect in you Cash the tremendous in

XX programs. and a million provide these very, We course, or has to even help can participating $XX of the our proposition very of deposits. firms in highly PPP were them to enhances We for able frankly, very but we program FDIC-insured have Quite Demand lending value some of clients, small been really These high. have probably to up clients. in for program. the still helpful. attractive that say very, partner their relatively XX loans, more are let's This

can so of Just, least the profitability we provide an want client on what cover these some more in a top terrific source our our Obviously, industry because really partners think a and hopefully the thought of is that expenses to this solutions our and unique helping quite to weather really program organization only of of returns capabilities We scale an about this but about or are to reinforce never at big the create frankly giving survive storm access direct the to of crisis access of they profitability. programs, clients. it are it proposition. power these and to see entrepreneurial value these our way as to

Owen Lau

the financial for too now impact be able it us is So quantify for to or would still like you early?

Rudy Adolf

helping and a early. it's So but are covering program we that our partners. are of is The probably this we power real too our expenses more, little

clients. you If increase to increase share them capabilities, wallet, attract want help their advisory the new of

of a programs. of these came seen out have we number referrals fact, that In

others. satisfied have we very one Here referred

So new we reason economics then of the and one number get of retain the our incremental our therefore partners course and helping this get it's that's and for split really program. clients

Owen Lau

very you much. Okay, me. that's for Thank it

Operator

you. Thank

Please of Our question. from next comes question Jefferies. your O'Hara Jerry with with line proceed the

Jerry O'Hara

one you can this XX% what target. else of and frame an growth conducive the the morning help and this accelerate the to we backdrop Good might guidance, sort Perhaps forward all isn't for just it's I us thanks. that It's disclosure understandable forward but appreciate morning. year? environment that latter sort towards half of equal M&A on going fails growth perhaps enhanced the expect of if Great,

Rudy Adolf

said precise second provided a quarter kind for course, we're guidance because the most compounding Remember, providing that, is to of is Having XXXX. and XXXX. share and not QX this business the it per difficult just was QX, since income XX% It's very guidance We, important. back revenue of to of given full-year this goes guidance. volatility EBITDA, XX% all net provide adjusted This XX.X%.

very So have business at this rates. track we record of a attractive tremendous growing very,

a influence, I about from normalizing however, continue be this telling with model to of towards the that stress, number larger. have know are from of frankly given very right power I the but clients, frankly centers today. quite referral the and expected. industry momentum another the and human consolidation high-quality to We and pipelines of once course business we toll to one overall a They quite partners- is from I you're Most The and need The are got other tax conscious attractive. their wouldn't is of are this something the very us that partner markets significantly of interesting just crisis, targets advice. our want thing dynamics to significant economic be and these move

once speaks good meeting are dynamics frankly Focus and overall settled closings and here. person. reaffirm the XXXX that worth in clients. the We record target client this high seeing for These are good for very in net ultra-high our has these clients without about partners actually a track Quite out - very certainly these net feel ever we actually worth We itself. is

James Shanahan

guide with Jerry, up. hopefully, M&A we the of the the part saw we'll as towards later pick the year

deploy. have operate allocation firepower recent the As capital a Rudy points on we've the drops is the M&A terms have our the in of revolver. firepower When the to for We'll available become as accelerate flow towards We rates equity and where generate and post-COVID sufficient in long-term cash use. continue Obviously, the LIBOR market have LTM in range interest to basis normalizing the leverage of have XX capacity M&A. to about continue starts that we We'll a on to our cash we to beneficiary had obviously environment, the to we execute also today. targets. in a currency mentioned,

Jerry O'Hara

with reasonable That's you. and Rudy, fair. Okay. staying

You take that recently initiative. promised us a the we out focused highlights to you ESG few on building how enhanced but give mentioned of at could us of to initiatives the a a and some video, all sense look give you're just perhaps

Rudy Adolf

very initiative? You were beginning. cutting off in Which the

Jerry O'Hara

I'm sorry. The ESG initiative.

give If you could of is moving forward. that us a couple highlights how on

Rudy Adolf

ultra-high Quite the to they do their they very invest care your our committed to you're business money. who when way space with, enhancements launched. ESG worth for want that are We the we particularly in for just operating net frankly, criteria if clients really about this

are this. here the of course, of such launched in and a key As proxy. just we components There number they're

our We very have enhanced governance, important.

