Q2 2022 Piper Sandler Companies Earnings Call
Good morning, and welcome to the Piper Sandler companies conference call to discuss the financial results for the second quarter of 2022.
During the question and answer session Securities industry professionals may ask questions of management.
The company has asked that I remind you that statements on this call that are not historical or current box, including statements about beliefs and expectations are forward looking statements involve inherent risks and uncertainties.
Factors that could cause actual results to differ materially from those anticipated are identified in the Companys earnings release and reports on file with the SEC, which are available on the company's website at Piper Sandler Dot com and on the SBC website at SEC Gov.
This call will also include statements regarding certain non-GAAP financial measures. The non-GAAP measures should be considered in addition to and not a substitute for measures of financial performance.
Prepared in accordance with GAAP.
Please refer to the company's earnings release issued today for a reconciliation of these non-GAAP financial measures.
The most directly comparable GAAP measure.
The earnings release is available on the Investor Relations page of the company's website.
And the S E C a website.
As a reminder, this call is being recorded.
And now I'd like to turn the call over to Mr. Chad Abraham Mr. Abraham you may begin your call.
Good morning, and thank you for joining us.
I am here with Deb Schoneman, our president.
Jim Carter our CFO .
We will go through our prepared remarks, and then open up the call for questions.
The firm delivered solid performance during the quarter and we continue to invest in acquisitions to expand our areas of focus and accelerate long term growth.
Our business proved resilient against the challenging backdrop, reflecting the benefits of a diversified business model.
Our strategy is focused around growing our advisory business through sector and product expansion as well as continuing to add scale and increasing market share in our financing and brokerage businesses through market cycles.
While the macro environment remains uncertain I'm confident about our position in the market and our ability to execute on our growth strategy.
At that point in June we closed on our acquisition of Stanford partners, our European consumer M&A boutique with a focus on food and beverage.
Stanford is highly complementary to our existing strong franchise in food and beverage.
And we will increase our ability to serve clients both domestically and internationally.
In addition on July 6th we announced the pending acquisition of <unk> partners.
<unk> investment banking firm the acquisition is expected to close during the fourth quarter of 2022.
And we will roughly double our technology practice to over 50 professionals on a combined basis.
The DBO team add exceptional talent and enhanced scale to our tech practice.
The acquisition will elevate our franchise by adding new sectors, reaching more clients and expanding our market share.
<unk> brings a strong track record of working with market, leading clients and enhances our large cap credentials as well as our brand in both the corporate and financial sponsor World.
In addition, <unk> General partner Advisory practice provides us with an additional valuable capability to offer our financial sponsor clients.
In turn we will provide DBO access to our equity and debt capital markets capabilities as.
As well as provide DBO with connectivity to the hundreds of private equity clients, we do business with.
Both transactions are consistent with the strategic goals, we've articulated previously, namely to grow our M&A business in technology and further expand our European business.
Focusing in on our financial results during.
During the second quarter of 2022, we generated adjusted net revenues of $346 million, a 17, 5% operating margin and adjusted diluted EPS of $2 47.
During the first half of 2022, we recorded adjusted net revenues of 707 million, a 19, 2% operating margin and adjusted diluted EPS of $5 59.
Although lower compared to the record prior year period, we delivered solid performance given the challenging and complicated macroeconomic environment.
Next let me review, our corporate investment banking business, beginning with advisory services.
Advisory revenues of $170 million during the second quarter of 2022 declined 20% sequentially and 32% from the exceptional year ago quarter.
Market volatility has resulted in delayed transaction closings, which impacted Q2 results.
Performance during the quarter was led by our financial services group.
Which advised on three of the five largest U S bank M&A transactions that closed during the quarter and.
And we remain the number one adviser to U S banks based on the number of announced M&A deals during both the second quarter and the first half of 2022.
In addition, our energy and power team has been capitalizing on renewed interest and increased activity in the industry driving strong results during the quarter.
More broadly Piper Sandler was the number two advisor for U S. M&A deals under $1 billion based on the number of announced transactions during both the second quarter and the first half of this year.
Our advisory pipelines across verticals remains strong however, current macroeconomic conditions have introduced a level of uncertainty in our outlook that we have not experienced in the past 18 months.
During the quarter, we began to experience more deals slipping into the second half of this year and a limited number of deals that die.
Longer deal timelines is a trend we expect to continue in the second half of 2022.
Turning to corporate financing.
We generated $29 million of financing revenues during the second quarter.
