Q1 2022 Perella Weinberg Partners Earnings Call

May 5, 2022

And.

Yes.

[music].

Good morning, and welcome to the Green brick Partners' first quarter 2022 earnings conference call.

During todays discussion all callers will be placed in listen only mode and should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

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This conference call is being recorded. At this time, I'd like to turn the conference over to Taylor Reinhardt, head of investor relations. Please go ahead.

This conference call is being recorded.

At this time I'd like to turn the conference over to Taylor Reinhart head of Investor Relations. Please go ahead.

Thank you, Operator, and welcome to our first quarter 2022 earnings call. Joining me today are Peter Weinberg, Chief Executive Officer, and Gary Brancic, Chief Financial Officer.

Thank you operator, and welcome to our first quarter 2022 earnings call. Joining me today are Peter Weinberger, Chief Executive Officer, and Gary Brandt, Chief Financial Officer.

A replay of this call will be available through the investor's page of the company's website approximately two hours following the conclusion of this live broadcast through May 19, 2022.

A replay of this call will be available through the investors page of the company's website approximately two hours. Following the conclusion of this live broadcast through May 19 2022.

For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, May 5, 2022, and have not been updated subsequent to the initial earnings call. Before we begin, I'd like to note that this call may contain forward-looking statements, including PWP's expectations of future financial and business performance and conditions in industry outlook.

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

Forward-looking statements are inherently subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance.

Forward looking statements are inherently subject to risks uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward looking statements and are not guarantees of future events or performance.

Please refer to PWP's most recent FEC filings for discussion of certain of these risks and uncertainties.

Please refer to Pwc's, most recent SEC filings for a discussion of certain of these risks and uncertainties.

The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statement.

The forward looking statements are based on our current beliefs and expectations and the firm undertakes no obligation to update any forward looking statements.

During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business.

During the call. There will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business.

PWP has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8K, which can be found on the company's website. I will now turn the call over to Peter Weinberg to discuss our results.

DWP has reconciled these items to the most comparable GAAP measures in the press release filed with today's form 8-K, which can be found on the Companys website.

I will now turn the call over to Peter Lindberg to discuss our results.

Thank you, Taylor. Good morning and thank you all for joining us for our first quarter 2022 earnings call. Gary and I are going to provide brief prepared remarks and then we will open the line for questions.

Thank you Taylor and good morning, and thank you all for joining us for our first quarter 2022 earnings call.

Gary and I are going to provide brief prepared remarks, and then we will open the line for questions.

Our first quarter results of $152 million in revenues represented our second highest first quarter revenues, and while modestly below our record level achieved a year earlier, far exceeded every other first quarter in the firm's history.

Our first quarter results of $152 million in revenues represented our second highest first quarter revenues and while modestly below our record level achieved a year earlier far exceeded every other first quarter in the firms history.

Our level of client dialogue and client touch points are higher today than ever before as we continue to execute against our growth plan.

Our results were supported by activity across our platform with notable contribution from our European business, which turned in another record revenue quarter, significantly exceeding the prior year period, notwithstanding strong 2021 performance. We have invested heavily in European talent over the past few years, and we are seeing good return on those investments.

Our results were supported by activity across our platform with notable contribution from our European business, which turned in another record revenue quarter significantly exceeding the prior year period, notwithstanding strong 2021 performance, we have invested heavily in European talent over the past few years.

And we are seeing good return on those investments.

From a sector and product standpoint, we saw strength in our industrials, energy and health care groups. In addition, our first quarter results included an increased contribution from our restructuring and liability management business, including the contribution of a very sizable fee event in the quarter.

From a sector and product standpoint, we saw strength in our industrials energy and healthcare groups. In addition, our first quarter results included an increased contribution from our restructuring and liability management business, including the contribution of a very sizeable fee event in the quarter balance sheet.

Balance sheet impacts from rising rates and macroeconomic headwinds are spurring a moderate pickup in demand for these services, but barring further deterioration in the market, we do not expect a material rise in traditional restructuring activity for the balance of 2022.

<unk> from rising rates and macroeconomic headwinds are spurring a moderate pickup in demand for these services, but barring further deterioration in the market. We do not expect a material rise in traditional restructuring activity for the balance of 2022.

We are now seeing an environment going forward where two forces are pulling at one another.

We are now seeing an environment going forward, where two forces are pulling at one another.

The factors that drove the high level of activity in 2021 are still very much in place, and the need for high quality independent advice is, if anything, elevated.

The factors that drove the high level of activity in 2021 are still very much in place and the need for high quality independent advice is if anything elevated.

That said, we're in a very tough macroeconomic environment, and we do not see that changing any time soon. And while these dynamics will continue to affect M&A and financing volumes in the short term, an inflection point will come just as it did in March of 2009 and May of 2020.

That said, we're in a very tough macroeconomic environment, and we do not see that changing anytime soon.

And while these dynamics will continue to affect M&A and financing volumes in the short term and inflection point will come just as it did in March of 2009 and May of 2020.

Market volatility translates into greater volatility to our top line, particularly while we are building scale.

Market volatility translates into greater volatility to our topline, particularly while we are building scale. We experienced this to the upside with a very strong first and second quarters in 2021 and now based on what we are currently seeing we expect revenue for the second quarter to be well below our first quarter.

We experienced this to the upside with a very strong first and second quarters in 2021. And now based on what we are currently seeing, we expect revenue for the second quarter to be well below our first quarter results. Although the current environment makes it more difficult to predict when the current high level of activity will translate into revenue, we expect a stronger second half of the year than the first half.

Although the current environment makes it more difficult to predict when the current high level of activity will translate into revenue, we expect a stronger second half of the year than the first half.

even given the current macroeconomic backdrop.

Even given the current macro economic backdrop.

As I've noted before, our business will experience variability in revenue on a quarter-to-quarter basis, but we manage the business with the long-term objective of sustained investment and growth through cycle.

As I've noted before our business will experience variability in revenue on a quarter to quarter basis, but we manage the business with a long term objective of sustained investment and growth through cycles.

Even in the current environment, we are in active dialogues to add a creative senior talent to continue to grow our coverage footprint year to date. We have promoted or hired four partners to our platform and look forward to another partner joining the firm in June .

Even in the current environment, we are in active dialogues to add accretive senior talent to continue to grow our coverage footprint.

Year to date, we have promoted are hired for partners to our platform and look forward to another partner joining the firm in June .

This new partner will bolster our industrials practice and expand our energy transition effort, a topic relevant to our clients across industries. We will continue to add to our partner ranks in carefully determined positions in industry groups, products, and regions.

This new partner will bolster our industrials practice and expand our energy transition efforts a topic relevant to our clients across industries.

We will continue to add to our partner ranks and carefully determined positions and industry groups products and regions.

Some of our recent growth areas, notably tech and fintech, as well as our private capital markets business, have benefited from the addition of revenue generating managing directors who represent strong client leadership.

Some of our recent growth areas, notably tech and Fintech as well as our private capital markets business has benefited from the addition of revenue generating managing directors, who represent strong client leadership.

While we continue to view productivity per partner as the most relevant indicator of our business performance on a per head basis, we are encouraged by this trend, are continuing to hire behind it, and we look forward to the impact that these individuals will have on our newer investment areas.

We continue to view productivity per partner as the most relevant indicator of our business performance on a per head basis. We are encouraged by this trend are continuing to hire behind it and we look forward to the impact that these individuals will have on our newer investment areas.

In our 16-year history, we have found times of uncertainty and volatility advantageous to progressing our firm and creating meaningful value, and we look forward to once again capitalizing on opportunities to drive growth.

And our 16 year history, we have found times of uncertainty and volatility advantageous to progressing our perm and creating meaningful value and we look forward to once again capitalizing on opportunities to drive growth.

We have a strong balance sheet with no debt, which we will use opportunistically. Our platform is diversified across product offerings and our restructuring, liability management and financial advisory businesses provide for counter cyclical revenue streams.

We have a strong balance sheet with no debt, which we will use opportunistically our platform is diversified across product offerings, and our restructuring liability management and financial advisory businesses provide for counter cyclical revenue streams.

The fundamental growth opportunity for our business is unchanged. The benefit of our recent investments has yet to be fully realized, and we are continuing to execute against our strategic initiative.

Fundamental growth opportunity for our business is unchanged the benefit of our recent investments has yet to be fully realized and we are continuing to execute against our strategic initiatives. We remain extremely confident in our future growth prospects.

We remain extremely confident in our future growth prospects. On that note, Gary.

On that note, Gary I will turn it over to you.

Thank you, Peter, and good morning, everybody. As Peter mentioned, revenues for the first quarter totaled $152 million, down 11% as compared to the prior year period. Year-over-year decline was driven by a reduction in mergers and acquisition activity in our U.S. business relative to record 2021 results, partially offset by an increase in non-U.S. mergers and acquisitions completion.

Thank you Peter and good morning, everybody as Peter mentioned revenues for the first quarter totaled $152 million down 11% as compared to the prior year period.

Year over year decline was driven by a reduction in mergers and acquisition activity in our U S business relative to record 2021 results, partially offset by an increase in non U S mergers and acquisitions completions.

Our first quarter saw fewer advisory transaction completions despite a moderate increase in average fee size per client as compared to the same period in 2021.

Our first quarter saw a pure advisory transaction completions. Despite a moderate increase in average fee size per client as compared to the same period in 2021.

Our first quarter results did not include any transaction fee revenue from closings in the second quarter of 2022 in line with both the prior year period and the prior quarter period. While we did experience a significant fee event within the first two days of the second quarter, our revenue recognition policy dictated that that transaction be booked in Q2.

Our first quarter results did not include any transaction fee revenue from closings in the second quarter of 2022 in line with both the prior year period in the prior quarter period, while we did experience a significant fee event within the first two days of the second quarter, our revenue recognition policy dictated that that transaction be booked in Q2.

