PWP - Earnings call transcript Q4 2021 | Perella Weinberg Partners

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Operator

Good morning and welcome to the Perella Weinberg Partners Full Year and Fourth Quarter 2021 Earnings Conference Call.

During today's discussion, our call will be placed on listen-only mode. And following management's prepared remarks, the conference call will be open for questions from the research community. This conference call is being recorded. At this time, I'd like to turn the conference over to Taylor Reinhardt, Head of Investor Relations. ahead. go Please

Taylor Reinhardt

and quarter operator our year full Thank earnings welcome call. fourth XXXX and you, to

Joining are of XXXX. March Barancik, of the Chief be me conclusion and through the Financial Officer; today available live two Officer. Peter company's Weinberg, of website A hours Investors this XX, replay the this approximately will Executive call page Chief following Gary through broadcast

of presentation, initial made subsequent who those listen as February For herein remind remarks that the to rebroadcast and this to XXXX you we of updated are have earnings today, XX, been the not call. the

we PWP's that this expectations Before industry performance call including financial to future and statements, business and forward-looking I'd begin, of and like may note conditions contain outlook.

risks, SEC for beliefs of most actual could assumptions Please those and PWP's current or statements. to no uncertainties of the refer forward-looking are materially statements and expectations our uncertainties. from events Forward-looking and results obligation certain in differ risks guarantees statements and these cause the any forward-looking not firm filings are performance. to on discussed and inherently forward-looking update that The to future are undertakes of recent statements based subject to a discussion

business. our the to now filed Weinberg the which press call today's results. discuss the the PWP can During of the financial has relevant the are will these X-K measures in website. found release with company's a which turn believes of most some be reconciled GAAP Peter will comparable measures over are to to discussion on be Form I there call, also metrics management financial the non-GAAP in performance items assessing which

Peter Weinberg

more reported I for Q&A. and fourfold adjusted to open million, Taylor of respectively, joining are it transformational for growth and XX going thank This prepared development a full up for listing XXXX platform. we then provide and the earnings the full around good going important minutes than fourth year year PWP Thanks public record our in of and over income results with remarks with our we're call. for everybody a increase morning, Gary of and and period. to $XXX ongoing XXXX $XXX very to much, morning June million you quarter an increase, milestone and representing was revenues for year year net our and a global XX% in prior us

business. Our benefits broad-based platform continued XXXX the strength in driving enabled in number of The evidenced is across completed transactions. well growth activity strong consumer was financial This sponsors geographies. robust transactions in increase future. of both results long-term the underscore across and our sectors and our is all We across levels industries fee providing as performance. commitment in showing discipline financial an to showcase cap, shareholders as emerging and our across investment which advice delivering the this achieved trusted activity of rise experienced amongst with The execution to XXXX, sectors. our In we and a our and activity those mid-market high-quality the an the of M&A a industrials, and past level large to by healthcare, of investment increase corporates clients in balanced experienced and value in focused

before. a the the deployed between for opportunities not waiting important financial today historically and community represents sponsor significant While the we've base client firm. market the There an remains blurring, be amount of toward clients, and was become and to DNA sponsor is line of strategic participant PWP corporate dry creating seen increasingly has enormous skewed powder an

and this from volatile continue to markets. client We believe base will XXXX activity more in that even continue see strong in

repurchase stock program a announced concurrent capital from earnings this A market time. Turning stock $XXX to open priorities; with our we common us release, to will time This our million authorization. the in allow repurchase morning, to Class

program, remind more to our on time. all public excess will provide commitment details Gary our the and you to I capital employee/shareholder of While returning investors over affirm want alignment our with strong

levels and continue On the we were franchises. the exceptional highs. growth partner professionals to our both recruiting add XXXX strategic a investment talent front, near at fit our support We firm to with of who record attract to total able our represented adds culture. all year our of build-out needs the all-time strategic and for

remains into external having XXXX heading with conversations pipeline we're and strong we're encouraged recruiting Our candidates. by