Although the equity capital markets remained largely shut down we improved on a sequential basis as we underwrote 11 equity deals as well as several preferred and debt capital raises for financial services companies.
Turning to investment banking managing director head count.
We finished the quarter at 153, managing directors, representing our 11th consecutive quarter of managing director growth on a net basis.
We had an active quarter from a recruiting perspective.
As we added two M D is to strengthen our restructuring practice.
As well as expanded our technology and diversified industrials and services groups.
As we have experienced in the past during more challenging market conditions, we have had success strengthening our platform.
In the short term this can impact current results.
But as we have communicated our focus remains on growing the franchise long term to drive results for our shareholders.
Our success and momentum continue to resonate in the marketplace.
Both our recruiting efforts and the development of our own talent continue to be priorities.
Well the second half of the year remains difficult to predict I remain confident in our ability to execute our plan.
Strengthen our competitive position and achieve long term growth.
With that I will turn the call over to Deb to discuss our public finance and brokerage businesses.
Thanks, Chad.
I'll begin with an update on our public finance business.
We generated $35 million of municipal financing revenues up 29% from the first quarter, reflecting strong absolute and relative performance as we've gained market share on a year to date basis.
Overall market issuance during the quarter was slightly north of 100 billion down approximately 12% from a year ago.
Higher nominal interest rates and increased interest rate volatility resulted in less refinancing activity, which contributed to the year over year decline in issuance.
The diversification of our public finance business that was in the governmental space as well as specialty sectors continues to drive benefits we.
We generated solid activity across our governmental and specialty businesses during the quarter.
Interest rate volatility and municipal fund outflows have made pricing and distributing deals more challenging however, our strong distribution capabilities and expertise in the marketplace are allowing for strong results in a difficult market.
Looking ahead, we expect the second half of 2022 to be similar to the first half.
Our backlog of specialties sector financings is good and we could experience upside if market conditions allow for execution of this pipeline.
Turning to equity brokerage.
Equity markets continued to experience elevated volatility and volumes during the second quarter.
Our equity brokerage business generated record quarterly revenues of 51 million benefiting from a full quarter of cornerstone macro on our platform.
We're seeing strong collaboration between our fundamental analysts and our macro analysts from cornerstone, bringing a differentiated view to our clients.
With one of the broadest account coverage is on the street, we see opportunity to cross sell and deepen client relationships.
Given equity markets are down approximately 20% year to date, we expect the 2022 fee pool for research and trading services to also be down.
We believe the investments we have made and the strength of our enhanced platform will drive market share gains and offset these headwinds.
We are seeing early signs of impressive client ranking votes, which is an indicator of enhanced market penetration relevance to clients and ultimately increased market share.
From an outlook perspective, we expect to experience the typical summer slowdown during the third quarter of 2022 and rebound during the fourth quarter.
Lastly, turning to our fixed income business.
For the second quarter of 2022, we generated fixed income revenues of $54 million down modestly compared to the solid first quarter of this year.
The market experienced volatile interest rates during the second quarter as market participants digested the impact of inflation tightening monetary policy and the economic outlook.
Client activity was strong as demand or municipal centric clients as fund redemptions as well as higher yields and relative values in the municipal asset class drove secondary activity.
Our depository client activity was more muted during the quarter as volatility move clients to the sidelines.
The diversification of our fixed income business, both clients and products strengthens our ability to deliver consistent results across macro environments.
Now I will turn the call over to Tim to review, our financial results and provide an update on capital use.
Thanks Deb.
As a reminder, my comments will be focused on our adjusted non-GAAP financial results.
We generated net revenues of $346 million for the second quarter of 2022, driven by solid performances across most of our businesses.
Net revenues decreased 4% from the first quarter of 2022 due to lower advisory revenues as market headwinds adversely impacted transaction timing and deal risk in our M&A business.
Partially offsetting the sequential decline in advisory we experienced strong municipal financing and institutional brokerage revenues as well as improved corporate financing activity.
Net revenues decreased 30% from the exceptionally strong prior year quarter due to lower advisory revenues and historically low equity capital markets activity.
The diversity of our franchise and the investments we have made over the last few years continue to demonstrate the durability of our platform across market environments.
Net revenues for the first half of 2022 totaled $707 million down from the first half of last year, which benefited from record corporate financing activity.
Turning to operating expenses and margin.
Our compensation ratio was 62, 7% for the second quarter of 2020 to 20 basis points higher compared to the sequential quarter, resulting from lower revenues and a continued focus on investing in the platform.