My following comments will focus on non-GAAP metrics, which we believe are relevant in assessing the financial performance of the business, our GAAP measures and a reconciliation of GAAP to adjusted results can be found in our earnings press release, which is on our website.

My following comments will focus on non-GAAP metrics, which we believe are relevant in assessing the financial performance of the business. Our GAAP measures and a reconciliation of GAAP to adjusted results can be found in our earnings press release, which is on our website.

On the expense side, in the first quarter, we accrued adjusted compensation expense at 64% of revenues within the range of our previously communicated medium-term, mid-60s guidance, and in line with our expense accrual level in 2021 and our current expectation for the full year.

On the expense side in the first quarter, we accrued adjusted compensation expense at 64% of revenues within the range of our previously communicated medium term mid sixty's guidance and in line with our expense accrual level in 2021, and our current expectation for the full year.

Our commitment to growth through the addition of accretive talent remains a top priority, though it's our responsibility to respond to the market and manage costs and our compensation pool accordingly. While we continue to aggressively recruit senior talent, we've moderated some of our prior plans to add junior and mid-level headcount in 2022.

Our commitment to grow through the addition of accretive talent remains a top priority.

Our responsibility to respond to the market and manage costs and our compensation pool. Accordingly, while we continue to aggressively recruit senior talent, we've moderated some of our prior plans to add junior and mid level head count in 2022.

Our adjusted non-compensation expense was $32 million for the first quarter, up 31% year-over-year, though down 9% quarter-over-quarter, and represented 21% of our revenue.

Our adjusted non compensation expense was $32 million for the first quarter up 31% year over year, but down 9% quarter over quarter and represented 21% of our revenues.

In spite of the slight step down in adjusted non-compensation spend quarter over quarter, we continue to expect that our full year 2022 expense, excluding travel, meals, and entertainment, will be modestly above the run rate recorded in the second half of 2021.

In spite of a slight step down in adjusted non compensation spend quarter over quarter. We continue to expect that our full year 2022 expense, excluding travel meals and entertainment will be modestly above the run rate recorded in the second half of 2021.

As a reminder, the primary driver of this increased spend for 2022 over the back half of 21 is the anticipated double rent relating to our New York and London headquarters build-outs, which we expect to incur later this year and into next year. We recently entered into two new lease agreements for both locations, with New York commencing in April from an accounting perspective, and London expected to commence in mid-2022.

As a reminder, the primary driver of this increase spend for 2022 over the back half of 'twenty. One is the anticipated double rent relating to our New York and London headquarters build out, which we expect to incur later this year and into next year.

We recently entered into two new lease agreements for both locations with New York commencing in April from an accounting perspective, and London expected to commence in mid 2022.

Aside from some temporary accounting double rent, we expect that the medium-term run rate gross gap lease expense will be meaningfully below our current run rate in New York and approximately flat in London in spite of significantly increased square footage in both locations.

Aside from some temporary accounting double rent, we expect that the medium term run rate gross GAAP lease expense will be meaningfully below our current run rate in New York and approximately flat in London in spite of significantly increased square footage in both locations.

Our 2022 non-comp expense is also expected to include some impact from headcount growth and inflation, as well as investment in our people and IT systems, offset by some moderation of certain professional services expenses we incurred last year as a newly public company and do not expect to continue at the same level this year.

Our 2022 non comp expense is also expected to include some impact from head count growth and inflation as well as investment in our people and it systems offset by some moderation of certain professional services expenses, we incurred last year as a newly public company and do not expect to continue with the same level this year.

We saw T&E moderate a bit quarter over quarter to just north of $2 million as travel in January of 2022 was once again impacted by a variant resurgence. As cases receded, our T&E picked up a total of 1.3 million in March, marking the highest monthly level since the onset of the pandemic, although still about 20% below our 2019 average run rate of $1.6 million per month.

We saw it moderate a bit quarter over quarter to just north of $2 million as travel in January of 2022 was once again impacted by a variant researches.

As cases preceded our teeny picked up and totaled $1 3 million in March marking the highest monthly level since the onset of the pandemic, although it's still about 20% below our 2019 average run rate of $1 $6 million per month.

Adjusted net income totaled $21 million for the first quarter. Our adjusted, if converted, net income for the first quarter was $17 million and presents our results as if all partnership units had converted to shares of common stock.

Adjusted net income totaled $21 million for the first quarter. Our adjusted if converted net income for the first quarter was $17 million and presents our results as if all partnership units had converted to shares of common stock.

Adjusted diluted if converted net income per class a share was 19 cents for the three months ended March 31st

Adjusted diluted if converted net income per class a share. It was <unk> 19 for the three months ended March 31, 2022, the board of directors authorized a $100 million class a common stock repurchase program in mid February and the program commenced on March 25 2022.

The Board of Directors authorized a $100 million Class A Common Stock Repurchase Program in mid-February, and the program commenced on March 25, 2022.

From that date and for the four trading days remaining in the first quarter, we repurchased 172,000 shares in the open market for a total cost of $1.6 million.

From that date and for the four trading days remaining in the first quarter, we repurchased 172000 shares in the open market for a total cost of $1 6 million.

In addition, during the quarter, we net settled 559,000 RSUs and together with open market repurchases, reduced outstanding shares and share equivalents by 732,000 shares.

In addition during the quarter.

Net settled 559000, rsum and together with open market repurchases reduced outstanding shares and share equivalents by 732000 shares.

Our open market repurchases have continued in the second quarter and to date we've bought back in excess of 700,000 incremental shares.

Our open market repurchases have continued in the second quarter and to date, we've bought back in excess of 700000 incremental shares.

At our current valuation, we view sharing purchases as a particularly attractive means of returning capital to our shareholders.

At our current valuation, we view share repurchases as a particularly attractive means of returning capital to our shareholders.

As of March 31, 2022, our balance sheet had $223 million of cash and cash equivalents, no debt, and an undrawn revolving credit facility.

As of March 31, 2022, our balance sheet had $223 million of cash and cash equivalents, no debt and an undrawn revolving credit facility.

A portion of this cash has been earmarked for our headquarters expansion projects. We expect our out-of-pocket costs to be in excess of $50 million, mitigated in part by free rent periods at both locations.

A portion of this cash has been earmarked for our headquarters expansion projects, we expect our out of pocket costs to be in excess of $50 million mitigated in part by free rent periods at both locations.

The Board has declared a Class A Common Stock Dividend of $0.07 per share payable on June 2, 2022 to holders of record as of May 19, 2022.

Our board has declared a class a common stock dividend of <unk> <unk> per share payable on June <unk> 2022 to holders of record as of May 19 2022.

For the quarter, our adjusted as-if converted tax rate was approximately 30 percent. This rate will differ from the statutory rate due to several factors, including certain expenses that are non-deductible in nature, the impact of RSU vesting, and the impact of dual inclusion of some income in certain foreign jurisdictions.

For the quarter, our adjusted as if converted tax rate was approximately 30%. This rate will defer from the statutory rate due to several factors, including certain expenses that are nondeductible nature, the impact of <unk> vesting and the impact of dual inclusion of some income in certain foreign jurisdictions.

Our as-if converted tax rate is a theoretical figure, as it is computed ignoring certain gap items excluded in our adjusted reporting, which may have positive or negative tax attributes.

Our as if converted tax rate as a theoretical figure as it is computed ignoring certain GAAP items excluded in our adjusted reporting which may have positive or negative tax attributes.

In addition, it assumes all partnership units were exchanged for shares of the company's Class A common stock, resulting in all of the company's income being subject to corporate level tax. Before we open the line for questions,

In addition, it assumes all partnership units were exchanged for shares of the company's class a common stock, resulting in all of the company's income being subject to corporate level taxes.

Before we open the line for questions, Let me turn the call back over to Peter.

Thanks very much, Gary. One last thing I will note as we continue our journey as a newly public company, we welcome the potential of additional index inclusion in the coming months, which we view as particularly important given the increasing flow of assets into index and passive funds and the significant amount of long only buying power which tracks index ownership.

Thanks, very much Gary.

And last thing I will note as we continue our journey as a newly public company. We welcome the potential additional index inclusion in the coming months, which we view as particularly important given the increasing flow of assets into index and passive funds and the significant amount of long only buying.

Power, which tracks index ownership, we look forward to expanding our shareholder base and engaging with new investors with that we'll now turn the call back to the operator to open the line for questions. Thank you.

We look forward to expanding our shareholder base and engaging with new investors.

With that, we'll now turn the call back to the operator to open the line for questions. Thank you.

Thank you we will now.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time we will pause momentarily to assemble our roster.

Now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

Using a speakerphone please pick up your handset before pressing the keys if at anytime. Your question has been addressed then you would like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Our first question comes from Devin Ryan with JMP Securities. Please go ahead.

Our first question comes from Devin Ryan with JMP Securities. Please go ahead. Hey, good morning.

Hey, good morning, Peter and Gerry how are you.

So devin good morning.

Good morning.

Morning. First question, Peter, you talked about the backdrop and we've been in similar environments before and waiting for an inflection, which I completely agree with.

First question, Peter you talked about kind of the backdrop than we've been in similar environments before and kind of waiting for an inflection which I completely agree with.

You also said you're having higher dialogues with clients than ever before, but it's my impression, and we've heard from some other calls, it's just taking

You also said you are having higher dialogues with clients than ever before but it's my impression and we've heard from some other calls is just taken.

longer for deals to get to announcement. And so, um, love to maybe just dig in there a little bit and get your perspective. You know, I'm curious if you're seeing that around, you know, maybe buyers just looking for some more clarity.

Longer for deals to get to announcement and so.

What the maybe just dig in there a little bit and get your perspective Im curious if youre seeing that around maybe buyers just looking for some more clarity before we pull the trigger on doing something or sellers unrealistic on prices given that we've had some repricing.

before they pull the trigger on doing something or are sellers unrealistic on prices, given that we've had some repriced.