have Director. Independent We Lead now a

sustainability guidelines imposed have and just have we first stock ownership highlights We report. our published

the the working committed which develop encouraging our We here. ethical push and policy towards investing are with our and rather lot momentum was strategies, which of by not ESG. but partners our a to There's have these it was around also way - partners just strong a a from adopted sustainable a to demand we really from

the the way So make emphasis rolled to with marshaling of really it's is knowledge experts ESG then ultimately webinars collaborative of business in out. outside model. having them And an in we very important really this the and regular course are we Group collective We overall are. our

Jerry O'Hara

questions morning. the this for Thanks Understood. taking

Rudy Adolf

Thanks, Gerry.

Operator

the of with your proceed question. line from comes Shutler question with Blair. next Chris your Please And William

Christopher Shutler

start you're you do number is? restarted? discussion. get What the the How think Hope when with industry M&A do more morning. determine M&A kind think of gating main really right good I the on And Rudy across EBPC of do guess, just for you everyone, coming M&A environment. Hey what's well. to of Maybe doing you the factors out are to this

Rudy Adolf

senior advisors, frankly weather partners, now is co-gating is on they storm their best are very and Well, we the well. why so the very, the this clients to very one across This And takes possible weathering going the time. advice. quite this right why well is are storm the industry clearly really provide focused to factors determination reason industry real one

there I talk the partners my with little on by listen video has a are everybody this on relatively out just phones really and hearing going what they I to basis, very colleagues saying bring which broadly, partners it are doing. our to Yeah, often that busy more providing encourage they too. investment and would way we daily posted all advice, life to on mean They're what's to the are and advice, do I here to but what our very to much

course, the Second, the as market some disclosed, this, were we markets is really guiding based and we to equity second in impact there of on quarter.

So is, EBPC right and since to probably expertise EBITDA course to We obviously usually invest and rate beginning tremendous and to adjust. so probably run of you right based ultimately deals have get [indiscernible] the of projections. we revenue your second to or EBPC question, business, need done the on this looks the having XXX and

course return of XX% XX%. of capital a our track XX% itself. of very over returns in Yeah, record of deals north for way average deploying Now our professional have remember, created speaks

going what is we've for normalize, So time things of some we gates these are past. very confident have versus once disappeared. This in that seen probably accelerate of the period these, industry, to some consolidation once

Christopher Shutler

thanks. of for on the Jim, a couple Okay, few office just revenues, family a follow-ups types then of questions. And

million quarter? total would Is in - quarters or confirm be next would aggregate million there? first the you at that $XX three guess, mentioned you million $XX could I that per $XX over So in risk

James Shanahan

in QX, year. It's we and where are based total an aggregate It's on of QX this today. estimate over QX

Christopher Shutler

Okay.

ahead. go So,

Rudy Adolf

We real de minimis. It's would a don't impact, be for the areas adjust to because any and other expect in. key our EBITDA expenses preference these kicking yeah, some in

is come impact. there So when will specific. life that they entertainment a and This unclear will to really state related obviously space, It the really events consensus in is It's back. is it's de back. come minimis this very

small very obviously circumstances. given impact million So is total $XX the million impact $XXX aggregate the very, base on roughly a

Christopher Shutler

Yeah, okay.

to there. XX by QX, the into that's And divide XX then, it or Is so, the, for higher given just [indiscernible]. into guidance it or X what's confirm, is just divided QX, baked in

Rudy Adolf

guidance QX I'll QX, by our up be Yeah, we the I of later don't would a expect But in I guess, would specific quarter. year. in it and have follow more

Christopher Shutler

that be it. just down in is had just Yeah. And quarter-over-quarter, quarter I and you $XX QX make have numbers going the was revenue want I right? it to million, a I think to topic. like on million down then office like sure family sounds Got it expected that that lastly Jim, the correct. back just, $XX confirm,

James Shanahan

the At favorable estimate last right. million. call, and $XX that's earnings Yes, came around $XX it we more in an of had million

