Q3 2022 PJT Partners Inc Earnings Call
Good day and welcome to the P. J T partners third quarter 2022 earnings calls.
Today's conference is being recorded.
At this time I would like to turn the conference over to Sharon Pearson head of Investor Relations. Please go ahead ma'am.
Thank you very much and good morning, and welcome to the P. J T partners third quarter 'twenty to 'twenty two earnings conference call I'm, Sharon Pearson head of Investor Relations at P. J T partners and joining me today is to hold happened, our chairman and Chief Executive Officer, and Helen <unk>, Our Chief Financial Officer.
Before I turn the call over to Paul I want to point out that during the course of this conference call. We may make a number of forward looking statements.
These forward looking statements are subject to various risks and uncertainties.
And there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.
Believes that these factors are described in the risk factors section contained in P. J T partners 2021 and Form 10-K, which is available on our web site at P. J T partners don't come.
To remind you that the company assumes no duty to update any forward looking statements and that the presentation. We make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance.
The detailed disclosures on these non-GAAP metrics and their GAAP reconciliations.
You should refer to the financial data contained within the press release, we issued this morning also available on our website and with that I'll turn the call over to Paul.
Thank you Sharon and thank you all for joining us.
This morning.
We reported third quarter revenues of $266 million.
Adjusted pretax income of $54 million and adjusted EPS of <unk> 96 per share.
For the nine months period, we had record revenues of $746 million.
Adjusted pretax income of $159 million.
And adjusted EPS of $2.84 per share.
Before we review our results in more detail.
I wanted to make a few comments on the broader operating environment.
We have previously spoken about an increasingly challenging macro environment.
As the year has progressed.
Hopes have a soft landing have grown increasingly less likely.
At successive rate hikes have failed to stem the inflationary tide.
Clearly the fed will need to go further and push rates higher than previously thought.
This in turn has increased the probability of an economic contraction next year.
At the same time further disruptions caused by the war in Ukraine.
Rising energy prices.
Political instability or pressuring markets and economies in Europe and elsewhere around the globe.
Notwithstanding these significant headwinds each of our businesses continues to perform well with higher revenues in both the three and nine month periods compared to a year ago.
After Hell It takes you through our financial results.
I will review our business performance and outlook.
In greater detail.
Thank you Paul good morning.
Getting with revenues.
Total revenues for the third quarter with $266 million up 15% year over year, driven by meaningful growth in both strategic advisory and restructuring revenues and a slight increase to park Hill revenues.
Interest income and other revenue decreased $2 5 million in the third quarter.
For the nine months ended September Sushi total revenues were 746 million up 10% year over year.
With significant revenue increases in restructuring and P. J T Pak Hill, and a modest increase in strategic advisory revenues compared to the prior year.
Interest income and other revenue decreased $7 6 million in the nine month period, excluding interest income another total revenues for the nine months were up 11% year over year.
Turning to expenses consistent with prior quarters, we presented the expenses with certain non-GAAP adjustments. These adjustments are more fully described in our 8-K first adjusted compensation expense.
Our compensation accrual for the first nine months of the year was 64% of revenues, we increased the yesterday compensation ratio from 63% to 64% due to increased uncertainty, resulting from the current operating environment.
Given we had accrued compensation that 63% through the first six months of the year.
There was also comp was accrued at 65, 8% in the third quarter to bring our nine month ratio up to 64%, which is our current best estimate for the year.
Turning to adjusted non compensation expense.
Total adjusted non compensation expense was 37 million for the third quarter up $4 million year over year 109 million for the nine months.
$16 million year over year.
As a percentage of revenues. This represents 13, 9% in the third quarter and 14, 6% for the first nine months.
Of the $16 million year over year increase in non comp expense for the first nine months of the year approximately $12 million was due to increased traveling related expense.
For the full year, we continue to expect our non comp expense, excluding traveling related to grow in the high single digit percentages driven principally by increased client and internal events increases in senior advisor expense.
As well as a modest expansion of office space.
Turning to adjusted pretax income we reported adjusted pretax income of 54 million for the third quarter and 159 million for the first nine months are.
