Q4 2021 PJT Partners Inc Earnings Call
Good day and welcome to the P. J T Partners' fourth quarter 2021 earnings Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Sharon Pearson head of Investor Relations. Please go ahead ma'am.
Thanks, very much Jodi.
Good morning, and welcome to the P. J T partners full year and fourth quarter of 2021 earnings conference call I'm, Sharon Pearson head of Investor Relations at P. J T partners and <unk>.
Joining me today is Paul Taubman, our chairman and Chief Executive Officer, and Helen mates Chief Financial Officer.
Before I turn the call over to Paul I want to point out that during the course of this conference call.
A number of forward looking statements.
These forward looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.
We believe that these factors are described in the risk factors section.
Richie partners Twenty-twenty Form 10-K , which is available on our web site at P. J T partners dotcom.
I want to remind you that the company assumes no duty to update any forward looking statements and the presentation, we make today.
non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance for.
For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations you should refer to the financial data contained within the press release, we issued this morning, which is also available on our website and with that I'll turn the call over to Paul Good morning.
Thank you for joining us today.
Full year 2021 revenues were $992 million down modestly from 2000 Twenty's record setting performance.
In 2020, our results were driven by an extraordinary run up in restructuring revenues, coupled with market leading growth in strategic advisory.
In 2021.
All of our businesses away from restructuring delivered record performance.
And restructuring however, the story was very different.
Our 2021 restructuring results retreated to levels below 2019 performance.
A greater decline than we had previously anticipated.
This sharp step down more than offset strong performance.
And all of our other businesses.
The silver lining from this abrupt decline in restructuring activity.
Is that the headwinds we experienced in 'twenty, one are pretty much behind us.
And with our other businesses set to deliver strong performance in 2022.
Our firm is well positioned to resume its long term growth March.
After Helen reviews, our financial results I will speak about our businesses in more detail.
Good morning, beginning with revenues.
Total revenues for 'twenty, 'twenty, one with 992 million down 6%.
Yeah.
As Paul mentioned, while we had record revenues in strategic Advisory P. J T Park Hill and P. J T candidly, the very significant year over year decline in restructuring revenues more than offset that growth.
For the fourth quarter total revenues were $313 million down 3% year over year.
In the fourth quarter of record revenues and strategic advisory were offset by a significant decline in restructuring revenues the magnitude of the year over year to kind of restructuring in the fourth quarter of 2021 was slightly less.
Then the decline we experienced in the third quarter 2021, we also had record corporate placement activity in the fourth quarter.
Turning to expenses consistent with prior quarters, we presented the expenses with certain non-GAAP adjustments, which are more fully described in our 8-K first adjusted compensation expense.
Full year adjusted compensation expense was $625 million down almost 7% year over year with a compensation ratio of 63% down from 63, 5% in 2020.
As we did last year in determining the final compensation expense for the year, we looked at the totality of the year to reflect full year performance full year recruiting activity as well as external factors such as the competitive landscape.
Given we had accrued compensation that 62, 5% through the first nine months of the year, the resulting fourth quarter ratio was 64, 2%.
As we've done on the possible communicated our accruals for compensation expenses. The 2022 when we report our first quarter results.
Turning to adjusted non compensation expense total adjusted non compensation expense was 124 million for the full year 2021 up 11% year over year, and two 1 million for the fourth quarter up 13% year over year.
And as a percentage of revenues 12, 5% for the full year and 10% for the fourth quarter.
2021 a year over year growth reflects increased senior adviser costs higher recruiting costs as well as increased expense relating to investments in information technology. We did experience a step up in travel and related expenses in the fourth quarter as we started to return to more normal levels of business travel.
Looking ahead to 2022 outside of traveling related expense, we expect our other non comp expense to grow in aggregate in the low teens percentage year over year with continued investment in talent continues to be spent in I T and increased business activity. We do expect traveling related expense to increase in 'twenty to 'twenty two.
Two although it's unclear at this stage by how much.
As a point of reference our pre cut the travel expenses was approximately $2 million per month.
