PWP - Earnings call transcript Q4 2024 | Perella Weinberg Partners

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Operator

Good morning, and welcome to the Perella Weinberg Partners Full Year and Fourth Quarter Earnings Conference Call. [Operator Instructions] And now at this time, I'd like to turn things over to Taylor Reinhardt, Head of Communications and Marketing. Taylor, please go ahead.

Taylor Reinhardt

Thank you, operator, and welcome all.

Joining me today are Andrew Bednar, Chief Executive Officer; and Alex Gottschalk, Chief Financial Officer.

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

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

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

Andrew Bednar

record. our superior a situations, both through our of for validate morning. shareholders. XXXX enables market, market good and results optimal, focus for you, transaction Taylor, previous full deliver firm. for in larger revenues year were XXXX $XXX our year clients more improving we yet Thank and generated an to though million, results firm's up These and was our Today, records XX% XX% our up which from not reported history, of in on our and us highest the year-over-year, and to strategy complex cycles

by I'm amount businesses, accomplishments, earned we boutique our record to stock Dealogic, the in industry, continued our by we significant capital restructuring holders. for of We new our by ranking our #X proud in our restructurings to revenue, as also and were returned global equity announced record and and highs, single by a and incredibly of deal our year. are our recognized reach #X ranked record-setting team fees volume M&A both These Debtwire. largest Beyond

XXXX business was firm up. from Our contribution across performance the by with driven strong lines in all

were results business, Our and expect our continue. led trend we by to U.S. that

in In are the early business addition, activity of our days XXXX. Europe we from increased seeing in

XXXX, challenges, Fed, We by expect management decisions increased M&A restructuring in tailwinds the current in in policy with cuts combined by rate the with structural U.S. pause globally the related the to taken albeit and to market the demand. Throughout new in we And services are roles XXXX liability continue, administration. with we repeat keep volatility will to clients now on We extremely transformative advise added we and increasing clients of continue to with. many clients. and importantly, continue XXXX, see an new transactions, proud into who partner clients to number world-class high advisory

still our $XX talent, confident a have first in cap, fee important a market and talent is a has of billion exceeded exceeded financial this our count some partner grow in year our our level priority, selection on we a marks billion $X of continue in last reach. XXXX we We our we Adding stock are to XXXX, milestones public and MD now we in company. senior in at As right been prudent operating and price, goal we to as annual expand client closing as and seen discipline, a history productivity a strategic to upward revenue. $X our with result today in steady feel investment our combined and always our potential. the ability business firm

and delivering our boutique we you to further As adviser, our results superior delivering entire review all a our in global standing for results continued driving and our to in their turn foremost detail. leading on our success. Thank to on success your financial solidify now growth, as around with clients, and congratulations you continue on will focus drive exceptional call focused we for capital Weinberg Perella turn team the management to the over more clients results. Alex, I'll first

Alexandra Gottschalk

you, Thank Andrew.

was Our of adjusted our compensation XXXX the compared target range. the within to XXXX accrual margin X XXXX, XX% full for in and months for XX% our below year XX% first

from This expense original expectations $XXX was non-compensation to directly million revenue. slightly fees increase XXXX, above litigation was a year costs was XX% the and and primarily ago. adjusted for Our professional full additional to correlated higher up our year due

XXXX, previous public questions. the with million declared have dividend quarterly of returned open $XXX than in XX% Our we the annual to ratio share. With expense to investments cash ended XXXX, year XX single-digit had full the year. of our holders, we aggregate common Class year-end, holders. We percent in And A we short-term we and operator, XX.X no equity more a In please increase outstanding. shares we expect XXXX, line in returned equity and since non-compensation morning, In our million year and This non-comp and million last moderate our stock range. At to to high. the listing was $X.XX XXXX million record partnership double compared XX% million for $XXX per that, $XXX to quarter over units in a debt.

Operator

this to go Instructions] Devin morning [Operator Ryan Citizens of first We'll JMP.

Devin Ryan

record Perella largest year, Congratulations and some Question move deals the Obviously, market advisory results appreciate the past advised I over here. of needle. those can business. on the the on on the deals in the M&A

for seeing some create sense the would better, particularly love context around get post larger create just some about think the that to but what with things So to market. chain reaction seem of seeing deals get and the you're ability of that just and what industries that especially So getting kind are activities? as there, it within love part you're in election, of we to a more outlook

Andrew Bednar

Sure.