Our adjusted pretax margin was 23% for the third quarter and 21, 4% for the first nine months.
The provision for taxes as with prior years, we have presented our results as if all partnership units had been converted to shares and all of our income with taxed at a corporate tax rate.
Our effective tax rate for the first nine months of 2022 was 25, 8% and we expect this to be our effective tax rate for the full year.
Our adjusted if converted earnings were <unk> 96 cents per share for the third quarter and $2 84 per share for the 59 months.
On the shape of course, our weighted average share count was 41 5 million shares during the third quarter, we repurchased the equivalent of approximately 279000 shares primarily through open market repurchases, bringing our repurchases in the first nine months to approximately 2 million shares, including the exchange of partnership units.
The cash.
On the balance sheet, we ended the quarter was $290 million in cash cash equivalents and short term investments and 293 million of net working capital and we have no funded debt outstanding.
Finally, the board has approved a dividend of <unk> 25 cents per share the dividend will be paid on December 21, 2022 to class a common shareholders of record as of December season, and with that I'll turn it back to Paul.
Thank you Helen.
In strategic advisory.
Despite the volatile operating environment many of the leading indicators we track remain positive.
Our mandate count is at near record levels as our clients remained highly engaged on matters of strategic importance.
And our addressable market continues to grow.
As our coverage footprint expands.
Following the Covid sequestration, our bankers are back traveling criss crossing the globe to be with clients.
This greater degree of in person engagement fundamentally plays to our strengths.
It showcases our differentiated capabilities and collaborative culture.
And better positions us to cultivate new relationships.
As well as strengthening existing ones.
On an industry wide basis, while our clients' willingness to engage in strategic dialogues remains high.
Converting mandates into announcements.
Has become increasingly difficult.
In the U S and globally industry wide M&A announcement volumes have fallen sharply from year ago levels.
Many announced transactions are taking longer to close.
With an increasing number of terminated deals.
Amidst this turbulence, we continued to perform well on a relative basis.
As clients increasingly recognize our integrated holistic approach to advice.
Although we delivered record strategic advisory revenues for the nine months period.
Given deals pushed out and deals withdrawn we no longer expect our full year strategic advisory revenues to exceed last year's record levels.
Our strategic advisory partner Count has grown 18%.
From year end 2021.
We see this environment as a particularly opportune one to invest in and have stepped up our senior recruiting efforts as a result.
Turning to restructuring.
Rising interest rates inflationary trends supply chain pressures.
And less accommodating capital markets are pressuring companies village sheets.
And their access to funding.
As the year has progressed.
Structuring business has become increasingly active.
With an uptick in mandates compared to year ago levels.
Our restructuring revenues are up for both the three month and nine month periods relative to a year ago.
As we have spoken about previously.
Our close partnership between our restructuring bankers.
And our expanding roster of strategic advisory bankers.
Has increasingly enabled us to present, our integrated and differentiated liability management capabilities.
Two companies at the first signs of distress.
Not surprisingly our firm has maintained its leadership position in restructuring.
Liability management.
For the first half of 2022, the most recent period for which we have published rankings.
We ranked first in number of announced restructurings in the U S.
And second globally.
And then P J T Park Hill.
After a red hot fundraising environment at two <unk>.
'twenty one.
Market conditions have softened.
As asset allocators feel the sting of price declines across their investment portfolios.
With fewer M&A monetization dividend recapitalizations and Ipos.
The pace of capital return to LP investors.
Has slowed considerably.
As a result, both Lps and GPS are looking for alternative ways to create liquidity in their.
Folios.
Against this backdrop P. J T Park Hill delivered record nine month revenues and remains on track to deliver record full year results.
As we look ahead.
Current operating environment is impacting each of our businesses in different ways.
While these market conditions have been positive for our restructuring business.
They have negatively impacted our strategic advisory business.
And P. J T part kill the effects have been more nuanced.
With unsettled markets dampening our primary businesses.
Benefiting our secondary businesses.
In difficult environments, such as these our differentiated business model more clearly shines through.