Turning to adjusted pretax income we reported adjusted pretax income of 242 million for the full year 2021 down 11% year over year, and 81 million for the fourth quarter down 19% year over year.
Our adjusted pretax margin was 24, 4% for the full year and 25, 9% in the fourth quarter.
The provision for taxes as with prior quarters, we presented our results as if all partnership units had been converted to shares and that all of our income was taxed at a corporate tax rate.
Our effective tax rate for the full year was 22, 3% down slightly from the 23% estimated rate we applied for the first nine months of the year.
2022 we would expect I'll say fictive tax rate to be approximately 25%.
This rate will move depending on the ultimate value of the tax benefit realized related to share deliveries and we will refine our view at the end of the fifth quarter.
Earnings per share our adjusted if converted earnings were $4 44 per share for the full year and $1 52 in the fourth quarter.
Share count for.
For the year, ending 2021 our weighted average share count was $42 4 million shares up 2% year over year.
During the year, we repurchased a record pre quaint 2 million shares and share equivalents and we are currently in receipt of exchange notices for an additional 103000 partnership units.
As we have done in the past we will exchange these units for cash.
Has approved an increase in our quarterly dividend from five cents per share to 25 cents per share the dividend will be paid on March 23rd 2022 to class a common shareholders of record as of March 9th.
Consistent with our capital priorities, we will continue to focus on investing in the business and use excess cash to reduce the dilutive impact of these investments we continue to be mindful of our float and notwithstanding the record level of repurchases that float grew modestly this past year and has grown by a food since spin.
On the balance sheet. We ended the year was $200 million in cash cash equivalents and short term investments and $261 million and working capital and we have no funded debt outstanding I'll now turn back to Paul.
Thank you Helen.
Beginning with restructuring.
The risk on the low interest rate environment that fueled markets in 2021 .
Is increasingly under attack.
As we have often said more and more companies that have been severely disrupted by COVID-19 will need to address their capital structures as financing markets become more difficult.
Recent supply chain disruptions and inflationary pressures.
Have only increased the challenges for many of these companies.
Higher levels of debt and leverage less favorable financing markets and mounting business locations.
Ultimately drive significantly increased restructuring activity.
Our restructuring and advisory practices are working closely together to ensure that we are well positioned to advise our clients as opportunities present themselves.
Our current outlook for restructuring is for similar activity levels in 2022 relative to 2021.
However, it is only a matter of time before we see a meaningful uptick in activity.
Turning to P. J J Park Hill.
R. P. J T Park Hill business delivered record performance in 2021 with strong year over year growth.
P. J T Park Hill is benefiting.
From the strong secular growth trends, taking place in the alternative asset space.
In light of the record pace of which capital has been deployed sponsors are coming back to market earlier than previously anticipated and with larger fund sizes.
Accordingly, we expect 2022 to be a very active fundraising year.
For alternative asset managers.
Our firm wide financial sponsor initiatives are increasingly benefiting from closer collaboration and coordination between P. J T Park Hill and strategic advisory.
P. J T Park Hills pipeline continues to grow and the business is expected to have a strong 2022.
Turning to strategic advisory.
Okay.
In our strategic advisory business, we began 2021 with.
With considerable momentum in most all of the leading indicators that we track.
These include breadth and depth of footprint.
Brand recognition level of client engagement and number of active mandates.
Even with such positive leading indicators.
It often takes time for this momentum to be reflected in our financial results.
And what it does it frequently does so in a step function matter.
This was the case in Q4, where we had a record quarter in strategic advisory.
By a significant margin.
We previously spoke about 2021 strategic advisory results being back end weighted.
And this fourth quarter contribution helped us deliver strong year over year growth in strategic advisory.
Even with all of our success to date, our strategic advisory business is still early in the build out phase.
And remains very much an idiosyncratic growth story.
Our success has been and continues to be far more closely linked to the pace and pay off of our many investments.
Then it is to the health of the overall M&A market.
On the investment front, we continue to make significant investments.
In our capital markets Advisory group at.
