Q1 2022 PJT Partners Inc Earnings Call
Okay.
Please standby we're about to begin.
Good day, everyone and welcome to the P. J T Partners' first quarter 2022 earnings call. Today's conference is being recorded at this time I'd like to turn the conference over to MS. Sharon Pearson head of Investor Relations. Please go ahead ma'am.
Thank you very much Allen.
And welcome to the P. J T partners first quarter 2022 earnings conference call joining.
Joining me today is Paul Taubman, our chairman and Chief Executive Officer, and Helen <unk>, Our Chief Financial Officer.
Before I turn the call over to Paul I want to point out that during the course of this conference call. We may make 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 indication statement.
We believe that these factors are described in the risk factors section contained in P. J T partners 2021, and Form 10-K , which is available on our web site at P. J G partners don't come.
I want to remind you that the company assumes no duty to update any forward looking statement and the presentation. We make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance.
The 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.
I'll turn the call over to Paul.
Thank you Sharon and thank you all for joining us this morning.
Earlier today, we reported our Q1 financial results.
For the quarter, we generated revenues of $246 million.
Adjusted pretax income of $56 million.
And adjusted earnings per share of $1.
Measured against each of these metrics, we had our strongest first quarter ever with.
With broad based strength across our businesses.
R P J J Park Hill and restructuring businesses.
Deliberate significant year over year growth in revenues.
With strategic advisory revenues down just slightly compared to strong year ago levels.
As we mentioned on our fourth quarter earnings we expect the strong momentum we are seeing in our strategic advisory business too.
To increasingly shine through as the year progresses.
After Helen reviews, our financial results.
Ill review each of our businesses in greater detail Helen.
Thank you Paul.
Good morning.
Beginning with revenues.
Total revenues for the quarter with 246 million up 19% year over year and as Paul mentioned, we had significant revenue increases in P. J T poculum restructuring and a slight decline in strategic advisory revenues.
Turning to expenses consistent with prior quarters with.
It was presented the expenses with certain non-GAAP adjustments and these adjustments are more fully described in our 8-K.
First adjusted compensation expense.
We accrued adjusted compensation expense at 63% of revenues for the first quarter, which is flat. This is a full year 2021 ratios and represents our current expectation for the full year 2022 ratio.
Turning to adjusted non compensation expense.
Total adjusted non compensation expense was 55 million in the first quarter up from 28 million in the same period last year.
As a percentage of revenues non compensation expenses were 14, 2% for the first quarter up from 13, 5% in the same period last year.
We saw a meaningful increase in travel and related activity in March.
Activity remains below pre COVID-19 levels, not surprising they travel and related costs were the most significant driver of our higher non comps in the quarter at $4 5 million.
With 500000 in the prior year.
Excluding travel and related expenses, our non comp expenses in the first course that were up 11% year over year.
Let's say the growth in head count continued I'm disappointed I T and increased business activity. We continue to expect our full year non compensation expenses, excluding traveling unrelated to grow in aggregate in the low double digit percentages year over year.
In terms of that travel and related expense those numbers are likely to grow as the gift for Christmas.
Turning to adjusted pretax income we reported adjusted pretax income of 56 million for the first quarter up 15% year over year.
Our adjusted pretax margin was 22, 8% for the fifth quarter compared with 24% for the same period last year.
The provision for taxes as with prior quarters, we've 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 was 25, 8% for the first quarter compared with 22.3% for full year 2021 .
We had a lower tax benefit relating to the delivery of Vista, She has relative to their amortized costs compared to last year.
We take a full year view of that benefit and would expect our full year effective tax rate to be in line with the first quarter rate of 25, 8%.
Earnings per share our adjusted if converted earnings for a dollar per share for the first quarter up 12% compared with 89 cents per share in the first quarter last year.
But the share count.
For the quarter, our weighted average share count was 41 8 million shares during the first quarter, we repurchased the equivalent of approximately one 2 million shares including approximately 887000 shares in the open market.
The launch of the repurchases came from the exchange of partnership units for cash and the net share settlement of employee tax obligations.
In addition, we plan to exchange 65000 partnership units for cash on May two 2022.