We remain confident that our diverse mix of integrated businesses.
<unk> us well on both an absolute and.
Relative basis.
We have the right people.
The right capabilities.
And the right culture to not only weather this challenging environment.
Sure emerge stronger on the other side.
And with that.
We will now take your questions.
And if you would like to ask a question. Please signal by pressing star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment again. It is star one to ask a question.
The first question today comes from the line of Devin Ryan of JMP Securities.
Thanks, Good morning, everyone.
Good morning, Devin good morning.
Thanks for all the details I guess I just want to start on the financing markets and interplay with what you're seeing in strategic advisory and maybe some of the outlook commentary obviously.
Financing markets hit a little bit of a rough patch in the third quarter and in fed funds.
And rates or just more broadly is still expected to move higher as you mentioned.
So the borrowing costs are higher.
Can you talk a little bit about how that's impacting both the friction in the market and higher borrowing costs activity in strategic advisory and your outlook for both sponsors and corporates.
Sure.
I think all of us.
Side, it's pretty clear you've got a micro and macro pressure I think on a micro level.
Level, there's less quantum of debt available.
From a financing perspective for most assets.
And the cost of that debt has gone up.
Your pencil out rates of return clearly you're getting to lower valuations coast Theres less leverage.
And the leverage that is part of the financing structure is more expensive and that clearly has an effect on valuations.
Which until the market fully adjust and there is a reset.
That creates a headwind.
But I think you have a second issue, which is an awful lot of capital has been put out by financial sponsors in a relatively short period of time.
And probably the vast majority of those investments are you know worth in the current spot market you know the same or less.
Then when they you know agreed to those transactions. So I think there is a you know a second order, which is until there's greater clarity as to.
Where markets are going to settle out at and whether or not there is potentially another leg down there's probably going to be a.
A less aggressive push to put capital out so we see sponsors being less active in the near term.
That presents itself in the data, but it's also very clear anecdotally.
But that's that's not a permanent phenomenon, that's sort of a transitory phenomenon and if sponsors were overly active you know in 2021.
Probably you know correcting to the downside and youre seeing that significant deceleration.
In activity, but I think you know over time as we get to a new normal as we get to some equilibrium in terms of financing.
And cost of capital and prices you'll.
You'll start to see that activity pick up and then I think you also have another phenomenon, which is you have.
You know the the.
The balance sheets clog to some extent with a number of banks holding significant inventories of committed but not syndicated financings and until that works its way through I think all else equal wall.
Still be transactions, probably that pressures the market for larger sized commitments a bit but inevitably all of this.
It works its way through the system.
Yep, Okay. Thanks for all the detail there.
I want to follow up just on the.
Strong growth in employee head count it was up 9% in the third quarter from the end of the second quarter.
Yeah. So you know it seems like you're still very much leaning in on growth and you talked about kind of accelerating senior banker recruiting as well and so I'm curious was this big step up just kind of a timing dynamic and just catching up to support the existing firm or just getting a little bit ahead of some of the senior.
We're recruiting that youre going to be doing and then.
Just taken altogether I'm, assuming you know this isn't battening down the hatches and.
You know obviously people are starting till about letting people go. It just feels like you guys are going the opposite direction. So just want to maybe dig into a little bit more on that in the thought process on the big step up.
Yes, I think I think you need to be careful when you go from the second quarter to the third quarter you got all the campus recruiting and all of the analysts and associates that show up.
So if you look at it quarter to quarter, you really need to look at that year over year and over the full year because that's when you know a disproportionate amount of our junior recruiting shows up in the head count because they all arrive in the third quarter. So that that's not representative of full year growth you can't take.
That and annualize it but you know we have slowed our overall head count a smidge, it's literally a smidge and I think that's a technical financial term a smidge.
Relative to last year.
What we said previously was in this environment, we were going to be most focused on hiring at the most senior levels.
And if transaction activity and velocity has slowed a little bit we needed less incremental head count to support that and that's probably what you'll see as we continue to move into 2023, but we feel that this is very attractive environment for us I have.