Or there are other dynamics that are maybe slowing things down around kind of the readjustment financing rates and having to either go find new financing or just kind of get people to wrap their head around that. I'm just trying to get a little more color there. And then maybe the second part of that is if you can differentiate or distinguish between what you're seeing with corporate clients versus sponsor clients on that.

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Or are there other dynamics that are maybe slowing things down around kind of the readjustment financing rates and have it done either go find new financing or just kind of get people to wrap their head around that I'm, just trying to get a little more color there and then.

The second part of that is if you could differentiate or distinguish between what youre seeing with corporate clients versus sponsor clients on that front.

Yes, okay.

Yeah, okay. So first of all, I think this really all needs to be looked at within the backdrop of our global environment. And you know, as I mentioned, global unrest and macroeconomic concerns are the culprits of difficult environment here. And we believe that's going to more than offset a lot of the forces that were at work in 2021.

Well first of all I think this really all needs to be looked at within the backdrop of our.

Global environment.

And as I mentioned global unrest and macroeconomic concerns are the culprits of difficult environment here, and we believe thats going to more than offset a lot of the forces that were at work in 2021.

I think to your point, there's a hesitancy, I think, in in the boardrooms today, just given those concerns. And I do feel that there will be an elongation between signing and closing as kind of a general matter.

I think to your point.

There is a hesitancy.

In the boardrooms today, just given those concerns.

And I do feel that there will be an elongation between signing and closing is kind of a general matter.

You know, interestingly, our announced and pending backlog is lower now than it was last year at this time, but our pipeline is actually higher. And that's a dynamic that we have generally seen, as you referenced, over time in stressed environments.

Interestingly, our announced and pending backlog is lower now than it was last year at this time, but our pipeline is actually higher and Thats a dynamic that we have generally seen as you reference overtime in stressed environments.

To your last point, the sponsor ecosystem is a growth.

To your last point, the sponsor ecosystem as a growth ecosystem within our addressable market and that comes in a lot of different areas and I actually believe that the sponsor community.

ecosystem within our addressable market. And that comes in a lot of different areas. And I actually believe that the sponsor community will be as active as they have been, if not more so, and that the opportunities created by changes in valuation and volatility will more than offset the higher interest rate environment.

We'll be as active as they have been if not more so and that the opportunities created by changes in valuation and volatility will more than offset the higher interest rate environment.

Okay great.

Okay, great. And then I guess the follow up, you'll get to hear about some of the recent recruits and the momentum there. And I think just kind of keeping the eye on the ball in terms of.

And then I guess the follow up.

Here about some of the recent recruits and the momentum there and I think just kind of keeping the eye on the ball in terms of driving the business for the long term here.

driving the business for the long term here. If you could, could you just maybe, because you guys have so many growth opportunities, I think, across the franchise, could you just stack rank, if you think out over the next maybe two years of kind of where the biggest areas of focus are, just stack rank where kind of you're leaning in most, and so we can maybe think about from the outside that those are the pockets where you could see the most kind of acceleration in either headcount or just kind of early signs of growth momentum.

If you could could you just maybe could you guys have so many growth opportunities I think across the franchise could you just stack rank. If you think out over the next maybe two years of kind of where the biggest areas of focus are to stack rank, where kind of you're leaning in most and so we can maybe think about from the outside of that those are the pockets, where you could see the most kind of acceleration.

Head count or just kind of early signs of growth momentum.

Yeah, so the the growth in our firm comes from a bunch of different sources. First of all, in our industry groups, there are growth opportunities in subsectors in almost every industry group we have.

Yes.

The growth in our firm comes from a bunch of different sources.

First of all in our industry groups, there are growth opportunities and sub sectors and at almost every industry group we have.

uh... anna and also i will add to that that the uh... capital markets advisory group or capital solutions isn't is is a growth area for us it's relatively new and something even newer than that has been our private capital business uh... which is very important to the firm because

And also I will add to that that the capital markets Advisory group or capital solutions.

As a growth area for us, it's relatively new and something even newer than that has been our private capital business.

Which is very important to the firm because.

It exposes us to growth companies really across our platform. And so, you know, that's where the growth is really is coming from. I think with respect to the partners that you mentioned, you know, we've hired or elevated four partners this year so far, one external, three internal. We're expecting another one soon, and we're having a lot of conversations with partners, partner candidates from outside the firm right now.

It exposes us to growth companies really across our platform and so that's where the growth is really is coming from I think with respect to our partners that you mentioned.

We've hired our elevated for partners. This year, so far one external three internal.

We're expecting another one soon and we're having a lot of conversations with our partners partner candidates from outside the firm right now.

Great I'll leave it there thanks very much.

Thank you.

The next question comes from Richard Ramston with Goldman Sachs. Please go ahead.

The next question comes from Mike <unk> with Goldman Sachs. Please go ahead.

Good morning guys. So, Peter, maybe you can expand a little bit on what you're seeing geographically. It sounds like Europe was actually a bright spot for you in the first quarter of the year. You know, maybe you can talk to the sustainability of European activity. Obviously, a lot has changed over the last few months.

Good morning, guys.

So Peter maybe you can expand a little bit on what youre seeing geographically it sounds like Europe was actually a bright spot for you in the first quarter of the year maybe.

Maybe you could talk to the sustainability of European activity, obviously, a lot has changed over the last.

Few months.

uh... and then if you could also just touch on what you've seen in terms of the appetite for larger transactions versus middle market transactions and how that has evolved since the start of

And then if you could also just touch on what you've seen in terms of the appetite for larger transactions versus middle market transactions and how that has evolved since the start of the year.

Sure. So in Europe , Richard, I would say that the good news is that the markets in which we operate are governed by stability-oriented leadership. We avoided a close call a few weeks ago in that regard, but I think that's a real positive and something that we don't take for granted. And further, Europe has never been so united, albeit for reasons related to the Ukraine conflict.

So in Europe Richard.

I would say that the good news is that.

The markets in which we operate are governed by stability oriented leadership.

We avoided a close call a few weeks ago in that regard, but I think thats, a real positive and something that we don't take for granted.

Further Europe has never been so United, albeit for reasons related to the Ukraine conflict.

Having said that, in addition to the global challenges we all face today, Europe is focused on energy supply and energy security more so than the United States, which can disproportionately affect.

Having said that in addition to the global challenges, we all face today Europe is focused on energy supply and energy security.

More so than the United States, which can disproportionately affect.

the industrial economy in Europe , particularly in Germany.

The industrial economy in Europe .

Particularly in Germany.

But our business has been resilient in Europe . We have a terrific team there. And we're not gonna be immune to these forces, but as I said earlier, the comment that I referenced about our firm as a whole is accurate in the United States and Europe , which is that we've never had more conversations going on and more engagement with our clients.

But our business has been resilient in Europe , we have a terrific team there and we're not going to be immune to these forces.

But we and as I said earlier, the comment that I referenced about our firm as a whole is.

Accurate in the United States, and Europe , which is that we've never had more conversations going on and more.

Engagement with our with our clients.

With respect to.

With respect to your second question on large-cap versus mid-cap clients,

Your second question on large cap versus mid cap clients.

I would say that there's a slowdown a bit in the large transactions as it relates to high-profile transactions, particularly in the technology space, in part due to the antitrust situation that we're now facing. But there were

I would say that the large there is a slowdown a bit in the large transactions as it relates to high profile <unk>.

Transactions, particularly in the technology space.

In part due to the antitrust.

A situation that we're now facing.

But there were there were in.

in 2021 over 60,000 merger transactions, and we continue to, there's still going to be an enormous amount of transaction activity below the large cap, but there will be large cap activity, and I just think it will be in the context of the antitrust environment. We continue to spend time both on large cap transactions and mid cap transactions.

In 2021 over 60000 merger transactions.

And we continue theres still going to be an enormous amount of transaction activity below the large cap but.

There will be large cap activity and I just think it will be in the context of the antitrust environment. We continue to spend time, both on large cap transactions and mid cap transactions.

And Peter, I might just add one thing to your your comment on Europe , which is that.

And Peter I might just add one thing to your comment on Europe , which is that.

You know, as you know, we've we've really invested quite heavily in the European franchise over the last few years, not not only, you know, adding, adding, you know, some very senior partners in areas like, you know, fintech, digital transformation, and obviously building up some of our private capital business. There's been a lot of investment there, which we are kind of happy to see coming through.

As you know, we've really invested quite heavily in the European franchise over the last few years, not not only adding adding some very senior partners in areas like <unk>.

Fintech digital transformation, obviously building up some of our private capital business Theres been a lot of investment there, which we are kind of happy to see coming through.

I will say that the first quarter and the very strong performance there, that's obviously representing a lot of transaction activity that really originated last year. So as we think forward to the market, again, be a little careful about extrapolating, but you do have...

I will I will say that the first quarter and a very strong performance there.

That's obviously, representing a lot of a lot of transaction activity that really originated last year. So as we think forward to the market again, it would be a little careful about extrapolating, but you do have.

you know a very active dialogue there a lot of positive momentum. But you know again first quarter closings. This is true across the firm. You know generally relate to transactions that got started long before you know the very recent market turbulence.

A very active dialogue there are a lot of positive momentum, but again first quarter closings. This is true across the firm.

Generally relate to transactions that got started long before.

Very recent market turbulence.

That's helpful. And then maybe as a follow up can you just expand a little bit on your comments around the second half being stronger than the first half what type of environment are you assuming is it a continuation of what we're seeing today are you assuming that things stabilize or deteriorate I think that would be helpful. If you could just contextualize that.

That's helpful. And then maybe as a follow-up, can you just expand a little bit on your comments around the second half being stronger than the first half? What type of environment are you assuming? Is it a continuation of what we're seeing today? Are you assuming that things stabilize or deteriorate? I think that would be helpful if you could just contextualize.

Yeah, and we could both answer that, Richard. The comment that we made earlier is that we do expect a stronger second half. And I would say that applies, and we said this to the current environment.

Yes, and we can both answer that Richard.

The comment that we made earlier is that we do expect a stronger second half and I would say that applies and we said this to the current environment.