On the balance sheet, we ended the quarter with 96 million in cash cash equivalents and short term investments and 218 million and net working capital.
We had modest store in our revolver in the quarter, which has not been repaid.
The board has approved a new authorization of $200 million to the Companys common stock repurchase program.
$17 million less than our prior share repurchase authorization and finally, the board has approved a dividend of 25 cents per share the dividend will be paid on June 22nd 2022 to class a common shareholders of record as of June eight and with that I'll turn it back to Paul.
Thank you Helen.
Beginning with P. J J Park Hill.
P. J T Park Hill business delivered strong performance in the first quarter.
Compared to the prior year.
It continues to track toward another year of record performance.
2022 is shaping up to be an extremely busy.
But challenging year for alternatives fund raising.
Many managers are back out fundraising with record setting fund size targets.
In this increasingly in this increasingly crowded marketplace.
Some managers may struggle to meet their fund size targets as asset allocators become increasingly selective and capital constrained.
Despite this challenging backdrop, we are well positioned to continue our strong performance.
On the fundraising side the team's rigorous selection process.
<unk> us to bring the highest quality fund managers.
With differentiated strategies and differentiated track records to investors.
In secondary advisory our leadership position in advising on large complex GP led transactions, coupled with our deep network of L. P relationships.
Allows us to facilitate the institutional investors increase demand for capital redeployment and liquidity.
Turning to strategic advisory.
Given the early stages of our advisory build out.
We are disproportionately levered to the number of new client relationships developed.
Rather than the level of overall M&A activity.
Our ability to cultivate new banking relationships is greatly enhanced when we meet clients in person.
Our collaborative culture and differentiated capabilities.
Can best be appreciated rather than over zoom.
To that end, our strategic advisory business is benefiting greatly.
From the resumption of travel.
In person meetings and more personal client engagement.
Our strategic Advisory practice also continues to benefit from the contribution of P. J T camera views.
Nique investor focus perspectives in relation.
As these two disciplines continue to melt.
And depth of our client relationships.
Grace is appreciably.
As previously communicated we have consistently forecast 2020, twos global M&A volumes to decline.
Relative to 2021 levels.
However, we remain confident that 2022 will be another record year for our strategic advisory business.
As the momentum in our increased client dialogues mandates and announced transactions is increasingly reflected in our financial results as the year progresses.
Turning to restructuring.
Although we continue to expect overall 2022 restructuring activity levels.
To be largely in line with 2021 .
Stress is beginning to build in the system.
The combination of increasing interest rates.
<unk> pressures.
As supply chain.
We're having an impact on many companies that emerge from the COVID-19 pandemic with.
With highly leverage capital structures.
Further disruptions caused by the war in Ukraine are impacting companies everywhere, but particularly in Europe .
We continue to believe that it is simply a matter of time.
Before we see a meaningful uptick in overall restructuring activity.
Our restructuring practice continues to be a market leader receiving numerous accolades for its best in class capabilities.
Including being named global restructuring bank of the year by Ifr for the second year in a row.
But yet ready to suggest we are at an inflection point.
We have seen some uplift in P. J cheese number of restructuring mandates.
Accordingly.
We now believe that our 2022 restructuring revenues.
While increased slightly from 2021 levels.
Turning to our capital priorities.
Our first investment priority continues to be attracting and developing best in class talent.
Even with the challenges of recruiting in a COVID-19 environment.
Bold strategic advisory partner and non partner head counts.
Grew at double digit rates over the past 12 months.
Offsetting the share dilution, resulting from our human capital investments.
Remains a close second in terms of capital priorities.
At recent trading levels.
Pelling investment opportunity in our shares.
Caused us to weight, our 2022 open market share repurchases to earlier in the year.
We committed more dollars to open market repurchases last quarter than.
Than in any previous quarter.
As a result of our significant open market repurchases, we has as of today only $17 million left on our previous share repurchase authorization.
Consequently.
The board has approved an additional share repurchase authorization of $200 million.
As before we intend to remain active re purchasers of our shares.
But that activity is likely to slow in the second half of the year.