'XX in the that's back broadly point And the start markets. since QX trend So we continued that's by M&A maybe call, QX saw just that's a I'll inflection to XXXX. when our going where

the of peers I markets. our the think M&A in saw same turn a evidence

back half I happened market, elections of announcements. results November coming deal sure, yet bigger what's the towards out think with of is especially on and the for back, that 'XX, the the not

that the is I conversation. the that's start not at conversations, transformative with which has atypical something these lagged think Usually, all. transactions larger

So this different ago we're seeing very conversations a saw that. time. that are what year We're seeing than at we

So Biden remember January, nominee the for of presumptive 'XX, February had we frame still President. as Democratic time

a changed has conversations ambitious. the So are But more then. lot since They very encouraging. are

they in a boards to as a which transact said need sure more market have clients, lot there's both executives, now environment, in here. something of albeit close lot a accommodative think just our bit for of is volatility now. people I and try And that sort part is upfront I that of of are part remarks, more and the confidence that to the open can we're them for a tough going volatility, their eyes through definitely to in the

Devin Ryan

then it. And a businesses. the follow-up non-M&A on Got

advisory like M&A growth sounds it So in non-M&A there the was contribution across contribution XXXX. both and

from the kind for of ahead, non-M&A outlook advisory think kind any just of be can non-M&A here contribution quarter And do So grow year contribution? we relative in your businesses more M&A you and around about to as share to you great just to that of year. then of those the context kind how get level advisory it advisory would expect

Andrew Bednar

Yes.

So tremendous they to opportunity both grow. have, I think,

restructuring So at Today, financing. than and we're markets business, capital it's broader M&A core market share in much non-M&A it's constrained solutions business. not is or the traditional the which, all course, management, our either capital liability it's business of advisory,

So didn't the available in have those that those businesses. ago, fee something solutions and and quite really subsegments of capital are our large years we business X X, pools financing

there. entirely for very, us, offerings provide reception seen we've to new we to are our they the markets So where that and nice service very a clients

markets of And And used not and in seeing peak back you importantly, we're the any in anymore. coexist doesn't down financing broad when large. were are then and those markets growth constraints XX countercyclical. restructuring coexist markets, seeing That the really markets. are see when management market they down. and restructuring up because a and liability to XX, are exist if somewhat solutions they markets type not fee are pools performance. M&A that just M&A again, correlation is restructuring these quite years countercyclicality That's market we markets at that go up the on where Historically, of we're can they So there

So of optimistic very businesses. both we're those on

Operator

Hall We now to next KBW. of go Aidan

Aidan Hall

Europe about of there. to was Europe. starting you're just pick focus on by some seeing inflection wondering pickup optimism comments a of be just for or more U.S., maybe little the kind Great. your prepared and And by results think that? I continue What could you in really color on up the a terms led activity? activity an talking driving is as Andrew, to any that sector we in do see recent you're if but really maybe of of region in bit

Andrew Bednar

business, We've markets size markets. the look broadly the European our U.S. are if Yes. markets, own announcements, just half but lag not M&A in seen the you Europe of at U.S. about the

billion. and U.S. at So about persist. think don't trillion a European relationship or at markets And so will $X.X I $XXX that are markets that's

add I closing think and announcement to Europe continue activity. activity eventually will

from then closing more a I So And looking structural. we're the and It's not market I market. conversation lag. you market know, the it's market. see will public a perspective, guys the and as I And engagement upfront, think said the at announcement

impossible are conversations important, and to get without engagement. All closings and it's of upfront but those announcements

quite promising. continued have discussions, those and indicators So year-end on feel and about Europe our very into the good early are January We February.

part there's a mentioned of was U.S. course we where markets, just statistics saw trend before. I I've capital of the and the dominance think such it the in over a 'XX

the you aggregate of equity globally, half is it about If States. United value the at look

tremendous tremendous in there's investing So in U.S. liquidity, the interest

reach some Europe early here. of how to shifting encouraged in U.S. lot the European And a to capital month of our now And conversations again, how certainly deploy to for companies? enhance U.S. dialogue in seeing exposure the think we're we're the additional January, conversations are so gain a and and about markets? I also how to bit those in of larger February some of scale by are