And and part of that is related back to my comment on on our pipeline, which is which is very strong, even though our announced and pending backlog is down. And so, you know, we see activity really across the board.

And part of that is related back to my comment on our pipeline, which is which is very.

Strong.

Even though our announced and pending backlog is down and so we see activity really across the board.

uh... in in mergers and possibly as we referenced an increase in restructuring and also in these two relatively new businesses that were in including capital markets advisory and private capital

And mergers and possibly as we referenced an increase in restructuring and also in these two relatively new businesses that we're in including capital markets Advisory and private capital.

And I think, look, the only thing I'd add to that in terms of the back half of the year, you know, again, as Peter, as Peter said, you know, that that comment did assume the current environment, you know, visibility in the back half of the year. And, you know, you've heard this from our peers is pretty challenging right now, right? It's not as strong as it may have been given the volatility. So,

And I think the only thing I'd add to that in terms of the back half of the year again as Peter as Peter said that comment did assume the current environment visit.

Visibility in the back half of the year and you have heard this from our peers is pretty challenging right now, but it's not as strong as it may have been given the volatility.

So what that means is when we think about our sort of forward gross backlog, which is just all of the dialogues, we're having not not just announced deals but unannounced things in the pipeline there is a lot there.

What that means is, you know, when we think about our sort of forward gross backlog, which is just, you know, all of the dialogues we're having, not just announced deals, but unannounced things in the pipeline, there's a lot there. Assessing the probability of completion for those is both more challenging, and we assume the completion risk is probably higher in this environment, and the time to completion is higher, given, you know, given that mix. So, those are kind of the dynamics that we see right now.

Assessing the probability of completion for those is both more challenging and we assume the completion risk is probably higher in this environment and the time to completion is higher.

Given given that mix. So those are kind of the dynamics that we see right now.

Okay. That's helpful. Thanks, a lot.

Thank you.

The next question comes from Stephen Chebek with World Research. Please go ahead.

The next question comes from Steven <unk> with Wolfe Research. Please go ahead.

Okay.

Hi, good morning.

So hi, good morning.

I wanted to start off with just a question on some of the market share trends in the quarter. Recognizing one quarter does not trend make, I was hoping you could just speak to some of the factors that might have contributed to market share loss as implied by the year-on-year decline this quarter, whether there were any idiosyncratic factors in terms of sector, geographic mix, or whether it was simply timing that weighed on revenues year-on-year this quarter.

Wanted to start off with just a question.

On some of the market share trends in the quarter, you know recognizing one quarter does not try and make I was hoping you could just speak to some of the factors that might have contributed to <unk>.

Market share loss as implied by the year on year decline this quarter, whether there were any idiosyncratic factors in terms of sector geographic mix or whether it was simply timing that weighed on revenues year on year this quarter.

Yes, I think Steve we feel that our first quarter. It was a very good quarter.

Yeah, I think Steve, we feel that our first quarter was was a very good quarter. It was our second best first quarter ever. And it's being compared to our last year first quarter, which was up 84%.

It was our second best first quarter ever.

And it's being compared to our last year first quarter, which was up 84%.

And, you know, I would just say, generally, with respect to our top line revenue, that, you know, in the same way that when we had an up 84% quarter in the first quarter of 21, or when we had an up over 50% quarter for the year of 2021, you know, it's all part of our growth story, which will be up and down and will not be quarter to quarter.

And I would just say generally with respect to.

Our.

Topline revenue that in the same way that.

When we had an up 84% quarter in the first quarter of 'twenty, one or when we had an up over 50% quarter and for the year of 2021.

All part of our our growth story, which will be up and down and will not be quarter to quarter.

We have, we feel very good about the development of our franchise across our industry groups and product areas and regions, and we're undaunted with respect to the pursuit of our growth story.

We have.

We feel very good about the development of our franchise across our industry groups and product areas and regions and were undaunted with respect to our the pursuit of our growth story.

Thanks for that, Collar, and maybe my follow-up just for Gary, you've been consistent in the messaging that organic growth is the highest priority with regards to capital management, but you're already near your recruiting bogey for the full year just on a year-to-date basis in terms of net new ads. Your stock price is down more than 40% year-to-date with significant capacity to accelerate the share repurchase.

Okay. Thanks for that color and maybe my follow up just for Gary.

<unk> been consistent in the messaging that organic growth is the highest priority with regards to capital management.

But you're already near Youre recruiting bogey.

For the full year, just on a year to date basis in terms of net new adds your stock price, it's down more than 40% year to day with significant capacity to accelerate the share repurchase I just wanted to better understand the framework of our approach just in terms of ROI, whether the return on investment on buyback is.

I just want to better understand the framework or approach just in terms of ROI, whether the return on investment, on buyback, is better than simply adding more partners here, given the capacity to accelerate repurchase, as well as a challenging macro back-to-back.

Is better than simply adding more partners here.

Given the capacity to accelerate repurchase as well as a challenging macro backdrop.

I don't think the two Steve are mutually exclusive, you know, we, we, you know, not only do we have

I don't think that too Steve are mutually exclusive.

Not only do we have.

the cash to invest in both, but frankly, most of the partner acquisition or lateral higher acquisition isn't usually a cash acquisition anyways. It's usually a share acquisition.

The cash to invest in both but frankly most of the partner acquisition or lateral hire acquisition isn't usually a cash acquisition anyways, it's usually a share acquisition. So.

You know, really, we look at the capital management, you know, on terms of ordinary kind of day-to-day operations is kind of separate. Now, obviously, there could be, you know, specific situations where having cash is dry powder is important, but we're not we're not constrained in that regard today. So, you know, we actually.

Really we look at the capital management.

In terms of ordinary kind of day to day operations as kind of separate now obviously, there could be specific situations, where having cash is dry powder is important but we're not we're not constrained in that regard today. So we actually.

You know, as you know, the board authorized our repurchase program in February . We very shortly thereafter gave instructions to our brokers to start that. We were advised by counsel that we should wait about, you know, wait, wait a while for cooling off period, just given some of the recent.

As you know that the board authorized a repurchase program in February .

We very shortly thereafter gave instructions to our brokers to start that we were advised by counsel that we should wait about wait wait a while for cooling off period, just given some of the recent.

SEC proposed regulations relating to 10B51 repurchases.

<unk> proposed regulations relating to <unk> repurchases and we've really since then been in the market.

And we've really since then been in the market as aggressively as our brokers advise us to be, so that we're not obviously moving the market and so forth in an open market program.

As aggressively as our as our brokers advise us to be so that we're not obviously moving to market and so forth in an open market program.

Hi, Gary could you just help frame like how we should think about the cadence for share repurchase I mean recognizing that.

And Gary, could you just help frame how we should think about the cadence for share repurchase? I mean, recognizing that...

built in some flexibility presumably into the program, but just want to better understand how we should think about the cadence as we start to think about the modeling of the share count trajectory.

Have you built in some flexibility and presumably into the program, but just wanted to better understand how we should think about the cadence as.

As we start to think about the modeling of the share count trajectory from here.

Yeah, Steve, I mean, look, in terms of the full year, obviously, we're going to, you know, we're going to look at things in the market environment at the time. So I'm not going to I'm not going to give a prediction for the for the full year. I will just kind of put it in context so far. You know, since the program started, we've been repurchasing at a clip of probably an average about 150,000 shares a week. And, you know, that's kind of where we've been thus far. And so that's, that's probably kind of the best

Yes, Steve I mean look in terms of the full year, obviously, we're going to we're going to look at things in.

And the market environment at the time, so im not going to I'm not going to give a prediction for the for the full year.

I will just kind of put it in context, so far since the program started we've been repurchasing.

At a clip of probably on average about 150000 shares a week.

And that's kind of where we've been thus far.

So that's probably kind of the best comment I can make that sort of gives you some color on that program.

comment I can make that sort of gives you some color on that program. All right. Sufficient color, Gary. Thanks so much for taking the time.

Alright sufficient color Gary Thanks, so much for taking my questions.

Alright, Thank you Steve.

The next question comes from Michael Brown with KBWP, go ahead.

Your next question comes from Michael Brown with <unk>. Please go ahead.

Great, thanks. Morning, Peter, Gary, Taylor. How's everyone? Good morning. Hey Michael, good.

Great. Thanks, Good morning, Peter Gary Taylor, how is everyone.

Good morning, Michael.

Most of mine have been asked I just wanted to.

follow-up on the outlook commentary here for 2Q specifically. So certainly understand that there's quarterly volatility here and that's inherent in the business.

Maybe follow up on the outlook commentary here for <unk>, specifically, so certainly understand that there is quarterly volatility here that's inherent in the business.

So I appreciate that you are able to give some guidance here for us in <unk>.

When I look at the business models here, the operating leverage is generally limited in these down revenue type of environments.

When I look at.

The business models here the operating leverage is generally.

A limited in these down revenue type of environment, and especially when you have <unk>.

Down in environments that are more quarterly quarterly.

Noise, if you will.

Versus kind of a full year situations. So.

So as we think about 2Q, and you talked about revenue being down significantly from 1Q, is it to...

As we think about <unk>.

You talked about revenue being down significantly from one Q.

Still fair, though that you can you can produce positive net income in that environment, just given where you're accruing comp and TNT is on the rise a bit here.

positive net income in that environment just given where you're you know accruing costs.

So Michael your question can we can we generate positive net income in the current environment. We believe we can.

Michael, here's a question. Can we generate positive income in the current environment? Yes, we believe we can. Certainly on an adjusted basis, we can. Look, as we think about, and I'll comment on some questions you haven't answered, but just to give a little bit of further color as we think about margins.

Certainly on an adjusted basis, we can.

Look we as we think about I'll just sort of comment on questions. You have an answer but just to give a little bit of further color as we think about.

Margins.