Oaken repeatedly about the double whammy that we faced in our recruiting in 2021, one was when you're on Lockdown and people are working remotely and they're not in the office, it's difficult to really vet candidates for candidates to understand just how special it place P.
J T is as the World has returned to a greater sense of normalcy not surprisingly our recruiting has picked up I've also spoken about how when you're at breakneck pace transaction activity as we were in 2021, it's very difficult to.
To recruit because everyone is so busy.
It's hard to get mind share, but also the friction with a senior hire leaving all of their client mandates.
Behind and leaving their clients in the Lurch is has compounded at a lower transaction velocity environment as we're in we're having more of those conversations there's greater take up and there's more comfort and making a senior move because the.
The friction cost is meaningfully less so we've talked about all of the headwinds that 'twenty 'twenty. One most of those you know have dissipated and now we've got some tail winds blowing so I would expect us to capitalize on that at the senior level, where the major focus will be and less.
In terms of the.
The infrastructure to support that so youre focused on the campus effects in Q3.
Yep, Okay got it thanks for all the color I'll hop back in the queue.
Okay, Thanks, Deb and good to speak.
And the next question comes from debt Richard Robinson of Goldman Sachs.
Hey, good morning, everyone. So Paul can you just help us think through the increase in the comp to revenue ratio. It sounds like on one hand, you said this is partly because of the uncertainty in the operating environment, but it also it does sound like you are accelerating the investments too. So it would be helpful. If you could just unpack the two and then on the investment side.
How long do you think this would persist or is this something that you think.
It was really just going to impact this year or do you think it could continue into next year as well.
Yeah, well, let's kind of put this in perspective.
We made our first comp accruals for the year, which was our best estimate of the full year at the end of the first quarter.
We're now looking at the World six months later.
Just to give you some perspective.
If you break up this year at roughly two five months periods.
Transaction activity was down about 20% in the first five months and down about 50% in the second five months. So clearly a significant step down what we're saying is in light of all of the news flow all of the dislocations all of the pressure unannounced transactions.
And in light of our commitment to invest and strengthen and capitalize on the business in light of all of that.
Our judgment is that as sitting here today, the appropriate full year comp to revenue ratio has moved 100 basis points.
That's how we think about it.
But it needs to flow through at some point, so what you're really seeing in the third quarter as the catch up for the first and the second quarter, which is why its more than a 100 basis points and in Q3, but we're never smart enough to know with precision you know one fourth of the way through the year, what the right ratio is and I think just given.
You know a slowdown in transaction activity, while recruiting remains robust.
<unk> that the appropriate thing to do is to is to bump the full year accrual by 100 basis points.
Okay got it and then secondly, I mean, it's probably too early to think about the outlook for 'twenty three but there's a lot of companies.
Does that have got significant financial obligations from a debt refinancing perspective heading into 'twenty, three and there's a significant refinancing need and obviously you talked about debt markets.
Zero rated if anything look should we think about that predominantly as a restructuring opportunity what do you think.
The debt markets are so dysfunctional could actually spur a pickup in M&A as we head into 'twenty three.
I think you could have both next year. If you said to me where do I have the greatest clarity. It's a that the restructuring trend will continue to vector up into the right I don't see any any signs that that's that that's going to change and it's hard to imagine that you know with all.
All that has transpired this year and all of that has been set in motion.
That that momentum now that it's kind of run it out of the track is is not going to lead to.
No more not less activity next year.
It's not clear to me, though that it pressures strategic advisory levels for a couple of reasons. One is when when we close the books on 2022 in strategic advisory.
This is going to be a very weak year and therefore, we're starting with a base level of activity.
Where you know there may well be you know a lot of reasons to think that next year will be stronger I also think that you know what we're dealing with here is just the the mass of you know move.
In financing rates.
Equity prices.
Uncertainty and it's less the absolute conditions and more of the rate of change and when you get everything into a new equilibrium I think you have a clear base to build back up so I'm not ready to.
Prognosticate for 2023, but I'm I'm not at all ruling out that we couldn't have you know.