Adding three partners to the practice since December .
We are increasingly seeing the payoff from these investments.
And expect this business to generate significant growth for the foreseeable future.
In Europe , we have consistently added talent at all levels.
In 2021 our European strategic advisory head count increase.
Increased more than 25%.
And it's now more than three times the size it was six years ago.
We continued to gain greater traction with European clients.
And have steadily increased our win rates and market share in the region.
Our investment in P. J T camera view has enabled us to broaden our expertise in governance.
Say on pay shareholder activism strategic I R. L E.
E S G.
Leading to more strategic advisory wins.
Our overall strategic advisory mandate count.
Has grown substantially these past two years.
Nearly doubling during that time.
While we begin 2022 with activity levels up meaningfully across the board.
We do not expect much of this momentum to be reflected in our financial results until later in the year.
We continue to be an idiosyncratic growth story.
Even though we expect 2022 s M&A market to cool.
We remain confident in our 2022 strategic advisory growth prospects.
Allow me to talk about our capital priorities.
Our capital priorities remain unchanged.
Our number one priority is to attract highly talented professionals.
To our firm.
We remain committed to further investment in all our businesses.
With the lion's share of that investment directed to strategic advisory.
In 2021 strategic advisory head count increased 19%.
With overall firm wide head count up 11% in the same period.
Our second highest capital priority is to offset the equity dilution.
From our substantial and sustained human capital investment.
As Helen mentioned, we repurchased a record number of share equivalents in 2021.
Enabling us to end the year with fewer shares outstanding.
Then when we began.
Even with our steadfast focus on these two priorities we are in a very strong financial position.
Labeling us to increase our shareholder dividends.
We paid a $3 per share special dividend in October .
And we announced this morning that we are increasing our quarterly dividend from five to 25 cents per share.
Looking ahead.
We begin 2022 with a firm that is demonstrably stronger and more powerful than a year ago.
The headwinds we experienced in our restructuring business in 2021 have subsided and the business will overtime.
<unk> on the enormous opportunities that will inevitably present themselves.
Our biggest growth engine strategic advisory continues on its significant growth path.
Becoming an ever increasing part.
Of our firm wide results.
In strategic Advisory P. J T Park Hill and P. J T can review.
All are well positioned entering 2022 .
With the strength of these businesses increasingly shining through.
As the year progresses.
Before I conclude.
I would like to reflect on the passing of our board member Dennis Hirsch.
Dennis joined our board in 2015.
And it was our lead director.
He served with great distinction.
Playing a critical role in our formative years.
He was a big believer in the importance of culture.
And help shape the unique work environment that makes our firm so special.
We will continue to build a firm that dentists would be proud of and.
And we are forever grateful for his guidance and support.
Over the years.
Thank you.
Okay.
Operator, well open it up for questions.
Thank you if you would like to ask a question.
He's taking by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to lay your signal to reach our equipment. Once again that is star. One if you would like to ask a question. We will take our first question from Devin Ryan with JMP Securities. Please go ahead.
Thanks, Good morning, everyone.
Good morning Devin.
To unpack the outlook a bit more on your overall advisory business and.
Here the comments on restructuring and the outlook there I'm curious on strategic advisory whether there was any push out in revenues.
From the back half of 2021 into early 2022, I know you have some some chunky deals and also suspects that are taking longer.
Just want to get a little.
Perspective on kind of the back half relative to expectations or more specifically the fourth quarter and then it.
If it's possible to parse through on the strategic advisory side.
They're in the 2022 just with you know the I.
A significant step up in in some of our partners that are a bit on the platform for less than two years, and how relevant and kind of the productivity of those partner scaling is.
Sure let me.
Let me take a crack at this and I'm sure I'll get some but not all of your question and one in one bite and then then once you come back if I haven't.
Hit all of your points.
We still have a relatively undersized footprint and as a result.
When we make progress it tends to be very much focused on where we've made investment.
And the payoff on that investment and.
