Q1 2025 Piper Sandler Co Earnings Call

Operator: Good morning and welcome to the Piper Sandler. first quarter 2025 earnings conference. Today's call is being recorded and will include remarks by Piper Sandler Management, followed by a question and answer session.

Good morning, and welcome to the Piper Sandler companies first quarter 2025 earnings Conference call. Today's call is being recorded and will include remarks by Piper Sandler management, followed by a question and answer session I will begin by turning the call over to Kate Winslow. Please go ahead. Thank you operator.

Kathy Winslow: I will begin by turning the call over to Kate Winslow. Please go ahead. Thank you, Operator.

Kathy Winslow: Good morning, and thank you for joining the Piper Sandler Companies first quarter 2025 earnings conference call. Hosting the call today are Chairman and CEO, Chad Abraham, our President, Deb Schoneman, and CFO, Kate Clune. Earlier this morning, we issued a press release announcing Piper Sandler's first quarter 2025 financial results, which is available on our website at PiperSandler.com slash earnings. Today's discussion of the results is complementary to the press release.

Speaker Change: Good morning, and thank you for joining the papers they on their company's first quarter 2025 earnings conference call hosting the call today are chairman and CEO, Chad Abraham our President Doug shot and then N C F O. Okay clear.

Speaker Change: Earlier. This morning, we issued a press release announcing papers handlers first quarter 'twenty 25 financial results, which is available on our website at Piper Sandler Dotcom slashed earnings today.

Speaker Change: Today's discussion of the result is complementary to the press release.

Kathy Winslow: A replay of this call will also be available at that same website later today.

Speaker Change: A replay of this call will also be available at that same web site later today.

Kathy Winslow: Before we begin, let me remind you that remarks made on today's call may contain forward-looking statements that are not historical or current facts, including statements about beliefs and expectations and involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's reports on file with the SEC, which are available on our website at pipersandler.com and on the SEC website at sec.gov. Today's discussion also includes statements regarding certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance. The non-GAAP measures should be considered in addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP.

Speaker Change: Before we begin let me remind you that remarks made on today's call may contain forward looking statements that are not historical or current facts, including statements about beliefs and expectations and involve inherent risks and uncertainties.

Speaker Change: Factors that could cause actual results to differ materially from those anticipated are identified in the company's reports on file with the S. E C, which are available on our website at Piper Sandler Dot com and on the SBC website at SEC Gov.

Speaker Change: Today's discussion also include statements regarding certain non-GAAP financial measures that management believes are meaningful when evaluating the company's performance.

Speaker Change: The non-GAAP measures should be considered in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP.

Kathy Winslow: A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in our earnings release issued today.

Speaker Change: A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in our earnings release issued today I will now turn the call over to Chad.

Chad Abraham: I will now turn the call over to Chad. Thank you, Kate.

Chad: Thank you Kate good.

Chad Abraham: Good morning, everyone. Thank you for joining our first quarter 2025 earnings call. Over the past month, we have witnessed heightened volatility in both equity and debt markets. with the only constant in this challenging environment being continued uncertainty. In response to these challenges, we are increasing client engagement, drawing on our deep sector expertise and leveraging our comprehensive suite of products to assist clients navigate this uncertainty with the support and insights they need to succeed.

Chad: Everyone. Thank you for joining our first quarter 2025 earnings call.

Chad: Over the past month, we have witnessed heightened volatility in both equity and debt markets with the only constant in this challenging environment being continued uncertainty.

Chad: In response to these challenges we are increasing client engagement.

Chad: Drawing on our deep sector expertise and leveraging our comprehensive suite of products to assist clients navigate this uncertainty with the support and insights they need to succeed.

Chad Abraham: Turning to our results. We are pleased with our start to 2025. We finished the first quarter strong with adjusted net revenues of $383 million, a 17.9% operating margin, and adjusted EPS of $4.09.

Chad: Turning to our results.

Chad: We are pleased with our start to 2025.

Chad: We finished the first quarter strong with adjusted net revenues of $383 million, a 17, 9% operating margin and adjusted EPS of $4 nine.

Chad Abraham: all up compared to the same period last Turning to Corporate Investment Bank Revenues for the quarter totaled $253 million, reflecting a 20% increase year-over-year. This improvement was driven by advisory services. which ended the quarter with revenues of $217 million, a 38% increase from last year. Showcasing strong absolute and relative performance. An increased average fee drove the growth in our advisory revenues as we completed 55 advisory transactions during this period, consistent with the first quarter of last Our performance across industry groups was broad-based, and five of the seven groups delivered year-over-year growth. We also saw balanced contributions from both strategic and financial sponsor clients.

Chad: <unk> up compared to the same period last year.

Chad: Turning to corporate investment banking.

Chad: Revenues for the quarter totaled $253 million, reflecting a 20% increase year over year.

Chad: This improvement was driven by advisory services, which ended the quarter with revenues of $217 million.

Chad: 38% increase from last year, showcasing strong absolute and relative performance.

Chad: And increased average fee drove the growth in our advisory revenues as we completed 55 advisory transactions during this period.

Chad: <unk> with the first quarter of last year.

Chad: Our performance across industry groups was broad based in five of the seven groups delivered year over year growth.

Chad: We also saw balanced contributions from both strategic and financial sponsor clients.

Chad Abraham: The outlook is difficult to predict in this environment. With heightened volatility, we expect active M&A deal cycles to slow and new announcements to be delayed. However, our ability to provide a range of solutions to clients should serve us well. Over the last several years, we have expanded both our industry and product capability. This expansion has significantly bolstered our ability to provide advice and solutions across more sectors of the economy throughout the entire market cycle. In addition, due to our diversified sector coverage, and because much of our business is U.S., mid-cap, and sponsor-centric, we believe that we are well positioned on a relative basis in this challenging environment.

Chad: The outlook is difficult to predict in this environment with heightened volatility we expect active M&A deal cycles to slow and new announcements to be delayed.

Chad: However, our ability to provide a range of solutions to clients should serve us well.

Chad: Over the last several years, we have expanded both our industry and product capabilities.

Chad: This expansion has significantly bolstered our ability to provide advice and solutions across more sectors of the economy throughout the entire market cycle.

Chad: In addition, due to our diversified sector coverage and because much of our business is U S. Mid cap and sponsor centric. We believe that we are well positioned on a relative basis in this challenging environment.