As we continue to be mindful of our float.
Looking ahead.
We said earlier this year that all of our businesses outside of restructuring we're poised for record performance in 2022.
That continues to be the case.
And our leading restructuring franchise.
<unk> to be well positioned.
For when the inevitable restructuring wave hits.
Our unique combination of businesses and the significant expansion opportunities that lie ahead.
<unk> as well to drive significant growth.
We remain confident in our prospects for 2022.
In the years to follow and with that.
We will now take your questions.
Thank you, Sir if you'd like to ask a question. Please signal at this time by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach our equipment.
Once again that is star one if you'd like to ask a question.
We'll take our first question from Devin Ryan with JMP Securities.
Thanks, Good morning, everyone. How are you.
Good morning, Devin we're fine thank you.
Great.
First question just on kind of the broader outlook.
So you appreciate all the guidance.
All of the different businesses, you sounded pretty similar to the commentary you guys gave with the fourth quarter call clearly a.
The macro backdrop has been pretty choppy since then.
Great escalation, so theres been a number of ships in the backdrop. So I'm just curious you know.
Are you seeing kind of a change in mix of activity in advisory as an example, you are the sectors.
That are they're outperforming either shifted there, but it's kind of giving you comfort in that outlook or anything else you can kind of provide around.
The strategic advisory side that gives you comfort that this should be a year of solid growth against a pretty pretty volatile backdrop with a lot of uncertainty.
I appreciate the question I'd say three months ago.
We communicated a view of 'twenty, 'twenty, two which had already baked into it.
An assumption.
The world was going to become more complex markets more volatile.
And are the macro environment more challenging.
I would say that overall since then.
The world is probably a bit more subtle than we had previously.
Thought.
And our view on our full year prospects is equal to if not slightly more constructive than it was.
At the beginning of the year and.
And I think that that's really occur.
Across the board strains, but a lot of that is that our advisory business.
Is by and large decoupled from the macro environment clearly at some point.
If you know M&A activity shuts down it shuts down completely but if it does it shut down it's much more for us a function of relationships.
What activity are the benefit of previous investments are being able to further support our businesses and we're seeing that that strength across the board and you know of all of the of all of the expense variance is the one that I really enjoy seeing as a travel of areas because of the <unk>.
More.
That people are out on planes trains and automobiles seeing clients engaging that is good for our business and I think we have we have benefited from that.
Yep.
Okay terrific and then just to follow up on the restructuring side of the business. Yeah, obviously caught the commentary around kind of a slight increases the expectation now.
You know I think that.
The market's kind of thinking about just what an abrupt normalization fed policy means for obviously the macro backdrop in the Big picture Big picture question, but just thinking about just at a high level, what that could mean for restructuring activity and any early anecdotes I. Appreciate you probably don't want to get too far out of your skis led restructuring.
Revenues do take time to materialize, so it might even be more of a 2023 story if restructuring starts to pick up but just you know the the view on rates has changed in the market in recent months and so is that the bigger driver or is it just more a function of you're starting to see some stress in pockets.
Some color there would be helpful. Thanks.
Sure Devin look I think it's a little bit of everything.
I think clearly there were companies that were challenged that in more normal markets.
Would have needed to do subset of restructurings in 2021 .
But just given the extraordinary risk on marketplace MIM stocks spacs.
Bundles of capital everyone chasing yield a lot of those companies were able to sidestep having to to restructure balance sheets.
That risk on environment, and mentality and mindset is clearly no longer present, certainly to the way or to the extent it was a year ago. So companies that that we're able to do amended extends and the like and kick the can down the road or to raise fresh equity.
That.
That sort of path is increasingly being block. So you have that then.
And then on top of that with companies that operate with relatively thin margins.
It's the Cod Flores of rise in interest rates inflationary pressures commodity costs labor costs supply chain disruptions that if youre dealing with relatively thin margins to begin with that puts pressure on on companies.
And at some point, we'll have to see as the fed tries to take all of this liquidity out of the out of the marketplace.
Tries to attack.
And inflation.
<unk> is going to be can they do that and get us to a safe landing or you know is.
