Q3 2019 Earnings Call

Chief Financial Officer recipe Mcgranahan General Counsel, and Tina Madon head of Investor Relations and corporate communications.

After this.

Tension to the fact of focus this 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 FCC, which lists some of the factors that may cause its results to differ materially from these statements and finally focus assumes no duty and does not undertake to update any such forward looking statements.

With that I will turn it over to our founder and CEO Rudolf Rudy.

Thanks Wall Street. Good morning, everyone. Thank you for joining our call. We appreciate your interest in focus.

We delivered excellent results indicate corridor capping it very strong first nine months for both periods or business generated year over year gross well above 20% annual targets for revenues and adjusted net income per share.

Before that increased our market share and drove revenues and earnings calls industry, leading levels, we as an outstanding portfolio of partner firms that excel in line service and retention this over half of our firm's already forming platforms for industry consolidation.

Our portfolio for performs on making solid progress against our strategic initiatives, which are center building scale to accelerate revenue grows and ensure high client in principle is attention.

More of our partner firms also accelerating scale it grows through mergers.

We are pleased this how well the subsequent integrations have grown as this is essential to achieving IRS in excess of 20%.

Based on our September Thirtyth cap infrastructure.

We estimate that the portfolio firms that have been business for at least two years has delivered a weighted average leverage or our of more than 25% since inception.

The same firms continue to sustain a weighted average revenue cable or more than 13%, reflecting the combination of solid gross from mergers and organic sources.

Our scale of over 200 billion inclined essence enables us to provide value to our partner firms across all elements of their businesses.

We are engaged with them on a number of strategic hires, particularly next generation advisory and senior management talent.

We also working in more than 20 operational and technology enhancements defining new marketing and business development initiatives for over 20 firms and expanding our cash credit programs through focused line solutions.

Additionally, we're placing an emphasis on enhance business intelligence and sharing of best practices.

We have closed 34 deals year to date, taking advantage of an active M&A market.

Although the environment is increasingly competitive we remain highly selective and maintain strong pricing discipline.

Being year to date multiples in the mid to high single digit range. These deals.

Aggregate of generating earnings accretion of over 20%.

We are pursuing a target that strategy that positions us to capitalize on industry consolidations through M&A and to grow market share by enhancing the services saw partner firms offered declines.

We're increasing our reach two highly attractive new partner firms, who have the business profile to become leading platforms in the future.

Through mergers, we have substantially accelerating the speed at which our partner firms in scale.

We also taking advantage of focus scaling expertise to help our partner from Seaworld plain service offerings.

As leaders in the industry.

Firms ability to continually in hands the quality of declined experience to offer is an important competitive differentiator.

Taken together.

We believe that these elements that drive shareholder value creation well into the future.

This year six new partner from strong focus expanding our track record of acquiring excellent firms and expanding our position in this March high gross consolidating industry.

The three largest transactions Williams Jones as Karla and Hs added an estimated over 90 million in total revenues and 29.4 million in a quiet base earnings on an annualized basis.

Prior to joining focus and deal for prior to benefiting from our value added services.

We generated an average three year revenue came.

From non M&A related organic sources of more than 10%.

This turns a year market leaders enhancing our presence in New York in Florida.

Ultra high net worth.

Artists and entertainers and into highly attractive Australian market.

But these acquisitions temporarily increased our net leverage ratio by approximately half a turn.

To further diversify our portfolio that cash flow and enhance our competitive position.

We expected these firms will evolve into large platforms, adding new talent declines.

In the commensurate 29.4 million increasing preference, we believe that they're higher net leverage ratio did not result in the material increase in our risk profile. While these new partner firms increased the value of our partnership.

Let me provide you with a little background on the unique characteristics of each one.

William Stones, or WT is an elite fiduciary wealth manager is approximately 8 billion inclined assets and over 30 years of experience serving high networks in ultra high net gross private clients integrate the New York City area, one of the largest wealth management market in the U.S.

While we do chair.

Yes, and long tenured management team sophisticated investment expertise and robust infrastructure.

Making it an attractive platform for advisors and teams as well as future merger candidates.

WHA also has a well defined growth strategy centered on expanding further in New York and in South Florida.

As karla.

It's one of the best recognized wealth management firms in Australia. This over 3 billion implied assets and offices in Melbourne, Sydney and purse.

Australia is one of the largest wealth management markets outside the U.S and is undergoing a similar secular shift to the fiduciary advice model.

There are only a few Australian fiduciary rules miniatures distant reached it is Carla heads in the high net worth us and ultra high Netlists phase, which make it an exceptional intra investments as column is planning to expand its national presence and establish a footprint in selected Asian markets.

Altman Greenfield in Slovakia, Ngs is one of the largest multifamily office in business management focus from Citywest catering to their ultra high net worth Ison high network clients nationally.

Got it gives us critical mass in this space and will be a source of meaningful organic gross.

We already using our scale expertise in purchasing power to enhance HSS operations and technology architecture.

Expected HTS offering, particularly in.

3 million and earn out obligations. Additionally, we will pay the final 12.5 million purchase price installment to learn more in Q.

Before.

Now turning to other balance sheet items.

We ended the quarter would approximately.

In Fivex because of the execution of Q3 firms, but at the same time.

We deployed capital extremely well and I think importantly, we don't even belief that the risk profile of the business increased.

Because yes.

Leverage went up a little but our preference the acquired.

Base earnings went up by $29.4 million, which basically it gives us an excellent.

Your downside protection, which of course is essentially in our business model. So we think we deployed capital extremely well into these three fast growing attractive platforms.

Alright, and then lastly, just really you mentioned the prepared remarks, placing an increased emphasis on business intelligence and shared best practices can maybe dive into those a little bit more.

Yes, so we'll be talking more if the investor day.

So it's a little sneak preview.

Yeah, we 63 part the firm's over 200 billion inclined assets.

Yes.