Q1 2020 Earnings Call

Thank you. Molly. Molly. Can you hear me?

But thanks good morning. And thanks to all of you for joining us. Let me say I hope everything is well with each of you and that you and your families are healthy and safe month. Obviously, we all know this is an incredibly difficult time for many of us individually the economy and in fact for the world as a whole and it's an emotional time for many people. Unfortunately, this sort of call is not the sort of back-and-forth conversation that allows me to check in.

With each of you personally.

Let me just say again. I do hope everything is well with each of you and the people you care deeply about in a minute. We'll share with you the specific thoughts are first quarter. Let me if I'm a upfront make three points that I think might be of interest to you.

First one is to let you know that I believe our team globally is doing a fabulous job. Not a perfect job cuz in this environment nobody does a perfect job but a fabulous job of juggling of adjusting of modifying in ways so that week weather this storm and help our clients weather the storm.

The second that I'd like to emphasize that there are both puts and takes with respect to the impact of coded on different parts of our business. There are some places where clients have Desperate urgent needs for immediate help from us the same time. There are places that have been negatively affected have slowed down and probably will be slow for a while.

The third point I believe is the most important which is that even though there will be put some takes none of the puts our takes in my view takes away from the underlying strength of this firm the terrific long-term three of been on an incredible trajectory. I believe over any extended period of time we can stay on

So let me take those three points and turn in terms of the first point our team just like I'm sure many of you have had to in are working through a whole lot of issues during this. 95% of our people around the world right now. We're working from home in some places around the world people are working from offices. Then the office is closed then they work from home then they went back to the offices and now they're back working from home the people working from home. Like I'm sure from any of you it's a challenge you have to try to collaborate with clients with each other and our teams to try critical work product. Sometimes with tight them deadlines with a level and duration of Separation that probably dead none of us have never had to face before.

And the many places people are doing.

And that will juggling kids who are home from school or taking care of sick relatives that live with them or nearby.

And of course everyone is dealing with stress and worries worries about themselves their families their loved ones.

I want to communicate that in the face of all that challenge disruption. I believe our people are doing a fabulous job supporting our clients supporting each other and keeping our business moved ahead. I can't give multi examples but a few on one assignment our Real Estate Group work twenty three consecutive days to need an aggressive deadline to help keep players in the mortgage industry avoid litigation life.

And check our teams over the last few weeks worked in many cases around the clock with clients to find a way to do secure review of legal documents not in our youth center's but at home.

Arkansas implemented new processes for digital forensics to collect and analyze data remotely versus having to go into a company for example, the crack car drives and other devices and many in our life. I figure out a ways to collaborate across FDI as well as with external parties, like law firms to podcasts webinars and other thought leadership to engage our clients on the wide array of changes now and the future that are being created by covid-19 in many places are people of accelerated training whether it's educating our teams or clients on new legislation, like tears are cross-training equip folks with the capacity to support areas in which demand is surging and then finally like many of you we've had people incredibly creative he worked on than I am but and it just it's a delight to see on internal connection activities maintaining morale promoting the spirit and level of collaboration necessary to succeed lots of people eating in

And that's resulting in enough maintaining Effectiveness and connections during this trying.

I hope that gives you a sense at least what our teams are doing to keep this company vibrant to make us most effective at helping clients who in many cases have deep needs right now, whether they're storm while also making sure we're engaged with clients don't currently have work. They're going to have needs down the road and position ourselves to best meet those needs.

The results of those activities I believe our company is weathering the storm about as well as anybody possibly can.

And you said that second point I want to underscore is that not all of our parts not all parts of our firm.

Are currently firing on all cylinders?

Some are some parts of our business for example are advising clients are facing near-term financial crisis or liquidity issues reputational issues.

Round that sort of work, there's enormous sense of urgency as you might expect and that is creating the need in some cases for our people to work incredibly long hours to deliver a for our clients and we are getting called on for a substantial amount of work like that.

the other

And one only has to talk to a few law firms to know that there has been recently a significant slowdown on a fair amount of litigation. There are professionals who are experts to testify in court will provide courtroom goes back to the courts are closed in many jurisdictions. Our litigation is being postponed has a very real effect.