Obviously, of the two main components on the comp margin, we accrued for the first quarter, consistent with our guidance that we've given in the past, it's sort of the mid-60s, and we accrued a 64 percent rate. And that's, you know, that mid-60s band is one that we're going to, you know, we would expect and try to stay very much within, you know, barring, you know, pretty unusual circumstances.

Obviously are the two main components on the comp margin, we accrued for the first quarter consistent with our guidance that we've given in the past of sort of the mid Sixty's and we accrued at 64% rate.

And Thats that mid <unk> band is one that we're going to we would expect and try to stay stay very much within barring.

Okay.

Pretty unusual circumstances.

And on the non comp side.

You know, the investments that we're making there are kind of long-term investments. A good portion of the non-comp, you know, margin is relatively fixed, but there are things at the margin where we can, you know, where we can make adjustments if we need to, and we think it's the right thing to do. You know, the way we kind of think about non-comp expenses, we try to be very disciplined in kind of where we're spending and where we have some higher non-comp expense today, it's very specifically for investments in the business for the long-term.

The investments that we're making there are kind of long term investments a good portion of the non comp margin is relatively fixed but there are things that the margin where we can.

Where we can make adjustments if we need to and we think it's the right thing to do while the way we kind of think about non comp expense as we tried to be very disciplined and kind of where we are where we're spending and where we have some higher non comp expense today, it's very specifically for investments in the business for the long term.

Okay, great. So it does sound like QQ will even with the revenues down.

Okay, great. So it does sound like <unk> will even with revenues down EPS will still be positive okay.

I'm not going to predict EPS for the quarter, but you can kind of extrapolate from sort of the margin guidance that we've given so far, and really, obviously, if you were to assume zero revenues, which I wouldn't, but if you were to assume zero revenues, you're not going to get there. And.

Well I'm not going I'm not going to predict.

EPS for the quarter, but you can.

You can you can kind of.

You kind of extrapolate from sort of the sort of the margin guidance that we've given so far and it really obviously.

If you were to assume zero revenues, which I wouldn't.

There are obviously not going to get there.

And.

Apologies if I missed it you ended the quarter with 223 of cash and.

We are all trying to.

toggle what's kind of considered your excess cash. Obviously been buying back stock in the second quarter here, so that.

Toggle, what's kind of considered your your excess cash.

Obviously been buying back stock in the second quarter here, so that that number has changed.

Um, but how do you think about what is, what is truly?

But how do you think about what is what is truly excess and I know thats, probably a moving target, but if you had to frame a range. How do you think about what that what that number is.

Yeah, I mean, the way we think about the cash balances is, you know, there's there's some amount that we are.

Yes, I mean, the way, we think about the cash balances is.

There is some amount that we are.

you know, that we kind of set aside, which is not excess, which is, you know, working capital needs as part of it. There's, you know, there's a component that we, you know, we will kind of assume.

We kind of set aside which is not excess which is working capital needs as part of it.

There is there is a component that we we will.

Kind of assume.

is amounts that we need to retain for specifically identified items like our headquarters build out, which we said, you know, we expect, you know, that could be north of $50 million of capital. So that's kind of a part of it.

It is.

Amounts that we need to retain it for specifically identified items like our headquarters build out, which we said we expect that that could be north of $50 million of capital. So that's kind of a part of it.

There's an aspect of keeping some amount of dry powder there so that we have the flexibility to take advantage of opportunities as they come up.

There is an aspect of keeping some amount of dry powder. There. So that we have the flexibility to take advantage of opportunities as they come up.

And kind of the remainder of that is excess and, you know, we can't.

And kind of the remainder of that is excess and we can't.

We're not going to be very specific on a number. However, what I will say is today, we definitely feel that we have excess cash even after the buybacks today, which is why our intention is to continue to look at ways of returning capital to shareholders in the current environment.

We're not going to be very specific on a number.

However, what I will say is today, we definitely feel that we have we have excess cash keeping after the buybacks today, which is why our intention is to continue to look at ways of returning capital to shareholders in the current environment.

Okay, great. Thanks for taking my questions.

Sure.

The next question comes from Ken Worthington with JP Morgan. Please go ahead.

The next question comes from Ken Worthington with J.P. Morgan. Please go ahead.

Hi, good morning. This is Brian Fitzgerald. I'm sure Ken Worthington

Hi, Good morning, This is Brian Fitzgerald I'm sure Ken Worthington.

So, I wanted to ask about the outlook for banking in the energy sector. So, given what's happening in Europe ...

So I wanted to ask about the outlook for banking in the energy sector.

Given what's happening in Europe and.

and the changes in energy sourcing and pricing, what do you guys see in terms of a changing dialogue for energy M&A? And then, Gary, on last quarter's call, you spoke towards excessive cash flows.

And the changes in energy sourcing and pricing.

What are you guys seeing in terms of a change in dialogue for energy M&A.

Then Gary on last quarter's call you spoke towards excessive cash flows.

going to capital return rather than M&A. So is that still the case? And then more broadly, what are you seeing in the energy pipeline?

Going to capital return rather than M&A. So is that still the case and then more broadly what are you seeing any energy pipeline. Thank you.

Sure.

Sure, well, Brian , I'll take the first part of that. With respect to our energy business, I would say that historically, rising energy prices has created M&A activity because it obviously creates earnings and confidence in the resources to transact.

Brian I'll take the first part of that.

With respect to our energy business.

Would say that historically rising energy prices.

Has created M&A activity, because it obviously creates earnings and confidence in the resources to transact.

Now, working with that are a couple of different factors which complicate an otherwise very bullish picture. One is just volatility and oil and gas prices, of course, but also the difference between the spot market and the futures market three, four, five years out, which just creates hurdles with respect to negotiating deals and price discovery.

Now.

Working.

With that are a couple of different factors, which complement complicate an otherwise very bullish picture. One is just volatility in oil and gas prices of course, but also the difference between the spot market and the futures market 345 years out which just creates.

<unk> hurdles with respect to negotiating deals and price discovery.

You know, like the rest of our business, we have a lot going on. We have an enormous number of conversations and touch points in the energy space around the world, and it's a very important and interesting area for us. But that's how I would sort of characterize the energy opportunity right now.

Sure.

Like like the rest of our business, we haven't a lot going on we have enormous number of conversations and touch points in the energy space.

Around the world.

And it's a very important and interesting area for us, but that's how I would sort of characterize.

The energy.

<unk> opportunity right now.

Great. Thank you.

This concludes our question and answer I would like to turn the conference back over to Peter Lindberg for any closing remarks.

This concludes our question and answer session. I would like to turn the conference back over to Peter Weinberg for any closing remarks.

Great. Thanks, very much operator, thank you all for joining and we look forward to following up with you at any time and I appreciate.

Great, thanks very much operator. Thank you all for joining and we look forward to following up with you at any time and appreciate being on the call this morning. Thank you.

Being on the call. This morning. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[music].

Good morning and welcome to the Perella Weinberg Partners First Quarter 2022 Earnings Conference Call. During today's discussion, all callers will be placed in listen-only mode, and should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Following management's prepared remarks, the conference call will be open for questions from the research community. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. This conference call is being recorded.

Good morning, and welcome to the Perella Weinberg partners first quarter 2022 earnings conference call.

During todays discussion all callers will be placed in listen only mode and should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Following management's prepared remarks, the conference call will be open for questions from the research community.

Following management's prepared remarks, the conference call will be open for questions from their search community.

To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2.

To ask a question you May press Star then one on attached on phone to withdraw your question. Please press Star then two.

This conference call is being recorded. At this time, I'd like to turn the conference over to Taylor Reinhart, Head of Investor Relations. Please go ahead.

This conference call is being recorded at this time I'd like to turn the conference over to Taylor Reinhardt head of Investor Relations. Please go ahead.

Thank you, Operator, and welcome to our first quarter 2022 earnings call. Joining me today are Peter Weinberg, Chief Executive Officer, and Gary Brancic, Chief Financial Officer.

Thank you operator, and welcome to our first quarter 2022 earnings call. Joining me today are Peter Weinberger, Chief Executive Officer, and Gary Brandt, Chief Financial Officer.

A replay of this call will be available through the investor's page of the company's website approximately two hours following the conclusion of this live broadcast through May 19, 2022.

A replay of this call will be available through the investors page of the company's website approximately two hours. Following the conclusion of this live broadcast through May 19 2022.

For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, May 5, 2022, and have not been updated subsequent to the initial earnings call. Before we begin, I'd like to note that this call may contain forward-looking statements including PWP's expectations of future financial and business performance and conditions and industry outlook.

For those who listen to the rebroadcast of this presentation. We remind you that the remarks made herein are as of today may five 2022 and have not been updated subsequent to the initial earnings call before we begin I'd like to note that this call may contain forward looking statements, including Pwc is expectations of future financial and business performance and.

Conditions and industry outlook.

We're looking statements are inherently subject to risks uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward looking statements and are not guarantees of future events or performance.

Please refer to PWP's most recent SEC filings for discussion of certain of these risks and uncertainties.

Please refer to P. W. P. At the most recent SEC filings for a discussion of certain of these risks and uncertainties.

The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statement.

We're looking statements are based on our current beliefs and expectations and the firm undertakes no obligation to update any forward looking statements.

During the call. There will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business.

During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business.

CWP has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8K, which can be found on the company's website. I will now turn the call over to Peter Weinberg to discuss our results.

AWP has reconciled these items to the most comparable GAAP measures in the press release filed with today's form 8-K, which can be found on the company's website.

I'll now turn the call over to Peter Lindberg to discuss our results.

Thank you Taylor and good morning, and thank you all for joining us for our first quarter 2022 earnings call, Gary and I are going to provide brief prepared remarks, and then we will open the line for questions.

Our level of client dialogue and client touch points are higher today than ever before as we continue to execute against our growth plan.

We are seeing good return on those investments.

Balance sheet impacts from rising rates and macroeconomic headwinds are spurring a moderate pickup in demand for these services, but barring further deterioration in the market. We do not expect a material rise in traditional restructuring activity for the balance of 2022.