Christopher Shutler

quarter second make of is correlated is then and I'm not but the, that's think in in And that that your it. lastly, markets advance. you understand, to I in there not trying revenue revenue what market build build range? XX% assumptions Got roughly your of did guidance of so just advance, equity to

James Shanahan

that's our assumption Generally what today is year. for the the market

Christopher Shutler

Got it.

you. thank Okay,

Rudy Adolf

Chris. Thanks,

Operator

you. Thank

Our of next Blostein your Sachs. the Alex from proceed question. question comes with with line Please Goldman

Brian Daley

even guess. X Brian wondering bit Daley for better? you wondering the could of behalf you if time - gives about now come better to confidence if advice you Thank Rudy, opportunity about, Alex. of A, that on kind if was This B, - is advice of X an actually of what been I the you a It's you Good different could, little back talk our I opportunity could what's I was of could taking opportunity? or we we X. morning. that see questions. being could

Rudy Adolf

Yeah.

here. another time same manage So XXXX, time, that our of frankly very crisis is more the health different. makes to at very easier than course it very, the from the than side is XXXX. what XXXX, But crisis This and much of because and on challenging of course for this is again of is, quite it partners than high hearing volatility, I'm human

course, to the about served them well. decisions being through make to and Our the the way frankly clients prudent the and crisis, experience have have this frankly staying quite really advices working quite financial listening the went extremely and

that it Yeah. partially, and Yeah. aging hard helping that's new to the industry What issues, issues, simply of is and address an to major remotely. we as partners our have up Having overall which In with in as we remote industry with address today. But working the the our this work with is period, security we for at again on not of address Ultimately helpful very, it market do, partially capabilities to that very challenges of go how was population, because scale believe to it's are to cyber experienced that resources. clients advisor the the is set clients. the a and we this communications kind same learning. time partners, our is the having having

very, And going model. and notice. very group sources a Our existing of who going nothing powerful are partners ultimately business there's satisfied other this firms go our well to than for become to are more through do prospects referral

through course and XXXX very of did we Third, financially, XXXX. well

again what base versus on was in in remember powder. deploy revenues quite were were markets going And the period do are capital this could deploy kept too XXXX. small, to careful XXXX, not we in employing really at And there well we may basically our and around is and basically very the We point. EBITA we basically when and dry could You did revenue XXXX who weren't fast. and flat the we capital that turned, impact many significant small frankly, prudent very very our

will deployment reputation basically, advantage consolidation. track and momentum prudent the will take ultimately to record, you're it M&A QX, be QX, the Therefore again QX the that of very believe we just resources, the then in maybe of And capital. the less all in we have

opportunity. yeah, this we how medium the optimistic can So very capture remain term, we in

Brian Daley

you. a Thank then it. on referrals. And maybe just question Got

think couple I the kind to on of would partner there focused whether as have you about on couple firms in your in expect interest more are mass can and more articles the we're anecdotally, but four seeing sales more there Is or of end same-store maybe You lower slowdown for over a of call next specifically times sales. bridge if same-store the that expected advice. maybe the think we that any next I the gap a is demand M&A and whether the quarters and of months? some wondering you was news over of seeing the And market, since it's to could way talk I six sales. same-store market a pickup

Rudy Adolf

high Actually, frankly are a in doing is mass sophisticated highly It space really think affluent the in We quite that cycles is are that with for the net advice sales better the ultra-high exactly is opposite. net see course it's longer. market the of we clients situation. the We don't worth and highly differentiator. sophisticated

other Braden yes, three emphasize so Our This massively decision net firms short-term. increase And not this & strategic to SCS or It's worth so years many like - and high-end of our this of some on. course and significant space with ago about volume. referral seen ultra-high and have here our Brownlie in Multifamily is we world. a end offices

So period going a to but additional partner time, activity I or of wouldn't for for structurally, QX, believe for are on attractive our QX have firms. good say that here to very our, it's we we see impact an going yes,

Brian Daley

you questions. Thank for the

Operator

Thank you.