The step up in activity in 2023, and I don't think you will need that much of a catalyst to do that but if we just kind of step way back you know our view, which I think was out of consensus at the beginning of the year was we saw the M&A market as being down.
Well I don't know if I ever publicly quantified it I think in our minds, we were thinking you know down 10% to 15% and.
And for the first five months of the year you know it was down 20%.
But theres no doubt that we're in a an air pocket, where as rates keep moving as inflation continues to spiral.
All of the second and third order consequences of the war in Ukraine in energy prices and supply chain and political uncertainty and market dislocations.
So behind I don't see that persisting, but we need to kind of get to a a new equilibrium and that could happen very soon or at least.
I think restructuring is clearly based on everything we see today.
In all likelihood only going to pick up speed. So I see that as you know in <unk>.
I think park Hill is gonna habits puts and takes next year I think clearly the fund raising environment is more challenging theres less liquidity.
It's just very hard if the market is down 50%.
To outrun, 50% through market share gains [laughter] at some point if the market.
As in extremities I, just don't believe that that's where we're headed to next year because I suspect that you know.
We will get to you know.
The point of exhaustion on rates will get to a point, where there is greater clarity where banks.
Banks will return to you know more forward.
Leaning lending commitments, where private equity having pause for some considerable period of time will.
Return to put significant amounts of capital out where strategics, who have seen some of their strategic ambitions. You know put on hold as long as we get a little bit more clarity and less volatility in the market that's sort of where my gut is but I just think it's a little hard to roll it all up.
Until we go and we're done and dusted on 'twenty, two but but I think there is the.
The most clarity of all isn't restructuring and I do think that there is a reasonable.
Prospect of restructuring and strategic advisory both moving forward next year.
That's really helpful. Paul and just for my follow up a clarifying question just on the full year advisory revenue guidance admittedly would that imply you're indicating.
And that's going to be down full year 'twenty two versus 21, certainly implies a rather challenging outcome for the fourth quarter why not better understand what's driving it is it simply a function of delays, which should I get and like do you expect any of those deals to fallout or any perspective that you can give in terms of what's driving it.
Some of the pressures in what's typically a very seasonally strong quarter not just for you but for the group more broadly.
Yeah, and again, there's a lot in that where you are.
<unk> seasonal with annual with advisory with our firm wide numbers. So let me, let me try and unpack that a little bit the fourth quarter is traditionally seasonally strong.
I don't think I have said anything.
But the fourth quarter wont be seasonally strong so, let's just take that one and move it to the side.
And then there's a second one which is.
I think I said in my comments that because we have seen.
A number of announced deals withdrawn.
And that's all part of the public record and there are probably other announced deals that may take longer to close I E fall into 'twenty two 'twenty three that tied to those factors, we no longer see ourselves setting another record in that one business of which we.
Have three businesses.
And then you did.
Go ahead.
David Sorry, I E B, but you did indicate that advisory revenues would be down full year 'twenty two versus <unk> 21.
Strategic advisory Okay, just wanted to be clear of that.
Yes.
That strategic advisory that's not talking about restructuring that's not talking about Park Hill.
Okay talking about retiring away on.
That's why I said, it's only one of three businesses.
And I did talk about the fact that park Hill would have a record year.
This year and I did talk about the fact that restructuring would be up so.
Two of our three businesses will be up in the third one will fall.
A smidge or more short because of the very specific factors.
Certainly a good outcome for this environment. Thanks, so much for taking my questions.
Thank you absolutely.
Our next question is from Jim Mitchell of Seaport Global.
Hey, good morning.
Good morning, Paul good.
Good morning, maybe we could just talk a little bit about the deals being withdrawn I think that's been more of a last few months type of phenomenon. So can you just sort of give us a sense of is that more of the financial sponsors you know based on price or financing whats. It just trying to get at or is it strategics, how do we think about what's driving.
<unk> with Drawls and how do you see that playing out for the next few months.
Buck, it's it's like anything else.
No.
When you have transactions, taking long periods of time to close.
And we've seen that phenomenon for a while some of that is you no longer regulatory reviews.
When markets are completely dislocated in all likelihood.
