Perella Weinberg Partners (the “Firm” or “PWP”) (NASDAQ:PWP) today
reported financial results for the second quarter ended
June 30, 2023.
CFO Transition
With this morning's results, PWP announced that,
effective December 31, 2023, Gary Barancik will be stepping down
from his role as Chief Financial Officer. Mr. Barancik joined PWP
as an Advisory Partner at its founding in 2006, became its Chief
Financial Officer in 2018, and has led the finance organization
through PWP's transition to a public company. Alexandra Gottschalk,
who has been with the Firm for over 12 years, including five years
as its Chief Accounting Officer, will become Chief Financial
Officer effective January 1, 2024.
Revenues
For the second quarter of 2023, revenues were
$165.5 million, an increase of 10% from $151.1 million from the
second quarter of 2022. The period-over-period growth was driven by
increased mergers and acquisition activity. Revenues attributed to
financing and capital solutions were largely flat in the
period.
For the first half of 2023, revenues were $297.0
million, a decrease of 2% from $303.0 million from the first half
of 2022. Mergers and acquisition activity was modestly up
period-over-period but was offset by lower financing and capital
solutions revenues due to certain large fee events in the year ago
period.
Expenses
|
U.S. GAAP |
|
Adjusted |
|
U.S. GAAP |
|
Adjusted |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating expenses |
(Dollars in Thousands) |
Total compensation and benefits |
$ |
148,428 |
|
|
$ |
127,014 |
|
|
$ |
113,563 |
|
|
$ |
96,763 |
|
|
$ |
266,062 |
|
|
$ |
255,149 |
|
|
$ |
198,971 |
|
|
$ |
193,964 |
|
% of Revenues |
|
90 |
% |
|
|
84 |
% |
|
|
69 |
% |
|
|
64 |
% |
|
|
90 |
% |
|
|
84 |
% |
|
|
67 |
% |
|
|
64 |
% |
Non-compensation expenses |
$ |
38,869 |
|
|
$ |
33,103 |
|
|
$ |
36,384 |
|
|
$ |
31,031 |
|
|
$ |
75,351 |
|
|
$ |
67,203 |
|
|
$ |
70,896 |
|
|
$ |
63,199 |
|
% of Revenues |
|
23 |
% |
|
|
22 |
% |
|
|
22 |
% |
|
|
21 |
% |
|
|
25 |
% |
|
|
22 |
% |
|
|
24 |
% |
|
|
21 |
% |
Three Months Ended
GAAP total compensation and benefits were $148.4
million for the second quarter of 2023, compared to $127.0 million
for the second quarter of 2022. Adjusted total compensation and
benefits were $113.6 million for the second quarter of 2023 as
compared to $96.8 million for the same period a year ago. The
increase in both GAAP total compensation and benefits and adjusted
total compensation and benefits was due to a larger bonus accrual
on an absolute dollar basis associated with higher revenues
combined with the quarterly impact of increasing the year-to-date
2023 compensation margin to 67%. On a GAAP basis, total
compensation and benefits include the impact of business
realignment costs associated with employee reductions undertaken in
the second quarter of 2023 to improve compensation alignment and to
provide for greater flexibility to advance strategic
opportunities.
GAAP non-compensation expenses were $38.9
million for the second quarter of 2023, compared with $33.1 million
for the second quarter of 2022. Adjusted non-compensation expenses
were $36.4 million for the second quarter of 2023, compared with
$31.0 million for the same period a year ago. The increase
experienced in both GAAP non-compensation expenses and adjusted
non-compensation expenses was largely driven by legal spend, higher
rent and occupancy costs associated with overlapping rent periods
and a related step-up in depreciation expense tied to New York and
London office renovations and relocation, technology investments,
and an increase in travel and related expenses.
Six Months Ended
GAAP total compensation and benefits were $266.1
million for the six months ended June 30, 2023, compared to $255.1
million for the six months ended June 30, 2022. Adjusted total
compensation and benefits were $199.0 million for the six months
ended June 30, 2023 as compared to $194.0 million for the same
period a year ago. The increase in both GAAP total compensation and
benefits and adjusted total compensation and benefits was due to a
higher compensation margin on a slightly lower revenue base. On a
GAAP basis, total compensation and benefits include the impact of
aforementioned business realignment costs. At the end of the second
quarter, the Firm increased the year-to-date compensation margin to
67% reflecting business and industry conditions and to support
talent investment.