were to XXXX As and reflects has base. XX of XXXX, proved partner added for XX in including platform figure December XX, lateral dynamic we advisory already partners. the partners hires promotes. This had who our internal

count at stands as three a of firm elevation partner managing partners, directors which from our outside advisory addition advisory reflects of the well recent two the XX As today, retirements. as to

product remain strong of by our internal We and We're the We our our focused XX% partner an expand internal talent, standpoint, current individuals throughout expertise committed internally. will our with industry pipeline on who geographic talent from both our and help growing and firm. are advisory to and representing encouraged to promoting external promotes. with base partner base approximately of coverage strengthening further the firm

both in tech industrials, Our Europe. healthcare broadly, fintech the financials, consistent partners our and these expand coverage and new with efforts, in U.S. energy, and objectives,

their continue and add to component can venture and new of we current us invested out growth we we to XXXX, strategy, companies businesses opportunities in lean traditional our this markets strategy growth further offering private expansion relationships clients ecosystem expertise where growth behind to into build further our capital a external with will platform. with time. of also previously Through M&A. As our capability this our in but the advisory over strengthen The align expect will and hiring needs and invite financing that our articulated only complement not

XXXX having express dynamics XXXX. in and following CEOs high the continue a try pandemic-related and The the of amount and the XXXX sheets towards react XXXX, share and activity their exists a see Leadership like and positive initial strong balance stability to economic availability from to with of positioned a drive continuation by As of market corporate over observations as changing leveraging we some remains a landscape the liquidity the transformation. dialogue found environment into improve At leaders growth. market PWP's look to to M&A level, confidence advisory positioning. vast experience of on level our we I'd widespread positioning. to credit. carrying high growth many of is There of to European shock The spurred clients

instability. later impact spurring tax inflationary near rates, However, and the year, volatility supply there market are M&A we rising which concerning interest this shifting including law changes, U.S. in momentum term potential antitrust macro environment, feel a risks disruptions likely are to chain geopolitical policy,

notably global meet believe some do we Additionally, in M&A activity from beginning will that and government the saw on lows tailwinds, pent-up levels are not XXXX to XXXX's abate. previous the stimulus factors, we these XXXX. Based levels

Turning experienced and restructuring XXXX. to considerably but in liability is from management; elevated continues activity levels it down the market

near expect activity rate to the to but the environment the lead to mandates remain hard the is rate than such We In predict. magnitude to more rising will likely timing of more M&A that is and conducive term, activity environment restructuring. longer term

a place base product-centric performance activity we results is of past, larger an reflected generated partner our client-centric, $XX million previous partner in As average PWP as adjust active. remains M&A We're to that well essentially model starting strong not than level as XXXX PWP-specific our ago record XXXX, in our year M&A with we can XXXX in noted market on peak very productivity respect a market. both matching backdrop, a have XXXX our over basis. revenues partner, productivity. within was and exceptionally in that than environment stronger in And according That client is every said, resources and a adjusted in the exceptional market to a We per needs. firm XXXX the that nearly PWP's advisory

backlog heading where into XXXX our strong levels, was, heading XXXX. it slightly While is it's below by historical into

over since averages Additionally, and are historical promoted ramping January partners partner of per invest these productivity in in their factors all towards partner still our XXXX With to of to expecting current considered, XXXX. productivity are growth. heavily our we today's XX were platform. continued hired or on move have base representing up XX% we

model worked to we have We prospects are that business revenues but our XXXX, translate aware our growth always not to in five our does intermediate in double years. conviction Beginning growth. in annual lockstep

revenue basis milestone on While you. straight-line and we turn achieved we billion Gary, on this toward that it goal, it as was and to look we beyond. not I to $X over the continue will note, that dynamic completed a expect

Gary Barancik

Thank you, Peter.