A deal that was struck in a different time, an era that was perfectly pitch between buyer and seller is no longer perfectly pitch between buyer and seller and either the buyer.
So as buyers remorse or the seller has seller's remorse, but there is a binding commitment now if things go long enough.
You know in some instances not all but in some instances not even many but in gist.
You know there is an opportunity because some condition has not been met and you no longer have to motivated sides to a transaction.
So to me, it's really it's the interplay.
<unk> extended period of time between signing and receipt of all.
Approvals in all conditions being satisfied.
And you know one side or maybe both saying you know what this deal made sense in that market environment. It doesn't make sense in this in some of these are mutual consent.
<unk> you know some of the reasons for a transaction no longer makes sense.
In others. It may be that one side as you know seeing that when you get to a termination period, rather than just automatically extending it they're saying Gee.
So we just assumed walk away, it's not dramatic but it tends to spike.
Some period of time after there's been a meaningful pivot at asset values up or down.
It's up it tends to be the sellers and if its down it tends to be the buyers who are asking themselves and if it's just dislocated equity markets, sometimes it's by mutual agreement. So that's and it's a little bit of everything there's no one culprit to it but it's the it's the final.
Told to pay.
We have a meaningful and a revaluation up or down and dislocation in markets deals that were struck at a different time made out in the fullness of time.
Is compelling and that affects everyone.
Is that different.
And okay, but again, that's why I think this is all about kind of this is like the the turbulence until you kind of you know get up to a higher cruising altitude and you can kind of get above it I think were you know almost all through that and I would suspect that.
That you know that that's really not going to be a forward looking issue that's more of a backward looking issue.
Okay, Great and then just maybe on.
Liability management within restructuring.
Yeah.
How big would you say that that business has become.
And I would imagine that has a shorter time or turnaround time in terms of completion.
Completion, so are both.
Both of those statements correct any way you can help us think through the impact of liability management.
Yeah, absolutely look I mean, clearly you have a lot of companies who are sitting there, saying, okay. Like you know my choke point may be out three years.
So what can I do today to give myself more room, how can I position myself Gee my debt's trading at a significant you know at.
Dislocated prices can I take advantage of it is there a debt tender is there an exchange is there.
Is there.
With a you know an amendment, there's all of that dialogue and.
This is really focused you know you know.
And your financial executives, who have the responsibility of keeping their company is fully funded.
As you look at walls of maturities as you look at access to bank revolvers and the like you need to make sure that you know you can always passed the stress test and this is clearly a stress test so that that has been a meaningful.
Tick in activity, but Youre also finding companies that have gotten to the end of the line, where theyre going to need to go through the court processes to.
Deal with their they're overleveraged situations. So it's.
Some point, it's going to be both but right now you're seeing a lot of <unk>.
Increased activity on liability management, and that's where having an ever growing presence in strategic advisory in the coverage force, that's that's where it's a real benefit because those dialogues.
Tend to be with trusted advisors.
And having those relationships and as we build that out that's fueling some of our restructuring success.
Great. Thanks.
Absolutely.
And our next question comes from Michael Brown of K B W.
Okay.
Yeah.
Great Hi, good morning, Mike.
Good morning.
And I'm still just getting some questions here about some of your commentary for the full years, just hoping to maybe.
Maybe just clarify your comment as it pertains to the fourth quarter. So.
I appreciate the color on the strategic advisory for the full year and your comments on restructuring and the placement business.
But if I take all of that together in a and b the challenges of deals in terms of withdrawals and elongation of closing times.
Do you is it is it still fair to expect that the advisory fee line can be sequentially higher in the fourth quarter versus the third quarter again, just a lot of commentary there I want to make sure that I.
I understand all the pieces correctly.
Yeah I mean.
I wish I could wave a magic wand and make that advisory placement distinction go away.
Because.
It's not really how we think about the business and how we manage the business and as we've talked about in advisory.
That we report you have restructuring revenues.
Do you have core strategic advisory revenues and you have some in park Hill revenues so.
It's a little bit of of everything let me, let me come at this a little differently and we're not giving fourth quarter guidance I'd simply made one comment which is that our strategic advisory business, which is one of our businesses that is up.