On a year to date basis, our compensation ratio was 62, 6%.
We continue to manage compensation, while considering absolute revenue levels mix of business and investments as we remain focused on growth.
Based on our current outlook and pipeline for growth opportunities, we expect our compensation ratio to be near or slightly above this level on a full year basis.
Non compensation expenses, excluding reimburse deal expenses for the second quarter of 2022 were $60 million, an increase of 9% compared to the first quarter of 2022, and 23% compared to the second quarter of last year.
The increase relative to the prior quarters, primarily resulted from an acceleration in travel activity and overall inflationary impacts on travel costs.
We also incurred higher professional fees associated with increased recruiting and hiring within investment banking.
With travel returning to pre pandemic levels, we expect non compensation costs to be near these levels going forward.
During the second quarter, we generated operating income of $61 million and an operating margin of 17, 5% for the first half of 2022 operating income totaled $136 million, which resulted in an operating margin of 19, 2%.
Our adjusted tax rate was 25, 2% for the second quarter of 2022, and 24, 1% for the first half of the year, which included a $5 million tax benefit related to restricted stock vesting at prices higher than the grant date price.
Excluding this tax benefit the adjusted tax rate for the first half of 2022 was 27, 5% we continue to.
To expect our full year adjusted tax rate will be within our targeted range of 26% to 28% excluding the impact from stock recipes.
During the second quarter of 2022, we generated net income of 44 million and diluted EPS of $2 47.
For the first half of 2022 net income totaled 101 million and diluted EPS was $5 59.
Let me finish with an update on capital.
Our strong absolute performance has generated significant cash that we continue to deploy to drive shareholder returns.
We repurchased approximately 418000 shares or $50 million of common stock during the second quarter of 2022 and.
And for the first half of this year, we have returned an aggregate of $254 million to shareholders through buybacks and dividends paid.
In addition today the board approved a quarterly cash dividend of <unk> 60 per share to be paid on September 19th to shareholders of record as of the close of business on August 26.
We have also been active deploying capital during the first half of 2022 through the acquisitions of cornerstone macro and Stanford partners.
And with the pending acquisition of GPO partners expected to close during the fourth quarter 2022 is shaping up to be a successful year from an investment perspective.
The diversification of our platform and durability of our business model continued to produce solid results. Despite tough markets and overall, we are pleased with our first half results.
We continue to make progress on our long term growth strategy and remain confident in our ability to grow and deliver shareholder value over the long term.
Thanks, and we can now open up the call for questions.
Thank you.
If you would like to ask a question.
Please signal by pressing star one on your telephone keypad.
If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
<unk> has star one to ask a question and we will pause for just a moment to allow everyone an opportunity to signal for questions.
And we'll take our first question from James <unk> with Goldman Sachs. Please go ahead.
Hey, good morning, everyone and thanks for taking my questions.
Maybe if I just start with the corporate financing you saw I think stronger than expected results this quarter and the number of ECM issuance in particular were up quarter on quarter and the trends appear.
Better than the broader industry, maybe you could just talk about whether you think this reflects any sort of green shoots and and whether you think you could build off this level in the back half of the year.
Yes, Thanks, James I actually think it's probably just a function of.
Really really low levels and.
In Q1, I mean, frankly, we're still operating at.
Really low levels for us that corporate financing line is primarily two things obviously, we've got the ECM line and in ECM, We definitely did.
A handful of more deals than we did in Q1, we had some stretches where we got some health care business, Don I would say.
That's sort of true.
Today, we did up our this this month as well we did a health care financing. This week we've got.
A few others slated for August , but still still pretty low levels and then in.
In the corporate financing line, we also have our.
DCM financing for financial services, and we still got a quite a bit done.
In Q2, so I think it's just relative to a very very low Q1 still at low levels, we still sort of expect this pace and yeah, I mean, I would say relative to green shoots.
Specifically for our healthcare ECM business, we're definitely seeing the conversations pick up and the urgency to raise capital to pick up and I think people's ability to wait.
It's getting tougher and then you know obviously the Spi in the you know the biotech stocks have bounced quite a bit so that help so we still expect pretty muted levels, but certainly.
<unk>.
Could it be better than the really low levels early in the year.
Okay that makes a lot of sense.
Somewhat encouraging maybe I could just touch on the advisory side in terms of your guidance I know you had talked about last quarter about the second half an advisory being being stronger than the first half and forgive me if I missed this in your prepared remarks, but do you still expect that to be true or has the environment just become a little bit more challenging.
