Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the Perella Weinberg Partners Second Quarter 2023 Earnings Conference Call.

During today's discussion, all callers will be placed in a 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. Please go ahead.

Taylor Reinhardt

welcome second and call. XXXX operator you, to quarter our earnings Thank

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

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

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

assumptions Forward-looking those statements to SEC guarantees Please of uncertainties. that a materially to PWP's in actual discussed of risks performance. discussion recent and of are and from differ results future inherently cause subject are and refer forward-looking most uncertainties, could statements the or not these for events to filings certain risks,

statements on firm any our the and and to expectations, obligation no undertakes statements. based forward-looking forward-looking are current beliefs The update

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

to results. call I will our now turn Andrew Bednar discuss over to the

Andrew Bednar

prior XX% Today, up ago from of and quarter million, Taylor XX% quarter. up revenues and morning. good second year reported you, Thank from the we a $XXX

$XXX year-over-year. essentially of flat were Our first half revenues million

a even five, market quarter where global in decline to we first M&A This year-over-year. year-over-year the increase delivered volumes continue as is

of our were spread In team, our strong and of across our driven second strength quarter, relative performance effective industries. brand Our client the quality traditional the tenacity results M&A and the the of key firm's activity our our resources. with our and in our relationships, speaks continued to above-market performance positioning by business

reflected increase of market that but and environment well completions across is as We encouraging increasingly we behind signs more our activity larger revenue challenging, Our transaction are conditions business, the trough transactions more have fees. see with activity absolute improved. The remains as in us. optimistic

increased key forward Our announced of indicator year-to-date. are pending year-over-year steadily has in backlog and volume

and do related Nevertheless, historical to will as continue to M&A We revenue see nearly aspects relative XX be to expect all after of this norms. activity of a signs we transaction data elongated points, of silver turning nearly lag months timelines cycle.

capital as Our debt of what has financing opportunities and access of capital see is for private and been period active solutions solutions structured of to our and clients equity business cost to capital. place increasing prolonged in uncertainty in increasingly a we

Restructuring has debt walls. momentum and driven gain including mandates year, by in and designed strong XXXX in extensions and continued with new management XXXX both financings, to maturity the Europe address the maturity liability to activity, exchanges US

and surge of in activity higher is credit, anticipate rate next environment baseline private be higher expected for given the In what cycle. capital longer the we a M&A financing to a and through solutions

additional product eight quarter. Managing selective scaling to in to and to join with partners two we the make our in We committed advisory franchise offering. four senior footprint client and partners third added hires invest enhance continue have and Directors our an Year-to-date,

activism. strategically hires defense, and sectors, bring new aerospace technology, including and Our expertise active stakeholder services, consumer business and in

three partners for above-market a mode in growth years. to less in seat XX% talent public up since been the XX% than our of to lead have our listing consistently We with of their

yet source revenue years of built-in productivity growth ahead. a partners in at the full These represent not are and

standards will be admission investment steady our stakeholders highly time. We to that our accretive are confident prove our over talent to high in lowering without

Our financial on and dedication year and globally our our for us very positioned to and for strategic this half and our to execute firm financial our and have their to results to goals our commitment well the teams clients beyond. to for first Thank you mission.

turn the that the acknowledge Before will position at end call to Gary, down I stepping want be over today's in just as earnings CFO I the announcement year. our his release to Gary of from

so founding, so been growth development, the firm's since Gary company. XX our transition his to many a have partnership We ago, a from over us our and have public including contributions with with integral years private to fortunate to

ensure the since But position for end Gary day until your Gary, to in for the transition, want to on more now, that one. say say will dedication on I'm to will both topic call. year of just smooth you, I have for thank firm the Given to a November's and your partnership remain his this we sure

working become to I'll Gary, forward also, her X. her currently Officer, CFO in new congratulations will her And wish finish look Alex by Accounting role. We saying you. to success who to our and with January over Chief Gottschalk,