It's not just litigation that's being affected by covid-19. Now all of our businesses fan as he contacts have service offerings that are focused on supporting major transactions with m&a activity plummeting this quarter and continued economic and political uncertainty out. There those parts of our business have been affected and will likely be affected for some time. We have businesses that are incredibly busy.

We clearly have seen negative effects of covid-19 as well. We saw a significant slow downs and some of our businesses tied to litigation two transactions toward the end of the first quarter not so much throughout the quarter but towards the end and we expect those slow downs to extend into the second quarter at least and maybe a v Beyond I do want to stress for I believe the key point. However,

maybe the most important point.

Which is even if we have slowdowns in parts of our business does not make those parts of our businesses bad businesses or unattractive when one thinks about any medium term time frame.

Just make an example to give an example. I think most of you on this call know we have an incredible International arbitration practice. I think it's the strongest International arbitration practice of the world that business has had a very slow first quarter, which is reflected in some of the economic results, which actually will talk about and we're expecting quite a slow quarter in the second quarter as well.

Pausing activity doesn't mean that the need for international arbitration Services is going away permanently nor does it mean that the leading positions we have around the globe or the caliber of people has changed because of covid-19.

Four people didn't get stupid overnight.

Just means we are currently having weak results and we would normally expect from that business and they for a while.

And the same is true for a number of our other litigation and transaction oriented businesses.

important longer-term

we do not.

Expect litigation or m&a or Capital markets activity to be permanently depressed.

Our experience with respect to litigation. In fact is to the contrary which is that this sort of crises ultimately triggers a huge amount of incremental litigation.

so the we expect some of these businesses to be affected impacted in the near-term we have no less confidence in the strength of our positions in those businesses or the ultimate Demand with our services in the medium and long-term

At least me to the third point the final point.

Which is that bill there are put some cakes. I do not believe at this time that it takes away in any way from the underlying strength of this firm the power of the trajectory that we have faith and the power of the LED to stay on that trajectory over any medium or long-term.

As we talked about a lot on these calls and Elsewhere One never can build a great Professional Services firm by focusing on court. Anyway, in fact an individual quarters result is often not a good indication of the long-term subject re a company is on.

A great Professional Services firm is created by having pains. Great people do develop and deliver on key propositions on how critical importance to client. None of that's created over a quarter off or does it get lost over a quarter?

We have that over the last several years building those capabilities.

Include quarters add quarters and it is that focused that is allowed the last five years of this company's history to be by far the best years five years ever.

Weather this year. We had great quarters were not great quarters. We will continue to build this Enterprise. We will not sacrifice building this business in anyway, just to make individual quarters look better off. In fact as we have in the past of great talent becomes available this year, even the businesses that happen to be slow in that quarter. We believe it will help us build the business for future. We will take advantage of that those opportunities potential disruptions and talent Market, even if if if further dampens a potentially slope order,

The reason we do this we tend to do this is not only because it's the right way to build a great Professional Services firm for our people and create value for shareholders over any extended period of time it's also because we can this company has never been as strong as we are today in terms of our client relationships the breadth of our offerings the capabilities of our people to relevance our brand of these are challenged or in terms of financial strength and balance sheet. So, yes, we met this year have some puts and takes

I do want to underscore the depth of my belief in the power of this company the terrific job. Our people have been doing and are doing and the confidence that leaves me with about our ability. Not only to weather the storm. It's average from covid-19 on at least as good a trajectory as we entered this.

What's act let me turn this over to give you more details on the border. Thank you, Steve. Good morning. Everybody in my prepared remarks this morning. I will provide an overview of our quarterly results segment Financial results and discuss guidance as part of the guidance discussion off the share our current expectations on how the global covid-19 pandemic may impact our business. So beginning with the first quarter results revenues of six hundred ninety, four point, six million dollars or up 53.3 million or 9.7% compared to revenues of 551.3 million dollars in the prior-year quarter of what's noting while revenues in India and North America increased 22.8% and 8.1% respectively in the quarter revenues and age.

Pacific which represented six point

6% of our overall revenues in 2019 declined 14.8% The decline in asia-pacific was primarily due to covid-19 related disruptions and Associated restrictions, which resulted in delayed or postponed client engagements. I will speak more to the impact of covid-19 on our business office in my prepared remarks gaap. EPS is a dollar Forty Nine compared to dollar sixty four in the prior-year quarter gaap EPS included 2.2 million of non-cash interest expense related to our convertible notes which decrease DPS by 4 cents.