We are now seeing an environment going forward, where two forces are pulling at one another.

We are now seeing an environment going forward where two forces are pulling at one another.

The factors that drove the high level of activity in 2021 are still very much in place and the need for high quality independent advice is, if anything, elevated.

The factors that drove the high level of activity in 2021 are still very much in place and the need for high quality independent advice is if anything elevated.

That said, we're in a very tough macroeconomic environment, and we do not see that changing anytime soon.

That said, we're in a very tough macroeconomic environment, and we do not see that changing anytime soon. And while these dynamics will continue to affect M&A and financing volumes in the short term, an inflection point will come just as it did in March of 2009 and May of 2020.

And while these dynamics will continue to affect M&A and financing volumes in the short term and inflection point will come just as it did in March of 2009 and May of 2020.

Market volatility translates into greater volatility to our top line, particularly while we are building scale.

We experienced this to the upside with a very strong first and second quarters in 2021. And now, based on what we are currently seeing, we expect revenue for the second quarter to be well below our first quarter results. Although the current environment makes it more difficult to predict when the current high level of activity will translate into revenue, we expect a stronger second half of the year than the first half.

even given the current macroeconomic backdrop.

Even given the current macro economic backdrop.

Even in the current environment, we are in active dialogues to add accretive senior talent to continue to grow our coverage footprint.

Year to date, we have promoted are hired for partners to our platform and look forward to another partner joining the firm in June .

This new partner will bolster our industrials practice and expand our energy transition effort, a topic relevant to our clients across industries. We will continue to add to our partner ranks and carefully determined positions in industry groups, products and regions.

This new partner will bolster our industrials practice and expand our energy transition efforts a topic relevant to our clients across industries.

We will continue to add to our partner ranks and carefully determined positions and industry groups products and regions.

we remain extremely confident in our future growth prospects.

On that note, Gary I will turn it over to you.

Thank you Peter and good morning, everybody as Peter mentioned revenues for the first quarter totaled $152 million down 11% as compared to the prior year period.

Year over year decline was driven by a reduction in mergers and acquisition activity in our U S business relative to a record 2021 results, partially offset by an increase in non U S mergers and acquisitions completions.

Our first quarter saw fewer advisory transaction completions despite a moderate increase in average fee size per client as compared to the same period in 2021.

Our first quarter saw pure advisory transaction completions. Despite a moderate increase in average fee size per client as compared to the same period in 2021.

Our commitment to grow through the addition of accretive talent remains a top priority, though it's our responsibility to respond to the market and manage costs and our compensation pool. Accordingly, while we continue to aggressively recruit senior talent, we've moderated some of our prior plans to add junior and mid level head count in 2022.

Our adjusted non compensation expense was $32 million for the first quarter up 31% year over year, though down 9% quarter over quarter and represented 21% of our revenues.

Our adjusted non-compensation expense was $32 million for the first quarter, up 31% year-over-year, though down 9% quarter-over-quarter, and represented 21% of our revenue.

In spite of a slight step down in adjusted non-compensation spend quarter over quarter, we continue to expect that our full year 2022 expense, excluding travel, meals, and entertainment, will be modestly above the run rate recorded in the second half of 2021.

As a reminder, the primary driver of this increased spend for 2022 over the back half of 'twenty. One is the anticipated double rent relating to our New York and London headquarters build out, which we expect to incur later this year and into next year.

We recently entered into two new lease agreements for both locations with New York commencing in April from an accounting perspective, and London expected to commence in mid 2022.

Our 2022 non-comp expense is also expected to include some impact from headcount growth and inflation as well as investment in our people and IT systems offset by some moderation of certain professional services expenses we incurred last year as a newly public company and do not expect to continue at the same level this year.

We saw <unk> moderate a bit quarter over quarter to just north of $2 million as travel in January of 2022 was once again impacted by a variant researches.

As cases preceded our teeny picked up and totaled $1 3 million in March marking the highest monthly level since the onset of the pandemic, although still about 20% below our 2019 average run rate of $1 $6 million per month.

Adjusted diluted if converted net income per class a share was 19 cents for the three months ended March 31st

Adjusted diluted if converted net income per class a share was <unk> 19 for the three months ended March 31, 2022, the board of directors authorized a $100 million class a common stock repurchase program in mid February and the program commenced on March 25 2022.

The Board of Directors authorized a $100 million Class A Common Stock Repurchase Program in mid-February, and the program commenced on March 25, 2022.

From that date, and for the four trading days remaining in the first quarter, we repurchased 172,000 shares in the open market for a total cost of $1.6 million.

From that date and for the four trading days remaining in the first quarter, we repurchased 172000 shares in the open market for a total cost of $1 6 million.

In addition, during the quarter, we net settled 559,000 RSUs and together with open market repurchases reduced outstanding shares and share equivalents by 732,000 shares.

In addition during the quarter.

<unk> settled 559000, rsum and together with open market repurchases reduced outstanding shares and share equivalents by 732000 shares.

Our open market repurchases have continued in the second quarter and to date we've bought back in excess of 700,000 incremental shares.

Our open market repurchases have continued in the second quarter and to date, we've bought back in excess of 700000 incremental shares.

At our current valuation, we view share repurchases as a particularly attractive means of returning capital to our shareholders.

As of March 31, 2022, our balance sheet had $223 million of cash and cash equivalents, no debt, and an undrawn revolving credit facility.

As of March 31, 2022, our balance sheet had $223 million of cash and cash equivalents, no debt and an undrawn revolving credit facility.

A portion of this cash has been earmarked for our headquarters expansion projects, we expect our out of pocket cost to be in excess of $50 million mitigated in part by free rent periods at both locations.

The Board has declared a Class A Common Stock Dividend of $0.07 per share payable on June 2, 2022 to holders of record as of May 19, 2022.

The board has declared a class a common stock dividend of <unk> <unk> per share payable on June <unk> 2022 to holders of record as of May 19 2022.

Our as-if converted tax rate is a theoretical figure as it is computed ignoring certain gap items excluded in our adjusted reporting, which may have positive or negative tax attributes.

Our as if converted tax rate as a theoretical figure as it is computed ignoring certain GAAP items excluded in our adjusted reporting which may have positive or negative tax attributes.

In addition, it assumes all partnership units were exchanged for shares of the company's class a common stock, resulting in all of the company's income being subject to corporate level taxes.

Before we open the line for questions, Let me turn the call back over to Peter.

Thanks very much, Gary. One last thing I will note as we continue our journey as a newly public company, we welcome the potential of additional index inclusion in the coming months, which we view as particularly important given the increasing flow of assets into index and passive funds, and the significant amount of long-only buying power which tracks index ownership.

Thanks, very much Gary.

One last thing I will note as we continue our journey as a newly public company. We welcome the potential additional index inclusion in the coming months, which we view as particularly important given the increasing flow of assets into index and passive funds.

And the significant amount of long only buying power, which tracks index ownership, we look forward to expanding our shareholder base and engaging with new investors with that we'll now turn the call back to the operator to open the line for questions. Thank you.

We look forward to expanding our shareholder base and engaging with new investors.

With that, we'll now turn the call back to the operator to open the line for questions. Thank you.

Thank you we will now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

Using a speakerphone please pick up your headset before placing the Keith if any during our question has been answered. Thank you I would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Our first question comes from Devin Ryan with JMP Securities. Please go ahead. Hey, good morning.

Our first question comes from Devin Ryan with JMP Securities. Please go ahead.

Hey, good morning, Peter and Gerry how are you.

Hey, Devin good morning.

Morning. First question, you know, Peter, you talked about kind of the backdrop and we've been in similar environments before and kind of waiting for an inflection, which I completely agree with.

Good morning.

First question, Peter you talked about kind of the backdrop than we've been in similar environments before and kind of waiting for an inflection which I completely agree with.

You know, you also said you're having higher dialogues with clients than ever before, but it's my impression, and we've heard from some other calls, it's just, you know, taking longer for deals to get to announcement. And so I'd love to maybe just dig in there a little bit and get your perspective. You know, I'm curious if you're seeing that around, you know, maybe buyers just looking for some more clarity.

You also said you are having higher dialogues with clients than ever before but it's my impression that we've heard from some other calls is just taken.

Longer for deals to get to announcement and so.

Love to maybe just dig in there a little bit and get your perspective Im curious if youre seeing that around maybe buyers just looking for some more clarity before we pull the trigger on doing something or sellers unrealistic on prices given that we've had to reprice signature.

before they pull the trigger on doing something or are sellers unrealistic on prices, given that we've had some repriced.

<unk>.

Or are there other dynamics that are maybe slowing things down around kind of the readjustment financing rates and have it to either go find new financing or just kind of get people to wrap their head around that im just trying to get a little more color there and then.

Through the second part of that is if you could differentiate or distinguish between what youre seeing with corporate clients versus sponsor clients on that front.

Yeah, okay. So first of all, I think this really all needs to be looked at within the backdrop of our global environment. And, you know, as I mentioned, global unrest and macroeconomic concerns are the culprits of difficult environment here. And we believe that's going to more than offset a lot of the forces that were at work in 2021.

Yes, okay.

So first of all I think this really all needs to be looked at within the backdrop of our.

Global environment.

And as I mentioned global unrest and macroeconomic concerns are the culprits of difficult environment here and we believe that's going to more than offset a lot of the forces that work in 2021.

I think to your point.

There is a hesitancy.

Thank.

The board rooms today, just given those concerns.

And I do feel that there will be an elongation between signing and closing is kind of a general matter.

Interestingly, our announced and pending backlog is lower now than it was last year at this time, but our pipeline is actually higher. And that's a dynamic that we have generally seen, as you referenced, over time in stressed environments.

Interestingly, our announced and pending backlog is lower now than it was last year at this time, but our pipeline is actually higher and that's the dynamic that we have generally seen as you reference overtime in stressed environments.

To your last point, the sponsor ecosystem is a growth.

To your last point there.