GAAP non-compensation expenses were $75.4
million for the six months ended June 30, 2023, compared with $67.2
million for the six months ended June 30, 2022. Adjusted
non-compensation expenses were $70.9 million for the six months
ended June 30, 2023, compared with $63.2 million for the same
period a year ago. The increase experienced in both GAAP
non-compensation expenses and adjusted non-compensation expenses
was largely driven by higher rent and occupancy costs associated
with overlapping rent periods and a related step-up in depreciation
expense tied to New York and London office renovations and
relocation, an increase in travel and related expenses, legal
spend, and technology investments, partially offset by a moderation
in professional fees, a reduction in co-advisory fees, and lower
D&O insurance costs versus the prior year period.
Provision for Income Taxes
Perella Weinberg Partners currently owns 48.77%
of the operating partnership (PWP Holdings LP) and is subject to
U.S. federal and state corporate income tax. Income earned by the
operating partnership is subject to certain state and foreign
income taxes.
For purposes of calculating adjusted
if-converted net income, we have presented our results as if all
partnership units had been converted to shares of Class A Common
Stock, and as if all of our adjusted income for the period was
subjected to U.S. corporate income tax. For the six months ended
June 30, 2023, the effective tax rate for adjusted
if-converted net income was 22%. This tax rate included a one-time
tax benefit recognized in the second quarter of 2023 due to the
release of a tax reserve at one of our foreign subsidiaries.
Balance Sheet and Capital
Management
As of June 30, 2023, PWP had $179.8 million
of cash and short-term investments in U.S. Treasury securities. The
Firm has no outstanding indebtedness and has an undrawn revolving
credit facility.
During the three months ended June 30, 2023, PWP
returned $14.2 million in aggregate to our equity holders through
(i) the repurchase of 919,379 shares at an average price per share
of $8.41 in open market transactions pursuant to PWP’s Class A
common stock repurchase program, (ii) the net settlement of 56,497
share equivalents to satisfy tax withholding obligations at an
average price per share of $8.01 and (iii) the payment of $6.0
million in pro rata distributions to limited partners which allowed
PWP to pay its dividends of $3.0 million on Class A common
stock.
During the six months ended June 30, 2023,
PWP returned $47.0 million in aggregate to our equity holders
through (i) the repurchase of 2,376,683 shares at an average price
per share of $9.46 in open market transactions pursuant to PWP’s
Class A common stock repurchase program, (ii) the net settlement of
1,177,991 share equivalents to satisfy tax withholding obligations
at an average price per share of $10.02 and (iii) the payment of
$12.7 million in pro rata distributions to limited partners which
allowed PWP to pay its dividends of $6.5 million on Class A common
stock.
During the three and six months ended
June 30, 2023, PWP made $0.5 million of cash payments
related to the business realignment. Currently, we are estimating
future cash payments of approximately $18 million related to the
business realignment, which are expected to be paid by or soon
after December 31, 2023.
The Board of Directors has declared a quarterly
dividend of $0.07 per share of Class A common stock. The dividend
will be paid on September 12, 2023 to Class A common stockholders
of record on September 1, 2023.
Conference Call and Webcast
Management will host a webcast and conference
call on Thursday, August 3, 2023 at 9:00 am ET to discuss PWP’s
financial results for the second quarter ended June 30,
2023.
The conference call will be made available in
the Investors section of PWP’s website at
https://investors.pwpartners.com/.
The conference call can also be accessed by the
following dial-in information:
- Domestic: (800) 225-9448
- International: (203) 518-9708
- Conference ID: PWPQ223
Replay
A replay of the call will also be available two
hours after the live call through August 10, 2023. To access the
replay, dial (800) 839-3617 (Domestic) or (402) 220-2975
(International). The replay can also be accessed on the investors
section of PWP’s website at https://investors.pwpartners.com/.