Chad Abraham: In particular, as the economic backdrop for M&A becomes more challenging, Financial sponsors are able to draw on our diversified product teams, including agented debt, continuation vehicles, and restructuring, to address capital and liquidity needs. And while we anticipate that the conversion of our pipelines will be impacted and that second quarter advisory revenues will decline from the first quarter levels It is worth noting that certain areas of the M&A market remain active. Service-based business models and those that are less impacted by trade barriers continue to transact and do so at strong valuation. When the market does find its footing once again, we anticipate a strong and fairly broad rebound in activity.

Chad: In particular as the economic backdrop for M&A becomes more challenging.

Chad: National sponsors are able to draw on our diversified product teams, including agent and that continuation vehicles and restructuring to address capital and liquidity needs.

Chad: And while we anticipate that the conversion of our pipelines will be impacted and that second quarter advisory revenues will decline from the first quarter levels.

Chad: It is worth noting that certain areas of the M&A market remain active service based business models and those that are less impacted by trade barriers continue to transact and do so at strong valuations.

Chad: When the market does find its footing once again, we anticipate a strong and fairly broad rebound in activity.

Chad Abraham: Particularly with financial sponsors as they continue to face pressure to transact given the aging of both uninvested capital and their portfolio investments. That backdrop, together with the roughly 340 companies we have sold to financial sponsors that still reside in their portfolios. Position us well as the incumbent bank to capitalize on round-trip sale, continuation vehicle and financing opportunities from our private equity client base.

Chad: Particularly with financial sponsors as they continue to face pressure to transact given the aging of both uninvested capital and their portfolio investments.

Chad: That backdrop together with the roughly 340 companies, we have sold to financial sponsors that still reside in their portfolios.

Chad: Position us well as the incumbent bank to capitalize on round trip sale continuation vehicle and financing opportunities from a private equity client base.

Chad Abraham: Turning to Corporate Financing Activity was challenged this quarter as the market environment for equity underwriting weakened. Declining equity valuations and increased uncertainty led investors to adopt a more risk-off stance ahead of the trade policy announcement. As a result, the economic fee pool declined meaningfully year over year, while the health care fee pool decreased over 60%. For the quarter, we generated 36 million of corporate financing revenues, down 32% from the year-ago period. We completed 27 financings, raising $10 billion for corporate clients. Highlights of these efforts include serving as a book runner on four IPOs, including two for medtech companies.

Chad: Turning to corporate financing.

Chad: Activity was challenged this quarter as the market environment for equity underwriting weakened.

Chad: Declining equity valuations and increased uncertainty led investors to adopt a more risk off stance ahead of the trade policy announcements.

Chad: As a result, the economic fee pool declined meaningfully year over year, while the healthcare fee pool decreased over 60%.

Chad: For the quarter, we generated $36 million of corporate financing revenues down 32% from the year ago period.

Chad: We completed 27 financings raising 10 billion for corporate clients.

Chad: Highlights of these efforts include serving as a book runner on four Ipos.

Chad: Including two for Med Tech companies.

Chad Abraham: Equity capital raising has been very slow in April, and we expect that trend to continue until volatility subsides and valuations stabilize.

Chad: Equity capital raising has been very slow in April and we expect that trend to continue until volatility subsides and valuation stabilize.

Chad Abraham: Shifting to Talent, we finish the quarter with 182 Managing Directors. a six percent increase from a year ago. During the quarter, we hired two MDs to our Energy, Power, and Infrastructure groups. These new hires, along with additional junior bankers, highlight a further expansion into the infrastructure sector, which naturally complements our well-established energy sector franchise. We also added a managing director to our healthcare investment banking team to serve and support clients within the pharma services sector.

Chad: Shifting to talent, we finished the quarter with 182, managing directors, a 6% increase from a year ago.

Chad: During the quarter, we hired two M D to our energy power and infrastructure group.

Chad: These new hires along with additional junior bankers highlight a further expansion into the infrastructure sector.

Chad: Which naturally complements our well established energy sector franchise.

Chad: We also added a managing director to our health care investment banking team to serve and support clients within the pharma services sector.

Chad Abraham: Let me close with a few final points. While the near term remains uncertain, we have strategically built an investment banking platform that is well positioned to gain market share. We continuously rank as a top three investment bank in middle market deal activity, an area of the market that typically demonstrates greater resilience. We have significantly grown market share with private equity clients, providing a solid foundation for future growth. Our diversified platform on a product and sector level enables our bankers to better assist the evolving needs of their clients.

Chad: Let me close with a few final points.

Chad: While the near term remains uncertain, we have strategically built in investment banking platform that is well positioned to gain market share.

Chad: We continuously rank as a top three investment bank in middle market deal activity and area of the market that typically demonstrates greater resilience.

Chad: We have significantly grown market share with private equity clients, providing a solid foundation for future growth.

Chad: Our diversified platform on a product and sector level enables our bankers to us to better assist the evolving needs of their clients.

Chad Abraham: And lastly, we remain a destination of choice for talent. This environment often presents opportunities to attract talented professionals who are drawn to our collaborative culture, proven track record of growth, and the positive impact they can have on their clients and the overall firm.

Chad: And lastly, we remain a destination of choice for talent. This environment often presents opportunities to attract talented professionals, who are drawn to our collaborative culture proven track record of growth and the positive impact they can have on their clients and the overall firm.

Debbra Schoneman: With that, I will turn the call over to Deb to discuss our public finance and brokerage business. Thanks, Chad. I'll begin with an update on our public finance Favorable market conditions to start the year, combined with growing infrastructure needs, led many issuers to access the market. For the first quarter of 2025, we generated 26 million of municipal financing revenues, an increase of 27% year over year, outpacing the market issuance growth in par value of 15%. Activity was robust across both our governmental and specialty sectors. Our strong performance was attributed to the breadth of our platform, both from a client and geographic perspective, which continues to benefit us.

Chad: With that I will turn the call over to Deb to discuss our public finance and brokerage businesses.

Deb: Thanks, Chad.

Speaker Change: I'll begin with an update on our public finance business.

Speaker Change: Although market conditions to start the year combined with growing infrastructure needs led many issuers to access the market.

Speaker Change: For the first quarter of 2025, we generated $26 million of municipal financing revenues, an increase of 27% year over year outpacing the market issuance growth in par value of 15%.

Speaker Change: Activity was robust across both our governmental and specialty sectors.

Speaker Change: Our strong performance was attributed to the breadth of our platform both from a client and geographic perspective, which continues to benefit us.

Debbra Schoneman: Looking ahead, April has started off slowly, as significant rate volatility has made it challenging to price transactions, and we have seen several transactions postponed. We have a robust pipeline of issuers looking to access the market, but our near-term outlook is dependent on stabilization of the market.

Speaker Change: Looking ahead April has started off slowly as significant rate volatility has made it challenging to price transactions and we have seen several transactions postponed.

