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spk09: Good morning and welcome to the Piper Sandler Company's conference call to discuss the financial results for the second quarter of 2022. During the question and answer session, securities industry professionals may ask questions of management. The company has asked that I remind you that statements on this call that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements that involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's earnings release and reports on file with the SEC, which are available on the company's website at pipersandler.com and on the SEC website at sec.gov. This call will also include statements regarding certain non-GAAP financial measures. The non-GAAP measures should be considered in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. Please refer to the company's earnings release issued today for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure. The earnings release is available on the Investor Relations page of the company's website and at the SEC website. As a reminder, this call is being recorded. And now, I'd like to turn the call over to Mr. Chad Abraham. Mr. Abraham, you may begin your call.
spk07: Good morning, and thank you for joining us.
spk01: I am here with Deb Shoneman, our President, and Tim Carter, our CFO. We will go through our prepared remarks and then open up the call for questions. The firm delivered solid performance during the quarter, and we continue to invest in acquisitions to expand our areas of focus and accelerate long-term growth. Our business proved resilient against a challenging backdrop, reflecting the benefits of a diversified business model. Our strategy is focused around growing our advisory business through sector and product expansion, as well as continuing to add scale and increasing market share in our financing and brokerage businesses through market cycles. While the macro environment remains uncertain, I am confident about our position in the market and our ability to execute on our growth strategy. To that point, in June, we closed on our acquisition of Stanford Partners, a European consumer M&A boutique with a focus on food and beverage. Stanford is highly complementary to our existing strong franchise in food and beverage and will increase our ability to serve clients both domestically and internationally. In addition, on July 6th, we announced the pending acquisition of DBO Partners, a technology investment banking firm. The acquisition is expected to close during the fourth quarter of 2022 and will roughly double our technology practice to over 50 professionals on a combined basis. The DBO team adds exceptional talent and enhanced scale to our tech practice. The acquisition will elevate our franchise by adding new sectors, reaching more clients, and expanding our market share. DBO brings a strong track record of working with market-leading clients and enhances our large-cap credentials as well as our brand in both the corporate and financial sponsor world. In addition, DBO's general partner advisory practice provides us with an additional valuable capability to offer our financial sponsor clients. In turn, we will provide DBO access to our equity and debt capital markets capabilities, as well as provide DBO with connectivity to the hundreds of private equity clients we do business with. Both transactions are consistent with the strategic goals we've articulated previously, namely to grow our M&A business in technology and further expand our European business. Focusing in on our financial results, during the second quarter of 2022, we generated adjusted net revenues of $346 million, a 17.5% operating margin and adjusted diluted EPS of $2.47. During the first half of 2022, we recorded adjusted net revenues of $707 million, a 19.2% operating margin, and adjusted diluted EPS of $5.59. Although lower compared to the record prior year period, we delivered solid performance given the challenging and complicated macroeconomic environment. Next, let me review our corporate investment banking business, beginning with advisory services. Advisory revenues of $170 million during the second quarter of 2022 declined 20% sequentially and 32% from the exceptional year-ago quarter. Market volatility has resulted in delayed transaction closings, which impacted Q2 results. Performance during the quarter was led by our financial services group, which advised on three of the five largest U.S. bank M&A transactions that closed during the quarter. And we remain the number one advisor to U.S. banks based on the number of announced M&A deals during both the second quarter and the first half of 2022. In addition, our energy and power team has been capitalizing on renewed interest and increased activity in the industry, driving strong results during the quarter. More broadly, Piper Sandler was the number two advisor for USM&A deals under $1 billion, based on the number of announced transactions during both the second quarter and the first half of this year. Our advisory pipelines across verticals remain strong. However, current macroeconomic conditions have introduced a level of uncertainty in our outlook that we have not experienced in the past 18 months. During the quarter, we began to experience more deals slipping into the second half of this year and a limited number of deals that died. Longer deal timelines is a trend we expect to continue in the second half of 2022. Turning to corporate financing, we generated $29 million of financing revenues during the second quarter. Although the equity capital markets remained largely shut down, we improved on a sequential basis as we underwrote 11 equity deals as well as several preferred and debt capital raises for financial services companies. Turning to investment banking managing director headcount, we finished the quarter at 153 managing directors. representing our 11th consecutive quarter of managing director growth on a net basis. We had an active quarter from a recruiting perspective, as we added two MDs to strengthen our restructuring practice, as well as expanded our technology and diversified industrials and services groups. As we have experienced in the past, during more challenging market conditions, we have had success strengthening our platform. In the short term, This can impact current results, but as we have communicated, our focus remains on growing the franchise long-term to derive results for our shareholders. Our success and momentum continue to resonate in the marketplace. Both our recruiting efforts and the development of our own talent continue to be priorities. While the second half of the year remains difficult to predict, I remain confident in our ability to execute our plan, strengthen our competitive position, and achieve long-term growth. With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.