About PWP
Perella Weinberg is a leading global independent
advisory firm, providing strategic and financial advice to a broad
client base, including corporations, institutions, governments,
sovereign wealth funds and the financial sponsor community. The
firm offers a wide range of advisory services to clients in the
most active industry sectors and global markets. With approximately
650 employees, PWP currently maintains offices in New York, London,
Houston, San Francisco, Paris, Los Angeles, Chicago, Calgary,
Denver, and Munich. The financial information of PWP herein refers
to the business operations of PWP Holdings LP and Subsidiaries.
Contacts
For Perella Weinberg Investor Relations:
investors@pwpartners.comFor Perella Weinberg Media:
media@pwpartners.com
Non-GAAP Financial Measures
In addition to financial measures presented in
accordance with GAAP, we monitor certain non-GAAP financial
measures to manage our business, make planning decisions, evaluate
our performance and allocate resources. We believe that these
non-GAAP financial measures are key financial indicators of our
business performance over the long term and provide useful
information regarding whether cash provided by operating activities
is sufficient to maintain and grow our business. We believe that
the methodology for determining these non-GAAP financial measures
can provide useful supplemental information to help investors
better understand the economics of our platform.
These non-GAAP financial measures have
limitations as analytical tools and should not be considered in
isolation from, or as a substitute for, the analysis of other GAAP
financial measures. These non-GAAP financial measures are not
universally consistent calculations, limiting their usefulness as
comparative measures. Other companies may calculate similarly
titled financial measures differently. Additionally, these non-GAAP
financial measures are not measurements of financial performance or
liquidity under GAAP. In order to facilitate a clear understanding
of our consolidated historical operating results, you should
examine our non-GAAP financial measures in conjunction with our
historical consolidated financial statements and notes thereto
included elsewhere in this press release.
Management compensates for the inherent
limitations associated with using these non-GAAP financial measures
through disclosure of such limitations, presentation of our
financial statements in accordance with GAAP and reconciliation of
such non-GAAP financial measures to the most directly comparable
GAAP financial measures. See “Non-GAAP Financial Measures” and the
tables at the end of this release for an explanation of the
adjustments and reconciliations to the comparable GAAP numbers.
Cautionary Statement Regarding Forward Looking
Statements
Certain statements made in this press release,
and oral statements made from time to time by representatives of
PWP are “forward-looking statements” within the meaning of the
federal securities laws, including the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Statements regarding the expectations regarding
the combined business are “forward looking statements.” In
addition, words such as “estimates,” “projected,” “expects,”
“estimated,” “anticipates,” “forecasts,” “plans,” “intends,”
“believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,”
“target,” “goal,” “objective,” “outlook” and variations of these
words or similar expressions (or the negative versions of such
words or expressions) are intended to identify forward-looking
statements. These forward-looking statements are not guarantees of
future performance, conditions or results, and involve a number of
known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside the control of the
parties, that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking
statements.
Important factors, among others, that may affect
actual results or outcomes include (but are not limited to): global
economic, business and market conditions; the Company’s dependence
on and ability to retain employees; the Company’s ability to
successfully identify, recruit and develop talent; conditions
impacting the corporate advisory industry; the Firm’s dependence on
its fee-paying clients and fluctuating revenues from its
non-exclusive, engagement-by-engagement business model; the high
volatility of the Company’s revenues as a result of its reliance on
advisory fees that are largely contingent on the completion of
events which may be out of its control; the Company’s ability to
appropriately manage conflicts of interest and tax and other
regulatory factors relevant to the Company’s business, including
actual, potential or perceived conflicts of interest and other
factors that may damage its business and reputation; the Company’s
successful formulation and execution of its business and growth
strategies; substantial litigation risks in the financial services
industry; cybersecurity and other operational risks; assumptions
relating to the Company’s operations, financial results, financial
condition, business prospects, growth strategy and liquidity;
extensive regulation of the corporate advisory industry and U.S.
and foreign regulatory developments relating to, among other
things, financial institutions and markets, government oversight,
fiscal and tax policy and laws (including the treatment of carried
interest); and other risks and uncertainties described under “Part
I—Item 1A. Risk Factors” in our Annual Report on Form 10-K.
The forward-looking statements in this press
release and oral statements made from time to time by
representatives of PWP are based on current expectations and
beliefs concerning future developments and their potential effects
on the Company. There can be no assurance that future developments
affecting the Company will be those that the Company has
anticipated. These risks and uncertainties include, but are not
limited to, those factors described in the section entitled “Risk
Factors” in our Annual Report on Form 10-K filed with the SEC on
February 28, 2023 and the other documents filed by the Firm from
time to time with the SEC. The Company undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws.