First quarter adjusted EPS of a dollar and $53 which excludes the non-cash interest expense compared to a dollar sixty $3 in the prior-year quarter.

Our convertible notes had a potential dilutive impact on EPS of approximately 433000 shares in weighted average shares outstanding for the quarter as all share price on average of $117.71. This past quarter was above a hundred and $1.38 conversion strength. What's noting the trigger for conversion of our convertible notes prior to maturity was not met during the quarter.

I think the most fifty six point seven million dollars compared to sixty two point six million in the prior year quarter, the year-over-year decrease in net income was primarily because of the 9.7% growth in revenues did not adequately offset increased compensation expense related to the 18.5% increase in headcount higher variable compensation and an increase in sg&a expenses sg&a of $127 or 21% of revenues this compares to sg&a of 113.2 million or 20.5% of revenues in the first quarter of 2019.

increase in sg&a get over here was primarily related to non billable headcount growth with salary and benefits increases as well as higher real estate and I.

First quarter of 2020 adjusted ebitda of 83.2 compared to Ninety Six Point 1 million in the prior year quarter are adjusted ebitda margin of 13.8% compared to 17.4% in the first quarter of 2019 our first quarter 2020 effective tax rate of twenty two and half percent compared to 24.1% in the first quarter of 2019. The 1.6 percentage Point decline was due to a favorable discreet tax adjustment related to share-based compensation lower amounts of non-deductible us expenses and a favorable adjustment to the valuation allowance on certain deferred taxes for the balance of twenty-twenty. We now expect our effective tax rate to range between 25 and 27%

What's Note 8?

Q one of 20 20 Gap and adjusted EPS were positively impacted by FX remeasurement games primarily due to the strengthening of the installer and the euro in the quarter as compared to the British found this benefited our first quarter of 2020 just Repairs by $0.07.

Billable headcount at the end of the quarter increased by 716 professionals or 18.5% compared to the prior-year quarter. The increase is due to growth across all business segments sequentially billable headcount increased by 156 professionals or 3.5% again with every business segment drawing.

Now I will share some insights at the segment level in corporate finance and restructuring Revenue increased 29.1% 207.7 million dollars compared to the prior-year quarter. The increase in revenues was due to higher demand for restructuring services in North America and Amiya which included Revenue contribution from August 2019 acquisition in Germany and increased demand for our business transformation and transaction services in North America.

From an industry perspective during the quarter we experience particularly strong demand in the TMT and energy verticals adjusted segment ebitda, a 48.9% or 23.6% of segment revenues compared to thirty seven point four million dollars or 23.2% of segment revenues in the prior quarter.

Sequentially revenues increased 14.7% driven by higher demand for both our business transformation and transactions and restructuring services in North America and Amelia.

Turning to forensic and Litigation Consulting revenues increased 6.2% to 147 point six million dollars compared to the prior-year quarter of an increase in revenues was driven by higher demand for our data and analytics Services as well as increased demand for our disputes and Construction Solutions services in the media and North Africa just a segment of 21.2 million or 14.4% of segment revenues compared to Thirty one point eight million or 23.9% of segment revenues in the prior-year quarter.

Sequentially revenues decreased 1.8% primarily due to engagements being delayed by both Court closures and travel restrictions resulting from the covid-19 outbreak particularly in Asia.

Our economic Consulting segment reported revenues of 132.1 million dollars which declined 7.1% compared to the prior-year quarter wage decrease in revenues was largely due to lower demand for financial economics and non m&a related antitrust Services as well as lower realize rates for International Education Services, which was partially offset by higher demand for m&a related Antichrist Services adjusted segment of twelve point seven million dollars or 9.6% of segment revenues compared to $24 million or 16.9% of segment revenues in the prior-year quarter.

Sequentially revenues decreased 13.7% primarily driven by lower demand and realization for our International arbitration services do operation hearings being postponed in light of the covid-19 pandemic and lower demand for a financial economic Services driven by large and Gage moments that wage loss.

In technology revenues increased 14.4% to 58.7 million compared to the prior quarter the increase in Revenue Source primarily due to higher demand for em, they related and Global cross boarder Investigation Services adjusted segment of 14 and 1/2 million dollars or 24.7% of segment revenues compared with twelve point seven million dollars or 24.8% of segment revenues in the prior-year quarter sequentially revenues increased 14% increase in revenues was driven wage higher demand for m&a related and litigation services in a Mia in North America.