Speaker Change: We have a robust pipeline of issuers looking to access to market, but our near term outlook is dependent on stabilization of the market.

Debbra Schoneman: Now, turning to our brokerage business. The equity markets experienced increased volatility and higher volumes during the first quarter, with indices peaking in early February before selling off to close the quarter down. Equity Brokerage generated 54 million of revenues for the first quarter of 2025 up 10% year over year. We traded 2.9 billion shares on behalf of over 1,200 unique clients as they sought our market leading research and trading capabilities. In periods of heightened volatility, clients trust our trading expertise to execute quickly and efficiently.

Speaker Change: Now turning to our brokerage desert.

Speaker Change: The equity markets experienced increased volatility and higher volumes during the first quarter with indices, peaking in early February before selling off to close the quarter dollar.

Speaker Change: Equity brokerage generated 54 million of revenues for the first quarter of 2025 up 10% year over year.

Speaker Change: We traded $2 9 billion shares on behalf of over 1200 unique clients as they thought our market, leading research and trading capabilities.

In periods of heightened volatility clients trust, our trading expertise to execute quickly and efficiently.

Debbra Schoneman: The second quarter has started strong, and as long as volatility persists, activities should remain elevated as clients actively position their portfolios in this rapidly evolving landscape.

Speaker Change: Second quarter has started strong and as long as volatility process activities should remain elevated as clients actively position their portfolios in a rapidly evolving landscape.

Debbra Schoneman: Lastly, turning to fixed income. We generated 45 million of revenues for the first quarter of 2025, up 7% from the year ago quarter, driven by solid activity across most client verticals. Our depository clients repositioned their balance sheets in response to the changing interest rate environment, while public entity clients put money to work in the short end of the curve. and our municipal-centric clients took advantage of higher absolute yields.

Speaker Change: Lastly, turning to fixed income reached.

Speaker Change: We generated $45 million of revenues for the first quarter of 2025 up 7% from the year ago quarter, driven by solid activity across most client vertical our.

Speaker Change: Our depository clients reposition their balance sheets and response to the changing interest rate environment.

Speaker Change: Public entity clients put money to work in the short end of the curve.

Speaker Change: And our municipal centric clients took advantage of higher absolute yield.

Debbra Schoneman: The fixed income outlook remains cautious in the near term. Persistent rate volatility continues to hamper investor conviction, keeping some clients on the sidelines. However, the combination of potential Fed rate cuts, a steepening yield curve, and reduced day-to-day volatility should increase investor confidence in committing capital into fixed income markets.

Speaker Change: The fixed income outlook remains cautious in the near term.

Speaker Change: Persistent rate volatility continues to hamper investor conviction, keeping some clients on the sidelines.

Speaker Change: However, the combination of potential fed rate cuts, a steepening yield curve and reduced day to day volatility should increase investor confidence in committing capital into fixed income markets now.

Katherine Clune: Now I will turn the call over to Kate to review our financial results and provide an update on capital needs. Thanks, Deb. As a reminder, my comments will address our adjusted non-GAAP financial results, which should be considered in addition to, and not a substitute for, the corresponding GAAP financial measures. We generated net revenues of $383 million for the first quarter of 2025, an operating income of $69 million, resulting in an operating margin of 17.9%. We delivered $73 million of net income and $4.09 of diluted EPS. Net revenues declined 23% from the seasonally strong fourth quarter of last year, however, increased 15% compared to the first quarter of 2024.

Speaker Change: Now I will turn the call over to Keith to review, our financial results and provide an update on capital use.

Keith: Thanks Deb as a reminder, my comments will address our adjusted non-GAAP financial results, which should be considered in addition to and not a substitute for the corresponding GAAP financial measures.

Keith: We generated net revenues of $383 million for the first quarter of 2025, and operating income of $69 million, resulting in an operating margin of 17, 9%.

Keith: We delivered 73 million of net income and $4.09 of diluted EPS.

Keith: Net revenues declined 23% from the seasonally strong fourth quarter of last year, However, increased 15% compared to the first quarter of 2020 for.

Katherine Clune: This growth was primarily driven by a strong performance in advisory services, which accounted for 57% of total net revenues and increased 38% year over year. Additionally, our institutional brokerage activity was solid, with revenues increasing 9% compared to the first quarter of last year. As we continue to grow our business, our focus remains on driving operating leverage. Notably, our operating income grew by 23% year over year, outpacing our revenue growth of 15%.

Keith: This growth was primarily driven by a strong performance in advisory services, which accounted for 57% of total net revenues and increased 38% year over year.

Keith: Additionally, our institutional brokerage activity was solid with revenues, increasing 9% compared to the first quarter of last year.

Keith: As we continue to grow our business our focus remains on driving operating leverage notably our operating income grew by 23% year over year outpacing our revenue growth of 15% as we remain committed to enhancing operational efficiency and profitability.

Katherine Clune: as we remain committed to enhancing operational efficiency and profitability.

Katherine Clune: Turning to expenses. We reported a compensation ratio of 62.5% for the quarter, a 60 basis point improvement compared to the same period of last year, driven by increased net revenue. Our compensation ratio remains largely aligned with revenue levels. Given our current outlook, we could see some near-term pressure on the ratio. We remain committed to exercising operating discipline and our approach to compensation will continue to balance employee retention and strategic investment opportunities.

Keith: Turning to expenses.

Keith: We reported a compensation ratio of 62, 5% for the quarter, a 60 basis point improvement compared to the same period of last year driven by increased net revenues.

Keith: Our compensation ratio remains largely aligned with revenue levels, given our current outlook, we could see some near term pressure on the ratio we remain committed to exercising operating discipline and our approach to compensation will continue to balance employee retention and strategic investment opportunities.

Katherine Clune: As we mentioned last quarter, non-compensation expenses would increase in 2025, driven by relocating our Minneapolis office headquarters, the addition of new employees to our platform, inflationary pressures, and the expectation of increased business activity. In the first quarter of 2025, non-compensation expenses, excluding reimbursed deal costs, were 70 million, an increase of 15% year over year and above our guided range, as our employees were particularly active serving our clients during the period, leading to more travel.

Keith: As we mentioned last quarter non compensation expenses would increase in 2025, driven by relocating our Minneapolis Office headquarters. The addition of new employees to our platform inflationary pressures and the expectation of increased business activity.

Keith: In the first quarter of 2025 non compensation expenses, excluding reimburse steel costs were $70 million, an increase of 15% year over year and above our guided range as our employees were particularly active serving our clients during the period leading to more travel.