spk08: Thanks, Chad. I'll begin with an update on our public finance business. We generated $35 million of municipal financing revenues, up 29% from the first quarter, reflecting strong absolute and relative performance as we've gained market share on a year-to-date basis. Overall market issuance during the quarter was slightly north of $100 billion, down approximately 12% from a year ago. Higher nominal interest rates and increased interest rate volatility resulted in less refinancing activity, which contributed to the year-over-year decline in issuance. The diversification of our public finance business, both in the governmental space as well as specialty sectors, continues to drive benefits. We generated solid activity across our governmental and specialty businesses during the quarter. Interest rate volatility and municipal fund outflows have made pricing and distributing deals more challenging. However, our strong distribution capabilities and expertise in the marketplace are allowing for strong results in a difficult market. Looking ahead, we expect the second half of 2022 to be similar to the first half. Our backlog of specialty sector financings is good, and we could experience upside if market conditions allow for execution of this pipeline. Turning to equity brokerage. Equity markets continue to experience elevated volatility and volumes during the second quarter. Our equity brokerage business generated record quarterly revenues of $51 million, benefiting from a full quarter of Cornerstone macro on our platform. We're seeing strong collaboration between our fundamental analysts and our macro analysts from Cornerstone, bringing a differentiated view to our clients. With one of the broadest account coverages on the street, we see opportunity to cross-sell and deepen client relationships. Given equity markets are down approximately 20% year to date, we expect the 2022 fee pool for research and trading services to also be down. We believe the investments we have made and the strength of our enhanced platform will drive market share gains and offset these headwinds. We are seeing early signs of impressive client ranking votes, which is an indicator of enhanced market penetration, relevance to clients, and ultimately increased market share. From an outlook perspective, we expect to experience the typical summer slowdown during the third quarter of 2022 and rebound during the fourth quarter. Lastly, turning to our fixed income business. For the second quarter of 2022, we generated fixed income revenues of $54 million down modestly compared to the solid first quarter of this year. The market experienced volatile interest rates during the second quarter as market participants digested the impact of inflation, tightening monetary policy, and the economic outlook. Client activity was strongest among our municipal-centric clients as fund redemptions as well as higher yields and relative values in the municipal asset class drove secondary activity. Our depository client activity was more muted during the quarter as volatility moved clients to the sidelines. The diversification of our fixed income business, both in clients and products, strengthens our ability to deliver consistent results across market environments. Now, I will turn the call over to Tim to review our financial results and provide an update on capital use.