Consolidated Statements of Operations
(Unaudited)(Dollars in Thousands, Except Per Share
Amounts) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
165,545 |
|
|
$ |
151,104 |
|
|
$ |
296,971 |
|
|
$ |
302,980 |
|
Expenses |
|
|
|
|
|
|
|
Compensation and benefits |
|
106,216 |
|
|
|
90,587 |
|
|
|
176,179 |
|
|
|
177,832 |
|
Equity-based compensation |
|
42,212 |
|
|
|
36,427 |
|
|
|
89,883 |
|
|
|
77,317 |
|
Total compensation and benefits |
|
148,428 |
|
|
|
127,014 |
|
|
|
266,062 |
|
|
|
255,149 |
|
Professional fees |
|
8,737 |
|
|
|
7,419 |
|
|
|
16,290 |
|
|
|
17,722 |
|
Technology and infrastructure |
|
9,293 |
|
|
|
7,521 |
|
|
|
17,805 |
|
|
|
15,077 |
|
Rent and occupancy |
|
6,678 |
|
|
|
5,378 |
|
|
|
14,092 |
|
|
|
11,107 |
|
Travel and related expenses |
|
4,726 |
|
|
|
3,641 |
|
|
|
9,500 |
|
|
|
5,935 |
|
General, administrative and other expenses |
|
5,796 |
|
|
|
6,491 |
|
|
|
11,190 |
|
|
|
11,766 |
|
Depreciation and amortization |
|
3,639 |
|
|
|
2,653 |
|
|
|
6,474 |
|
|
|
5,596 |
|
Total expenses |
|
187,297 |
|
|
|
160,117 |
|
|
|
341,413 |
|
|
|
322,352 |
|
Operating income
(loss) |
|
(21,752 |
) |
|
|
(9,013 |
) |
|
|
(44,442 |
) |
|
|
(19,372 |
) |
Non-operating income
(expenses) |
|
|
|
|
|
|
|
Related party income |
|
276 |
|
|
|
950 |
|
|
|
549 |
|
|
|
1,508 |
|
Other income (expense) |
|
(1,337 |
) |
|
|
3,776 |
|
|
|
(1,054 |
) |
|
|
5,619 |
|
Change in fair value of warrant liabilities |
|
— |
|
|
|
10,094 |
|
|
|
— |
|
|
|
22,100 |
|
Total non-operating income (expenses) |
|
(1,061 |
) |
|
|
14,820 |
|
|
|
(505 |
) |
|
|
29,227 |
|
Income (loss) before
income taxes |
|
(22,813 |
) |
|
|
5,807 |
|
|
|
(44,947 |
) |
|
|
9,855 |
|
Income tax expense (benefit) |
|
(4,543 |
) |
|
|
3,141 |
|
|
|
743 |
|
|
|
6,137 |
|
Net income (loss) |
|
(18,270 |
) |
|
|
2,666 |
|
|
|
(45,690 |
) |
|
|
3,718 |
|
Less: Net income
(loss) attributable to non-controlling interests |
|
(18,629 |
) |
|
|
(6,599 |
) |
|
|
(40,926 |
) |
|
|
(14,441 |
) |
Net income (loss)
attributable to Perella Weinberg Partners |
$ |
359 |
|
|
$ |
9,265 |
|
|
$ |
(4,764 |
) |
|
$ |
18,159 |
|
Net income (loss) per
share attributable to Class A common shareholders |
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.21 |
|
|
$ |
(0.11 |
) |
|
$ |
0.40 |
|
Diluted |
$ |
(0.19 |
) |
|
$ |
0.00 |
|
|
$ |
(0.56 |
) |
|
$ |
(0.01 |
) |
Weighted-average
shares of Class A common stock outstanding |
|
|
|
|
|
|
|
Basic |
|
42,743,611 |
|
|
|
44,584,181 |
|
|
|
42,531,895 |
|
|
|
45,247,373 |
|
Diluted |
|
86,521,626 |
|
|
|
90,688,871 |
|
|
|
86,566,075 |
|
|
|
91,953,077 |
|
U.S. GAAP Reconciliation of Adjusted Results
(Unaudited)(Dollars in Thousands, Except Per Share
Amounts) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total compensation and benefits—GAAP |
$ |
148,428 |
|
|
$ |
127,014 |
|
|
$ |
266,062 |
|
|
$ |
255,149 |
|
Equity-based compensation not
dilutive to investors in PWP or PWP OpCo(1) |
|
(18,269 |
) |
|
|
(18,525 |
) |
|
|
(38,603 |
) |
|
|
(37,235 |
) |
Public company transaction
related incentives(2) |
|
(11,491 |
) |
|
|
(11,726 |
) |
|
|
(23,383 |