The sponsor ecosystem as a growth ecosystem within our addressable market and that comes in a lot of different areas and I actually believe that the sponsor community.

ecosystem within our addressable market, and that comes in a lot of different areas, and I actually believe that the sponsor community will be as active as they have been, if not more so, and that the opportunities created by changes in valuation and volatility will more than offset the higher interest rate environment.

We'll be as active as they have been if not more so and that the opportunities created by changes in valuation and volatility will more than offset the higher interest rate environment.

Okay, great. And then I guess the follow up, you'll get to hear about some of the recent recruits and the momentum there. And I think just kind of keeping the eye on the ball in terms of.

Okay great.

And then I guess the follow up good to hear about some of the recent recruits and the momentum there and I think just kind of keeping the eye on the ball in terms of driving the business for the long term here.

If you could could you just maybe could you guys have so many growth opportunities I think across the franchise could you just stack rank. If you think out over the next maybe two years of kind of where the biggest areas of focus are to stack rank, where kind of youre leaning in most and so we can maybe think about from the outside that those are the pockets, where you could see the most kind of acceleration.

Either headcount or just kind of early signs of growth momentum.

Yeah, so the the growth in our firm comes from a bunch of different sources. First of all, in our industry groups, there are growth opportunities in subsectors in almost every industry group we have.

Yes, so the.

The growth in our firm comes from a bunch of different sources.

First of all in our industry groups, there are growth opportunities and subsectors in almost every industry group we have.

And also, I will add to that, that the Capital Markets Advisory Group, or Capital Solutions, is a growth area for us. It's relatively new, and something even newer than that has been our private capital business, which is very important to the firm because

And also I will add to that that the capital markets Advisory group, where capital solutions.

As a growth area for us, it's relatively new and something even newer than that has been our private capital business.

Which is very important to the firm because.

It exposes us to growth companies really across our platform. And so, you know, that's where the growth is really is coming from. I think with respect to the partners that you mentioned, you know, we've hired or elevated four partners this year so far, one external, three internal. We're expecting another one soon. And we're having a lot of conversations with partners, partner candidates from outside the firm right now.

It exposes us to growth companies really across our platform and so that's where the growth is really is coming from I think with respect to are the partners that you mentioned.

We've hired or elevated for partners. This year, so far one external three internal.

We're expecting another one soon and we're having a lot of conversations with partners partner candidates from outside the firm right now.

Great I'll leave it there thanks very much.

Thank you.

The next question comes from Richard Ramsden with Goldman Sachs. Please go ahead.

The next question comes from Richard Ramston with Goldman Sachs. Please go ahead.

Good morning guys. So, Peter, maybe you can expand a little bit on what you're seeing geographically. It sounds like Europe was actually a bright spot for you in the first quarter of the year. Maybe you can talk to the sustainability of European activity. Obviously, a lot has changed over the last few months.

Good morning, guys.

So Peter maybe you can expand a little bit on what youre seeing geographically it sounds like Europe was actually a bright spot for you in the first quarter of the year maybe.

Maybe you could talk to the sustainability of European activity, obviously, a lot has changed over the last.

A few months.

uh... and then if you could also just touch on what you've seen in terms of the appetite for larger transactions versus middle market transactions and how that has evolved since the start of

And then if you could also just touch on what Youre seeing in terms of the appetite for larger transactions versus middle market transactions and how that has evolved since the start of the year.

Sure So in Europe Richard.

I would say that the good news is that the.

The markets in which we operate are governed by stability oriented leadership.

We avoided a close call a few weeks ago in that regard, but I think thats, a real positive and something that we don't take for granted.

Further Europe has never been so United, albeit for reasons related to the Ukraine conflict.

Having said that, in addition to the global challenges we all face today, Europe is focused on energy supply and energy security more so than the United States, which can disproportionately affect

Having said that in addition to the global challenges, we all face today Europe is focused on energy supply and energy security.

More so than the United States, which can disproportionately affect.

the industrial economy in Europe uh... particularly in in in germany

The industrial economy in Europe .

Particularly in Germany.

But our business has been resilient in Europe . We have a terrific team there, and we're not gonna be immune to these forces, but as I said earlier, the comment that I referenced about our firm as a whole is accurate in the United States and Europe , which is that we've never had more conversations going on and more engagement with our clients.

But our business has been resilient in Europe , we have a terrific team there.

And we're not going to be immune to these forces.

But as I said earlier, the comment that I referenced about our firm as a whole is.

Accurate in the United States, and Europe , which is that we've never had more conversations going on and more.

Engagement with our with our clients.

With respect to your second question on large-cap versus mid-cap clients,

With respect to.

Your second question on large cap versus mid cap clients.

I would say that the large there is a slowdown a bit in the large transactions as it relates to high profile transactions, particularly in the technology space.

And in part due to the antitrust.

A situation that we're now facing.

But there were there were in.

in 2021 over 60,000 merger transactions. And we continue to, there's still gonna be an enormous amount of transaction activity below the large cap, but there will be large cap activity. And I just think it will be in the context of the antitrust environment. We continue to spend time both on large cap transactions and mid cap transactions.

In 2021 over 60000 merger transactions.

And we continue theres still going to be an enormous amount of transaction activity below the large cap but.

There will be large cap activity and I just think it will be in the context of the antitrust environment. We continue to spend time, both on large cap transactions and mid cap transactions.

And Peter, I might just add one thing to your your comment on Europe , which is that.

And Peter I might just add one thing to your comment on Europe , which is that.

You know, as you know, we've really invested quite heavily in the European franchise over the last few years, not only, you know, adding some very senior partners in areas like

As you know, we've really invested quite heavily in the European franchise over the last few years, not only adding adding some very senior partners in areas like <unk>.

Fintech, digital transformation, and obviously building up some of our private capital business. There's been a lot of investment there, which we are kind of happy to see coming through.

Fintech digital transformation, obviously building up some of our private capital business Theres been a lot of investment there, which we are kind of happy to see coming through.

I will I will say that the first quarter and a very strong performance there.

That's obviously, representing a lot of a lot of transaction activity that really originated last year. So as we think forward to the market again could be a little careful about extrapolating, but you do have.

A very active dialogue there a lot of positive momentum, but again first quarter closings. This is true across the firm.

Generally relate to transactions that got started long before.

It was a very recent market turbulence.

Yes, we can both answer that Richard.

Yeah, and we could both answer that, Richard. The comment that we made earlier is that we do expect a stronger second half. And I would say that applies, and we said this to the current environment.

The comment that we made earlier is that we do expect a stronger second half.

I would say that applies and we said this to the current environment.

And part of that is related back to my comment on our pipeline, which is which is very.

Strong.

Even though our announced and pending backlog is down and so we see activity really across the board.

uh... in in mergers and possibly as we referenced an increase in restructuring and also in these two relatively new businesses that were in including capital markets advisory and private capital

And mergers and possibly as we referenced an increase in restructuring and also in these two relatively new businesses that we're in including capital markets Advisory and private capital.

And I think the only thing I'd add to that in terms of the back half of the year again as Peter as Peter said that comment did assume the current environment visibility.

Visibility in the back half of the year and you have heard this from our peers is pretty challenging right now right. It's not as strong as it may have been given the volatility.

What that means is, you know, when we think about our sort of forward gross backlog, which is just, you know, all of the dialogues we're having, not just announced deals, but unannounced things in the pipeline, there's a lot there. Assessing the probability of completion for those is both more challenging, and we assume the completion risk is probably higher in this environment, and the time to completion is higher, you know, given that mix. So that's, those are kind of the dynamics that we see right now.

Assessing the probability of completion for those is both more challenging and we assume the completion risk is probably higher in this environment and the time to completion is higher.

Given given that mix. So those are kind of the dynamics that we see right now.

Okay. That's helpful. Thanks, a lot.

Thank you.

The next question comes from Stephen Chebek with World Research. Please go ahead.

The next question comes from Steven <unk> with Wolfe Research. Please go ahead.

Hi, good morning.

So hi, good morning.

I wanted to start off with just a question on some of the market share trends in the quarter. Recognizing one quarter does not trend make, I was hoping you could speak to some of the factors that might have contributed to market share loss as implied by the year-on-year decline this quarter, whether there were any idiosyncratic factors in terms of sector, geographic mix, or whether it was simply timing that weighed on revenues year-on-year this quarter.

Wanted to start off with just a question.

On.

Some of the market share trends in the quarter, you know recognizing one quarter does not trend make.

Was hoping you could just speak to some of the factors that might have contributed to market share loss as implied by the year on year decline this quarter, whether there were any idiosyncratic factors in terms of sector geographic mix or whether it was simply timing that weighed on revenues year on year this quarter.

Yeah, I think Steve, we feel that our first quarter was was a very good quarter. It was our second best first quarter ever. And it's being compared to our last year first quarter, which was up 84%.

Yes, I think Steve we feel that our first quarter was a very good quarter.

Was our second best first quarter ever and it's being compared to our last year first quarter, which was up 84%.

And, you know, I would just say generally with respect to our top line revenue that, you know, in the same way that when we had an up 84% quarter in the first quarter of 21 or when we had an up over 50% quarter for the year of 2021, you know, it's all part of our growth story which will be up and down and will not be quarter to quarter.

And I would just say generally with respect to.

Our.

Topline revenue that in the same way that.

When we had an up 84% quarter in the first quarter of 'twenty, one or when we had an up over 50% quarter and for the year of 2021.

All part of our our growth story, which will be up and down and will not be quarter to quarter.

We have, we feel very good about the development of our franchise across our industry groups and product areas and regions, and we're undaunted with respect to the pursuit of our growth story.

We have field.

We feel very good about the development of our franchise across our industry groups and product areas and regions and were undaunted with respect to our the pursuit of our growth story.

Okay. Thanks for that color and maybe my follow up just for Gary.

Thanks for that color. And maybe my follow-up just for Gary, you've been consistent in the messaging that organic growth is the highest priority with regards to capital management, but you're already near your recruiting bogey for the full year just on a year-to-date basis in terms of net new ads. Your stock price, it's down more than 40% year-to-date with significant capacity to accelerate the share repurchase.