Yeah, I would say you know obviously, we did the last call at the end of April it in things absolutely changed in May and in June and things got much tougher I do think if you just look at our history as a company nine of the last 10 years, our second half is better than first half and <unk>.
Certainly we will see.
Some pick up in Q4, but I think just given how tough.
May and June and July have been for advisory.
You could see an environment, where it's closer to flat.
Okay that makes a lot of sense and then just one last quick one here just on the restructuring.
<unk>, you've obviously continued to grow that this quarter, maybe you can just talk about what the outlook is from here and then if theres any sort of difference in activity on the traditional restructuring side relative to liability management.
Yeah, and again, just a reminder for US is we're coming off of a really low base. So even though you know industry levels are still pretty low for the first half.
We're definitely starting to see more volume more new engagements will see a pickup in revenue.
We've added a couple more managing directors, where we're still trying to build.
Build the team. So you know at some point this becomes a more meaningful line to revenues and we've definitely seen a pickup and we're excited about where this is headed.
But for us as a total mix of advisory.
<unk> relatively small.
Okay makes sense. Thanks, so much for taking my questions.
Yeah.
We will take our next question from Devin Ryan with JMP Securities. Please go ahead.
Hey, good morning, everyone. How are you guys doing.
Hey, Kevin.
Good maybe coming back to some of the commentary on the M&A advisory outlook, just kind of parse through a couple of the items here. So on one hand.
Yeah, the backlog sounds like it's in very good shape on the other hand purchase a lot more uncertainty.
Deals are kind of moving slow and we're hearing that from everyone. So I think thats.
And industry dynamic.
But maybe talk little bit about what you think needs to change to create kind of the or maybe reverse that elongation theme is it just the.
Uncertainty in the macro and that you're still creating a wide bid ask spread between buyers and sellers.
Are you seeing.
Youll financing, becoming an issue like I'm, just trying to get a sense of like how far in do you think we are to the dislocation obviously at some point is going to inflect here and so just trying to think about whether maybe the.
Pain is slowing down or we're still in a kind of a very uncertain moment today.
Yeah, I would say it's a.
It's really a combination of a few things youre definitely right I mean.
Backlog pipeline I mean, everybody measures at a little bit differently. If you look at just engagement letter signed deals that have potential things were working on yes, you know relative to other downturns, we still feel very good about that the list is long we have a lot of transactions but.
From April to kind of today, you know a lot of things we thought were.
We're tracking well closing.
Not that many have died but they're slower annual the longer they're slower the more you wonder if theyre going to.
Yes, John So I think it's a combination of things I think we definitely on the private equity side.
Financing isn't.
Shut down, but it's more difficult and it's not just <unk>.
Not just rate, but it's can you get a one turn less of leverage and in that case that impacts.
That impacts pricing quite a bit in valuation and it takes a little while for sellers to adjust.
Devaluation. So you know my own my own view is you know we'll see this.
At least another few months and certainly there is still lots of dry capital with private equity you know I was at a big private equity event, a lot of senior managing partners, a private equity funds and you sort of had a mixed reaction a couple of weeks ago. Some of them told me Hey, you know a third of us sort of.
Sitting on our hands not doing transactions sort of waiting till we see kind of what happened to others are looking but they might be looking more value oriented than they had been in the past you know others are trying to take advantage of.
Other people sitting on their hands to do transactions. So it's just all of that leads to just less activity.
In the past these stretches haven't lasted crazy long time, so we certainly are.
We certainly expect to pick up but it's not like we have perfect visibility into when.
Okay. Thanks.
Thanks, that's very helpful. And then maybe a follow up here for Tim just thinking about capital and capital allocation. So you guys had been as you mentioned very active on the investment front.
Which is good to see and doing Stanford DBO, just even recently on the advisory side.
How should we think about the liquidity position.
Accounting for in our Stanford already closed within <unk> as well, so kind of what that looks like and really what I'm getting at is maybe capacity.
On whats already announced.
Either more M&A or capacity for buybacks and then.
What your priority is at the moment, just given that you know I'm, assuming maybe they're theirs.
Lower expectation in the market for M&A.
Thanks for keep her role on the flip side your stock is a lot cheaper as well.
Yeah Devin.
Yes, I think we.
We are excited about the fact that we've been able to be more active on the corporate development side I think one piece I would maybe highlight along those lines in terms of how we're able to maybe generate capacity as it relates to the dividend in a range of 30% to 50%.
We've been at the higher end of that range may be the last year or so, but we've talked about when we're more active on corporate development.