Strategic Communications revenues increased 1.2% to fifty eight point four million dollars compared to the prior-year quarter. The increase in revenues was due to higher demand for public affairs Services adjusted segment of 8.8 million or 15% of segment revenues compared to eleven point five million dollars or 20% of segment revenues in the prior-year quarter sequentially revenues decreased 12% primarily due to a four point four million dollar Decline and pass through Dolby news and lower project-based revenues in India and Asia.

Let me know discuss if you cash flow a few key cash flow and balance sheet items as is typical. We pay the bulk of our bonuses in the first place.

So net cash use an operating activities of 123.6 million this quarter compared to one hundred two point 1 million dollars used in operating activities in the life of a quarter the year-over-year increase in use of cash was primarily due to higher annual bonus payments reflecting our record 2019 financial performance and a salary is related to the increase in headcount, which was partially offset by an increase in cash collected resulting from higher revenues.

During the quarter.

We spent approximately 50.3 million dollars to repurchase 450198 shares of our common stock an average price of $111.73 per share as of the end of the quarter approximately 116 million remains available for stock repurchases under our five hundred million dollar stock repurchase authorization total debt net of cash or 150 point two million dollars at March 31st, 2020 compared to one hundred thirty-seven million dollars at March that even 2019 and a -53.1 million dollars at December 31st, 2019.

The sequential increase in total debt amount of cash was primarily due to cash used in operating activities resulting from Bonus payments as well as an increase in share repurchases.

I am sure you are all more interested in what impact the global pandemic may have on our ensuing quarters and resulting guidance for 20 28 in our q1 results. The pandemic is certainly affecting our business segments don't different ways for a restructuring practice and to a lesser degree currently in a crisis driven disputes and communication Services. It is resulting in a significant Tailwind.

For other parts of our business. There is at least a deferral of work if not a reduction in demand.

It is uncertain how long we will have to proceed with shelter-in-place and similar orders and how deep the impact will be on the overall business in life.

We have run several scenarios shaped by our current expectations. I will now take you through these expectations.

We expect m&a transactions to be deferred and possibly canceled and litigation to be postponed or possibly settled causing the news from some of our service offerings in our SLC economic Consulting and Technology segments to decrease in the near-term.

As Steve mentioned are practitioners are doing a remarkable job serving our clients from home offices. However, certain essential aspects of what we do often difficult to do from home, which may impact Revenue adversely some examples of the delays are pauses that we are experiencing include in code expert witness. Testimony has been delayed due to court closures in many countries monitor ships in certain jurisdictions where our teams must be physically on site to perform their analyses are unable to continue and there are moratoriums on certain regulatory or other proceedings took a six-month moratorium in certain insolvent trading rules for directors and Australia, which means that many companies that would otherwise have filed for insolvency have stayed in business.

Also expect travel restrictions to hinder in person Business Development conversely also worth noting with business travel all but stopped there is an associate it drop and billable and non-billable travel and entertainment expenditures.

Resulting from these expectations are outlook in Q2 and perhaps even into Q3 is that the increased demand for a restructuring services offered me not adequately offset, the negative impact on several of our other businesses are second quarter EPS could be well below the level we reported in q1.

Don't we are currently expecting some weakness in the second quarter. We are not currently expecting that weakness to persist for the entire year for for resale first the wave of distress and ensuring default continues to grow and will likely continue even beyond the time frame when life that has been paused or deferred resumes already. We are seeing increased demand for a restructuring services in several articles including Retail Energy mortgage rates Healthcare Airlines gymnasiums, restaurants, entertainment and entertainment venues, which may further accelerate

Second restructuring practices also able to draw on resources from other areas within our property Finance segment and possibly to a lesser extent from other segments of the service these engagements third. The courts may not get fully back to normal. We are anticipating that the current constraints and travel restrictions off will not persist at this level and forth. Our expertise is needed as distressed transactions crisis Communications litigation relating to material adverse effect causes disputes related to business Interruption and investigations arising from improprieties in the face of this pandemic grow.

After running several scenarios based on the above expectations while there is an increased range of uncertainty and outcomes for the full year. 2012. We do not see a basis for changing our guidance range at this time.