Aidan Hall

within help Great. of expense us Maybe The of if Can the litigation 'XX, that we hits correctly, you growth, can non-comp, commentary. of items -- for Alex 'XX. the then will? you Appreciate kind amount in there? just that expectation that, of contextualize I kind year so if some this had was the growth whether other kind single-digit any non-com you some some of thoughts one drivers on of color. on about in core nonrecurring heard maybe a or And just think

Alexandra Gottschalk

Yes, sure.

bad year, continue debt on previous I are perspective, have to some year, on fees, So a those year-over-year. the I'll some in a we which perspective. of what that non-comp one those saw And we have into do expect to that also last increase. of we elevated the mentioned and addition current will increase last a but slight just expense that this few did costs that's a some the from drove XX% one in recur So still directly revenue, we our a from right? And And correlated of expectation over to really that we our was anomalies, expect litigation costs indicated don't mention calls, professional call. the single-digit uptick I that,

Operator

O'Brien of next to Research. Brendan go now We Wolfe

Brendan O'Brien

gap valuations get that playing And just whether recent versus dynamics push or maybe actually widest pull how acting how urge ahead cross-border values activity to activity. to at get the tariff U.S., to in exposure take your advantage other valuations? the of are question to one direction you comments European follow U.S. to as the different I response in in sense as highs risk. to memory, Aidan's depressed see start, U.S. with a Euro all-time companies dollar European the -- at look the we in guess -- just I up more wanted But want companies those and especially to out to of out? understand and light to I more of relating on for I

Andrew Bednar

Yes.

First on tariffs.

is temporary for or tool to economy. to tariffs think permanent a a waiting going our be I see world the are whether fixture policy in

it's think too early tell. I to

temporary, I think and bets more most of it'll through we'll those. the are work be that

positions the Number transaction So seen some headwind any around we with work is a one. around but and or a of they've currency haven't lot in are world. number currency tariffs, specific activity multinational we respects, two, clients the got impact

high and of Europe currency in points. in think of to part do about possibility that of in significant European U.S. a So X, of lot typically it's a themselves. I now, valuation that that been and a economy. but because currency part there And you're the look real type valuation, companies delta differential, tends the approaching couple into levels, alleviate think any U.S. issues companies I is again, of right X because probability to thinking home that and historic also X, a a you're points which has about, that is exposure that's thinking listing, multiple of

activity into U.S. activity that, and U.S. so we the transaction transaction But continue And see that do to expect could no question. Europe, you're into right certainly looking companies look to reverse

Brendan O'Brien

helpful for That's 'XX. do is recruiting. next you below quarter color. see we in be of Andrew, planning get should the were pipeline the my last recruiting I acknowledged trend, up that an comp an but pace wanted thinking Would on And about running you ratio the you're if to great be how And looking a on year, guess, just flow-through your acceleration follow-up, deliver your to you at update update get and how bit ability also, the leverage? to recruiting impact on an moment? picking of on the

Andrew Bednar

steady We've as investment exercise. at a always Yes. our looked hiring very

haven't had moments activity. we typically abnormal So of

of I last to think in mostly talking to firms. recruiting, QX, targets some our at below were stay I as came for incumbent mentioned folks on decided we we because year, the

though left other So they it as firms. wasn't for

pipeline had and couple to very for encouraged both the promising some combined MD we that at the year, between by So something ranks that senior well very hires. where hires as partner we're talking of level, hires contend very were were see, all and is strong, partner we we This senior situations the with also time, to stay. The candidates decided just we but a XX promotions. as what MD-level and looks

example, about don't to exercise we're to feel on But very because terms the the where we our additions also high we all-time get build. close for it's productivity. productivity. We're partner of look a So at good just to focused in X-part partnership, starting

on partners same the of the want diluting at partnership. value partners. is to the below sure in other So our of We're time, we that we were add targets, partnerships. otherwise an the got those working And partners, constantly productivity, to we've be add partnership to not optimized trying when we part equation, which terms also of making the you're accretive

about and we're of year, got We're in pipeline just feel exercise. seeing conversion some we both and X-part a it's us, for So to active have we parts which about. that better continuously, good very the this we're optimistic