) |
|
|
(23,950 |
) |
Business realignment costs(3) |
|
(5,105 |
) |
|
|
— |
|
|
|
(5,105 |
) |
|
|
— |
|
Adjusted total compensation and benefits |
$ |
113,563 |
|
|
$ |
96,763 |
|
|
$ |
198,971 |
|
|
$ |
193,964 |
|
|
|
|
|
|
|
|
|
Non-compensation
expense—GAAP |
$ |
38,869 |
|
|
$ |
33,103 |
|
|
$ |
75,351 |
|
|
$ |
67,203 |
|
TPH business combination
related expenses(4) |
|
(1,645 |
) |
|
|
(1,645 |
) |
|
|
(3,290 |
) |
|
|
(3,290 |
) |
Business Combination
transaction expenses(5) |
|
(840 |
) |
|
|
(302 |
) |
|
|
(1,165 |
) |
|
|
(589 |
) |
Warrant
Exchange transaction expenses(6) |
|
— |
|
|
|
(125 |
) |
|
|
— |
|
|
|
(125 |
) |
Adjusted non-compensation expense(7) |
$ |
36,384 |
|
|
$ |
31,031 |
|
|
$ |
70,896 |
|
|
$ |
63,199 |
|
|
|
|
|
|
|
|
|
Operating income
(loss)—GAAP |
$ |
(21,752 |
) |
|
$ |
(9,013 |
) |
|
$ |
(44,442 |
) |
|
$ |
(19,372 |
) |
Equity-based compensation not
dilutive to investors in PWP or PWP OpCo(1) |
|
18,269 |
|
|
|
18,525 |
|
|
|
38,603 |
|
|
|
37,235 |
|
Public company transaction
related incentives(2) |
|
11,491 |
|
|
|
11,726 |
|
|
|
23,383 |
|
|
|
23,950 |
|
Business realignment
costs(3) |
|
5,105 |
|
|
|
— |
|
|
|
5,105 |
|
|
|
— |
|
TPH business combination
related expenses(4) |
|
1,645 |
|
|
|
1,645 |
|
|
|
3,290 |
|
|
|
3,290 |
|
Business Combination
transaction expenses(5) |
|
840 |
|
|
|
302 |
|
|
|
1,165 |
|
|
|
589 |
|
Warrant
Exchange transaction expenses(6) |
|
— |
|
|
|
125 |
|
|
|
— |
|
|
|
125 |
|
Adjusted operating income (loss) |
$ |
15,598 |
|
|
$ |
23,310 |
|
|
$ |
27,104 |
|
|
$ |
45,817 |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes—GAAP |
$ |
(22,813 |
) |
|
$ |
5,807 |
|
|
$ |
(44,947 |
) |
|
$ |
9,855 |
|
Equity-based compensation not
dilutive to investors in PWP or PWP OpCo(1) |
|
18,269 |
|
|
|
18,525 |
|
|
|
38,603 |
|
|
|
37,235 |
|
Public company transaction
related incentives(2) |
|
11,491 |
|
|
|
11,726 |
|
|
|
23,383 |
|
|
|
23,950 |
|
Business realignment
costs(3) |
|
5,105 |
|
|
|
— |
|
|
|
5,105 |
|
|
|
— |
|
TPH business combination
related expenses(4) |
|
1,645 |
|
|
|
1,645 |
|
|
|
3,290 |
|
|
|
3,290 |
|
Business Combination
transaction expenses(5) |
|
840 |
|
|
|
302 |
|
|
|
1,165 |
|
|
|
589 |
|
Warrant Exchange transaction
expenses(6) |
|
— |
|
|
|
125 |
|
|
|
— |
|
|
|
125 |
|
Adjustments to non-operating
income (expenses)(8) |
|
1,401 |
|
|
|
(10,057 |
) |
|
|
1,438 |
|
|
|
(22,026 |
) |
Adjusted income (loss) before income taxes |
$ |
15,938 |
|
|
$ |
28,073 |
|
|
$ |
28,037 |
|
|
$ |
53,018 |
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)—GAAP |
$ |
(4,543 |
) |
|
$ |
3,141 |
|
|
$ |
743 |
|
|
$ |
6,137 |
|
Tax
impact of non-GAAP adjustments(9) |
|
4,962 |
|
|
|
1,811 |
|
|
|
1,884 |
|
|
|
3,253 |
|
Adjusted income tax expense (benefit) |
$ |
419 |
|
|
$ |
4,952 |
|
|
$ |
2,627 |
|
|
$ |
9,390 |
|
|
|
|
|
|
|
|
|
Net income
(loss)—GAAP |
$ |
(18,270 |
) |
|
$ |
2,666 |
|
|
$ |
(45,690 |
) |
|
$ |
3,718 |
|
Equity-based compensation not
dilutive to investors in PWP or PWP OpCo(1) |
|
18,269 |
|
|
|
18,525 |
|
|
|
38,603 |
|
|
|
37,235 |
|
Public company transaction