We will evaluate our guidance again after the second quarter when we will have better information regarding how adversely our business as a whole may be impacted and how much off of such decline is offset by The increased demand for restructuring and other services.

before

Right close. I want to reiterate a few key themes that underscored the strength and potential of our business.

We have significantly Diversified our offerings over the last several years with investments in areas such as non m&a related antitrust International arbitration business transformation cyber security and public affairs want some of these adjacencies may be depressed in the short-term. We believe that these areas will come out strong as we emerge on the other side of the home.

Our balance sheet strength gives us the flexibility to allocate capital and create shareholder value in numerous ways. Particularly. We are able to attract and retain the world's leading experts in their respective fields.

Our goal we help our clients, especially in times of this location as they navigate the most complex business challenges as Steve mentioned. I spend demek will undoubtedly result in a new genre of disputes investigations and conflicts that our experts are well-positioned to assist with and support package. We have a word renowned restructuring practice, and now even more than in the recent past. Our restructuring services are in great Demand with that. Let's open the call up for your questions. Thank you. We will now begin the question-and-answer session to ask a question. You may press start off on a telephone keypad. If you're using the speaker phone, we asked you please pick up your handset before pressing the keys.

If you would like to enjoy your question, please press * then two at this time. We will pause momentarily to assemble our roster.

And today's first question comes from Toby. Summer was SunTrust, please go ahead.

Thanks. Could you just start out by maybe giving us a a framework for the proportion of Revenue across the segments that is propelled by mergers and Acquisitions. Thank you.

Toby we don't we don't provide that detail and you know, I'm not going to do at this juncture. But what I will tell you our key drivers is you know for our business, are you age traditional key drivers for our business are restructuring m&a disputes including fraud. I mean those have been the traditional done it ton of diversification into you know, non imminent. I pressed for example in economics. I mean there have been what I will tell you is there have been quarters were non. M&a antitrust is not catching right up to m&a related antitrust services. So that diversification is sizable in our technology area. For example, yes second request activities Drive Technologies that we've done a fabulous job and getting into you know, investigations gold investigations as opposed to just second request activities in stratcom, you know, we we do all

Lines of communication as opposed to Simply related to m&a. Um, so m&a is a very significant.

Second part is a key driver, but boy have a diversified.

Sure, I guess an investor just struggle with understanding the relative size of bankruptcy versus those kind of more classic procyclical elements such as m&a so trying to understand that is you know is essential to understanding how the business is going to perform. I respect that sent off. Okay moving on how much of the business relies on court through put in sort of timely in a timely hearings or rulings to sustain High utilization rates.

So if I'll take I'll take a crack at that in in in f l c and in economics very much. So Toby, you know you you can do a fair bit of work, but you know, you do have to give testimony in court. I mean, that's what you are preparing for. So if the testimony is is delayed, you know, the preparation for the testimony is also delayed so you can see that in our in our FLC segment, even though it was even though it was in the second half of March in in North America and Europe and in Asia throughout the quarter. There is a decrease in utilization in FL see some of it is because we increased our headcount in the second half of last year, but I would say to 3 percentage points and utilization comes from kogi State impact related primarily to litigation stops dead.

Yeah, let me cuz maybe I can add to that. Can I answer that? I think the courts were permanently shut down. It could have a major major impact on econ on wage a lot of our businesses are dependent. You know, we don't believe that the world the world is at the world needs quarts of the world that we don't believe the courts are going to be shut down for multiple years, but we're seeing are significant shutdowns and and constantly delays and litigation Toby and you know, we think that that that those gears will get unstuck wage even if they get unstuck in a bit slower away for a while. I think that's the right way to say it but no no we if there were no litigation in the world. I mean it would be a huge effect on and and econ home and you know, cuz we we support

You know crisis stuff that often has courts involved but I don't think anybody in the world believes that that it's it's an issue of a temporary phenomenon here till does that make sense? It does it does and I'll ask two more questions. I'll get back in the Q. Could you describe the Arc of bankruptcy activity that you expect in compared with that Arc to the prior recession. And also if you could address what you're hiring plans are this year I get back home. I'll take a crack at this. Let me just make one thing. I just want to make sure one thing I think if I told me you get this I want to make sure for everybody on the call, you know, RCF business is not synonymous with restructuring and I don't know if we've separated that out and and disclose but a major portion because of the diversification we've done a major portion of RCF business is more pro-cyclical activities, you know, and and that's been one of the reasons.