Katherine Clune: Moving to income tax expense. In the quarter, our income tax expense was reduced by $25 million related to tax benefits from the vesting of restricted stock awards. Approximately half of this benefit was attributed to the vesting of the final tranche of the grants awarded at the beginning of 2020 in connection with the Sandler acquisition.

Keith: Moving to income tax expense in the quarter. Our income tax expense was reduced by $25 million related to tax benefits from the vesting of restricted stock awards.

Keith: Approximately half of this benefit was attributed to the vesting of the final tranche of the grants awarded at the beginning of 2020 in connection with the Sandler acquisition.

Katherine Clune: Excluding the $25 million of benefits, our effective tax rate for the quarter was $29.8 Now finishing with Kathy. We remain committed to deploying capital to drive shareholder returns. During the quarter, we repurchased approximately 266,000 shares of our common stock or 81 million related to employee tax withholding on the vesting of restricted stock award. These repurchases effectively offset the dilution from the 2025 annual stock grants. And notably, we've maintained a flat share count since 2021. As we've offset all of the dilution from hiring acquisitions and our annual Additionally, we paid an aggregate of $70 million or $3.65 per share to our shareholders through our quarterly and special cash dividends.

Keith: Excluding the $25 million of benefits, our effective tax rate for the quarter was 29, 8%.

Keith: Now, finishing with capital.

Keith: We remain committed to deploying capital to drive shareholder returns.

Keith: During the quarter, we repurchased approximately 266000 shares of our common stock were $81 million related to employee tax withholding on the vesting of restricted stock Awards. These.

Keith: These repurchases effectively offset the dilution from the 2025 annual stock grants and notably we've maintained a flat share count since 2021, as we've offset all of the dilution from hiring acquisition and our annual grants.

Keith: Additionally, we paid an aggregate of $70 million or $3 65 per share to our shareholders through our quarterly and special cash dividends.

Katherine Clune: Lastly, I am pleased to announce that today, the Board approved a quarterly cash dividend of $0.65 per share to be paid on June 13 to shareholders of record as of the close of business on May 30.

Keith: Lastly, I am pleased to announce that today the board approved a quarterly cash dividend of <unk> 65 per share to be paid on June 13th to shareholders of record as of the close of business on may 30th with that we can open up the call for questions.

Kathy Winslow: With that, we can open up the call for questions. Thank you. If you'd like to ask a question, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our Again, star 1 for questions.

Keith: Thank you if you'd like to ask a question you may signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again star one for questions well go first to Devin Ryan with citizens.

Devin Ryan: We'll go first to Devin Ryan. Hey, good morning, Chad, Deb, and Kate, how are you all? Good morning, Devin.

Devin Ryan: Hey, good morning, Chad Devin Kate how are you all.

Speaker Change: Good morning, good morning, Devin.

Devin Ryan: So, I want us to start with a question on M&A conditions. Obviously, an uncertain moment, so appreciate that's affecting kind of the visibility here. But I'm curious with sponsor clients, you know, is it a sell-side issue right now where just sellers feel like they can't start a process because there's just not enough market stability? Or is it something else where, you know, businesses kind of in the middle markets are actually being impacted and so sellers feel like, you know, it's not a good time for the business to sell or even buyers maybe don't want to buy that business because there's maybe economic uncertainty or something else that could affect it.

Speaker Change: So wanted to start with a question on M&A conditions obviously.

Speaker Change: With uncertain moment, so I appreciate that's affecting kind of the visibility here, but I'm curious with sponsor clients.

Speaker Change: Is it a sulfide issue right now we're just sellers feel like they can't startup process, because there's just not enough market stability or is it something else where.

Speaker Change: Businesses kind of in the middle markets are actually being impacted and so sellers feel like it's not a good time for the business to sell or even buyers maybe don't want to buy that business, because there's maybe economic uncertainty or something else that could affect I'm curious kind of what the bigger factors are maybe slowing things down here a little bit outside of that.

Devin Ryan: I'm curious kind of what the bigger factors are. Maybe you're slowing things down here a little bit outside of just the broader market volatility.

Speaker Change: Just the broader market volatility.

Chad Abraham: Yeah, I think Devin, it's it's a bit of the haves and have-nots. You know, we've definitely had a few processes stalled out, you know, I would say we haven't had that many. sort of canceled long-term, but you know, it kind of really depends on the sector. There are, you know, I would say one of our most challenging sectors is parts of consumer where, you know, in consumer products or beauty and personal care, you know, a lot of our, you know, a lot of the stuff is just sourced in China. So it's really hard to know kind of what the P&L is.

Devin Ryan: Yes, I think Devin it's a bit of the.

Speaker Change: Haves and have nots.

Speaker Change: We definitely had a few processes stalled out I would say we haven't had that many.

Sort of canceled the long term, but it kind of really depends on the sector. There are you know I would say one of our most challenging sectors as parts of.

Speaker Change: Consumer wear and consumer products or beauty and personal care and you know a lot of our.

Speaker Change: A lot of the stuff is just sourced in China. So it's really hard to know kind of what the P&L is and.

Chad Abraham: And, you know, if you don't know what the P&L is, you know, nobody's going to buy the business. I would say the flip side of that is in, you know, some of our traditional services businesses that are, you know, very domestic or, you know, other sectors like that, you're probably getting a little more interest just funneled to those sectors. So some of those projects are even getting stronger. And what I would say that the positive part about the sponsor business is, if it's a fairly unaffected business, there's so much credit that, you know, getting financing for those businesses is very, very strong.

Speaker Change: If you don't know what the P&L as you know nobody is going to buy the business I would say the flip side of that is in some of our traditional services businesses that are.

Speaker Change: You know very domestic ore.

Speaker Change: Other sectors like that you're probably getting a little more interest just bundle to those sectors. So some of those projects are even getting stronger and what I would say the positive part about the sponsor business is if it's a fairly unaffected business.

Speaker Change: Theres so much credit debt.

Speaker Change: Getting financing for those businesses is very very strong so.

Chad Abraham: So it's really, really sector dependent.

Speaker Change: It's really really sector dependent.

Speaker Change: Okay.

Devin Ryan: any ofl possible reasons you don't like and just the expectations for a potential ramp. It seems like people are kind of gearing up for a little more M&A than we've seen over the last couple of years. So just kind of the tone for that business and kind of whether that could be a 2025 revenue story or if it's more of a 2026 and beyond. Thanks.

Speaker Change: Yes.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: Expectations for potential ramp, but people are kind of gear up for more M&A.

Speaker Change: Seen over the last couple of years, so just kind of the tone for that business and kind of whether that could be a 2025 revenue story or if it's more of a 2026 and beyond thanks.