Is there some potential that will.
We will hit a a true contraction from a macroeconomic perspective, and if we then do that at.
And demand dries up for a lot of these companies you'll see another another wave. So if you just look at you know the way high yield credit is trading.
So you're seeing you know a lot of pressure but.
But not enough to move them from some pressured credits to to really troubled credits and I think the the stress is still early on and I wouldn't begin to suggest when when we might see a step function change, but what I am comfortable with is that we.
Sort of bottomed out in terms of restructuring activity, we as a firm have been quite successful in securing a significant number of mandates recently and I just think the tenor of our businesses is more constructive today.
It was three months ago, and certainly relative to the middle of last year.
Great. Okay. Good color. Thanks, Paul appreciate it.
Sure. Thank you Deb.
And your next question will come from the line of James <unk> with Goldman Sachs.
Hey, Thanks, a lot for taking my questions. So so we obviously saw record moves in interest rates in the first quarter and rates have moved further in the second quarter. How if at all is this impacting your strategic advisory dialogue and if not what level of rates would you sort of expect this to become more of a dampening effect on that side of the business.
Yes.
Yeah.
Look I think it's good.
Great rates are still quite low from a historical perspective, and really the issue is whether or not.
Companies can finance transactions that I think there there's an enormous.
Warmus amount of capital in the marketplace is just that the cost has gone up but at the same time, you're seeing some pressure on equity values and the likes so it's not all a one way trade I think the bigger issue is really just uncertainty.
And volatility.
And if you look at Europe , I think with a you know as we had said previously with elections in France.
And that will be additional elections in France.
Companies, who are waiting to look at the at the broader political landscape there have been various points in time, where it looks as if the.
The tack on Ukraine would continue to escalate at other points in time, there's been.
So I'm hopeful signs of progress I think until the world sort of settles out it's going to put.
A bit of a damper, but I don't think that the level of rates today or the ability to secure financing is having a chilling effect on activity.
It's just it's just raising the bar a little bit and there are a lot of companies.
Who are going to need to transact Cedric perspective.
Who might find the current environment not as.
Not as welcoming as where it was a year ago, but youre still.
A lot of transactions across industries geographies sizes, so I'm not really able to tell you exactly formulaic Lee when the market shuts.
Shuts down, but I think at this point in time, we're not anywhere near that but we have taken a bit of a breather from last year's frenetic pace and I think it's important to just look at the sheer volume of activity last year and the fact that we're with all of this volatility it will all of this uncertainty and with this move.
In rates the way, we look at it the M&A global market volumes are down about 15% year to date.
And.
That to me shows quite a bit of health in the in the system.
Okay that makes a lot of sense.
So maybe if we do enter a more prolonged period of weaker economic growth you, obviously have a lot of durability across your business largely from restructuring and we saw this.
Sort of play out in 2020, so maybe if you could just talk about you know.
If we did enter that sort of prolonged economic downturn is that an opportunity for you to grow more quickly in terms of hiring and then you know would that.
Given your relative strength versus more you know, perhaps strategic advisory skewed firms would it make it more attractive for you to do more inorganic type activity.
Well I'll look on the hiring side, we were a growth company, we see enormous growth opportunities, we're going to continue to grow.
We're not going to chase growth so.
We are a destination for talent and all of the talent that fits.
Our culture.
Can add to our capabilities, where we're all in and that's never been the issue and we're going to continue to grow as we've said consistently when you're trying to recruit and everyone is locked down in a COVID-19 sequestration and they're all from home.
It's far more difficult than when you can get people in person face to face and let them walk the halls, and really feel how special our firm is that as the COVID-19 .
<unk> locked down in the the work from home you know receipts.
And we get back closer to the old normal.
That's going to benefit us from a recruiting perspective, we've already seen that the.
The other thing is.
When you're talking to best in class investment bankers and they're dealing with a tsunami of deals because 'twenty 'twenty. One is the height of activity it's difficult for those.
Those individuals to really extricate themselves from all of their client entanglements. So what we've also said is that perversely, if the market slows down a little bit.