We've been able to grow CF over over over the last year's even while the restructuring business has not been booming. So, you know people

Back in the last crisis. I think ninety percent of our business may have been restructuring today. It's much more balanced with non restructuring activities. And that's why even though we started to see restructuring pick up a significant way in the first quarter. You don't think if you look at the year-on-year utilization rates or globally they're not different this year versus a year-earlier Molly or you can double-check that but I think that oh, okay, so that's sort of context and remind me of your question, Toby.

Describe the Arc of bankruptcy and stuff would say Mike and karlen run that practice with Mike spends more time on the restructuring and Carlin on all the other way. I can say that the phone's been ringing off the hook faster than it did in the last crisis. But with a little bit of a caveat even though it's ringing off the hook and we're winning winning a lot of jobs. Some of them can't get started right away because of court issues and and you know issues of of of of related to requiring some in-person meetings and so forth, but I would say that the this is this is a huge change at least initial read on this. This is a there's a huge amount of of of of Demand right out there. It's going to take a while before it off into utilization, but even so it's it really started to show up in the first quarter. Does that make sense? You have something you disagree with that or is that your sales as well? I agree.

So we does that help.

It does and if you could come in on your hiring plans for the year, that'd be great. Well, look, I think are hiring plans are you know, we drive are hiring plans off of need. Yes, but also rebirth long-term need and obviously we have some businesses that are slow you say so would would you ever higher into those things? Actually we would if if if you know, like I talked about our International arbitration business if this causes of dislocations and competitors and a lot of terrific Talent wants to come over to us will hire even in the face of slowed down because you know, great people will over any extended period of time, you know, build your business and and and be profitable and and and shareholder-friendly over an extended period of time but so I you know, we are we we had a hiring plan at the beginning of the year. We're we're not obviously driving that up in businesses that are very slow, but we're not abandoning higher wage.

And we're certainly not abandoning any offers we've given in the past would be prudent in the areas that are slow but a great talent becomes available. We're going to jump on it. You don't and and that's frankly Toby. I know we did that in a in a lot of our businesses when they were slow a few years ago. We did that some of the best adds to our business were during after four really slow quarters and seeing a few years ago and same thing for for cyber business was added when these prophets weren't very good. So we're going to continue to monitor the World Bank. We're in better shape than many players out there and if that causes a lot of talent to let it affect us will take advantage of that. Even if even if it hurts a quarter but behind that will obviously be prudent. Does that help?

Absolutely. Thank you.

Say the next question today comes from Andrew niccol. This is William Blair, please go ahead.

Hi, good morning morning. We look if we look back to you mentioned it obviously restructuring was a much bigger piece or the vast majority of the business mix in CFR in Toledo 9 vs today. But if I look back at that, it looks like margins were in the 30s and it's high as 34% in 2009. And so with that as context, I'm just trying to figure out is there any reason from a structural perspective that that the restructuring business on a stand-alone basis, you know couldn't get back up to those levels in today's environment. So that's the first question and and kind of a as a corollary to that. If you could provide any color on the profitability trade-off between restructuring and business transformation, that'd be helpful. Let me take a crack at this and then and let o j either added to it or correct anything I say that's wrong. Like I don't I saw those numbers in 2008 naija.

I'm not sure I would want people to be thinking that we're going to get those levels. Obviously a lot closer the bottom line as utilization goes up, but you know, wait no nine. We're still bring it by, you know, the original deals that were done in 03 and 04 with earn-outs and so forth, which I think always make it complicated to do comparisons. It's always complicated do comparisons depending on what deals are structured or four years after a deal is done versus on a steady-state going forward. So I clearly it is restructuring one of the month most profitable businesses, if if not most profitable and busier and gets like on all our businesses profitability goes up, but I I I'm not sure people should be thinking in terms of the numbers that were purchased in 2089. Do you disagree with that? Angers? No. No. I I don't disagree. I I will just add it just little one or two more points of texture. There's no dead.