Gary Barancik

want over been partner that since firm's founding the Andrew. guide and fact well-positioned PWP an a Alex XXXX. in XXXX a CFO you, exceptional honor its served it's talent next privilege the to to as since its CFO. advisory firm very attest Thank she note been just the worked as and to I past I've an can that closely have five the to have to and is is who with years

our results. to Turning

This the XX% with to in The year topline a performance second a level in at the the first second XX% for already reflected a at full for adjusted Andrew quarter accrued the of As begin his end of half, review quarter. accrual that revenues compensation expense expectations expenses. our our of our I'll resulted remarks, spoke blended margin. of in

our to few industry the factors, levels. a compensation talent, decision in including investments and The environment, increase by margin revenue dictated was compensation relative

we'll to As through of we progress continue the appropriateness this the year, assess estimate.

York XX% second the half. our year, million which in the same period T&E in quarter enhance first for result new the $XX offices for the brand and last to was half of to compared grew our those increased drive expense largely will New $XX non-compensation and non-compensation spend. revenue, the help London first spend million and adjusted and related Our expenses, Adjusted including

Our in that to expectation next our will XX% than come result XX% remains to support investment expense XXXX of XXXX, non-comp growth. adjusted infrastructure higher year full largely a of phase

is we expenditures approximately account expect In one-time growth expense without future $X.X to rent, moderate for million projected the in of of periods, our as rate to non-comp such which overlapping non-comp impact XXXX.

second the not second recur recognized of the therefore tax adjusted expect currently the half be Our year, tax in year's which half first XXXX and should a that in which XX%, to quarter, of year converted will the rate the if XX%. full for includes close rate was effective last tax for effective we our benefit

dividends we've settlement Year-to-date, common net in share returned stock through total repurchases, of a of million pro distributions. to lieu issuances, $XX rata and investors

continue and Looking shareholders operating business of be and return cadence through will from dependent needs repurchases although vary to on forward, we'll to the repurchases, time. quarter-to-quarter such capital will dividends and the environment at our

per the no short-term declared On in quarterly quarter of we share. $XXX $X.XX This the and debt. we million with a balance morning, investments cash dividend and sheet, ended

for to that, open line With call questions. the turn we'll to operator now the the back

Operator

take Securities. you. Instructions] from [Operator Devin We'll first Ryan question Thank our with JMP

Your line open. is

Devin Ryan

really we'll Its you, and I together here. the just a have another wishes Gary. pleasure, Andrew, morning Good been with quarter but great. guess time appreciate Hey best

First to solutions. capital on just the question, financing I touch want and

the So, were in the revenues flat roughly quarter year-over-year.

think you're actually down year-over-year little bit I a yet.

in growing of You tracking backlog there. a kind outside. We're from the of kind guys activity those talked growing as well about businesses

XXXX, you that better results. just talk magnitude of And so I'd orders that acceleration the how Is see of is in love year? how kind of showing this of maybe to up back Is backlog in about there? just half Thanks. much activity that and the

Andrew Bednar

well-balanced at first and Hi, When Yes. you product our half, a platform, it or back look industry you quarter the across at look Sure, Devin. very it's morning. or whether the good geography. by business really

really or pleased results. There's anything with one-off So that's the we're nothing anomalous. just

sets it so well. And us

very it think up growth I us for well forward. going sets

that look solutions the you capital the most about back the here And of arena M&A. looking XXXX, puts again, growth just our our at one outsized and from in to which and comparison event for traditional comparison, and And in XXXX, mix, revenue which flat. mix was did we the quarter coming at financing have revenue when the is

we I said, the and the But the balance like business now as right of mix.

hit. which even is I quarter-by-quarter can think it's grow. going that strong revenue we We foundation a predict from to year-by-year really don't when or

activity like But hitting really in of can we quarter don't indications type again, activity But M&A revenue of the versus the predict or level. Historically, the by cycle. year. be we it recent more early by that

