Perella Weinberg Partners

Good morning and welcome to the Perella Weinberg Partners Third Quarter 2022 Earnings Conference Call. Currently, all callers have been placed in a listen-only mode, and following the management's prepared remarks, the call will be open for your questions. If you would like to ask a question at any time, please press star 1 on your telephone keypad. If you would like to remove yourself from the queue, please press star 2. At any time, if you should need operator assistance, please press star zero. Please be advised that today's call is being recorded. I will now turn the call over to Taylor Reinhart, head of investor relations.

You may begin. Thank you, operator, and welcome to our third quarter 2022 earnings call. Joining me today are Peter Weinberg, chief executive officer, Andrew Bednar, co-president, and Gary Brancic, chief financial officer. The replay of this call will be available through the investor's page of the company's website approximately two hours following the conclusion of this live broadcast through November 10, 2022. For those who listened to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, November 3, 2022, and have not been updated subsequent to the initial earnings call. Before we begin, I'd like to note that this call may contain forward-looking statements, including PWP's expectations of future financial and business performance and conditions and industry outlook. Forward-looking statements are inherently subject to risk, uncertainties, and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance. Please refer to PWP's most recent SEC filings for a discussion of certain of these risks and uncertainties. The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statements. During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. PWP has reconciled these items to the most comparable gap measures in the press release files of today's Form 8K, which can be found on the company's website. I will now turn the call over to Peter Weinberg to discuss our results.

Good morning, and thank you all for joining us on our third quarter 2022 earnings call. This morning, we reported third quarter revenues of $145 million, adjusted pre-tax income of $31 million, and adjusted EPS of 26 cents per share. Particularly given the current environment, we are very pleased with the firm's performance, not only in terms of year-to-day quarterly revenue stability, but also in terms of the significant client activity across our global platform. Today, I would like to discuss the current market conditions, the performance of the firm, and how we are positioned for the future. As it relates to today's macro environment, we are certainly not out of the woods yet. Structural inflation is causing a significant increase in interest rates around the world. Both prices and new issues in the debt markets have declined significantly, particularly among more leveraged credits Equity markets have followed suit. New issues have slowed to a trickle. All of these factors, plus macroeconomic and geopolitical sensitivities around the world, have inflicted a blow to confidence amongst corporate leadership and investors. M&A is a symptom of that being down more than 30% this year. Capital solutions advisory is a bright spot in our industry, as it typically is when economies and markets are stressed. More on that in a moment. Within the context of this environment, there are two overarching themes for our firm. The first being that complexity and stress create an enormous need for the type of advice that we provide. Unlike prior down cycles, and I count eight since I got to Wall Street years ago, we find ourselves extremely busy and are actively engaged with clients across the business. Our gross deal pipeline has been broadly stable year to date and can be characterized as extremely full. But given elevated completion risk and a longer timeline to announcement and close, our announced backlog is experiencing a step down as fee events get pushed out. As it relates to the areas of activity, we're seeing broad and healthy dialogue across our coverage and product areas. We are especially encouraged by conversations in areas of recent investment, which are being driven by partners who are not fully ramped on our platform. Today, more than a third of our partners have been in their current position for less than three years. The second theme is something that you've heard us say before. We are undaunted in our long-term plan to grow and enhance our revenues and profitability, our brand, our product suite, and our global footprint. We continue to hire and promote partners and managing directors and are investing in talent in a disciplined manner. we do not feel market share constrained, either in our client businesses or in recruiting senior people from other firms, quite the opposite. We continue to see great opportunity in both of these growth engines in spite of the current environment. In addition to building out our traditional M&A franchise in areas of strategic significance, Our capital solutions advisory business, which includes restructuring and liability management, capital markets advisory, and private capital placement, has been an investment area for the firm. In this environment, we are having strategic conversations with nearly all of our clients on capital matters. and we are seeing an increase in pitches and engagement letters in restructuring and liability management, which, depending on the timing of a recovery, is likely to show results in 2023. While I don't want to be in the business of predicting the future, I do want to convey how we're thinking about and planning for it. While most would agree that the market will bottom at some point, the timing of a recovery in the financial markets in new issue financing and in M&A activity is unknown, and the precise catalyst is, of course, not clear. We are in a slowing economic environment, and we expect that rate rises will continue, at least in the near term, not only at the direction of the Fed, but from central banks around the world, That said, CEOs and the public equity and credit markets, for that matter, will quickly change their sentiment as conditions improve. We anticipate the return of confidence long before economic statistics see meaningful improvement, and we believe that the resulting increase in visibility and predictability will translate into more favorable conditions. We are focused on being ready for that across our businesses whenever it occurs. With no debt and a strong cash position, we're poised to continue investing in our business and serving our clients in this extreme time of need. And again, on continuing to deliver on our plan put forward when we became a public company, we are focused on returning capital to shareholders and simplifying the firm's capital structure. Since the end of March, we have utilized approximately 60% of our $100 million repurchase authorization and continue to see value in our stock. The successful completion of our warrant exchange eliminated the future potential dilutive impact of the 7.9 million warrants, which were previously outstanding. Lastly, I want to say a few things about the leadership transition that we announced in late September regarding Andrew Bednar succeeding me as CEO come January 1st. I have known Andrew for 25 years, having met at Goldman Sachs in the early days. In addition to Andrew's exceptional skills as an investment banker, he has proven to be an excellent manager and leader as co-president of the firm for the last two and a half years. The news of Andrew's ascension has been very well received by our team and clients alike, and justly so. As a shareholder, a founder, a continuing partner as chairman, I believe the firm has never been better positioned than it is today. On that note, I will turn it over to Gary to discuss our results in more detail.