There's no structural. There's no mathematical reason for margins and outcome. But there's no mathematical reason that if revenues absolutely surged at margins won't expand. So I mean, there's no we have a gap on margins. That's that's not the case. You see this quarter. You see the corporate finance restructuring margins, you know it, you know, we we have a record record quarter in terms of revenues in that area and you see the margins associated with that where it goes Revenue over time there goes margin, but look in 2008/2009 65% of revenues roughly were in North America or 95% Now it's sixty-five, you know, we have a larger meal breakfast. We have a larger Australia practice. I mentioned on my call in Australia, there are certain moratoriums Thursday delaying restructurings there. There are code process process is around the world that are gummed up but clearly clearly we that is an area where that is served. Absolute surgeon Dammam.

we are we are boring from the

Business transformation area for people to accommodate that the extremely high utilization. We're boring even from other segments within the company will going to do all the things that any business person wage to do do to increase utilization and therefore margins, but there are also differences one time just say that will equate to what it is now.

Makes sense. That's that's helpful. And then just one follow-up. Obviously, the the first quarter was was weak in a pack as you had kind of outlined on the song called but I was hoping one you could just refresh us on the mix the businesses in that region. And then if there's any commentary you could provide on on how that business more specifically has looked in April to see if if you know that could be an indication of some sort of Rebound in North American and as we get through some of these coronavirus specific delays, thanks green shoots, you know some encouragement. In fact, you know, when we used to talk to them in in January, we used to express sympathy Etc. But I am I don't think it really hit home till it came here and now they called and reassure me to say don't worry. It will all get better, you know don't panic etc. Etc on a personal level dead.

On the business side China is certainly open for business. But in Hong Kong in Singapore, Indonesia, Cayman Island, Richard Virgin Islands, you know, some of the choices are related in terms of the copse. Some things are still closed. Um, so there there are green shoots there. I'd also say that you know that you asked about the mixed dog that area. We have a significant Corporate Finance business, but it's more in the liquidation side of things as opposed to traditional chapter eleven and we have a significant efforts wage that is cross-border in in in nature and that is what got impacted.

Got it. Thanks a lot.

Thank you a safe.

I know next question today comes from our critic. This is Debbie in Company, please go ahead.

Hi, good morning. Everyone morning Mark.

I wanted to touch on something you had mentioned as far as the potential for new maybe some foods that cleanse may have following. You know, I'm not taking place now whether you know, it's it's different types of expertise that's related to to pandemics or or what-have-you is wonder if you could expand on that a little bit and and maybe touch on uh, not that that you have the current expertise in those areas or is that something that you think might be added or if that could lead to new practice areas in the life?

Yeah, I'll take a crack. This looks like a lot of different needs and look at their evolving. We're spending a lot of time are people are spending a lot of time both talking to clients and also talking Co-operative lie with law firms that we work with lots of to sort of explore this but you know, a lot of the stuff that is going to come out of this is areas where we have real expertise. I mean, you know, there's I think you know, I don't know if you I think you know the words what material adverse change Clauses our first horse manure claims related to m&a sometimes contracts where people tear it up and I'm not saying this is qualified and what's the damage is associated with it. I mean that's a compass lexecon people are are are people are international arbitration people all have tremendous expertise in those areas, There's a lot of insurance related stuff that could come out of this business Interruption Insurance, you know, the coverage is the legal question, but then the damages is a set of issues. Yep.

Typically of these environment there are a lot of fraud allegations that come out.

Which is and and requires either investigations or monitor ships or set of things which is what we are efficacy business does you know, I mean, I'm one of the out of the last prices Madoff was identified as a big fraud thing and we spent a number of years actually helping get back. I don't know if you know remember the number aaja something over ten billion dollars working for working for the judge who was overseeing this to help do the sleuthing to figure out where all the money went and see if we could help him get it back. So I think this is took there's always something new in an environment that creates new legal twists and so forth and the lawyers and we are talking about her but this is the expertise of that we have is very much off a line with what is likely unfortunately to come out of a of an event like this. We're not that's not a concern of ours at this point marker. Is that help

No, it does it does. Thank you. And the last one for me is I was curious as far as you know with the court closures and the like I was wondering if you're getting a sense of the the level of communication that you get to receive and and maybe you know lead time for you know, when these things might open what that communication levels like and I'm not sure but if there's ever really been a a similar situation where courts were closed for a length of time either maybe in the one particular jurisdiction why they're related or something like that that might give you a little bit of a of a insight as to how how these things in my life might re-emerge. Thanks. Look. I know. It's a good question. Look as you know, I've only been in this business for six years, but I've you know, I now talk with a lot of not only are people who have been in this business for twenty years, but I took a lot of conversations with managing partners of law firms and I got to tell you that nobody thinks that there's a clear precedent on this we're figuring it out as it goes along. I think nobody believes.