Devin Ryan

perfect. Okay,

M&A the on outlook. Just

that sheets If of little it is bit increased you to, broad-based of some can Track you're alluding is some green a seeing where more that in it the were on specific sectors? activity, or elaborate just

also in platform have story or there's here, on also, a guys three kind just been PWP the then you that number the than bankers two years. ramping on higher for of that of are less platform And have

coming maybe love and just more are of seeing, with Thanks. of that would recently talk maturing So, the clients to connecting business kind some through growth you're also maybe there's and about bankers talent? added more idiosyncratic just

Andrew Bednar

Yes Devin.

to M&A to well our tend volumes. you global given tethered know, as less the we So, scale, be

of very to basic growth quite hires, our relative be market. in to partner think in And and have with some happy happening where and COVID, believe, strategic and energy very And can XXXX hires of class outsized and we deliberate early especially coming areas continue XXXX time really time I broader continue like we our of see turnaround do technology. and that because over scale. made those sectors we so to we from time, transition active, we'll to very and the materials what's returns out We're

that talent. that So very we We're been of have our good those investment in pleased type investments very made. steady with

activity I and cycle an lags for very hard quite think what M&A, quarter-by-quarter, to converting and is especially revenue longer. generally, it's the again predict with things always revenue, certainly, challenging, in even always year-over-year elongation that's start here though to activity taking

for here and there's that's might just increase that again And activity, saying be and forward. finding we're think that when thinking a good think time plan to the is platform. will type here, where change, and conditions about in managements for current accepting stop they that which thinking of I going most that see the and happening have been a starting conditions a start are setting to to while improve I be boards across we're

Devin Ryan

color. great leave someone there ask. that’s and Okay, I'll let guys. it Thanks

Andrew Bednar

Thank you.

Operator

we'll James Sachs. our next take Yaro Goldman with question And from

open. line is Your

James Yaro

Hey questions. and thanks morning good taking for my

Maybe seeing you're Chapter in been that the benefit your restructuring your you versus the trends and liability management? could XX the just differentiate quite different. has from tone business of between With peers speak to maybe hindsight,

Andrew Bednar

peers and those extraordinary events our of reported are documented. certainly some well they've they have on, Yes, and had think I some that

I in we think for solutions in events, increase didn't our have have, of business. and and steady think, business quarter, very we I but those growing this capital across a financing our activity extraordinary type particular

of event in revenue As bit I comparison mentioned is, there XXXX that for challenging that the on answer current makes more a set a questions, quarter. prior for outsized was the my was

our seeing Going pretty I'd broad liability in the bankruptcies. people business. financing advisory that forward, say around we're activity reported uptick on in management have and

uptick, and don't well that we significant a well are though think I documented some there very see are publicized.

of it's market cost challenging capital. to and realizing certainly it's companies respect more accessing a more market about a that with think more respect with challenging capital to I

in client You base have of with. which and credit the the new increase are unfamiliar a private the is our lot that advent participants markets,

markets. that assistance client need will accessing a helpful corporate trend the in our in business our So, where traditional sure, credit base is private for

sheet lot and a in and stories balance we're request maturities, management of for where which coming need through XXXX. in seeing So, a people is for help complex thinking XXXX

our at as lags as look Europe, that feel I where, know, about team, think as early there. we the made positioning what for investments market, see indicators significant the in States both revenue seeing trends positive Europe of good our trends, and always positive as United very some So, that we've in we're and well we in you and across we

James Yaro

clear. that. for very that's Okay, Thank you

Just both in wanted on comp term to and the near the touch longer the ratio, term.

on coming upward the result So, in additional in ratio on XXXX? comp the near-term about hires you that additional could platform. pressure talked

you to the good XX% could thoughts put think you just the your on that what maybe quarters? then it'd time normalize over in And to recent period comp back XX%, ratio be up range get

Andrew Bednar

Yes.