And when we step way back and look at the mandates that we have that are active that we're pursuing that number continues to grow and it continues to grow at a very substantial pace and it's continued to grow very significantly over the past two years now.
Now when when things hit and when they don't that's just sort of the nature of the business, which is why it's such a lumpy business and as our footprint gets bigger and bigger.
You'll see probably less variance quarter to quarter than you currently see which is why we look at this on a one year two year three year basis, and if you look at how much we've grown our strategic advisory business over the last two years.
It is you know very significant numbers, we were dramatically out of sync with the market in 'twenty 'twenty, because we grew the business at a pace that that no. One really came close to we continue to grow the business at a considerable clip in 'twenty, one but on a rare.
Live basis, it did not look as as compelling as it did the year prior but over the two years it was sort of top of the pack and.
I see those elements of our business continuing to present themselves into 'twenty, two but the way in which individual transactions hit as far as moving from a mandate to an announcement or the announcement to a to a closing it.
Just lumpy its just sort of the way the way it is.
Got it okay.
And then move it out a little bit here to restructuring and the outlook there appreciate.
No the expectation could be levels model I guess, if I could.
It will be flattish.
I guess what are the.
I guess risk to the downside, but also the upside there as we think about kind of this macro backdrop evolving and are you seeing any signs of a pick up or is it just more an indication that.
Ah you're rates move.
Significantly higher that that could.
Essentially be a catalyst to drive more activity there.
Sure. So so restructuring is a bit different when I talk about the Lumpiness in advisory I think restructuring has a different dynamic to it what we saw at the beginning of Covid.
And we were there early and we were there at our leadership position.
A record number of situations, where resolved in an extraordinarily compressed period of time.
And as a result traditional restructurings that might have extended into 'twenty. One many of those resolve themselves in 'twenty 'twenty.
And as this year went on.
Our restructuring business, given the benign environment and the fact that there was less of an imperative to resolve some of these situations those situations.
Started to take longer and longer so we sort of had acceleration.
The most immediate and pressing restructuring situations into late 'twenty 'twenty and then we had a change in the cadence with things taking longer.
I certainly see a meaningful change in the dialogues that we're having.
But I will own the fact that I was perhaps with hindsight too optimistic about our restructuring business in 2021 and as a result, I'm gonna be cautious for now and say I see it to be pretty much the same but that we certainly are seeing increasing stress building in the system and.
We're seeing companies, having more difficulty in refinancing we're seeing companies are more nervous about their their business prospects and that to me is an essential element for a change in restructuring, but I certainly think that the headwinds are behind us when we get the tailwind.
It will happen I'm, just not yet prepared to say its going to happen soon.
Yeah, Okay terrific contacts there Paul and then just last quick one here if I could squeeze in on the shareholder advisory or P. J T Chamber view, given that it's hard for us to kind of keep a contribution there I appreciate it's integrated with the overall business but.
Any way to kind of frame out how that business has been growing and contributing since it was acquired in late 2018 are size and scale today relative to that.
Well, it's it's.
It's more than doubled its its business. Since then in terms of resources that are committed to it and its results, but what we look at.
More than than anything else.
Is how that business integrates into our broader strategic advisory footprint because at the end of the day they have a market leading presence they have enormous footprint.
And the opportunity for us to provide an integrated opportunity.
Is what really you know sort of squares the circle. It makes all of our businesses better and.
And increasingly what you should see is you know as we continue our momentum in strategic advisory that if you'd go back and look at where some of those relationships are introductions or initial our relationship with our firm you know originated from it'll be from the shareholder advisory side.
And given what is going on in the broader environment.
With you know increase in shareholder activism increase in shareholder engagement the need to.
Crisply and powerfully tell one story to investors.
All of the ESG threads as you put all of that together.
Our offering becomes of greater relevance and it just helps us scale and get our get our message out to a much broader audience. So so increasingly it's just going to be one one integrated offering.
Okay, Great I'll leave it there, but I appreciate it.
Thank you Debbie.
Thank you we'll take our next question from Richard Ramsden with Goldman Sachs.