At this level of closure of the courts can sustain itself. I mean the Delaware courts are having massive amounts of litigation and and and and Thursday, there's a lot of stress and and courts play an important role in society. And so, you know, you you may need meat packing plants. You also need courts to work. And so God, none of us really believe this will sustain itself for years, you know how quickly it loosens up, you know again on calls twice a week where somebody says we steal the sense of loosening over here or the courts have agreed not to do non in-person hearings over here. And so we're seeing some of this loose and I don't think we have a good

Trajectory prediction if we did, you know, they would have said, yep. We think this is going to be slow for for half of the second quarter and it'll be all the way back, you know, we don't know that at this point, but we don't think it needs to be you know years how many months how fast it loosens up or not? Sure. Does that give you a sense at least Mark know that sounds good. I appreciate it. Thank you very much.

And our next question is a follow-up interview summer with SunTrust, please go ahead.

Thank you within your corporation in bankruptcy related work. How would you describe your performance with respect to a chair on credit or side versus company side, so I know you made a push and had some success increasing your exposure to companies that work.

Do you want to let me call later? I mean, let me look. We've made incredible progress. I didn't look I think this is something I am I think our teams should be and I think our incredibly proud of we have strong and already strong business at one point. We were known as a, you know, great creditor side company in the United States and understated actually the company side positions we had but that's how we were known we've over the last few years reinforce the Creditor side in the United States that substantially built our our our company's side capability United States and we've strengthened our positions abroad incredibly whether it's in London, whether it's off on the continent whether it's Germany, you know, whether it's an already strong position in Hong Kong whether it was a weak position. We once had in Australia that we strengthened to our strong position in Latin America off that business has never been as strong as it is today on a global basis or or in the United States. I think I would you know, one of the definitive sources that you could look at it I think is public the debt wire stuff Molly's pub

Look at look at who's the leading player on debt wire in the United States over over the first quarter. I think that's the first quarter report that I just saw Molly. Is that right and and look up strong how many companies side cases we have in addition to how strong we are on the Creditor side. I think it's it's real source of strength and I think the debt wire would be a third party Source from a look at that that backs that up. Does that help? It does in one more question for me and I'll end it when you think about the new businesses that you've launched under wage tenure organically does a. Like this lend itself to being more fertile to make investments in new businesses than normal ngamuk times. What is your experience? Tell you? Yeah, look there are two reasons the two reasons you two things that are required to to enter a new business and wage.

No.

In Professional Services one is a clear client need and in our case. It's not a clear client need for Commodities service is a clear plant need for a high-value service where people may want and are willing to pay for expertise. So that's the first one the second one is a supply-side issue. Right? Can you get the talent that you need in order to be a leading player in that same certainty ography and then ultimately and multiple geographies. I think any sort of stress situation like that is creates both of those on the demand side. There are stresses and strains in the world as we talked about a little bit earlier some of which relate to historical practices but others as we're talking about with law firms are are adjacent services with their critical going forward. So there is going to be news services that that that we will be.

going into the other thing that I think you know is is the case is the strength of

For a company over the last while has made us as we talked about before it a a magnet in a way that that would ever been 4 count pack and I think you know we have we don't have we have I don't know whether what how much that that we have posted zero o j and and we can invest in people who have shown our willingness to invest in people and I think that will has been attractive over. The last few years is the way we've gotten so many talented lateral hires. I think our guess is that that has a shot of them. So I think on both the demand side and the supply side this this position position us position as well. That's why I actually warned early in the call that you know, if we have tremendous opportunities to acquire talent in a quarter. That's low.

Let me think that's going to help just the fundamental trajectory this business. We should do that, and we will do that later in the year, and we think there's a good chance of those opportunities. We don't know for sure. Does that answer your question till we thank you.

This concludes today's question-and-answer session and today's conference. We thank you all for attending today's presentation. You may not disconnect your lines and have a wonderful day.