And bankers catch their breath, it's easier for us to have those substantive conversations and the switching costs go down so the way we see it all of those Sightlines are are positioning us to to be able to pick up our recruiting momentum because of that also ends up events.
And.
When we think about where we can add best in class talent, it's really across the firm. There's no doubt a disproportionate amount is going to be in strategic advisory, but at our park Hill and restructuring businesses Theres always opportunities for us to add best in class individuals and then as it relates to acquisitions of like I've been quite consist.
Which is if you can find the right ones that are you know simpatico with the culture.
And bring the right incremental capabilities that are not duplicative. It's a wonderful thing, they're just very difficult to find we have a high bar for those.
Oh it is.
Right.
Okay. Thank you.
Thank you. Your next question comes from the line of Steven <unk> with Wolfe Research.
Good morning, Paul This is Brendan O'brien filling in Pristina.
So on the sponsors all your firm is viewed as being more reliant on large cap strategic M&A recent trends suggest that you've had a lot of success winning deals among sponsors can you speak to the strength of your sponsor franchise and whether the recent wins within the space is something we should anticipate.
Bet more of going forward and maybe provide a bit of color on your strategy for growth there.
Sure well first of all I've I've always said that there are two types of firms there are firms that do large deals and small deals.
And there are firms that just as small deals.
And just because you do large deals does not mean you do not do smaller deals. There's always a reason why you want to be able to follow your clients. It may be to have insights into new technologies that you're fintech banker by definition Youre looking at the next generation Disruptors, if you're a med tech.
There are a life sciences banker by definition Youre looking for the next company, that's that's going to be able to sort of change the lives of people from a from a drug discovery perspective, So you always need to be going up and down but there are always certain firm.
<unk> that have the confidence of the largest most sophisticated companies to do the largest and most complex transactions and that's the space that we seek to occupy is to be called upon to do the largest most complex most sophisticated.
<unk> transactions, but also to be able to find opportunities and to follow our clients regardless of transaction size and as it relates to financial sponsors. What we've consistently said is we're on a journey.
And every day that goes by we strengthen our firm by adding more capabilities. We we have more domain expertise, we have more capabilities, we have more ways in which we can serve clients and we have a lot of incumbent strains as it relates to financial sponsors we.
Have our park Hill business, which touches an enormous number of alternatives a G p's.
We have a leading restructuring practice.
There's a lot of time dealing with highly leveraged situations and sponsors have a disproportionate number of portfolio companies with leverage capitalizations, we have deep domain expertise in many industries and as a result that creates Ah Ah.
Impelling reason for sponsors to want to talk to our bankers.
We have a significant initiative in direct lending, which is another reason and everyday that goes by we do more of that I've always seen sponsors as being an ever increasing part of our practice.
And it's just part of the journey so.
I Wouldnt monitor it too much quarter to quarter, but I am quite confident that over time, you know our balance of business between corporates and sponsors will look a lot more like the way the overall market breakdown is between corporates and sponsors.
That's great color. Thanks, a lot Paul and then as a follow up as you noted the conflict in Ukraine is having an impact on activity across all geographies, but it feels like Europe has been more severely impacted given its closer proximity and heavy airlines on Russian exports.
Hoping you can discuss what youre seeing in terms of activity within the region on both a standalone basis and relative to the U S across both strategic and sponsor M&A and maybe a little bit of a compare and contrast on the construction side as well.
Yeah.
We are delighted to look there.
The reality is that that the statistics are not that different and if you look at you know that's down 15%.
In activity levels globally year to date, the way, we measure it and we look at it.
Ex Spacs because I've always question, whether spag transactions are really another form of IPO, whether they're really true M&A business, but if you look at it that way, we see the market as being down about 15% Theres no doubt that the U S has been strongest.
Europe has not been that much weaker and it's really rest of world and clearly you know Asia has been the most challenged during that time I think there are real pockets of strength in Europe , I think the U K continues to be a.
<unk> opportunity I think there is a.
A very significant number of compelling investment opportunities in the U K.
And sponsors are increasingly focused on.