Operator

go James Sachs. now Yaro to We Goldman next of

James Yaro

turn just to time a sponsor I rates cuts transact dynamic. or slows? shape rate -- to to the need a and you the M&A. Or the Does just outweigh Maybe do steeper yield growth the activity recovery differently? fewer curve and wanted see slows to the speak eventually could of on for this sponsor sponsor of you impact

Andrew Bednar

not I but that in me I'm press think well just day-to-day involved before we're there're this that into a inflationary I macroeconomist, as it was pressures. rate call cuts not coming the last just 'XX. mentioned I'm I've to on some a optimistic activities banker, seems And as our still reports in on in big

so don't And something the of cuts big external I the coming some and completely shock see just to absent system. kind

market, of But we're rate. to in funds back be rate going a XXXX, active with if XXXX environment Fed plenty to sponsors this for while. X.X a we type a go So elevated were

continue monetizing that different vehicles so So that of house. now their lot on base. preventing in can the I in or are, because think, the that's move they think challenge, just capital sponsors liquidity investor of of large have events looking enough you're of deployment different what's and at life new not Those sort to a and are a a place assets that I

it up. So market we people is be. where do should pick would expect not The where it like be IPO that will to quite and back

So I tremendous a think amount still sponsors are capital. sitting of on

the be very ship maintain vertical rocket lift ingredients credit, very, of not to it but have always and up sponsor the grind active you a thought a I slower was that activity. sponsor I off You a with combine availability all cycle, that for on going

now up, it business So will forward, so vertical not we And I whereabout right a our to trending but pacing pick XX% is think see I off lift think a of sponsors. forward. or it's do

James Yaro

restructuring, It's stay levels elevated been at really obviously from clear. even that? year. Maybe grow very this for just turning could has XXXX, drivers strong potentially which or just of to provide it into the and across industry whether your you could and the outlook here currently Maybe restructuring

Andrew Bednar

Yes.

about significant financing earlier, as bankrupt broadly. go very need in restructuring, liability tenor the having to environment, thinking a we're of teams for well market and a our liability trying create I just just finance and proactive, in the environment, market, in both are the these capital That as volatility, is forward said Europe of very this As rate U.S. XXX that to at It's players, very, an solutions in not sources policy And very in kind companies navigate thinking environment is both valuable. capital through very our business. good all management, and market and term, adviser anymore. complex I things management alongside

add value what to our the table are about we very bring and with optimistic clients reacting very to provide, services connection in favorably and complex the financing. we So

getting not Doesn't in volatility any term. like we're going near is to world the So the reduced simpler. seem have

about still very, we good very that business. So feel

James Yaro

just comp like about ratio make look year. as could a on light about thinking comp in How then the of mid-XXs put normalized comp And we beyond progress Great. ratio should then well? adjusted longer-term your XXXX the up comp think ratio XXXX to the target? XX% in further just lastly, for you And what ratio ability

Andrew Bednar

Yes.

in look, we're still growth mode. So

margin in a company public mid-XXs to when we 'XX We We for a 'XX. that years became indicated abnormally down XXXX. industry, are we and still of couple committed our had the

we share team costs think, appropriately sure place we between and and the our took margin, So investment our the in rebound, energized for think, I kept up us. we the and and our now, assets make front is motivated to which shareholders of in

as the So I an We almost we over We from we basis because that bottoms-up have feel very points for down we comp but investments good we'll as team, XXX we get compensate in the more revenue think $XXX sure, last we margin And million. for leverage. we very algorithm additional good we year. don't feel what took analysis scale the to should drove our that business we scale made. leverage. need the non-comp get we a do about business,

As a couple don't just have we that Alex there think outlined before, items are recurring. of we in

good So algorithm to business might year we be it's I scale line feel don't early But indicate leverage continue and year. we we as both about on up. getting a items this of have in certainly those specific the too where to the

Operator

will Andrew turn And conclude portion this call today's closing back now I call. for of will the the Q&A any to comments.

Andrew Bednar

thank Thank you to interest Thank look everyone, in our forward today. us appreciate and for a talking firm, We our we in Goodbye. to you you, respect results. first to operator, and quarter joining you, Okay. months again. your with few

Operator

and the Earnings Fourth Partners you. Perella does Quarter This Full Year Call Thank and conclude Weinberg webcast. XXXX

this have a You time, may lines disconnect Goodbye. wonderful day. your and at

Perella Weinberg Partners (PWP) 7 Feb 252024 Q4 Earnings call transcript