and offset restructuring fourth the revenues and for XXXX of was the can sectors revenues The by of prior client, total The both and over reduction as were M&A decrease several quarter year in fourth management increase prior service quarter fourth acquisition period-over-period primarily advisory liability mentioned, as a up was million, quarter period. Peter M&A fees the XXXX. by X% the to across activity levels $XXX The quarter compared quarter for $XXX of compared full advisory the in year-over-year increase and XXXX high as fee completions both the client revenues full noticeable to full partially driven in management the prior for in period. was XX% in the levels in both the size most to quarter as and and year mergers for of period advice The liability lines, particularly As activity period size driven compared increase year period and for of XXXX year-over-year. year The year per up average of restructuring revenues for fourth the growth same reflects the in in be an the This average the year per firm. fourth increase peak geographies. periods. represented number in an advisory included million, to transaction the the revenue attributed for fourth fee increase

we that accounting of assessing will in with of the And XXXX in in results quarter to financial did in metrics my the principles. closings of relevant performance fourth of which closed not period. line transactions quarter, quarter million year revenue in the Our with compares revenue the any quarter first are from comments believe This transaction line prior business. amount $XX relevant from recognized on third early the focus XXXX, fourth include the a non-GAAP in fee following

Our GAAP on can our a release in to measures is adjusted reconciliation be our of earnings found which press website. and results GAAP

margin the for months expense year. of the is adjusted our nine first XX% expense expense of is the compensation range the side, communicated mid-XXs medium-term within during below and accrual of On previously margin of guidance XXXX XX% the our

XX%, year implied at result fourth year-to-date with a our XX%, ratio of compensation As third our together of our quarter margin was quarter setting full accruals XX%.

million for fourth the up X% $XXX was million quarter, last XX% $XX expense up and the full for non-comp the period year year. adjusted Our XXXX, year-over-year from same

As D&O overall of for was fees for expense and pandemic-related XX% related consulting as a year company travel in an and quarter. costs, primarily XX% restrictions a to increase in reflected related non-comp increase and increased revenues, public and the recruiting our full dollar modest expense in percentage expenses fourth also year expense The professional quarter increase by non-comp adjusted including adjusted driven the travel full The was insurance. eased.

of we'd our modestly to due expect second double and travel, excluding entertainment, relating anticipated both to run half non-compensation the headquarters. mostly our rate New London expense, the to in York XXXX, above meals For adjusted rent and be XXXX,

leases on respectively. meaningfully footage for September New 'XX noted the significant London our and And expanding call, projected our 'XX, headquarters I square our York of December growth given both anticipate last in we As of our in earnings expire locations. and

for services of incurred our we some about is $XXX expense and impact some for public $X the quarter certain include company to below a pace and month, last as totaled average to same million up investment professional the month. expect In XXXX million fourth to of addition, people fourth still XXXX as just non-compensation for and a systems, this 'XX the and our moderation $X.X offset growth year. under not year income net quarter. run newly inflation in from IT expected do as million headcount adjusted We well continue million at Adjusted per bit in our by per pick saw expenses $XX rate T&E

Adjusted net fourth if-converted the as to diluted presents $X.XX three XXXX. partnership units quarter $XX stock. converted of per for and the XX, results months our income net shares Our income all share ended had A Class December if million common was was adjusted if-converted for

to Now, turning balance the sheet.

typically undrawn revolving following and first the cash is quarter cash compensation for XX, bonus no debt and out As of of facility. in of A million XXXX, year-end is had portion credit that $XXX of our cash December we an fiscal year. paid equivalents, earmarked balance significant the

$XXX XX, our compensation of As million. XXXX, December stood at accrued liability

we growth through initiatives, compensation New generative purposes, is York returning shareholders. capital cash periods business investment to capital to We Our headquarter sufficient cash quite to excess retain and fund specific of to all for intend are over working growth such London time, and including and as in accrued our build-out, volatility to committed obligations. support

stock no of As a a we to actual number repurchase program timing stock has depends excess as result of repurchased including as expect conditions. minimum million the least on with restrictions our immediately. somewhat repurchase quarterly. be effective program, A dynamic authorized will dynamic of repurchased legal environment, variety cash Under our at a market may Board common shares amount of in requirements date. The the position expiration has this time cash be and transactions. open common our A Consistent to Class the The commitment, company's well business time review Class regulatory from $XXX and and authorization the factors, likely shares market