Smaller and mid sized companies in the U K, because they afford compelling valuations and there continues to be a valuation disconnect between the way companies are value there and the way they're valued in the in the U S. So that that's probably where you're seeing the greatest strides I think the election result.
In France.
Are are a positive for some renewed.
Strategic activity in France.
And I think.
It's just going to be it's going to be very much dependent upon.
How.
How all of these sanctions play out whether theres any escalation or whether we can hopefully get a get an end to this horrific conflict in the near term so I'm not ready to tell you exactly.
What the outlook is but no doubt because no one knows perfect no doubt.
The further you are from Europe . The more insulated you are I think China has its own issues.
But there are certainly you know significant pockets of activity in Europe , and I'd also make the point that when we talked about our firm.
So we're still a much smaller firm and we're really not dependent on macro trends or themes. We.
Where we're truly building our firm and our franchise one client at a time.
And we continue to be quite optimistic about.
Our progress in Europe , notwithstanding the overall, the overall macro environment and that's what makes our firm so different and so special.
Great.
That's great color. Thanks for taking my question.
We're taking the next question will come from Jeff Harte with Piper Sandler.
Yeah.
Good morning, good congrats on a good quarter.
A couple of follow ups. Most a lot has been asked when it comes to restructuring you mentioned, maybe things looking a little better and also the higher revenues kind of driving a lot of the year over year growth in advisory.
I'm, assuming the higher revenues are kind of completions of deals that were already in the works as opposed to kind of revenues coming from new mandates is that the right way to think of it.
Well in the quarter I'm sure that there was relatively little to do in the quarter that came in the door and was executed in the quarter. There was some of that but that's why you know when we think about the health of our business. We're always looking at.
At our pipelines and our mandate counts and the like so.
That is correct most of the first quarter.
Came in before but some of it not not that much before.
Okay and as we think when you talked about maybe 2023 being a little better than 2021, that's on a revenue basis or are you kind of look into the activity levels figure them. All the revenues may take longer to show up.
I'm, sorry, you may 2022 .
Yeah, I'm sorry, yes.
2022 maybe being slightly better for 2021 for for you guys in financial restructuring.
Are you referring to revenues are you, referring to mandates and kind of activity levels.
Revenues.
Yeah.
Okay.
That's what I thought and finally, when we look at expenses as long as growth keeps coming that that's great. It seems like it's going to keep coming.
If we actually tip into a recession and things really you know stop on the M&A front.
Is there a kind of a floor dollar amount or a fixed portion of compensation are we.
Should kind of be thinking about.
Hey, Jason.
Kevin I would say.
It's hard to say what absolute dollar amount is.
Because of the fixed component of our cost base does scrubbed and one. Good example would be occupancy where its relatively fixed but there is some small relative investment.
But we think of the cost basis being at roughly 60% fixed FX like in that we've always said, we think twice more slowly than that than the variable expense.
Leave it to you that base stays in place.
Okay. Thank you.
Yeah.
Alright. Your next question comes from the line of Michael Brown with K B W.
Yeah.
Yeah.
Hi, good morning, Thanks for taking my questions.
Oh well.
Well I wanted to.
Narrowing on the restructuring cycle here as we know.
Perhaps start sorry.
A new cycle this year.
How do you anticipate the early part of the restructuring cycle too.
To perform should we expect to see a rise in bankruptcies is that went on when the cycle will officially start to contribute.
Your business or would you expect to see a lot more non traditional restructuring activity that could start to come through before traditional bankruptcies rise.
And then maybe just a follow up on the restructuring.
How how is your your business in China have you have you guys been working on any of the and mandates there related to the Chinese property sector.
I don't like to talk about specific situations, what I will say as we we if you look at our you know.
The history of transactions, you'll see that while we have a very small presence in mainly.
Mainland China, we do have an office in Hong Kong, we have represented companies in the region and we do have significant access capabilities.
And like so we're we're certainly mindful of that opportunity, but it has not been in.
<unk> that we've committed.
As you know onshore.
Onshore presence too we've done this all sort of offshore, but we do have a leading restructuring practice with a lot of experience working with companies in the region and have significant expertise in that obviously there are many of those situations.