spk02: Thanks, Deb. As a reminder, my comments will be focused on our adjusted non-GAAP financial results. We generated net revenues of $346 million for the second quarter of 2022, driven by solid performances across most of our businesses. Net revenues decreased 4% from the first quarter of 2022 due to lower advisory revenues as market headwinds adversely impacted transaction timing and deal risk in our M&A business. Partially offsetting this sequential decline in advisory, we experienced strong municipal financing and institutional brokerage revenues, as well as improved corporate financing activity. Net revenues decreased 30% from the exceptionally strong prior year quarter due to lower advisory revenues and historically low equity capital markets activity. The diversity of our franchise and the investments we have made over the last few years continue to demonstrate the durability of our platform across market environments. Net revenues for the first half of 2022 totaled $707 million, down from the first half of last year, which benefited from record corporate financing activity. Turning to operating expenses and margin. Our compensation ratio was 62.7% for the second quarter of 2022, 20 basis points higher compared to the sequential quarter, resulting from lower revenues and a continued focus on investing in the platform. On a year-to-date basis, our compensation ratio was 62.6%, We continue to manage compensation while considering absolute revenue levels, mix of business, and investments as we remain focused on growth. Based on our current outlook and pipeline for growth opportunities, we expect our compensation ratio to be near or slightly above this level on a full year basis. Non-compensation expenses, excluding reimbursed deal expenses, for the second quarter of 2022 were $60 million. an increase of 9% compared to the first quarter of 2022 and 23% compared to the second quarter of last year. The increase relative to the prior quarters primarily resulted from an acceleration in travel activity and overall inflationary impacts on travel costs. We also incurred higher professional fees associated with increased recruiting and hiring within investment banking. With travel returning to pre-pandemic levels, we expect non-compensation costs to be near these levels going forward. During the second quarter, we generated operating income of $61 million and an operating margin of 17.5%. For the first half of 2022, operating income totaled $136 million, which resulted in an operating margin of 19.2%. Our adjusted tax rate was 25.2% for the second quarter of 2022 and 24.1% for the first half of the year. which included a $5 million tax benefit related to restricted stock vesting at prices higher than the grant date price. Excluding this tax benefit, the adjusted tax rate for the first half of 2022 was 27.5%. We continue to expect our full-year adjusted tax rate will be within our targeted range of 26% to 28%, excluding the impact from stock vestings. During the second quarter of 2022, we generated net income of $44 million and diluted EPS of $2.47. For the first half of 2022, net income totaled $101 million and diluted EPS was $5.59. Let me finish with an update on capital. Our strong absolute performance has generated significant cash that we continue to deploy to drive shareholder returns. We repurchased approximately 418,000 shares, or $50 million, of common stock during the second quarter of 2022. And for the first half of this year, we have returned an aggregate of $254 million to shareholders through buybacks and dividends paid. In addition, today the Board approved a quarterly cash dividend of $0.60 per share to be paid on September 9th to shareholders of record as of the close of business on August 26th. We have also been active deploying capital during the first half of 2022 through the acquisitions of Cornerstone Macro and Stanford Partners. And with the pending acquisition of DBO Partners expected to close during the fourth quarter, 2022 is shaping up to be a successful year from an investment perspective. The diversification of our platform and durability of our business model continue to produce solid results despite tough markets. And overall, we are pleased with our first half results. We continue to make progress on our long-term growth strategy and remain confident in our ability to grow and deliver shareholder value over the long term. Thanks, and we can now open up the call for questions.
spk09: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off. to allow your signal to reach our equipment. Again, press star 1 to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions.
spk06: And we'll take our first question from James Yarrow with Goldman Sachs.
spk09: Please go ahead.
spk04: Hey, good morning, everyone, and thanks for taking my questions. Maybe if I just start with corporate financing, you saw I think stronger than expected results this quarter and the number of ECM issuance in particular were up quarter on quarter and the trends appear better than the broader industry. Maybe you could just talk about whether you think this reflects any sort of green shoots and whether you think you could build off this level in the back half of the year.
spk01: Thanks, James. I actually think it's probably just a function of really, really low levels in Q1. I mean, frankly, we're still operating at really low levels. For us, that corporate financing line is primarily two things. Obviously, we've got the ECM line. And in ECM, we definitely did a handful of more deals than we did in Q1. We had some stretches where we got some healthcare business done, I would say. That's sort of true today. This month as well, we did a healthcare financing this week. We've got a few others slated for August, but it's still pretty low levels. And then in the corporate financing line, we also have our DCM financing for financial services. And we still got quite a bit done in Q2. I think it's just relative to a very, very low Q1, still at low levels, you know, we still sort of expect this pace. And yeah, I mean, I would say relative to green shoots, specifically for our healthcare ECM business, we're definitely seeing the conversations pick up and the urgency to raise capital to pick up. And, you know, I think people's ability to wait is getting tougher. And then, you know, obviously the XBI and, you know, the biotech stocks have bounced quite a bit. So that helps. So We still expect pretty muted levels, but certainly could be better than the really low levels early in the year.
spk04: Okay, that makes a lot of sense. Somewhat encouraging. Maybe I could just touch on the advisory side in terms of your guidance. I know you talked about last quarter about the second half and advisory being stronger than the first half, and forgive me if I missed this in your prepared remarks, but do you still expect that to be true, or has the environment just become a little bit more challenging?