Please of of proceed line the Carrier question. with Bank from Mike comes with America. your question next Our

Dean Stephan

favorable is the Hey Carrier. Stephan hear Dean trends firms. partner guys, Mike client for on retention Good to at this

look from what shift have back focus guys may ahead, a in these to the given for we any see some growth rebound order seen their or to need sentiment? firms this terms And kind of focus in positive the to in you of rally we recovery and be market reversal recent and market retention client As expansion. economic

Rudy Adolf

for that's basically error side. of and worth industry, holistic power families. the ultra-high so advice XXX%. high deep industry Yeah, firms Retention on in This and our of worth partner the has net retention always this for net just retention the been rounding is known

retention never to you question. a And however. So the promise the on on The is fulfilling why focus clients. asked issue, correct you're these

weather partners You're storm of what the that course right our what's the is helping and of essence is them happening now do.

referrals, because at life space almost comes of synonymous most video, from Again the growth partners. from comes Retention clients because referrals world the existing here do from it to and worth look the from or either influence. these is in growth to in net centers this ultra-high really of referrals

of the more dynamics our so coming And current so hearing these in. are that clients, we the these That's from partners, better of many referrals better partners. serve I'm - the sorry

going what time. and this being we the in repeat very obviously by underserved, accelerating a the experienced coming the itself That And out. perspective the served, quite to They them ultimately, were traditional market work than these that's just are didn't misadvised And even poorly brokers where clients who from. product. didn't way last share a selling the the were who holistic some are take even not is are right referrals they frankly, hiding holistic shift brokers what what Quite thereafter, situation. the not in phenomenon is from more many can frankly we Because RIA so, way in advisory advice to that we be, - are. space, more we pronounced that's hopefully comfortable that And their place that's overall do clients. under, now the - to are experienced XXXX is and

Dean Stephan

in follow-up, possibly priorities then maybe retention helpful thanks, a the cash for are debt? or the backdrop just of terms and quarters. paying M&A the quick given next cash couple What that's expected Okay, near-term tougher down of

Rudy Adolf

fire important funding the the the now. $XXX What environment, understand on fixed so in million are revolver. First just into million swapped between before debt the grade. is on details, we just we It's at $XXX on balance I interest into not can the investment power so basically rate side, the Jim but sheet based current go plus mentioned cash sheet almost is you're balance to a

there assured level basically high capital leverage. So advantage. for cost us equity years, Many funding. are out similar of grade are usually private a almost tremendous This other investment bios gives of very of of sponsor-based X we kind the or

much, Quite pre-crisis, and deals we times frankly deal it's in higher Recently, leverage. to close is this capital that have, but the what than leverage are of that X.X having. we we so trouble. not know cost of nowhere quite much at frankly Because happening just were all

deals leverage out. can deals, This sources frankly dried capital many of So financed have be anymore. quite these for

locked to for more this deal long in of So period either maintained they happen. expensive time. and much We or firepower equity can't our need we simply deploy a

we balance it deploy the committed keeping we that are we this, that not and have flexibility down rather but X.X a we that we cash to us, Yeah, are we tremendous attractive. clearly debt target X.X are of year priority because we and whenever just kind steadily within see on believe sheet, So paying it's additional leverage last the just. is will for but not to this we flexibility believe an we committed need it, opportunities too,

deploying in are said is don't is But this in play to and we XXXX. Steady I way were is There ahead. times prudent learned XXXX or before XXXX opportunity XX rush the we what if the of and capital. our is as one there's thing we tremendous size

James Shanahan

about the on We go cash in page of quarter. through On year, of terms and earn-outs We about we which $XX XX. X.X loan through for the supplement full should earning million. QX a term priorities the for be the amortization is the give and go which our guidance

capital The cash allocation. $XXX as we're was flow. And generating Rudy said, LTM for then million

that of fungible at and that the appropriate revolver accretive we transactions cash the use to deploy in time. the can with on sort So

Dean Stephan

thanks Okay, guys.