related incentives(2) |
|
11,491 |
|
|
|
11,726 |
|
|
|
23,383 |
|
|
|
23,950 |
|
Business realignment
costs(3) |
|
5,105 |
|
|
|
— |
|
|
|
5,105 |
|
|
|
— |
|
TPH business combination
related expenses(4) |
|
1,645 |
|
|
|
1,645 |
|
|
|
3,290 |
|
|
|
3,290 |
|
Business Combination
transaction expenses(5) |
|
840 |
|
|
|
302 |
|
|
|
1,165 |
|
|
|
589 |
|
Warrant Exchange transaction
expenses(6) |
|
— |
|
|
|
125 |
|
|
|
— |
|
|
|
125 |
|
Adjustments to non-operating
income (expenses)(8) |
|
1,401 |
|
|
|
(10,057 |
) |
|
|
1,438 |
|
|
|
(22,026 |
) |
Tax
impact of non-GAAP adjustments(9) |
|
(4,962 |
) |
|
|
(1,811 |
) |
|
|
(1,884 |
) |
|
|
(3,253 |
) |
Adjusted net income (loss) |
$ |
15,519 |
|
|
$ |
23,121 |
|
|
$ |
25,410 |
|
|
$ |
43,628 |
|
|
|
|
|
|
|
|
|
Less: Adjusted income tax
expense (benefit) |
$ |
(419 |
) |
|
$ |
(4,952 |
) |
|
|
(2,627 |
) |
|
|
(9,390 |
) |
Add:
If-converted tax impact(10) |
|
2,483 |
|
|
|
8,004 |
|
|
|
6,268 |
|
|
|
15,561 |
|
Adjusted if-converted net income (loss) |
$ |
13,455 |
|
|
$ |
20,069 |
|
|
$ |
21,769 |
|
|
$ |
37,457 |
|
|
|
|
|
|
|
|
|
Weighted-average diluted
shares of Class A common stock outstanding |
|
86,521,626 |
|
|
|
90,688,871 |
|
|
|
86,566,075 |
|
|
|
91,953,077 |
|
Weighted average number of incremental shares from assumed vesting
of RSUs and PSUs(11) |
|
275,508 |
|
|
|
41,654 |
|
|
|
1,001,289 |
|
|
|
168,435 |
|
Weighted-average adjusted diluted shares of Class A common stock
outstanding |
|
86,797,134 |
|
|
|
90,730,525 |
|
|
|
87,567,364 |
|
|
|
92,121,512 |
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per
Class A share—diluted, if—converted |
$ |
0.16 |
|
|
$ |
0.22 |
|
|
$ |
0.25 |
|
|
$ |
0.41 |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
Key metrics: (a) |
|
|
|
|
|
GAAP operating income (loss)
margin |
(13.1)% |
(6.0)% |
|
(15.0)% |
(6.4)% |
Adjusted operating income
(loss) margin |
9.4 |
% |
15.4 |
% |
|
9.1 |
% |
15.1 |
% |
GAAP compensation ratio |
90 |
% |
84 |
% |
|
90 |
% |
84 |
% |
Adjusted compensation
ratio |
69 |
% |
64 |
% |
|
67 |
% |
64 |
% |
GAAP effective tax rate |
20 |
% |
54 |
% |
|
(2)% |
62 |
% |
Adjusted if-converted
effective tax rate |
16 |
% |
29 |
% |
|
22 |
% |
29 |
% |
|
|
|
|
|
|
(a)
Reconciliations of key metrics from U.S. GAAP to Adjusted results
are a derivative of the reconciliation of their components
above. |
|
Notes to U.S. GAAP Reconciliation of Adjusted
Results:
(1) |
Equity-based compensation not dilutive to investors in PWP or PWP
Holdings LP (“PWP OpCo”) includes amortization of legacy awards
granted to certain partners prior to the Business Combination and
PWP Professional Partners LP (“Professional Partners”) alignment
capital units and value capital units awards. The vesting of these
awards does not dilute PWP shareholders relative to Professional
Partners as Professional Partners’ interest in PWP OpCo does not
change as a result of granting those equity awards to its working
partners. |
|
|
(2) |
Public
company transaction related incentives includes equity-based
compensation for transaction-related restricted stock units