includes remit share the dilution RSUs to return required reduce net taxes. capital Over to dilution vesting withholding This moderate other of to settlement employee over repurchases anticipate we current term, favoring by intention strategies. long our

partners, towards XX, outstanding PWP However, share PWP our count. consummation allow rata made also conditions. million Holdings PWP, of it's LP on order $XX repurchase we market in or special stock. to based XXXX, the Class the we've in our may capital $XX common on on dividends dividends business consider the limited pro A combination dividends distributions million to allocated pay our including June of reducing in and Since to quarterly it's warrants

shares of has million through FinTech Board from to $XX A vested in stock $XX withholding and sponsor XX, we common holders settlement on RSUs. related of of as March payable IV tax dividend share obligations of record per addition, March common In Class The we to the million $X.XX of declared XXXX. repurchased redeemed to a equivalents share, net X, the XXXX, satisfy

turn questions, me the the Before over for open we back line let Peter. call to

Peter Weinberg

up, wrap prospects are exceptional And To Gary. mentioned we much, growth quarter, in our very going we I confident forward. an had Thanks as a last XXXX. company,

integrated pivot for us and platform in clients financial invest more of as even our model, our Irrespective As strategic efficiently us that, market platform we our become to and allocate will back operator allowing trusted advice Thank and and more With to execute we to it remain our continue you. the now your the environment, with the turn profitably. to client-centric our stronger to to serve and with balanced, allowing committed our open line we'll across resources model, needed. questions. support

Operator

from Devin JMP Instructions] first [Operator Our comes question Ryan Securities. of

Devin Ryan

are How Peter Good you? Gary. and morning, Great.

Peter Weinberg

Good Devin. morning,

Devin Ryan

I the want buyback. and to start the on capitalization

And if to a million comments, to how $XXX there's excess up came think be but about your position number more authorization. where Class will capital more it's and the the today? next with buyback you just of and still shares the -- created you in as about current that that we A And large like think capital seems generated clearly, million to $XXX think it capital about I around just satisfy thinking dividend. even over we'll see year, Gary, be can, a relative the the broadly, heard kind level, good than the the of clearly, outstanding I just capitalization firm that excess would

outlooks up bit for how to came number you love that then in capital. a dig and around So with little more just other maybe

Gary Barancik

billings Devin. volume have kind trading I repurchased the of of where thought float, share of float was based the obviously, thinking precedent market is million sort could public much relative Sure, cap obviously in at less be $XXX our price basis, we so. amount the of obviously and transactions from economic large looked The number think kind range market impacting a million under -- of different business that variables generation of of our as we derived think size what looking done. really current where cash at about on number without There our reasonable We lot environment, think kind program things. we scenarios. that's there. well as been but the would a are a what different at number on a going, different different We're our many, Look, of be to $XXX our a of

to was us amount without small So Board to we having example. it's subjective that back right we a and of the have for appropriate allow go quickly, factors of amount would an really there such that very the have a that amount thought flexibility number to

So, it's those all factors. really of

-- we're think, and just of look, And have the more to kind to of that. the in can we -- next going we terms such of monitor or that and do we're really if obviously, cash determine excess generation cash we I duration quickly, excess we'll many quarters. over sort forth, cash this going so that do of continue generation to

So just of see going we're rest plays as out. the to that's the of something year sort

Devin Ryan

guess a Okay, great. Very for And follow-up then, Peter. here helpful. I

heard advisory broader outlook market. for kind you the the commentary So of around

so I most M&A think $X people last moderation there. was announced trillion far by high the expect year a watermark, some

ramping On platform, of the the lot partners you Perella on as other mentioned. a kind hand, Weinberg of has

on growing than about intermediate-term there? puts faster just your franchise kind in company other the you've the how of But as out the path you're the productivity, we most takes of progression should but peers So moderates maybe of maybe set overall think the for the some a of outlook and a kind here. linear bit hand, backdrop of