Operator

you. Thank

question proceed next the comes with Our of line with Kyle from question. Voigt KBW. Please your

Kyle Voigt

question. my in guidance. for I bit margin really little EBITDA want Thanks morning. dig taking a to just to good Hi,

to second a kind you in see and of a that position if is expect from earnings. more kind margin all So need drawdown realize and to or at preferred preferred benefit, market base are the of benefit base would without the or you in wondering just quarter, expect earnings, second AUM position quantifiable the your you So bigger benefit to at or all? quarter, EBITDA a to material it be you benefit do seeing a would what see

James Shanahan

It's Kyle, actually Hi, good question. interesting.

well. press are partners the quite small. the frankly And of We benefit weathering extremely and weathering storm storm are the our is very the

significantly expected. So would in, what disruption really higher we a market to kick much is the very preference which need it for

of you streams. revenue course, the of the stability It's, understand

are of made there and this company You base, understand more our ready the crisis. to more have the it how quite the upswing and issue, was on of course partners. you are the take been to frankly about discretionary frankly our of the expense necessary, when. but of so advantage quite we the just side. question know They upswing going is of adjustments expense if nimbleness variability do we not That's a And is this to and not It's survive positioned is come. as really

feature, And so it but the now is it's very important market preference is balancing a much level of not an act, a correction. of

the quite mirror. this more most years now And them. partners is the this significantly to we take there point, may of to remember two, because in it this the this a rate correction rear run maybe Even level didn't because liquidity a of And in would it's for for after view explained for we recent dynamics, in. market relevant base there usually, was then so need year not course, be most it's past, preference in At this as transactions, in bigger huge for or or first the two the bit, so number is relatively market so, where we important. and even of a therefore on kick event. don't frankly, our Yeah, firms but little

Kyle Voigt

really better bit So follow-up a it than really just level the you you your then And Are into XQ. in margin just expense mentioned that to at doing at a built reduce Is time. looking XQ expected? to there things the also holding And helpful. least guidance also company related offset then that at level? count trying head this holding That's of for EBITDA partner firms EBITDA at the kind point guidance margin understand. reduce to expenses? I'm to just corporate we aren't company Are

provide pulling maybe they back? other Thank you. more of Is are or So where G&A, marketing, just there? you could on details kind some it

James Shanahan

holding overall First of company. company just a small the relatively part The the base. on expense holding is

watch people course, like only base The cost is the of we overall very holding much, XX remember have company. in You firms. the partner

revenue in but absolutely the There the entertainment for of in in need stability the very, it's areas isolated the so, then the some anything is the That's much. adjusted one correct. revenue except is no but very expenses. side, of course, base, space, discretionary You're all

small quite of a thing. expenses. the quite frankly there. quite of are be And We ultimately, healthcare entertainment and although pools bonus Travel out want frankly as self-adjusted, - his are course frankly not some rationalizing we good it's to

clients. is We and with it are opening important our will meet partners these there of again, things for their whenever course, be out up to

now. this a And obviously very has but item which for significant item, right line a This meaningful so this will on line us. come impact is back,

there the basically upswing. side. all the is an impact don't an head to where constantly need that a are it's we industry where behind And frankly, is industry for side, This shortage so of running we be count. quite recruiting And is the really on talent. headcount this on ready areas And the

staff well recipe our - when upside treating fairly this coming. really the them capture and So treating retaining them best it's is to

and in I expense ultimately, the our the the are be partners to holding managing we company, between comfortable very circumstances, we still So think ready the will upside. capture that base prudently given are we very

Kyle Voigt

you. Thank

Operator

Thank you.

Mr. of We call over would Adof for session. remarks. turn end reached have I question-and-answer like to our back the closing any to the

Rudy Adolf

Yes.

what candidates position current financial in professionalism, for how demonstrating of is face time future. seasoned adopted our core So have all will service, of our the the consistency clients our the thank see the our in In turn, crisis. and what clients are incredibly of attract The value remember prices reinforcing post enabling times, and are we extraordinary model. current proposition you and these substantial proud in your superior interest business resilience and developing for partners us merger we the will new stability and well to closing, opportunity

positioning attributes economies markets will We recover. enhance and competitive further that as believe our these

our talented our beyond to who company helping and Importantly, across gone have I partners want team the thank firms holding partners of crisis. our in this colleagues employees and and our above navigate

we today everyone healthy stay extraordinary behalf They Thank resolve, and commitment, you. you hope Focus, without and be months. business shown strong as all the not weeks and them. coming safe at of On in our as it have dedication, is that and would

Focus Financial Partners (FOCS) 12 May 202020 Q1 Earnings call transcript