(“RSUs”) which are directly related to milestone events that were
part of the Business Combination process and reorganization. These
payments were outside of PWP’s normal and recurring bonus and
compensation processes. |
|
|
(3) |
During
the second quarter of 2023, we began a review of the business,
which will result in employee reductions in order to improve
compensation alignment and to provide greater flexibility to
advance strategic opportunities. Costs include separation and
transition benefits and the accelerated amortization (net of
forfeitures) of certain equity-based awards. Such amortization
includes $0.1 million for certain Professional Partners Awards
and $0.5 million for certain transaction-related RSUs, which
are excluded from Equity-based compensation not dilutive to
investors in PWP or PWP OpCo and Public company transaction related
incentives, respectively, for the three and six months ended
June 30, 2023. Currently, we are estimating $23 million of
total business realignment costs, including cash benefits and
non-cash accelerated amortization of equity-based awards, with
approximately $18 million expected to be incurred during the
second half of 2023. |
|
|
(4) |
On
November 30, 2016, we completed a business combination with Tudor,
Pickering, Holt & Co., LLC (TPH), an independent advisory firm
focused on the energy industry. The adjustment reflects the
amortization of intangible assets associated with the acquisition,
and such assets will be fully amortized by November 30, 2026. |
|
|
(5) |
Transaction costs that were expensed associated with the Business
Combination, including (i) equity-based vesting for
transaction-related RSUs issued to non-employees and (ii) costs
incurred in 2023 related to a potential future partnership
restructuring that was contemplated during the implementation of
the up-C structure at the time of the Business Combination. |
|
|
(6) |
Transaction costs that were expensed associated with the exchange
offer and solicitation relating to the Company’s outstanding
warrants, which the Company commenced on July 22, 2022. |
(7) |
See
reconciliation below for the components of the consolidated
statements of operations included in non-compensation expense—GAAP
as well as Adjusted non-compensation expense. |
|
|
(8) |
For the three and six months ended June 30, 2022, this
adjustment includes gains of $10.1 million and $22.1 million,
respectively, on the change in fair value of warrant liabilities,
which is non-cash and we believe not indicative of our core
performance. A minimal adjustment for the amortization of debt
discounts and issuance costs is also included for all periods as
well as a non-operating loss on investment of $1.4 million for the
three and six months ended June 30, 2023. |
|
|
(9) |
The non-GAAP tax expense represents the Company’s calculated
tax expense on adjusted non-GAAP income. It excludes the impact on
income taxes of certain transaction-related items and other items
not reflected in our adjusted non-GAAP results. It does not
represent the cash that the Company expects to pay for taxes in the
current periods. |
|
|