Peter Weinberg

week we XX. Devin, of think, as Yes. Well, in look, mean, are I X XXXX, about we

are, and knows, on know exactly year you clouds you not as be My this as to purely suggested, quite really darker -- less out. transitory storm go about respect -- would inflation predict the environment been. earlier the to consensus easy how on based than level to less in antitrust geopolitical I storm every won't seem the rate But just difficult, $X shape, another trillion policy going through increases very the detail. interest that one everyone to is is temperatures turn they just higher to and were So going being get day. have and every it's clouds of the with year high, think I And and is on frequency call comments feel, I macro which taking

And to so year respect would environment. macro last amount the in a I year, last first we about comment -- I the had reached we said XXXX. in reach And that really was firm, was we early with think where the revenue XXXX

And so of we was And a at was, us. have there our significant increase do of a new. peak. partners very -- for are Productivity course, X/X

plan your how positive is are we are at business. with very our the mostly because and looked And growth, -- and that's so context But conversations the this question. having recruits just in going we We're just of the that excited they forward about clients very with to really and the we're how positive year be. we really continue

Devin Ryan

Thanks there. I'll Okay, lot. it Appreciate great. leave it. a

Peter Weinberg

Devin. Thanks,

Operator

Michael question comes next Brown from with KBW. Our

Michael Brown

Great, guys. good thanks. Hi, morning,

Peter Weinberg

Hi, Mike.

Michael Brown

there. wanted question, maybe guess, I follow to start question -- to Devin's productivity with on on So build the the I

partner. $XX historical closer XXXX very back, So expect looks per strong something million you return periods. range. it's of, I think the mentioned hit productivity to When per obviously like range, And believe to million sort a historical you that it mentioned and you partner about I look to I a, had $XX you

forward? tick over you're that a one, expecting you guess, it the to from more. little of to Just range what that I business wanted is going down time? that So kind flesh bit towards is Or expect out that

Gary Barancik

we're I going we we take for think extremes. all, for not that Yes, can as plan that our Look, of to one, Mike. plan first business, I --

environment. partners productivity the even definitely the And positive get You mentioned, as heard we what while very level, our long-term trends about on in we commentary being own more see productivity the platform. kind with of mature our as Peter see

at For in we XXXX, towards environment we're sort planning to was this good. that's, what towards trends and just levels. that's obviously productivity we it, of planning more something when into And more handful do -- think we how we historical reverting not a partner where at by weeks the of average the $XX had visibility year are way, Not are is point we're going an have an we we that were in at, going than are productivity. always we internally probably we're look that of of very million particularly said average. much stronger to for But the

Michael Brown

Gary. really helpful. That's Okay,

that to makes I It's the -- peak. reverting bit energy it's hear follow-up. So And space. about to just little one I down not the ticking wanted certainly historical guess a level. more sense. from okay, And the

that's I for important seems sector activity. an think right for M&A and your to it company more be

in how piece there your any the activity for of XXXX? comment has lately expectations business So on been and that

Peter Weinberg

Yes. Sure.

different So cash. be liquidity will over this I things right other that looked are private where winning probably of is pushes number -- would space, uses about now would I is possible But would is One -- is your not I correct: uses deliberating flow, other two at oil activity companies time. to one say, companies, that say return enormous cash slightly, the energy in looking cash event, a And capital now think now is that shareholders of and although if barrel, of $XX I a point because amounts honestly, capital M&A. you're flow just companies, they returning the but that oil of it that generating gas and with would haven't a now. are the morning as be completely.

industry. prices companies have dynamics And more the with companies on worth would are so also, a say going we with dialogue just midstream in higher I and -- the with space. And private of now lot energy the of more

a I very significant really for us the commitment us. that's It's at and opportunity. So it's look interesting how a very space for

Michael Brown

very color. Thank interesting Okay, you.

Operator

Wolfe question from Steven comes with Chubak next Our Research.