provides in within we're for that had a our So, the I mid-XXs. guidance listing think parameters we'd but statement statement, we when were and of be in precise put our flexibility, the still We we around little public downside the that out upside. bit

still think where had uptick an I We've warrants environment bands. the I in bit an margin. think of it comp a operating we're within the

quite has we steady Gary hiring. reasons highlighted I disciplined we've think And and very that. think about been for always the how in

much And firm. employers, of is we're it though are that for in high people very, terms in more so even favorable environment the interested a the changing the maintaining and still recruiting joining very their numbers standards

think of beyond that financially a type I always culturally that and with so you And of goes a have steady growth growth talent. challenge

require we'll to hiring. that productive bounds stay up current We comp not be the be our to to steady bankers in So, We're gap terms steady. continue so of continue we overinvest the going see ratio any to within don't growth. also can in and in our

now. right deliberate pretty and there disciplined pretty we're So,

level we of and we'll conditions closely. our the Gary watch very opening the that a it we'll As change, in where is year, end at believe but that expectation we're current can said remarks,

I've invest be as always we're going our prior team, in behind not foolish And calls, to. said to it'd

hopefully, in where are so that's XX we And is up at which the an ended need it view, we we ratio, in to but now best first the half. the right move our and don't reflects comp where level, environment

James Yaro

thanks clear. the few that’s the Okay, a Gary and best. very lot years help Thanks all past your and all for a lot over

Gary Barancik

James. you, Thank

Operator

our from Wolfe take with We'll next Stephen Chubak Research. question

line Your is open.

Brendan O'Brien

Steven. This in filling morning. is O'Brien Good Brendan for

can So, we initiative color you was some provide you actions on comp type the I the on you aims take question. side. wanted release, more what on that of of realignment expect In what I you're and to business going undertaking the hoping are the forward? expense indicated actions the to follow-up should on

Andrew Bednar

Yes, thanks.

our optimize the of less really to expense base. about allocation reducing and were actions capital Our overall

as product so resources at well and close perspective. really an as industry And both had where we took we geographically look a from

that And we right can our the where sure the on have ground and focus we is the win. place around in making team right

making make to across our decided at toward growth see platform towards that have we that opportunities. are where see redeploy all we resources sure we places we capital so And and levels, some and new in and changes we will positioning where investment

and result. system out the for to about not think resources a I And that we're where think cost costs it it's our better allocation position so of So, don't to capital taking of putting we as cutting, earnings growth. I get it of firm better as can the

Brendan O'Brien

in for color. That's in of if discuss and my in activity perspective are would Thank on in and on the the some And you they terms of conversations Europe, hike we've could wanted cycle. path impacted for I in how follow-up, I the the Central great to US. versus on region guess great be the that. rates compare or US. rate Europe seen at are get uncertainty dynamics dynamic has you activity there banks the levels said behind the the where how It play this

Andrew Bednar

right people that probably pretty Bank two the or are expected rates ECB behind, think step a modeling but you're think terminal are the in and I I there. Yes, well of England

I adjusted to as conditions that think States in be surprise, Europe. and persist concept time, rates for of likely are absent for longer, believe, higher people some United well So, as I what have will be the across conditions this to

activity. think of is I seeing Europe type similar

is at look our key But the activity, I across we think, we're they're States. when in always revenue United what lags. of very similar again, Europe seeing indicators

seeing terms is the Europe lag to the our revenue, the States little but platform, what higher see similar United of we than European converting are to United which activity think across a States. effects I bit are increased we usually in in in

indicators, and of they're the early macro of central little bit spite being activity terms similar bank in quite potentially in behind. a So,

Brendan O'Brien

for you Thank questions. taking my

Operator

This would concludes the to additional like the for Q&A turn or now Bednar over I portion remarks. closing back to of today's Andrew call. call

Andrew Bednar

support forward in course, Okay. you, and your look joining of Thank firm Thank operator. to we talking you interest for November. Thank for for you, your our you. to everyone in and and

Operator

Partners and the earnings concludes Weinberg webcast. second quarter This Perella call XXXX

Good You a at time may lines this day. disconnect wonderful have bye. and your

Perella Weinberg Partners (PWP) 3 Aug 232023 Q2 Earnings call transcript