We may bring that down to the lower end so that that does provide some forward.
Capacity.
We pay at the lower end of that range.
I think we will continue to obviously it at the levels that we're at generate cash that we can continue to deploy so there will be capacity to continue to do some things.
<unk>.
We will continue to also think ahead here next October we got the second tranche of the.
Note. That's due at 125, so we want to be mindful or around that as well.
And then maybe the last piece just in terms of.
Buybacks I mean, we have been more active over the first half of this year and bought back almost one 1 million shares.
We've always talked about continuing to try to be opportunistic, but we might be a little bit more measured in terms of our pace on buybacks as we go forward here again, given a little bit of the uncertainty and continuing to want to prioritize corporate development I think that that always is sort of top of our list to continue to grow the platform.
I would just I would just add Devin.
So as we think about it we've kind of always use these tools the regular dividend the special the buyback and you know investing in acquisitions, and we still sort of need all of them to deploy capital I mean, as we are growing that top line over the last several years, we really have an increase to any need for our own capital to operate the business. So.
It's a matter of putting it to work and I think Tim said it well.
Because we you know we use some cash for cornerstone Stamford, we will for DBO. This year will likely be at the lower end of the payout ratio, but still frankly need all of those tools to deploy capital and with the stock down here.
We will continue to lean on the buyback.
Yeah, Okay terrific and then how many managing directors are coming in with DBO once that deal closes.
Seven.
We've talked probably the top strategic priority when everybody keeps asking me is.
Undersized team, we have in Tac relative to health care financials energy in our kind of place in the market. This is a big opportunity for us to sort of jumpstart recruit more add to the team with the real high quality teams. So yeah, we added seven senior partners.
In California.
Over 20 people total to the team and we're pretty excited about what it's going to do to our tech M&A practice.
Alright, great ill leave it there thanks, everyone.
Seven.
We will take our next question from Steven <unk> with Wolfe Research. Please go ahead.
Hey, Good morning, guys. This is Brendan O'brien filling in for Steven.
Hey, Brendan so so.
First on the advisory piece.
Obviously strong results in the first half within your bank M&A group.
Some of those deals likely coming from last year given the.
A longer timeline for completion.
But in the past, we've seen banks that M&A tends to slow more dramatically in times of elevated stress, but at the same time, obviously default rates remain near historical lows and balance sheets appear to be healthy at the moment.
The dialogue has been with financial institutions do you got a sense that they are willing to transact at this point.
Even if we do not go into a recession, how do you anticipate higher rates will impact activity given on the one hand, there will be generating more cash, but also there'll be potentially less needs to generate scale.
Yeah, I would really say youre your opening commentary is true.
We had a very strong first half in financial services some of that is related to long.
Lead times for some of the depository deals and some of the larger deals.
Frankly, we've seen pretty good announcements for us the last couple of months, but it's mostly in the smaller deal market sort of the 100 200, we haven't seen a lot of the.
Larger deals, but frankly, the pace of deals has been pretty good. So I think we feel good about that there is no question the pace in larger deal market has changed.
So I would say, it's sort of a tale of two cities depending on the size of the transaction, but your commentary is right for certain for certain folks where the stocks are where rates are will slow transactions, but over time that should be.
That should be quite positive and then I would also say for our financial services business.
Really diversified it.
This year, we're seeing again, a good pickup in some of the things we're doing in asset management insurance some of our non depository business. So since we closed Sandler a few years ago, that's really been a good growth area for us.
Great.
Great color. Thank you and then on <unk>.
On the fixed income both on a brokerage in public finance business. The results there came in much better relative to some of your peers.
So I was hoping you could unpack maybe some of the idiosyncratic factors about your business led to this greater resiliency and would you expect that to continue as the year progresses.
Based on on your comments that you expect the second half to be similar or youre, not anticipating that typical seasonal build but any color. There you could provide.
Great.
Yeah sure, let me start with that.
Municipal financing public finance side of it.
I would really say that it's just the diversification of our business not only in the governmental side geographically across the U S. But also the breadth of the specialty sectors that we've built out over time, so often we'll see different parts of the business performing better in certain environments that just tends to give us a more a more balanced business and <unk>.
As we think about the outlook as you noted in the call.
Commentary has been that we feel like the second half probably similar to the first and it sort of look at that from a perspective of refinancing is down and if I look at last year the amount of new money raise that issuance if that stayed flat right now and and last year was a very strong year.