That have a creditor side to it where you're dealing really with with global credit funds and the like so.
That's probably the best way to talk about that.
On the on the restructuring side.
I think there's really two things if there is if there's a shock of true shock to the system.
Then everything is in play and that's what we saw.
In March and April of 2020.
We're not there and we're not close to that at some point, we may be but we are not close to that what we are seeing is really getting back to a more normal normal cause 2021 was not a more normal normal because there were just.
So many pockets of capital.
So many folks facing growth and yield that a lot of companies, who should have been restructured in a more traditional environment, we're able to avoid it.
And when we think about stress in the system one.
One of the one of the best they are early indicators is just to look at high yield debt trading levels.
And to see how the market is trading a lot of these credits and what Youre seeing is you know there are more companies that are pressure today.
But there are still a.
Very very few number that are trading is broken credits.
And that's probably the single fast into early indicator of where the market is going in and in that environment. You know we spent a lot of time looking to restructure companies out of court.
Use our financial strength and skills to do that so we have a balance of.
Of capabilities and then it also is a function of which region of the globe. Because you know it's really the U S has its unique chapter 11 proceedings, but there are plenty of other ways to to resolve.
Credit situations.
And a negotiated matters. So you should expect to see us.
And all of those elements and then there were a lot of companies who are now at least prepared to have a conversation on liability management.
When it would not have.
<unk> been deemed to be pressing a year ago and that just brings in a whole another list of capabilities from from our firm. So I think this is something where it's going to take a while for the for the part.
December and potentially Boyle.
What's really more important to us as last year.
We simply experience you know the retreat.
All the way back to pre Covid levels from the enormous COVID-19 activity and what we've done is we have been able to put up.
Under the 2021 activity level and as we no longer have that headwind I think the strength of our other businesses, which was really.
The case in 2021 , but it was obscured by the pullback in restructuring that that's increasingly shining through and you're now being able to see because you no longer have the restructuring headwinds youre seeing that core underlying strength at our park Hill business, our camera view business our strategic advice.
<unk> business and on top of that I suspect.
There'll be a moment in time, where the.
Touring activity level spikes appreciably.
Right out there.
And I am not.
Even close to suggesting that that's that's in the near term.
Okay got it. Thanks, Thanks, Paul that was that was really helpful color.
And then maybe just one last one for me on placement business. You know this quarter you talked about the fact that the.
One fund placement revenues are but where the real contributor and corporate placement activity was.
A bit lighter.
Up versus the prior year, when you think about the placement business and the outlook for the rest of the year is it fair to expect that that's going to be the right next here.
Assuming that that's a reflection of the stock market.
There versus 2021 .
And then just one other follow up on that can you remind us of the seasonality in that business. It looks like the second quarter is usually a bit slower off of the first quarter. When I look back over a couple of years, where stronger yearend for that business. So just wanted to check to see if that's the right way to think about the revenue.
Seasonality.
Well just as I as I continue to remind folks. This this placement versus advisory demarcation is increasingly less relevant in understanding our firm because.
The place that has got strategic advisory in Park Hill in it.
And advisory has.
Strategic advisory in part gel with it and it's really not a direct representative of either because parts of.
Both of those businesses get get booked in both placement and advisory and therefore, the splits or something we spend increasingly less time on if you asked me about the park Hill business to the extent there is seasonality in the park Hill business it tends to be in Q4.
Because there's a little bit more momentum.
Not have closings necessarily it's one thing to have a closing roll from Q1 to Q2 or Q3 to Q4, there tends to be more of a forcing function to have it close in the year.
There's really no other observed.
Hey.
Okay, great. Thanks, Paul Thanks, taking my questions.
Sure. Thank.
Thank you Mike.
Yes, and that was our final question. So I'd like to now turn it back over to Mr. Paul <unk> for his closing remarks.
I gather they made a little static on this call, which I really apologize.
And.
Again, appreciate everyone's time and attention and interest in our company.
And we will get back at it in three months and I wish everyone. A good day and we'll be speaking soon thank you.
That does conclude today's conference we thank everyone again for their participation.
[music].
Okay.
Okay.
[music].