Okay. Good morning, everyone. Paul can you just expand a bit on your comment that you expect the M&A market to cool a bit in 2022, what do you. What are the factors that you think are going to drive that is that interest rates.
Pickup in market volatility and then within that other any either product verticals or geographies that you think will see greater normalization than others. Thanks.
Sure well look I I think that the the current the.
The current market broadly remains quite hospitable to M&A. So I think we're going to continue to see.
Elevated M&A activity by historic standards, but if you're asking me how does this year compare to last year.
I think financing markets.
Or a bit more challenging but more to the point what it does is it creates price volatility.
And when you have price volatility it makes it more difficult.
For many parties to come to agreement on valuation the whole valuation discovery process becomes elongated in a bit more complicated so I suspect that that probably affects things a bit.
We have already seen you know in the and the very large transactions.
There have been you know a lot of self editing where companies are not prepared to embark on quite ambitious transactions because of fear of antitrust review.
Or very long reviews, which you know.
Add to the risk. So I think we've already seen that trend I suspect that that trend continues in may at the margin increase.
Fake with just a little bit more uncertainty around the world with some European elections like my sense is that.
You probably have a lots of individual factors that probably will serve to to cause activity levels to cool a bit.
From a from the year before so if you had to ask me my Crystal ball I think it'll be it'll be quite active but it will it will be less.
Okay. That's that's helpful. And then secondly, I'm just maybe it's just not possible at this point in the year to answer this but I'm going to just try anyway, which is look if you just take a step back.
Can you just frame what your revenue growth expectations are in totality for the business for this year and obviously, there's a lot of different moving parts around what you think the market will do the 19% growth that you talked about in head count and strategic advisory different cross currents and the restructuring business and obviously strengthened the park Hill business I mean, what do you think.
Is a reasonable revenue growth rate for 2022 is it kind of revert back to the longer term average or do you think it's going to be below that level.
I mean I looked at that very hard to to give you a direct answer all because I just don't know what I do know is.
We had three businesses that were growing handsomely and what enormous headwind, which sort of you know more than offset all of that that that headwind is gone.
But I, just don't know whether or not we're going to get any lift in restructuring. This year. So we may have whatever.
Important business, there's clearly a much smaller percentage of our business today than it was a year ago, but it may be treading water this year, which obviously.
Tamps down grows our strategic advisory business continues to grow at very significant rates.
And the Park Hill on camera view business grow, but they grow at lower rates. So it's a little bit of you know.
How that all comes together in a in a consolidated matter, but I certainly feel quite comfortable that we're going to resume our our growth March this year, because when you look at 'twenty 'twenty and 2021 you need to look at them together you can't really look at 2021 with the <unk>.
Step down in restructuring without looking at 'twenty 'twenty with the step up.
And if you look at those two years together.
And see that in those two years, a restructuring business actually retreated a bit.
And then looked at the growth in our other businesses that took us from 2019 to 21 levels do you start to get a sense of the underlying trajectory of our other businesses.
Okay, Alright, that's helpful. Thanks Lowell.
Thank you Richard.
Thank you we'll take our next question from Stephen <unk> with Wolfe Research.
Hi, good morning.
So I wanted to spend some time just talking about the expense outlook are the comp accrual for <unk> was a little bit higher than we were anticipating.
How much it inflationary pressures impact the comp ratio and what comp accrual should we be contemplating for the coming year, given the combination of a better revenue outlook, some easier restructuring comps, but at the same time, just the headwinds from general wage inflation and intensifying competition.
Sure. So so if you step way back we made our initial comp accrual in the first quarter.
We played out four quarters at the end of the year, our comp accrual for the year was 50 basis points off of what we accrued at the beginning of the year and I think we've been pretty clear that the restructuring environment was more negative than we had believed it to be at the beginning of the year and throughout the year, So when I step way back.
If our initial comp accrual can pretty much hold up within 50 basis points given what we saw in one of our important businesses I think we've just been exercising a bit of judgment to reflect the fact that revenues were a bit disappointing relative to our expectations.