Air and the refinancings stay at similar levels to where it is right now youre going to see a pretty.
Probably a 420 billion dollar overall issuance, which is about double the first half so that's sort of the market context behind our statements. They are.
Now that said as I also alluded to in the comments that we have a strong pipeline in particular in our specialty sectors, unless we see some stability of assets in the high yield Muni market, where there will be some ability to take advantage of that pipeline.
If I move to the fixed income services.
That's a brokerage side of it that's not.
Really much different of a story, it's been the breadth of our <unk>.
Client base and our products. So for example, banks were less active the depository, but we saw strength in asset management as I spoke about municipal centric assets and those investors being strong, but also even public entities as the short end of the curve is rising it's a lot more activity from those clients.
So that breadth of clients and then I'd also say product.
From the standpoint that it's not only the CUSIP trading progress products, but we're able to do with our derivatives and loan trading non CUSIP products that helped drive some stability. So overall I'd say the message is diversification across both of those businesses yes.
And I would just add on the equity side, obviously it was.
Really strong quarter with cornerstone.
Full quarter, but also just you know really the platform we've built.
And yes, we sort of agree after seeing everybody's results, both fixed income and equities.
On a relative basis had a very strong quarter I would say headed into July both of those businesses have slowed a bit some of that is just the summer months. So we certainly expect a slightly slower Q3 for both of them.
Okay.
Great. Thanks for the color guys.
As a reminder, its star one to ask a question we will take our next question from Michael with Northland Securities. Please go ahead.
Hey, Thanks, guys.
Chad a little bit of clarity on your <unk>.
Strong backlog in M&A comment.
How would you see the backlog is sort of relative to the last 18 months is it comparable or like 80% of that backlog just trying to get a feel for on a relative basis.
Yeah, what I would say.
In terms of number of active engagement letter signed letters that art sort of Super old they're actionable, it's pretty darn close to where it was at periods of last year now.
Some deal sizes are smaller you are not getting into sort of the ratchets on valuation as much.
The buyer lists certain processes, where we get.
Big list of bidders on some of the private equity deals maybe that list of final bidders is smaller.
You don't see quite as much valuation stretch. So then it's a question of will the clients transact can you close the deal will the party be there at closing so it's not it's not about the number of situations. It's just about the number of situations, we can get closed that.
That the client will accept.
Got it and then.
For the overall business.
Was July a little encouraging or was it kind of more of the same how would you characterize July .
I would say July was very much more of the same with most of the businesses.
Like I said even.
Little slower in equities little slower in fixed income.
<unk> sort of the same probably the only.
The only thing we're starting to see the green shoots are is relative to the healthcare backlog in ECM more clients talking about should we take advantage of a little bit of an uptick in some of the stocks and interest in health care either in August or post labor day, but.
We've seen that before with market spikes, we actually need to you need to see that volume of transactions actually play out. So I would say July was very much more of the same.
Fair and then maybe lastly for Tim.
You guys always are careful on the expense side.
Are you guys starting to sort of you know even think more critically on expenses.
Just as this tougher environment kind of continues to way kind of where's the mentality on that today.
Yes, Mike.
I think you are right we were pretty consistent in terms of I was thinking about expenses and managing those.
Yeah, we've certainly seen this this increase.
On the travel side.
We think you know.
That's been important to get back in front of clients and have sort of those face to face meetings. So we encourage that.
We've also had some additional expenses just in terms of recruiting and.
Hiring which is also.
Good thing from a longer term perspective I think.
We feel like you know on the travel front, we may be back now to more normalized pre pandemic levels on that.
So we expect I guess noted in my comments that these non comps could be in sort of the range that we've seen in Q2.
We will yeah, I mean I think.
As we go forward here continue to think about what is the outlook how does that impact margin from a non comp perspective.
Try to make decisions as we typically do based on the outlook, but.
At current time, I wouldn't say that we're doing anything.
All that different than we have in the past and I would just add Mike obviously were.
We're focused on long term growth so when it comes to spending related to production and clients and seeing clients I mean, I'm very encouraged that that's picked back up relative to other kind of spending I mean, obviously, we're very conscious revenues are down.
Quite a bit from last year. So we're very focused on it.
Cool great. Thanks, a lot guys.
It appears there are no further questions at this time I would like to turn the conference back to Mr. Abraham for any additional or closing remarks.
Okay. Thank you operator, and thanks, everyone. We look forward to updating you on our third quarter results.
October have a great day. Thank you.
And this concludes today's call. Thank you for your participation you may now disconnect.
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