Chad Abraham: Yeah, and I think I you were breaking up there a little bit, but I think you asked about depositories. Is that right? Yes, just kind of the outlook for depositories. Yeah, I would I would say, yeah, we are feeling more positive about that. You know, we've been on a couple of, you know, nice transactions just in the last week. And I think I said on the last call, you know, how this year's impact, it has a lot to do kind of with what we get announced in April, May, June.

Speaker Change: Yeah, and I think you were breaking up there a little bit, but I think you asked about depository.

Speaker Change: Alright.

Speaker Change: Yes, I'll, just kind of the outlook for depository.

Speaker Change: Yeah, I would I would say.

Speaker Change: Yeah, we are feeling more positive about that we've been on a couple of.

Speaker Change: Nice transactions just in the last week and I think I said on the last call.

Speaker Change: You know how this year's impact it has a lot to do kind of with what we get announced in April May June.

Chad Abraham: But I do think, you know, at least this is what I'm hearing from our bankers, I do feel like some of the stuff we got announced in April, has a chance to close this year, which if we would have been in April of 24, we wouldn't have said that. So I think on the margin, it will be positive for depositories. And yes, you know, some of those conversations are picking up.

Speaker Change: But I do think.

Speaker Change: This is what I'm hearing from our bankers I do feel like some of the stuff. We got announced in April has a chance to close this year, which if we would've been in April of 'twenty four we wouldn't have said that.

Speaker Change: So I think I think on the margin it will be a positive for depository and yes. Some of those conversations are picking up.

Devin Ryan: Okay, great. If I can squeeze one more in for Deb, just on the MUNI side. So, I heard, you know, pipelines sound like they're pretty good, but just near-term visibility is making it a bit tough.

Speaker Change: Okay, great if I can squeeze one more in for Deb just on the Muni side, So I heard.

Speaker Change: The pipeline sounds like they are pretty good, but just near term visibility is making it a bit tough.

Debbra Schoneman: Can you just characterize kind of what the – any framing of the pipeline? Because I know that there's been some impacts from inflation and other things that maybe are kind of becoming better stories for issuance on the MUNI side. So, just how the pipeline looks today, appreciating it may take time to kind of get through, but what it looks like today relative to some other periods.

Speaker Change: Can you just characterize kind of what the any any framing of the pipeline because I know that there has been some impacts from inflation and other things that maybe you are kind of becoming better stories for issuance knee side. So just.

Speaker Change: How the pipeline looks today appreciating it may take time to kind of get through but what it looks like today relative to some other periods of time.

Debbra Schoneman: Yeah, thanks, Devin. I wouldn't say we're seeing any big shifts in the pipeline relative to cost of projects or something really changing what that pipeline looks like. So I feel like it's really a continued build off of what we saw in 24. So no big changes there. And at the end of the day, from an Outlook perspective, to execute on that pipeline. It's really rate volatility, in particular, the MMD, the muni side of that, it is absolute level of rates, and then muni fund flows. So just giving some parameters for you to think about in terms of what needs to stabilize in the market for that pipeline to be realized.

Devin Ryan: Yes, Thanks, Devin I wouldn't say, we're seeing any big shifts in the pipeline relative to cost of projects or something really changing what that pipeline looks like so I feel like it's really a continued build off of what we saw in 'twenty four.

Devin Ryan: So no big changes, there and and at the end of the day from an outlook perspective to execute on that pipeline.

Devin Ryan: Really rate volatility in particular, the N M D. The muni side of that it is absolute level of rates and then Muni fund flows.

Devin Ryan: Giving some parameters for you to think about in terms of what what needs to stabilize in the market for that pipeline to be realized in and it can change fairly quickly. We did see some stabilization in the last couple of days and got some nice deals done. So the question is will that stabilization continue going forward.

Devin Ryan: And it can change fairly quickly. We did see some stabilization in the last couple days and got some nice deals done. So the question is, will that stabilization continue going forward? Okay, great. I will leave it there, but really appreciate it. Thanks, Devin.

Devin Ryan: Okay, Great I will leave it there, but really appreciate it.

Speaker Change: Thank you thanks, David.

James Yaro: We'll take our next question from James Yaro with Goldman. Good morning and thanks for taking the questions. I just wanted to touch a little bit on the countercyclicality that you talked about, Chad, that's now part of your advisory business.

Speaker Change: We'll take our next question from James Euro with Goldman Sachs.

James Euro: Hi, good morning, and thanks for taking the questions.

Speaker Change: Wanted to touch a little bit.

Speaker Change: On the counter cyclicality that you talked about Chad So part of your advisory business.

Chad Abraham: Any ability for you to contextualize for us the contribution either this quarter or more recently over a longer period of time from the three businesses, perhaps in total, that you noted that offer more of that durability in a weaker M&A backdrop? And I specifically think that the three businesses were secondaries, continuation funds, capital markets, advisory, and restructuring. Yeah, so for us, I mean, obviously, that those three segments, you know, we've been focused on, you know, our debt capital markets advisory business has been very much a long year kind of 10, 10 year organic build. And I would say in debt capital markets, like I said, there's just an abundance of capital.

Speaker Change: Ability for you to contextualize for us the contribution either this quarter or are more recently over a longer period of time from the three businesses. Perhaps in total that you noted that offer more of that durability and a weaker M&A backdrop, and I, specifically say that.

The business for secondary consideration towards capital markets Advisory.

Speaker Change: Restructuring.

Speaker Change: Yeah.

Speaker Change: Yes, so for us I mean, obviously that.

Speaker Change: Those three segments.

Speaker Change: We've been focused on.

Speaker Change: Our debt capital markets Advisory business has been very much a long year kind of 10 10 year organic build and I would say in debt capital markets like I said, there's just an abundance of capital so we feel.

Chad Abraham: So we feel really good about that business. Obviously, with restructuring, we acquired the small team several years ago, we've continued to build that we had a really nice recent transaction with that was just a great partnership between sort of a combination of the debt capital markets team, and the restructuring team. So I think, sort of, you know, finding new capital with all those solutions is important. And then obviously, we're in the early innings with the liquidity team, but but have to have some good business. So, you know, I would say we've obviously seen, you know, some other competitors talk about that being, you know, half the business, you know, it's nothing like that, for us.

Speaker Change: Really good about that business, obviously with restructuring we acquired this small team several years ago. We've continued to build that we had a really nice recent transaction with that was just a great partnership between sort of a combination of the debt capital markets team and the restructuring team. So I think.

Speaker Change: Finding new capital with all of those solutions is important and then obviously we're in the early innings.