spk01: Yeah, I would say, you know, obviously we did the last call at the end of April, and things absolutely changed in May and June, and things got much tougher. I do think if you just look at our history as a company, nine of the last 10 years, our second half is better than first half. And, you know, certainly we'll see some pickup in Q4. But I think just given how tough, you know, May and June and July have been for advisory, you know, you could see an environment where it's closer to flat.
spk04: Okay, that makes a lot of sense. And then just one last quick one here, just on the restructuring. business. You've obviously, you know, continued to grow that this quarter. Maybe you can just talk about, you know, what the outlook is from here, and then if there's any sort of difference in activity on the traditional restructuring side relative to liability management.
spk01: Yeah, and again, just the reminder for us is we're coming off of a really low base. So, you know, even though, you know, industry levels are still pretty low for the first half We're definitely starting to see more volume, more new engagements. We'll see a pickup in revenue. We've added a couple more managing directors. We're still trying to build the team so, you know, at some point, you know, this becomes a more meaningful line to revenues. And we've definitely seen a pickup and, you know, we're excited about where this is headed. But for us as a total mix of advisory, you know, it's still relatively small.
spk03: Okay, makes sense. Thanks so much for taking my questions.
spk09: I'll take our next question from Devin Ryan with JMP Securities. Please go ahead.
spk07: Hey, good morning, everyone. How are you guys doing?
spk10: Hey, good.
spk07: Devin?
spk10: Good. Maybe coming back just to some of the commentary on the M&A advisory outlook, just kind of parse through a couple of the items here. So on one hand, the backlog sounds like it's in very good shape. On the other hand, there's just a lot more uncertainty. Deals are kind of moving slow and we're hearing that from everyone. So I think that's an industry dynamic. But maybe talk a little bit about what you think needs to change to create kind of the, or maybe reverse that elongation theme. You know, is it just the uncertainty in the macro and that's just still creating a wide bid ask spread between buyers and sellers? Are you seeing financing becoming an issue? I'm just trying to get a sense of how far in you think we are to the dislocation, because obviously at some point it's going to inflect here. And so just trying to think about whether maybe the pain is slowing down or we're still in a very uncertain moment today.
spk01: Yeah, I would say it's really a combination of a few things. You're definitely right. I mean, Backlog pipeline, I mean, you know, everybody measures it a little bit differently. If you look at just, you know, engagement letters signed, deals that have potential, things we're working on, yeah, you know, relative to other downturns, we still feel very good about that. The list is long. We have a lot of transactions. But, you know, from April to, you know, kind of today, you know, a lot of things we thought, you know, we're tracking well, closing, you know, not that many have died yet. but they're slower and the longer they're slower, the more you wonder if they're going to get done. So I think it's a combination of things. I think we definitely, on the private equity side, financing isn't shut down, but it's more difficult. And it's not just rates, but it's can you get one turn less of leverage? And in that case, that impacts that impacts pricing quite a bit and valuation, and it takes a little while for sellers to adjust to valuation. So my own view is we'll see this at least another few months, and certainly there's still lots of dry capital with private equity. I was at a big private equity event, a lot of senior managing partners of private equity funds, and You sort of had a mixed reaction a couple weeks ago. Some of them told me, hey, a third of us sort of are sitting on our hands, not doing transactions, sort of waiting till we see kind of what happens. Others are looking, but they might be looking more value-oriented than they had been in the past. Others are trying to take advantage of other people sitting on their hands to do transactions. So it's just all of that leads to just less activity. in the past, you know, these stretches haven't lasted crazy long time. So, you know, we certainly expect a pickup, but it's not like we have perfect visibility into when.
spk03: Okay. Thanks.
spk10: That's very helpful. And then maybe follow up here for Tim, just thinking about capital and capital allocation. So you guys have been, as you mentioned, very active on the investment front, which, you know, it's good to see. And between Stanford and DBO, which is even recently on the advisory side. Yeah. How should we think about the liquidity position accounting for, I know Stanford already closed, but then DBO as well. So kind of what that looks like and, and really what I'm getting at is maybe capacity beyond what's already announced to do either more M&A or capacity for buybacks. And then what your priority is at the moment, just given that, you know, I'm assuming maybe there's, lower expectation in the market for M&A where you can buy things for cheaper. On the flip side, your stock is a lot cheaper as well.
