Perella Weinberg Partners(US:PWP)2022-05-04 16:00Financial Performance - Revenues for Q1 2022 were $151.9 million, a decrease of 11% from $169.8 million in Q1 2021, primarily due to reduced M&A activity in the US [208]. - Operating income for Q1 2022 was a loss of $10.4 million, compared to an income of $28.0 million in Q1 2021, reflecting an 83% decline in income before taxes [204]. - Net income for Q1 2022 was $1.1 million, a 95% decrease from $22.5 million in Q1 2021 [204]. - Non-operating income for Q1 2022 was $14.4 million, a significant improvement from a loss of $3.5 million in Q1 2021, driven by a $12.0 million gain on the change in fair value of warrant liabilities [223]. Expenses - Total operating expenses for Q1 2022 were $162.2 million, representing 107% of revenues, up from $141.8 million or 83% of revenues in Q1 2021 [212]. - Total compensation and benefits expenses increased to $128.1 million in Q1 2022, compared to $115.6 million in Q1 2021, accounting for 84% of revenues [211]. - Non-compensation expenses rose by 30% to $34.1 million in Q1 2022 from $26.1 million in Q1 2021 [212]. - The increase in compensation expenses was primarily due to a rise in equity-based compensation, with $40.9 million in amortization of equity awards in Q1 2022 compared to $6.2 million in Q1 2021 [218]. - Non-compensation expenses for Q1 2022 totaled $34.1 million, representing 22% of revenues, compared to $26.1 million (15% of revenues) in Q1 2021 [221]. Client Activity - The number of advisory clients decreased from 95 in Q1 2021 to 77 in Q1 2022, with clients paying fees of $1.0 million or more dropping from 29 to 28 [209]. - Global M&A volumes in Q1 2022 were down 30% sequentially and annually, indicating a significant slowdown in market activity [198]. - The company anticipates continued demand for independent advisory services despite near-term macroeconomic headwinds [201]. Cash and Liquidity - Cash and restricted cash decreased to $225.1 million as of March 31, 2022, down $279.6 million from $504.8 million at the end of 2021 [229]. - The company paid $3.4 million in cash dividends during Q1 2022 and made partner tax distributions totaling $15.8 million [232]. - The Company has a Revolving Credit Facility with an available line of credit of $50.0 million, which provides additional liquidity [235]. - The Company believes that post-transaction cash, net cash from operations, and available borrowing capacity will be sufficient for operating needs over the next twelve months [237]. Debt and Capital Management - The Company repaid all outstanding borrowings under the Credit Agreement, totaling $27.7 million in principal plus accrued interest, and amended the agreement to extend maturity to July 1, 2025 [236]. - The Company has a stock repurchase program authorized for up to $100.0 million, with 172,303 shares repurchased at a cost of $1.6 million during the three months ended March 31, 2021 [238]. - As of March 31, 2022, the Company had no outstanding balance related to the Revolving Credit Facility and no incremental revolving commitments incurred [236]. Regulatory and Tax Matters - The Company actively monitors its regulatory capital base to ensure compliance with minimum capital requirements across various jurisdictions [239]. - The Company entered into a tax receivable agreement providing for payment of 85% of cash savings in U.S. federal, state, and local taxes realized from certain transactions [246]. Foreign Currency and Transactions - For the three months ended March 31, 2022, the Company recorded a $1.4 million gain and a $2.0 million loss from non-functional currency related transactions [252]. - As of March 31, 2022, the Company held $32.6 million in non-U.S. dollar denominated currencies, including pound sterling, Euro, and Canadian dollars [253]. Business Combinations - The company completed a business combination with Tudor, Pickering, Holt & Co. in November 2016, enhancing its advisory capabilities in the energy sector [194]. Future Projections - Future amortization of equity awards related to the Business Combination is projected to be $76.2 million for Transaction Pool RSUs and $67.4 million for Long-Term Incentive Awards over the next five years [217]. Office Expansion - The Company has various non-cancelable operating leases, with expected capital contributions exceeding $50 million for new office spaces in London and New York [247]. Share Repurchase - The Company repurchased 1,000,000 founder shares at $12.00 per share for a total of $12.0 million on August 9, 2021 [244].