Speaker Change: With the avidity team, but but have some good business. So.

Speaker Change: I would say, we've obviously seen some other competitors talk about that being half the business. It's nothing like that for us, but all of those other businesses are probably growing faster right now than our M&A business. So it is providing sort of some ballast there so hopefully.

James Yaro: But all of those other businesses are probably growing faster right now than our M&A business. So it is providing sort of some ballast there. So, you know, hopefully that helps. That was really helpful. Thanks, Chad. Just as a follow-up. It appears, obviously, as you alluded to, we're now in a bit of an elongated M&A recovery.

Speaker Change: That helps.

Speaker Change: That's really helpful. Thanks, Chad.

Speaker Change: Just as a follow up.

Speaker Change: It appears.

Speaker Change: Obviously.

Speaker Change: You alluded to we're now in a bit of an elongated M&A recovery.

Chad Abraham: or perhaps worse, could you help us think through what this means for your ability for an appetite to conduct acquisitions? And are there specific products or geographies that you're particularly focused on right now? Yeah, I would say we've been reasonably active there.

Speaker Change: Or perhaps worse.

Speaker Change: Could you help us think through what this means for your ability for an appetite to conduct acquisitions.

Speaker Change: And are there specific products or geographies that you are particularly focused on right now.

Speaker Change: Yeah, I would say we've been reasonably active there I mean, one of the I think we talked about this one of the challenges with just coming out of 2020. One was you know everybody is sort of ahead.

Chad Abraham: I mean, one of the I think we talked about this one of the challenges, you know, with just coming out of 20 and 21 was, you know, everybody sort of had Spiked revenues and sort of thought forever that was going to be their revenue level. I think, you know, now we have at least a few years of data points beyond that and, you know, we kind of know what our revenue levels are, the targets know what their revenue levels are. So I think we are at a place where we can, you know, come up with good value.

Speaker Change: Spiked revenues and sort of thought forever that was going to be there revenue level. I think now we have at least a few years of data points.

Speaker Change: Beyond that and we.

Speaker Change: We kind of know what our revenue levels are the targets know what.

Their revenue levels are so I think we are at a place where we can.

Speaker Change: It will come up.

Chad Abraham: So I do think, you know, now is a decent time, you know, with our diversified business, a lot of products that people would like access to. I mean, I think the boutiques are very interested in sort of the debt products we have now. given the market.

Speaker Change: It was good value. So I do think now is a decent time with our diversified business.

Speaker Change: A lot of products that people would like access to.

Speaker Change: I think the boutiques are very interested in sort of the debt products, we have now.

Speaker Change: Given the market. So I would say we are.

Chad Abraham: So I would say we're, you know, again, it's hard to find larger ones, but plenty of good small, small fits, I would say priorities are kind of the same that they've been probably first and foremost things in and along, you know, technology with whether that's software, or services, you know, some select things within Europe as we, you know, are starting to have more success. there, but really, then within all of our industry groups, you know, there are, there are sectors I've talked about this before in sort of healthcare, you know, we're, we're overweighted biotech and medtech and underweighted services, which really fits well with Private Equity, so pretty much everywhere there are pockets we could add.

Speaker Change: Again, it's hard to find larger ones, but plenty of good small.

Speaker Change: Small fits I would say priorities are kind of the same that they have been.

Speaker Change: Probably first and foremost things in it a long time.

Speaker Change: <unk> with whether that software.

Speaker Change: Or services some select.

Speaker Change: Things within Europe, as we are starting to have more success.

Speaker Change: There, but really then within all of our industry groups there are.

Speaker Change: There are sectors I've talked about this before in sort of health care.

Speaker Change: We're overweighted biotech and med tech and underweight, it services, which really fits well with.

Speaker Change: Private equity so pretty much everywhere there are our pockets we could add.

Chad Abraham: Excellent. Thank you so much.

Speaker Change: Excellent. Thank you so much.

Brendan O'brien: We'll take our next question from Brendan O'Brien. Morning and thanks for taking my questions. To start, you know, I wanted to follow up on your response to one of Devin's questions. You know, it seems pretty clear that we're in a bit of a bifurcated market at the moment. You call it the haves and the have-nots.

We will take our next question from Brendan O'brien with Wolfe Research.

Brendan O'brien: Good morning, and thanks for taking my questions to start I wanted to follow up.

Speaker Change: On your response to one of Devins question, you know it seems pretty clear that we're in a bit of a bifurcated market at the moment.

Brendan O'brien: You call it the haves and have not.

Chad Abraham: But I was just hoping you could drill down a bit on how activity is tracking in your key industry verticals outside of consumer and services. And if possible, how much of your advisory revenues come from some of these sectors that are less exposed to tariff risk? Yeah, so I think we kind of got to take it team by team. I think last, you know, last year, we talked about it, you know, one of our largest teams is healthcare. And it was, you know, it was one of our only teams that was down. I do think we expect a bit of a better healthcare market.

Brendan O'brien: But I was just hoping you could drill down a bit on how activity is tracking in your key industry verticals outside of consumer and services and if possible how much of your advisory revenues come from some of these sectors that are less exposed to tariff risk.

Brendan O'brien: Yes, so I think we kind of got to take it team by team.

Brendan O'brien: I think last last year, we talked about it one of our largest teams is healthcare and it was one of our only teams that was down.

Brendan O'brien: I do think we expect a bit of a better health care market and obviously a lot of our health care businesses.

Chad Abraham: And obviously, a lot of our healthcare businesses are pretty domestic. It's, you know, it's not not all of them, obviously, our med tech business is pretty global. But I think because of that, you know, especially healthcare services in some of the sectors, you know, you can actually see more interest. So I think that's one example. Energy, I would say, you know, obviously, we had an incredible another record year last year, obviously, with oil prices where they are, it's a little tougher this year. So you know, that that's a business that could potentially be down a bit.

Brendan O'brien: Our pretty domestic.

Brendan O'brien: Not all of them, obviously are med tech businesses, it's pretty global but I think because of that especially health care services and some of those sectors.

Brendan O'brien: You can actually see more interest.

I think Thats One example.

Brendan O'brien: Energy I would say, obviously, we had an incredible another record year last year, obviously with oil prices, where they are it's a little tougher this year.

Brendan O'brien: So that's a business that could potentially be down.

Chad Abraham: And then, you know, I would say probably the toughest sector, you know, relative to just you know, the markets is consumer, you know, anything kind of soft goods, we talked about some of the products businesses, you know, those are heavily sort of sourced internationally. But you know, even within consumer, we got some really good food transactions done in Q1. And then we've got some sectors like, you know, our fitness business, which is sort of unaffected and is doing quite well. So I think there are puts, you know, puts and takes. puts and takes their. Great color.