Brendan O'Brien

This guys. nice Brendan you comps morning, Good that guess was a exhibited the filling quarter Gary, for Steven. O'Brien in is surprise. certainly for I this

given partner suggesting your growth pool contract fee is However, the strong to industry in likely XXXX. and the comments

of a get to about moving wanted forward? we thinking ratio should Just how sense the trajectory the of be comp

Gary Barancik

changing have extremely in view really think I of that revisited. of guidance given reasonable, mid-XXs. that far. where on our not sort that's If we that that's in think terms medium-term we We're be so Yes. think to the environment we've at We think But the of environments, obviously, extremes. were I negative, turn kind would that -- to see comfortable things with now, right very given we're most

Brendan O'Brien

activity on for Europe, And that. been back of this the in last the thanks Great, year. on building half optimism has -- since region then

in of and in occurring risks, these of like Europe provide was it hoping light of in outlook an color in around has you're how a in feels of there? the rising the this term the terms In tensions number of and major could area you that Continental risk is impacted with seeing outlook However, are your elections some guys. the which you increasing, activity Ukraine year, I region what for strength near particularly

Peter Weinberg

Yes.

at trillion. the was think about just mean, believe, looking So $X M&A XXXX, out the trillion Europe, in of volume I -- backwards I I $X.X

the in enormous as an you alluded U.K., where it's are quickly. France now really to, present. So And and growing Germany, rightly it's is -- we and really the largest been it's activity market

of growing will equity you about powder private global is One argue of geopolitical and opportunity. a the it's say it can the relevant very one the enthusiastic in listen, about there very proximity, I quickly. risk a But at relevant the couple it's Europe dry things is M&A forward, Ukraine. particularly least as make and to because is relates enormous which us very, Looking

to is so European now and M&A volume And of going X/X that's be increasing. PE about volume

that's lagging The rate in more and year kind we've case reasons But which technology significant, technology availability might infrastructure very, the are last increases And still So buttresses anything capital are frankly, albeit focused due cost the than in of there. -- digital be it's higher, also activity to we're for of it structural -- very there. financial there. a hired areas else. is the particularly and still and which over on growing

and net-net, but sensitive issues So we're geopolitical very still the I'm acknowledging on to bullish Europe.

Brendan O'Brien

Thanks that. color. for really That's

Operator

next with comes Ken from question Our Worthington JPMorgan.

Ken Worthington

up guess maybe To Hi, the leading maybe for or are to to your pronounced? times, close We've seeing that outlook one greater too close what just heard sectors to or on either I longer good wondering morning. what that extent volatility I longer and for follow XXXX. regions me. Peter, is either you're times. was deal less this more

Peter Weinberg

Sure, Ken.

of Essentially, So I taking no because that policy. so of think of to in because antitrust less now, right why actually and the so is reason longer the antitrust terms -- close, review. major deals volatility are the more there is fast track

that, deal will And extend times. definition, by so

with number a as an mentioned not much do level issue there's all. very more a a level feel and high of of the to I've general of market comfort as whether the timing isn't time volatility. appropriate or to feel -- it's volatility at the people an think that issue, that a times But I I enter this

least in experience, But so delays. of specific for a And And seen, our reason question, delays at terms haven't think in I'm come your XXXX. in we -- be mean M&A -- there technology. will I could deals very comment be large to in sensitive on deals, on XX,XXX otherwise, spaces were -- regulation, I like where mean linked I part that in the particularly of think I my of last it from, those and terms your very, very antitrust

as there There's the generally. we big clouds -- it's we're -- are bullish lot a activity of activity -- a And so there. are market. level of said there's the on I've some but There remain on horizon,

Ken Worthington

Thank much. so helpful. Very you

Operator

back with I'd showing not call the questions to remarks. that, I'm to further Peter Weinberg like this for closing And any time. And at hand

Peter Weinberg

Thanks, thank good you first group Kevin and Have reconvene joining. Call Okay. all the we and after quarter. know as for I will any a a day. time

Operator

does presentation. this gentlemen, and today's conclude Ladies

day. You may now have wonderful disconnect a and

Perella Weinberg Partners (PWP) 17 Feb 222021 Q4 Earnings call transcript