And we're always cognizant of the competitive market and our view is that we want to make sure that we're always investing in our people and our business and we're always you know moving forward and not being overly tethered to a comp ratio for one quarter.
The second thing I'd say is you need to look at 2020 . One together really is a pair trade because of what I said the run up in the run down in restructuring over that period of time, we took out.
Comp ratio from 64, 1% to 63.
So we continue to believe that over time, you're going to see our comp ratio come down, but how much. It comes down in a given year is just going to be a function of what our business performances that year.
The quantum of recruiting that we do and the competitive environment, but I do believe it will continue to come down, but the pace at exactly how that happens.
We need to we need to actually play out the years in the quarters to to figure that out with exactitude.
Thanks for that context, Paul it's really helpful. Just for a follow up on the odd placement fees, which it's interesting you were talking about strategic advisory and some of the other top line drivers maybe growing more slowly but your placement revenue is actually growing at a 25% CAGR over the last three years.
You noted that the backdrop for alternative fund raising remains quite constructive.
Or do you see as a sustainable growth rate for that business could you provide some context on some of the other drivers there as well recognizing that may be back related pipe placement and things of that sort of might slow down in the face what still up pretty constructive fundraising backdrop for alternatives.
Look I think increasingly the.
Way to to look at this is on a on a total revenue basis, because when you talked about the strategic advisory there are number of strategic advisory initiatives in revenues that show up in the placement wide.
So when we do a spec underwriting or when we do a placement of a pipe or a corporate private placements. So we're increasingly seeing strategic advisory revenues show up in both lines and in a similar vein at our Park Hill business as we continue to grow the <unk>.
Secondary advisory business some of the Park Hill revenues related to secondaries are G. P solutions show up in advisory. So it's it's not nearly as pure of distinction as it was six years ago and as a result, I think to best understand our firm is to is to rely on the commentary.
That I've given you have to look at the total revenue because if you try and allocated to business unit based on advisory or placement I don't think you'll you'll be getting at the underlying trends.
Thanks for that Paul and maybe just if I could squeeze in one more just on this.
Spak related outlook Spak M&A has certainly been a big contributor to your results in 'twenty, one and we even see a big contribution just in terms of the the overall backlog composition I was hoping you could help size the contribution from spark related M&A since I know, there's some improvement.
Decision and Dealogic related forecasts and your outlook given the the drop off in snack related issuance and some of the poor performance we've seen in stock related deals.
Yeah, I think when I when I gave my outlook for strategic advisory It was inclusive of spec. So I think we we we certainly see the market to be more challenged this year than it was last year. So none of that is is lost on us, but we're increasingly seeing you know.
The totality of our strategic dialogue across all products.
In all geographies and industries, continuing to expand and we may or may not get.
To.
The levels, we enjoyed last year, we just announced a significant spec transaction.
Week or so ago. So we're going to continue to do those we're not relying on that market you know staying anywhere near at the frenetic pace. It was a year ago. I'll also point out that a year ago. We said that the market was tolerating a lot of marginal transactions and that we were only.
<unk> focused on the highest of high grade situations and that continues to be the case. So to the extent there are transactions to do they're more likely to be with companies that meet our underwriting standards and who were prepared to commit to that time too, but as a broader trend.
We see enormous opportunities in capital markets advisory, but I am Lowe's to start talking about each one of these as their own business because at the end of the day whereabout relationships whereby clients Whereabout advice.
And if you're going to have the best firm delivering the best advice you need to have holistic conversations with clients and that starts sometimes with a capital markets issue, sometimes it starts with.
A strategic issue related to a particular industry, sometimes it relates to activist engagement and and as we just build out the tools and as we have more ways to connect with clients and to serve clients it'll ultimately manifest itself in our strategic.
Advisory business, but what the linchpin was.
Is sort of beside the point so while we talk about these individual capabilities what makes our firm unique is how integrated we are and how it's all about client relationships and solutions.
And spacs are have their plates, but without a firm that's organized around how to just do spacs or do you no. One particular type of transaction as if it makes sense that if there's a market opportunity and we can move our clients further along but by using that as an option we were.