(10) |
The if-converted tax expense represents the Company's
calculated tax expense on adjusted non-GAAP income assuming the
exchange of all partnership units for PWP Class A common stock,
resulting in all of the Company’s income being subject to
corporate-level tax. |
|
|
(11) |
Assumed vesting of RSUs and performance restricted stock units
(“PSUs”) as calculated using the treasury stock method and to the
extent dilutive to Adjusted net income (loss) per Class A
share—diluted, if-converted. |
U.S. GAAP Reconciliation of Adjusted Results
(Unaudited)(Dollars in Thousands) |
|
|
Three Months Ended June 30, 2023 |
|
U.S. GAAP |
|
Adjustments |
|
Adjusted |
Professional fees |
$ |
8,737 |
|
$ |
(840 |
) |
(1) |
$ |
7,897 |
Technology and
infrastructure |
|
9,293 |
|
|
— |
|
|
|
9,293 |
Rent and occupancy |
|
6,678 |
|
|
— |
|
|
|
6,678 |
Travel and related
expenses |
|
4,726 |
|
|
— |
|
|
|
4,726 |
General, administrative and
other expenses |
|
5,796 |
|
|
— |
|
|
|
5,796 |
Depreciation and amortization |
|
3,639 |
|
|
(1,645 |
) |
(2) |
|
1,994 |
Non-compensation expense |
$ |
38,869 |
|
$ |
(2,485 |
) |
|
$ |
36,384 |
|
|
|
|
|
|
|
Three Months Ended June 30, 2022 |
|
U.S. GAAP |
|
Adjustments |
|
Adjusted |
Professional fees |
$ |
7,419 |
|
$ |
(427 |
) |
(1) |
$ |
6,992 |
Technology and
infrastructure |
|
7,521 |
|
|
— |
|
|
|
7,521 |
Rent and occupancy |
|
5,378 |
|
|
— |
|
|
|
5,378 |
Travel and related
expenses |
|
3,641 |
|
|
— |
|
|
|
3,641 |
General, administrative and
other expenses |
|
6,491 |
|
|
— |
|
|
|
6,491 |
Depreciation and amortization |
|
2,653 |
|
|
(1,645 |
) |
(2) |
|
1,008 |
Non-compensation expense |
$ |
33,103 |
|
$ |
(2,072 |
) |
|
$ |
31,031 |
|
|
|
|
|
|
|
Six Months Ended June 30, 2023 |
|
U.S. GAAP |
|
Adjustments |
|
Adjusted |
Professional fees |
$ |
16,290 |
|
$ |
(1,165 |
) |
(1) |
$ |
15,125 |
Technology and
infrastructure |
|
17,805 |
|
|
— |
|
|
|
17,805 |
Rent and occupancy |
|
14,092 |
|
|
— |
|
|
|
14,092 |
Travel and related
expenses |
|
9,500 |
|
|
— |
|
|
|
9,500 |
General, administrative and
other expenses |
|
11,190 |
|
|
— |
|
|
|
11,190 |
Depreciation and amortization |
|
6,474 |
|
|
(3,290 |
) |
(2) |
|
3,184 |
Non-compensation expense |
$ |
75,351 |
|
$ |
(4,455 |
) |
|
$ |
70,896 |
|
|
|
|
|
|
|
Six Months Ended June 30, 2022 |
|
U.S. GAAP |
|
Adjustments |
|
Adjusted |
Professional fees |
$ |
17,722 |
|
$ |
(714 |
) |
(1) |
$ |
17,008 |
Technology and
infrastructure |
|
15,077 |
|
|
— |
|
|
|
15,077 |
Rent and occupancy |
|
11,107 |
|
|
— |
|
|
|
11,107 |
Travel and related
expenses |
|
5,935 |
|
|
— |
|
|
|
5,935 |
General, administrative and
other expenses |
|
11,766 |
|
|
— |
|
|
|
11,766 |
Depreciation and amortization |
|
5,596 |
|
|
(3,290 |
) |
(2) |
|
2,306 |
Non-compensation expense |
$ |
67,203 |
|
$ |
(4,004 |
) |
|
$ |
63,199 |
|
|
|
|
|
|
(1) Reflects an adjustment to exclude transaction costs
associated with the Business Combination.
(2) Reflects an adjustment to exclude the amortization of
intangible assets related to the TPH business combination.
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