spk02: Yeah, Devin. I think we are excited about the fact that we've been able to be more active on the corporate development side. I think one piece I would maybe highlight along those lines in terms of how we're able to maybe generate capacity is related to the dividend and our range of 30% to 50%. I think We've been at the higher end of that range maybe the last year or so, but we've talked about when we're more active on corporate development, we may bring that down to the lower end. So that does provide some forward capacity if we pay at the lower end of that range. I think we will continue to, obviously, at the levels that we're at, generate cash that we can continue to deploy. So there will be capacity to continue to do some things. You know, we will continue to also think, you know, ahead here, you know, next October we've got the, you know, the second tranche of the note that's due at 125. So, you know, we want to be mindful around that as well. And then maybe, yeah, the last piece just, you know, in terms of, you know, buybacks, I mean, we have been more active, you know, over the first half of this year, you know, have bought back, you know, almost 1.1 million shares. You know, we've always talked about continuing to try to be opportunistic, but, you know, we might be a little bit more measured in terms of our pace on buybacks as we go forward here, again, given a little bit of the uncertainty, and continuing to want to prioritize corporate development. I think that, you know, that always is sort of top of our list to continue to grow the platform.
spk01: Yeah, and I would just add, Devin, I mean, we – You know, as we think about it, we've kind of always used these tools, the regular dividend, the special, the buyback, and, you know, investing in acquisitions. And we still sort of need all of them to deploy capital. I mean, as we've grown that top line over the last several years, we really haven't increased any need for our own capital to operate the business. So it's a matter of putting it to work. And I think Tim said it well, you know, because we, you know, we use some cash for Cornerstone, Stanford, we will for DBO this year. you know, will likely be at the lower end of the payout ratio, but still, frankly, need all of those tools to deploy capital. And, you know, with the stock down here, we'll, you know, we'll continue to lean on that, the buyback.
spk07: Yeah.
spk03: Okay.
spk07: Terrific.
spk10: And then how many managing directors are coming in with DBO once that deal closes?
spk01: Seven. Yeah, DBO, we're really excited about that. I mean, I think, you know, we've talked probably the top strategic priority when everybody keeps asking me is, you know, the undersized team we have in tech relative to healthcare, financials, energy, and our kind of place in the market. This is a big opportunity for us to sort of jumpstart, recruit more, add to the team with a real high-quality team. So, yeah, we added seven senior partners recently. in California, you know, over 20 people total to the team. And we're pretty excited about what it's going to do to our tech M&A practice.
spk07: All right, great. I'll leave it there. Thanks, everyone.
spk06: Thanks, Devin.
spk09: We'll take our next question from Stephen Chubak with Wolf Research. Please go ahead.
spk07: Hey, good morning, guys.
spk00: This is Brendan O'Brien filling in for Stephen. Hey, Brendan. So first on the advisory piece, obviously strong results in the first half within your bank M&A group. Some of those deals likely coming from last year, given the longer timeline for completion. But in the past, we've seen bank debt M&A tends to slow more dramatically in times of elevated stress. But at the same time, obviously default rates remain near historical lows and balance sheets appear to be healthy at the moment. How have dialogues been with financial institutions? Do you get a sense that they're willing to transact at this point? And even if we do not go into a recession, how do you anticipate higher rates will impact activity, given on the one hand, they'll be generating more cash, but also there will be potentially less need to generate scale?
spk01: Yeah. I would really say your opening commentary is true. We had a very strong first half in financial services. Some of that is related to long lead times for some of the depository deals and some of the larger deals. Frankly, we've seen pretty good announcements for us the last couple of months, but it's mostly in the smaller deal market, sort of the 100, 200, you know, we haven't seen a lot of the larger deals, but frankly, the pace of deals has been pretty good. So I think we feel good about that. There's no question the pace in larger deal market has changed. So I would say it's sort of the tale of two cities, depending on the size of the transaction. But your commentary is right. For certain folks, where the stocks are, where rates are will slow transactions. But over time, that should be quite positive. And then I would also say for our financial services business, we've really diversified it. This year, we're seeing, again, a good pickup in some of the things we're doing in asset management, insurance, some of our non-depository business. So since we closed Sandler a few years ago, that's really been a good growth area for us.
spk00: great great color thank you and then on a on the fixed income both on the brokerage and your public finance business the results there came in much better relative to some of your peers and so i was hoping you could unpack maybe some of the idiosyncratic factors about your business that led to this great resiliency and would you expect that to continue as the year progresses i guess based on On your comments that you expect the second half to be similar, you're not anticipating that typical seasonal build, but any color there you could provide is great.