But where we're sort of agnostic to the technology and much more focused on what's the right advice for our clients.
No that's great color Paul Thanks, so much for taking my questions.
Absolutely David Thank you.
Thank you we'll take our final question from Michael Brown with K B W.
Great. Thank you operator.
So I guess most of my questions have been touched on but.
I didn't want to dig in a little bit on Europe .
You know Paul in your prepared remarks, you talked about the growth of the franchise there.
And in your commentary about 2022, you mentioned you know there is some uncertainty with elections there.
There's also no rising pensions on the on the Ukraine border. So just wanted to hear a little bit about what you've been seeing year to date I know, it's still early in the year, but how how is activity performing right. Now is it is it generally kind of quieter in the region or is still there's still activity progressing at this time.
Well I appreciate the question because you sort of have really got to the to the heart of the matter, which is we are an idiosyncratic growth story and I think both of those things are correct and they can both coexist, which as we continue to see enormous opportunities for our global franchise, and we see enormous opportunities for us to continue.
To build out our European presence I'm not sure that Europe as a market will grow this year.
It may be it may be challenging to to match last year's levels. I think there are some puts and takes you'll probably continue to see more sponsor activity in Europe , I suspect that with French elections, with as you said rising tensions.
And just some unease amongst corporates you may well have a you know a less than a record setting year in Europe , but we're still quite comfortable in our European prospects no different than how we see the U S and and the rest of the world and our growth is very much a function.
Of where resources are committed how long those resources you know are out there.
The the capabilities that we could build around it and we're literally building a firm you know one client at a time from the bottom up and.
Where we're mindful of the macro but where we're much less tethered to it and I think you've seen that the last two years, then I think youll see it again this year I suspect that we're just going to continue to grow pretty much regardless of what the macro environment is.
Okay, Great and then just one last one for me on on the talent front. So.
Where's your partner head count.
It looks like it ended the year at 97 and.
Just give us that update and then what is what is your outlook here in terms of.
Hiring how is that competitive landscape is it fair to assume that 2022 could be a bit better than in 2021, obviously, it's always just kind of idiosyncratic, but would love some commentary there.
Yeah, well, let me start and then I'll turn it over to <unk> to <unk>.
Hello.
So just some some statistics to maybe help a bit so.
As we mentioned in our remarks strategic advisory head Count grew 19% this year.
From strategic advisory partner Count, we expect sort of a year in and year out if you look at our experience that the net adds if you will at a net additions they've been about six or seven strategic advisory partners a year I think this year that number will have been six.
Covid has not helped our recruiting efforts. It is just more difficult to appreciate how special it place. This is.
When you cannot walk the halls, and and engage with folks and for a significant part of the year. So a lot of the dialogues that we were having we did not get as far as we would had we all been back.
Back in the office, it's interesting to note that with our return to office, how much the recruiting picked up.
And we've we've added and will add four strategic advisory partners starting between the months of December and February . So we see the way we ended the year from a recruiting perspective is much more indicative of what the partner growth will be in 'twenty, two and I think zoom.
Works for lots of things.
If you're recruiting best in class individuals who are quite low.
Successful at their incumbent firm the best way to get people to make that commitment is to have everybody back in the office and as we return to the office not surprisingly we've seen a big uptick in our partner Onboarding, but if there are other questions. Helen can give you more specifics with you just to confirm that that's correct.
Ninety-seven partners as of 12, 31, which includes 56 patent as an advisory and as Paul said and since then we have a country. The promotion process. So we've added some partners and also hired some partners. So when we report Q1 all of that will be reflected in our third at our head count numbers.
Okay, great. Thank you Helen and Paul.
Great.
Thank you and we have another question from Jeff Harte with Piper Sandler.
Hey, good morning.
Just a couple left for me.
Thinking about kind of the Alt fundraising and what's going on with Park Hill.