For the nine months.
Most likely not end the year up.
But we have two other businesses that you know.
<unk> are not included in that commentary.
No.
And I think I've been pretty clear about their prospects.
Sure. Okay. Thank you and then on the restructuring side I was hoping to just hear a little bit more about the complexion of the mandates there in terms of what youre seeing by sector and by region and what's what some of the themes that are at play that's driving the increase in restructuring right right now and.
When you look out to 2020.
Yeah.
And as I understand is quite a lag in success fees and it really depends on the type of transaction, but you do see those as more of a second half type of contribution for the year or is it fair that it could start to be more consistent throughout the year.
I think that look these are steady builds right because as you take on more assignments you get more retainers and then as things where we've started to see an inflection point you know.
I think we started to get more constructive on restructuring late last year would be my sense right sort of late late 'twenty, one and we just started to see that inflection. So you know you start as you start to get some tick up in mandates.
Does take some quarters to resolve themselves. So you start to see some of those early wins starting to <unk>.
Work their way through and as you have more retainers, but clearly like anything.
It takes a while for that momentum to build so all else equal.
So it's probably not a straight line you know equally a portion quarter to quarter it probably.
It gets better.
As you know time.
Marches on and I think that that would be just a general direction about how restructuring will continue to feed into our results.
You know for the rest of this year and into next year, probably more time better results.
I think we're seeing all sorts of situations in a broad array of industries and there's a lot of diff.
Different.
Catalyst I think some of this is you have as I've spoken about repeatedly you had companies that were severely damaged by COVID-19.
And.
It all was covered up by extraordinarily.
So.
Accommodative fiscal and monetary policy and near zero interest rates and you know when you take that punch Bowl away some of the lasting damage in some of the <unk>.
<unk> behaviors that existed in that you know.
Oh it will retreat.
<unk> back to normal all of a sudden a lot of those companies find that they they don't have the balance sheet to enable them to operate their businesses. So that's a theme.
Then you have another theme of companies.
Who have a lot of floating rate debt.
All of a sudden.
Rates move up you have others.
Who are dealing where theres a mismatch in currency in the wild swings in currencies has created a stress. There then you're dealing with companies who are operating a relatively thin margins and now you're dealing with.
Supply chain delays and dislocations and you can't get it.
<unk> product to the end user and you can't get revenues booked but you've got all of this expense.
And then you've got just idiosyncratic situations in various companies.
That you know create issues.
<unk> management.
Management decisions that have not.
Not worked out well or litigation overhang or the likes so it's it's just about everywhere I would also say that.
Activity levels in Europe tend to lag.
And now as we get a little bit more into this credit cycle.
We're starting to see you know more and more.
And as we've continued to build out our coverage footprint in Europe , where we're able to capitalize on more of that and then.
It should come as no surprise that even though the Asian.
Opportunity has tick.
Just given you know.
So all that has gone on.
That part of the World. So it's not one thing.
It's almost everything starting to just turn a little bit.
And.
I don't really expect that to change in the in the foreseeable future I think that this is kind of the next wave where in some of Thats a function that we were in just unnaturally benign markets before.
And you can argue that we're just going from the abnormal as far as near zero rates risk on plentiful capital.
Record equity prices et cetera to you know more of a normal normal.
But I think it's beyond that and I suspect that there's there's real structural challenges for lots of companies in lots of industries around the.
The globe in.
We will present ourselves to try and help companies be proactive, where we can hence more and more focus on liability management, but there'll be other situations, we're working through the.
The restructuring.
Our processes will be more appropriate.
Very interesting. Thank you for taking my questions as well.
Absolutely.
That was our final question, we will now turn it back to Paul's Hoffman for closing remarks.
Wonderful well again, we very much appreciate everyone's interest in.
And our company for your questions. Thank you for your.
<unk> time this morning, and we look forward to speaking with you again, when we report full year results in early 2023. Thank you.
Yeah.
[music].
Yeah.
Uh huh.
[music].
Right.
[music].
Okay.