Brendan O'brien: Down a bit and then I would say probably the toughest sector relative to just.

Brendan O'brien: The market is consumer.

Brendan O'brien: Anything kind of soft goods.

Brendan O'brien: <unk> talked about some of the products businesses.

Brendan O'brien: Or heavily sort of sourced.

Brendan O'brien: Internationally, but even within consumer we got some really good.

Brendan O'brien: Food transactions done in Q1, and then we've got some sectors like our fitness business, which is sort of unaffected and is doing quite well. So I think there are puts.

Brendan O'brien: Puts and takes.

Brendan O'brien: Puts and takes there.

Speaker Change: That's great color and then for my follow up just wanted to.

Brendan O'brien: And then for my follow up, I just wanted to touch on the near term advisory outlook. You know, you spoke to a decline quarter on quarter in advisory revenues, which is obviously understandable given the backdrop.

Speaker Change: Touch on the near term advisory outlook, you know you spoke to a decline quarter on quarter Advisory revenues, which is obviously understandable given the backdrop.

Chad Abraham: And while things could snap back quickly if we get clarity on tariffs before the end of the quarter, I just wanted to get a sense as to how revenues and advisory have been tracking relative to one Q, or if you could help frame the potential magnitude of decline that we could see near term. Yeah, I mean, I think, you know, obviously, that's, that's difficult. We tried it, we tried to, you know, give a little bit of outlook when we can, you know, we actually had some good transactions close in April that, you know, we're We're teed up before that.

Speaker Change: Things could snap back quickly if we get clarity on tariffs before the end of the quarter I just wanted to get a sense as to how revenues advisory had been tracking relative to <unk> or if you could help frame the potential magnitude of decline that we could see near term.

Speaker Change: Yeah, I mean I think.

Speaker Change: Obviously, that's that's difficult we tried it we tried to.

Speaker Change: Give a little bit of outlook when we can.

Speaker Change: We actually had some good transactions close in April that were.

Speaker Change: We're teed up before that but I think the question is are we going to get the same level of closings in May and June. It you know it only takes a handful of meaningful ones.

Chad Abraham: But I think, you know, the question is, are we going to get the same level of closings in May and June in it, you know, it only takes a handful of meaningful ones that, you know, that don't that don't kind of make it to make those comments. I don't I don't think we're talking about a major decline, you know, because we do have offsets, as we talked about from those different industry groups. And then, you know, relative to how long it takes, we really haven't seen that many companies say, I'm not going to go. I'm not going to try it.

Speaker Change: That don't that don't kind of make it to make those comments I don't I don't think we're talking about.

Speaker Change: A major decline.

Speaker Change: Because we do have offsets as we talked about from those <unk>.

Speaker Change: Different industry groups, and then relative to how long. It takes we really haven't seen that many companies say I'm not going to go I'm not going to.

Chad Abraham: I think there's a lot of companies sort of teed up. We're working on the materials. We're working on sort of prepping the sponsor community. And it's just a matter of the launch. And so if we get some clarity in the next couple months, you know, we'll be fine to launch.

Speaker Change: Try it I think theres a lot of companies sort of teed up we're working on the materials, we're working on sort of PREPA.

Speaker Change: Trapping the sponsor community and it's just a matter of.

Speaker Change: The launch.

Speaker Change:

Speaker Change: And so if we get some clarity in the next couple of months.

Speaker Change: We will be fine to launch.

Chad Abraham: you know, lots of transactions and impact sort of Q3 and Q4 if you know, if we start bumping up against, oh, we're not going to launch something in August, and it starts to be to September, you know, then then that'll have some impact. But I think as of now, we're just kind of viewing it as a bit of a short term bump with a handful of transactions that we notice. And we'll have to watch the next month or two.

Speaker Change: Lots of transactions and impact sort of Q3 and Q4 if you.

Speaker Change: If we start bumping up against Oh, we're not going to launch something in August it starts to be the September then that'll have some impact, but I think as of now we're just kind of viewing it as a bit of a short term bump with a handful of transactions that we notice.

Speaker Change: And we'll have to watch the next month or two.

Brendan O'brien: Great, thank you for taking my question. Thank you.

Speaker Change: Alright, Thank you for taking my questions.

Speaker Change: Thank you as a reminder, starwood for questions. We will go next to Mike Grondahl with Northland Securities.

Kathy Winslow: As a reminder, star one for questions.

Mike Grondahl: We'll go next to Mike Grondahl with Northland Security. Hey, guys, thanks. Um, sort of two questions here. You know, the first one, in discussions with your customers, Is it all about tariff uncertainty? Or maybe if you could just talk about the top three things you're hearing. from your customers and what they need clarity on. And then secondly, I know it's only been. short term like a couple days and Deb even pointed that out. But are you seeing, I don't know, any sentiment change just this week with, you know, the S&P is is kind of rebounded nicely?

Mike Grondahl: Hey, guys. Thanks.

Mike Grondahl: Sort of two questions here.

Speaker Change: The first one.

Speaker Change: Discussions with your customers.

Speaker Change: Is it all about tariff uncertainty or maybe if you could just talk about the top three things you're hearing.

Speaker Change: From your customers and what they need clarity on.

Speaker Change: And then secondly.

Speaker Change: I know, it's only been.

Speaker Change: Short term like a couple of days and Debbie been pointed that out but are you seeing I don't know any sentiment change just this week.

Speaker Change: With the S&P is is kind of rebounded nicely.

Mike Grondahl: So just curious there.

Speaker Change: Just curious there on those two.

Chad Abraham: Yeah, I would I would say with with clients, I always have to remind people, you know, relative to M&A, one of the biggest things, you know, to transacting is just CEO confidence. And so I think it's just around uncertainty where, you know, where people sort of have good pipelines, good visibility, you know, the buyers are there, you know, strategic still want to transact sponsors, you know, if they can get their arms around the P&L, there's so much dry powder and credits really good, you know, they want to transact. So I do think, you know, first and foremost, it's just a matter of you know, where sort of does global trade really impact a PNL?

Speaker Change: Yes, I would say with with clients I always have to remind people.

Speaker Change: Relative to M&A, one of the biggest things.

Speaker Change: To transacting as just CEO confidence and so I think it's just around uncertainty where where people sort of have good pipeline is good visibility.

Speaker Change: The buyers are there.

Speaker Change: Strategic still want to transact sponsors if they can get their arms around the P&L. There's so much dry powder in credit is really good they want to transact. So I do think first and foremost it's just a matter of.