Can you talk a bit about kind of the longer term secular outlook, which I got investor demand for off keeps keeps rising versus maybe any potential near term headwinds I mean, the market's been awfully volatile I'm not sure how big of an impact that has those higher interest rates you know provide more competition for capital, maybe slow things down, but kind of near term versus long.
Term perspective there.
Yes.
Thank the look that the tailwind is a headwind right with everybody coming back to market.
You're going to have a crowded marketplace and given the spectacular you know performance certainly in P. E U.
You have a lot of Lps that are over allocated to the asset class.
So one of the challenges to the fund raising environment will be everybody coming back. So there's a lot of you know asks out there and you've got to create the supply now I think where that does dovetail nicely is that causes a lot of Lps to need to readjust their portfolios and.
More liquidity, whether it's through sales of <unk>.
Existing L. P interests or are working with a G piece to create liquidity through whether it's a continuation fond or S. P vs or other technologies. So I think that the market is continuing to evolve because this has been such a successful asset class and its.
Continuing to attract more and more capital, but you need to you need to be much more nimble as to how you manage all of this to ensure that that you have successful fund raises so I I suspect that with everyone not everyone, but with most everyone returning to the market, it's going to be a highly competitive.
Have a place to get the attention of Lps, and we're going to need to continue to attract additional capital to the space.
And I see that sort of Ying and Yang continuing.
For a long time, so it could be that you know in order to create more opportunity on the primary side youre going to need to be more creative on the secondary side.
Okay and on the dividend increase I made that the meaningful regular dividend increase.
Should we read anything into that as far as kind of your confidence in the sustainability of cash flows I know buybacks, you could turn on and off especially as you can do it will incur.
The increase in the.
It was kind of a fixed dividend is that kind of signal anything to us.
I don't know what it signals, but I certainly wouldn't do it if we thought that we were creating a rock solid dividend <unk> 25, a quarter and I would I would note that we.
We introduced our firm with a five cent dividend Ah.
It's Ben.
Six years, plus we havent touch that dividend were dramatically different firm today with.
With different growth you know and just.
Size scale et cetera, So I think we're very very comfortable.
That dividend is a is a rock solid dividend otherwise we would not have gone.
<unk> gone to that level, but you do need to look at it in the context of not having touched it for for six plus years.
Okay. Good point thank you.
Thank you, we'll now take a follow up from Devin Ryan with G. M P Securities.
Yeah. Thanks for the follow up here, just want to kind of dovetail on that and just capital return more broadly you did touch on but.
You know as you think about the dividend and just kind of your excess cash position today I appreciate your stock to pay bonuses, but.
Yeah, you're still creating a lot of excess capital and.
A fair amount more than the dividend. So I'm curious how you guys are thinking about the stock and the buyback and balancing you know the stock price here versus kind of liquidity and float and kind of how how much you maybe want a win win on that the stock here at these prices.
Ah well started thanking forgive me yet another opportunity to talk about our undervalued stock. So I. Appreciate I appreciate that look we have always been big believers in.
In our prospects and we have directed the vast majority of our free cash flow to buybacks as opposed to dividends I think even moving the dividend to a dollar a share.
That's not going to change that and if you go back to our priorities priority one is to invest in the business.
Number two is to you.
Oh buyback as much of that cheap stock as we can.
And then if there's money left over there is a dividend there we're quite comfortable at a dollar a share I don't think those those change much on a going forward basis, but we have to evolve and and we have to tweak it and when you think about.
How much additional capital we're generating to have none of it reflected in the dividend.
And just to keep the dividend that we introduced ourselves with in October of 2015 that that's not the right balance either so we're going to continue to buyback stock and we're going to continue to find ways to capitalize on on these dislocations.
Got it okay. Thanks, Paul.
Absolutely.
Okay.
Thank you and that was today's final question I would like to turn the conference back over to Mr. Taubman for any additional or closing remarks.
Just want to thank everyone for joining us this morning, and thank you for your interest and your support and we look forward to meet.
Meeting again, when we report our first quarter results. Thank you and have a good day.
And again that does conclude today's conference. We do thank you all for your participation you may now disconnect.
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