<unk> been consistent in the messaging that organic growth is the highest priority with regards to capital management.

But you're already near year recruiting bogey.

For the full year, just on a year to date basis in terms of net new adds your stock price, it's down more than 40% year to date with significant capacity to accelerate the share repurchase I just wanted to better understand the framework of our approach just in terms of ROI, whether the return on investment on buyback.

I just want to better understand the framework or approach, just in terms of ROI, whether the return on investment, on buyback, is better than simply adding more partners here, given the capacity to accelerate repurchase, as well as a challenging macro-backdrop.

Is better than simply adding more partners here.

Given the capacity to accelerate repurchase as well as a challenging macro backdrop.

I don't think that too Steve are mutually exclusive.

I don't think the two, Steve, are mutually exclusive. You know, we you know, not only do we have.

Not only do we have.

You know, the cash to invest in both, but frankly, most of the partner acquisition or lateral hire acquisition isn't usually a cash acquisition anyways. It's usually a share acquisition.

The cash to invest in both but frankly most of the partner acquisition or a lateral hire acquisition is unusually a cash acquisition anyways, it's usually a share acquisition. So.

Really we look at our capital management.

As you know that the board authorized a repurchase program in February .

We very shortly thereafter gave instructions to our brokers to start that we were advised by counsel that we should wait about wait wait a while for a cooling off period, just given some of the reset.

SEC proposed regulations relating to 10B51 repurchases.

SEC proposed regulations relating to <unk>, one repurchases and we've really since then been in the market.

And we've really since then been in the market as aggressively as our brokers advise us to be, so that we're not obviously moving the market and so forth in an open market program.

As aggressively as our as our brokers advise us to be so that we're not obviously moving the market and so forth in an open market program.

And Gary, could you just help frame how we should think about the cadence for share repurchase? I mean, recognizing that...

Hi, Gary could you just help frame, how we should think about the cadence for share repurchase I mean recognizing that.

built in some flexibility presumably into the program, but just want to better understand how we should think about the cadence as we start to think about the modeling of the share count trajectory.

You built in some flexibility and presumably into the program, but just wanted to better understand how we should think about the cadence.

As we start to think about the modeling of the share count trajectory from here.

Yes, Steve I mean look in terms of the full year, obviously, we're going to we're going to look at things.

And the market environment at that time, so im not going to I'm not going to give a prediction for the for the full year.

I will just kind of put it in context, so far since the program started we've been repurchasing.

At a clip of probably on average about 150000 shares a week.

And that's kind of where we've been thus far.

So that's probably kind of the best.

comment I can make that sort of gives you some color on that program. All right. Sufficient color, Gary. Thanks so much for taking the time.

Comment I can make that sort of gives you some color on that program.

Sufficient color Gary Thanks, so much for taking my questions.

Sure. Thank you Steve.

The next question comes from Michael Brown with KBWP, go ahead.

Your next question comes from Michael Brown with <unk>. Please go ahead.

Great. Thanks, Good morning, Peter Gary Taylor, how is everyone.

Great, thanks. Morning, Peter, Gary, Taylor. How's everyone? Good morning. Hey Michael, good.

Good morning, Hey, Michael.

Most of mine have been asked I just wanted to.

follow-up on the outlook commentary here for 2Q specifically. So certainly understand that there's quarterly volatility here and that's inherent in the business.

Maybe follow up on the outlook commentary here for <unk>, specifically, so certainly understand that there is quarterly volatility here that's inherent in the business.

I appreciate that Youre able to give some guidance here for us in <unk>.

Um, you know, when I, when I look at the, the, the business models here, the, the operating leverage is generally limited in these down revenue type of environment.

When I look at.

The business models here the operating leverage is generally.

Limited in these down revenue type of environment, and especially when you have that.

So in environments that are more quarterly quarterly.

Noise, if you will.

Versus kind of a full year situations. So as we think about <unk> and you talked about revenue being down significantly from <unk>.

So as we think about 2Q, and you talked about revenue being down significantly from 1Q, is it still?

Is it still fair, though that you can you can produce positive net income in that environment, just given where you're accruing comp and TNT is on the rise a bit here.

positive net income in that environment just given where you're you know accruing costs.

So Michael your question can we can we generate positive net income in the current environment.

Yes, we believe we can.

Certainly on an adjusted basis, we can.

Look we as we think about.

Ill comment on questions you haven't answered, but just to give you a little bit of further color as we think about.

Margins.

Obviously, of the two main components on the comp margin, we accrued for the first quarter, consistent with our guidance that we've given in the past, that's sort of the mid-60s, and we accrued a 64 percent rate. And that's, you know, that mid-60s band is one that we're going to, you know, we would expect and try to stay very much within, you know, barring, you know, pretty unusual circumstances.

Obviously, you have the two main components from a comp margin, we accrued for the first quarter consistent with our guidance that we've given the past of sort of the mid sixty's and we accrued 64% rate.

And Thats that mid sixties band is one that we're going to we would expect to try to stay stay very much within barring.

<unk>.

Pretty unusual circumstances.

And on the non comp side.

The investments that we're making there are kind of long term investments a good portion of the non comp margin is relatively fixed but there are things that the margin where we can.

Where we can make adjustments if we need to and we think it's the right thing to do.

The way, we kind of think about non comp expense as we try to be very disciplined and kind of where we're spending and where we have some higher non comp expense today.

It's very specifically for investments in the business for the long term.

Okay, great. So it does sound like <unk> will even even with revenues down EPS will still be slightly positive okay.

Okay, great. So it does sound like QQ will even with the revenues down.

Well, I'm not, yeah, I'm not going to predict EPS for the quarter, but, you know, you can, you know, you can, you can kind of, you know, you kind of extrapolate from sort of the, you know, sort of the margin guidance that we've given so far. And it really, obviously, you know, if you were to assume zero revenues, which I wouldn't, but if you were to assume zero revenues, you're not going to get there. And it.

Yes.

I'm not going to predict EPS for the quarter, but you can.

You can you can kind of.

You kind of extrapolate from sort of the sort of the margin guidance that we've given so far and it really obviously.

If you were to assume zero revenues, which I wouldn't.

There are obviously not going to get there.

And.

Apologies if I missed it you ended the quarter with 223 of cash and.

We are all trying to.

toggle what's kind of considered your excess cash. Obviously been buying back stock in the second quarter here, so that.

<unk>, what's kind of considered your excess cash obviously been buying back stock in the second quarter here, so that that number has changed.

Um, but how do you think about what is, what is truly?

But how do you think about what is what is truly excess and I know thats, probably a moving target, but if you had to frame range. How do you think about what that what that number is.

Yeah, I mean, the way we think about the cash balances is, you know, there's there's some amount that we are

Yes, I mean, the way we think about the cash balances is there is some amount that we are.

you know, that we kind of set aside, which is not excess, which is, you know, working capital needs as part of it. There's, you know, there's a component that we, you know, we will kind of assume.

We kind of set aside which is not excess which is working capital needs as part of it.

There is there is a component that we we will.

Kind of assume.

is amounts that we need to retain for specifically identified items like our headquarters build out, which we said, you know, we expect, you know, that could be north $50 million of capital. So that's kind of a part of it.

As.

There's an aspect of keeping some amount of dry powder there so that we have the flexibility to take advantage of opportunities as they come up.

There is an aspect of keeping some amount of dry powder. There. So that we have the flexibility to take advantage of opportunities as they come up.

And kind of the remainder of that is access and, you know, we can't.

And kind of the remainder of that is excess and we can't.

We're not going to be very specific on a number.

However, what I will say is today, we definitely feel that we have we have excess cash treatment. After the buybacks today, which is why our intention is to continue to look at ways of returning capital to shareholders in the current environment.

Okay, great. Thanks for taking my questions.

Sure.

The next question comes from Ken Worthington with J.P. Morgan. Please go ahead.

The next question comes from Ken Worthington with JP Morgan. Please go ahead.

Okay.

Hi, good morning. This is Brian Fitzgerald. I'm sure Ken Worthington

Hi, Good morning, This is Brian Fitzgerald I'm sure Ken Worthington.

So, I wanted to ask about the outlook for banking in the energy sector. So, given what's happening in Europe ...

So I wanted to ask about the outlook for banking energy sector.

So given what's happening in Europe and.

and the changes in energy sourcing and pricing, what are you guys seeing in terms of a changing dialogue for energy M&A? And then, Gary, on last quarter's call, you spoke towards excessive cash flows.

And the changes in energy sourcing and pricing.

What are you guys seeing in terms of changing dialogue for energy M&A.

Then Gary on last quarter's call you spoke towards excessive cash flows.

going to capital return rather than M&A. So is that still the case? And then more broadly, what are you seeing in the energy pipeline?

<unk> to capital return rather than M&A. So is that still the case and then more broadly what are you seeing in the energy pipeline. Thank you.

Sure.

Brian I'll take the first part of that.

With respect to our energy business.

Would say that historically rising energy prices.

Has created M&A activity, because it obviously creates earnings and confidence in the resources to transact.

Now.

Working.

Hurdles with respect to negotiating deals and price discovery.

Like like the rest of our business, we have a lot going on we have enormous number of conversations and touch points in the energy space.

Around the world.

And it's a very important and interesting area for us, but thats, how I would sort of characterize.

The energy opportunity right now.

Great. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Peter Weinberg for any closing remarks.

This concludes our question and answer your question I would like to turn the conference back over to Peter Lindberg for any closing remarks.

Great, thanks very much, operator. Thank you all for joining and we look forward to following up with you at any time and appreciate being on the call this morning. Thank you.

Great. Thanks, very much operator, thank you all for joining and we look forward to following up with you at any time and I appreciate.

Being on the call. This morning. Thank you.

We'll conference is now concluded. Thank you for attending today's presentation you may now disconnect.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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