Speaker Change: We're sort of just global trade really impact <unk>.

Chad Abraham: Now, I would say there's some conversations, you know, with people trying to predict you know, if this lasts a long time, when will it sort of really start to impact spending both at sort of the corporate and consumer level? And, you know, I guess your guess, you know, is as good as mine. I would say, you know, this week is a reminder that things can, you know, bounce back relatively fast. I think as Deb said, you know, a little bit of change in the muni market, we got some good transactions done. We have a couple of IPOs on the road in financial services, you know, which we haven't had for a while.

Speaker Change: Oh, no I would say theres, some conversations with people trying to predict.

Speaker Change: If this lasts a long time when will it sort of really start to impact spending both at sort of the corporate and consumer level and I guess your guess is as good as mine I would say this week is a reminder that things.

Speaker Change: Bounce back relatively fast I think as Deb said.

Speaker Change: A little bit of change in the Muni market. We got some good transactions done we have a couple of Ipos on the road in financial services, which we haven't had for a while we had another nice depository deal it out so.

Chad Abraham: We had another nice, you know, depository deal announced. It can change pretty quick with sentiment. Got it. Okay.

Speaker Change: It can change pretty quick with with with sentiment.

Got it Okay, Hey, good luck this summer.

Chad Abraham: Hey, good luck this summer. Thank you.

Speaker Change: Thank you.

James Yaro: We'll go next to James Yaro. Thanks, Jake. Follow-ups.

Speaker Change: Well go next to James <unk> with Goldman Sachs.

Speaker Change: Okay.

Speaker Change: Thanks for taking follow ups, just firstly could you just touch a little bit on the IPO pipeline I think it just leads to deals on the road, but just more generally on the IPO backlogs and how those have evolved and what youre hearing from companies.

James Yaro: Just firstly, could you just touch a little bit on the IPO pipeline? I think you just alluded to two deals on the road, but just more generally on the IPO backlogs and how those evolved and what you're hearing from companies, you know, around their need to transact there. And then specifically, could you just comment a little bit around the healthcare business, specifically on the equity capital market side? Yeah, I would say, I mean, obviously coming into this year, it's the first time in a while, I mean, we've had we've had some rough years in the IPO market, I would say it's the first time we had some pretty good traction, you know, we some of the sectors that matter to us medtech, you know, where we get sort of significant share, we did a couple great transactions in q1, we did a nice energy transaction, you know, which we haven't seen much of, I would say across sectors, you know, there's, there's some good backlog, I think some of the biggest best companies there, you know, we're not going to need to see much stabilization.

Speaker Change: Around their need to transact there and then specifically could you just comment a little bit about the healthcare business, specifically on the equity capital market side.

Speaker Change: Yes, I would say I mean, obviously coming into this year.

Speaker Change: And it's the first time in alignment we've had some rough years in the IPO market I would say, it's the first time, we had some pretty good traction.

Speaker Change: Some of the sectors that matter to us Med Tech, where we get sort of significant share. We did a couple of great transactions in Q1, we did a nice energy transaction, which we haven't seen much of I would say across sectors.

Speaker Change: There's some good backlog I think some of the biggest best companies. There you know, we're not going to need to see much stabilization and we will start to see them.

Chad Abraham: And we'll start to see them transact what I would say relative to healthcare, you know, obviously, our biggest chunk of fee share is in biotech. And relative to market performance, some of the small cap biotech stocks, you know, have been decimated. And you know, it's going to take a while there, you're going to need to see some of those come back. And frankly, investors are going to come back to those beat up names before they come back to sort of the high IPOs and biotech. So I think that's going to be a little slower on the healthcare side, especially small cap.

Speaker Change: Transact, what I would say relative to healthcare.

Speaker Change: Obviously, our biggest chunk of fee share is in biotech and relative to market performance. Some of the small cap biotech stocks have been decimated and it's going to take a while there youre going to need to see some of those.

Speaker Change: I'll come back and frankly investors are going to come back to those beat up names before they come back to sort of the high ipos in biotech.

Speaker Change: I think that's going to be a little slower on the healthcare side, especially small cap.

James Yaro: Great, that's really helpful.

Speaker Change: Great. That's really helpful. Just one last one for Deb.

Debbra Schoneman: Just one last one. For Deb, we obviously saw a substantial rate fall this quarter and, and again in April, and I would have thought that that would have catalyzed some fixed income trading activity by banks. Could you just walk us through what you're seeing and hearing from bank clients and their appetite to transact in this backdrop?

Speaker Change: We saw a substantial rate fall this quarter end and again in April.

Speaker Change: Would've thought that that would catalyze some fixed income trading.

Speaker Change: Trading activity by banks.

Speaker Change: Could you just walk us through what you're seeing.

Speaker Change: And hearing from bank clients and their appetite to transact in the spectrum.

Speaker Change: Yeah, James I would say holistically volatility is creating too much uncertainty right now for.

Debbra Schoneman: James, I would say, holistically, volatility is, you know, creating too much uncertainty right now for many, really, across our client set to step in with any conviction. Now, specifically, the depositories where we are seeing activity is related to M&A, where there are balance sheet restructurings being done because of that. Outside of that, depositories, I think there's just too much uncertainty still for bank decision makers to jump in and being willing to maybe absorb current losses in their portfolio to be able to reposition. So where we're seeing more activity is just on our derivatives hedging side to try to be helpful to those depositories to manage through this environment.

Speaker Change: Many really across our client set to step in with any conviction now specifically the depository is where we are seeing activity is related to M&A, where there a balance sheet restructuring being done because of that outside of that depository is just too much uncertainty still for.

Speaker Change: Bank decision makers to jump in and being willing to maybe absorb current losses in their portfolio to be able to reposition so where we're seeing more activity is just on our derivative hedging side.

Speaker Change: Try to be helpful to those depository to manage through this environment.

Debbra Schoneman: Thanks a lot. Thank you.

Speaker Change: Thanks, a lot.

Speaker Change: Thank you that will conclude our question and answer session. At this time I would like to turn the call back over to Mr. Abraham for any additional or closing remarks.

Kathy Winslow: That will conclude our question and answer session.

Kathy Winslow: At this time, I'd like to turn the call back over to for any additional or close All right, thanks, everyone, for joining us this morning. We look forward to updating you on our second quarter results this summer. Have a great day.

Speaker Change: Alright, thanks, everyone for joining us. This morning, we look forward to updating you on our second quarter results. The summer have a great day.

Kathy Winslow: That will conclude today's call. We appreciate your

Speaker Change: That will conclude today's call. We appreciate your participation.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].