spk08: Yeah, sure. Let me start with the municipal financing, public finance side of it. I'd really say that it's just the diversification of our business, not only in the governmental side geographically across the U.S., but also the breadth of the specialty sectors that we've built out over time. So Often we'll see different parts of the business performing better in certain environments, and that just tends to give us a more balanced business. And as we think about the outlook, as you noted in our commentary, it's been that we feel like the second half is probably similar to the first, and sort of look at that from a perspective of refinancing is down. And if I look at last year, the amount of new money raised, that issuance, if that stayed flat, right now. And last year was a very strong year, and the refinancing stayed similar levels to where it is right now. You're going to see a pretty, probably a $420 billion overall issuance, which is about double the first half. So that's sort of the market context behind our statements there. Now, that said, as I also alluded to in the comments, we have a strong pipeline, particularly in our specialty sectors, and if we see some stability of assets in the high-yield muni market, there will be some ability to take advantage of that pipeline. If I move to the fixed income services, the actual brokerage side of it, that's not really much different of a story. It's been the breadth of our client base and our products. So, for example, banks were less active, the depositories, but we saw Karen Grove- strengthen asset management and we, as I spoke about municipal centric assets and those investors being strong, but also even public entities. Karen Grove- As the short end of the curve is rising, we saw a lot more activity from those clients so that breadth of clients and then i'd also say product. from the standpoint that it's not only the QSIP trading products, but what we're able to do with our derivatives and loan trading non-QSIP products that helps drive some stability. So overall, I'd say the message is just diversification across both of those businesses.
spk01: Yeah, and I would just add on the equity side, obviously it was a really strong quarter with Cornerstone, you know, full quarter, but also just, you know, really the platform we've built And yeah, we sort of agree after seeing everybody's results, both fixed income and equities on a relative basis had a very strong quarter. I would say headed into July, both of those businesses have slowed a bit. Some of that is just the summer months. So we certainly expect a slightly slower Q3 for both of them.
spk07: Great. Thanks for the call, guys.
spk09: As a reminder, it's star one to ask a question. We'll take our next question from Mike Grinnell with Northland Securities. Please go ahead.
spk05: Hey, thanks, guys. Hey, Chad, a little bit of clarity on your strong backlog in M&A comments. How would you say the backlog is sort of relative to the last 18 months? Is it comparable or like 80% of that backlog? I'm just trying to get a feel for it on a relative basis.
spk01: Yeah, I would say, you know, in terms of number of active engagements, letters signed, you know, letters that aren't sort of super old, they're actionable. It's pretty darn close to where it was at periods of last year. Now, some deal sizes are smaller. You're not getting into sort of the ratchets on valuation as much. You know, the buyer lists, you know, certain processes where we get, you know, a big list of bidders, you know, on some of the private equity deals. You know, maybe that list of final bidders is smaller. You know, you don't see quite as much valuation stretch. So then it's, you know, it's a question of Will the client transact? Can you close the deal? Will the party be there at closing? So it's not about the number of situations. It's just about the number of situations we can get closed that the client will accept.
spk05: Got it. And then for the overall business, was July a little encouraging for or was it kind of more of the same? How would you characterize July?
spk01: I would say July was very much more of the same with most of the businesses. Like I said, even a little slower in equities, a little slower in fixed income. Advisory is sort of the same. Probably the only The only thing we're starting to see the green shoots are is, you know, relative to the healthcare backlog in ECM, you know, more clients talking about should we take advantage of a little bit of an uptick in some of the stocks and interest in healthcare either in August or post-Labor Day. But, you know, we've seen that before with market spikes. We actually need to see that volume of transactions actually play out. So I would say July was very much more of the same.
spk05: bear. And then maybe lastly for Tim, you guys always are careful on the expense side. Are you guys starting to sort of, you know, even think more critically on expenses just as this tougher environment kind of continues to weigh kind of where's the mentality on that today?
spk02: Yeah, Mike, you know, I, I think you're right. We're pretty consistent in terms of always thinking about expenses and managing those. We've certainly seen this increase on the travel side. We think that's been important to get back in front of clients and have those face-to-face meetings, so we've encouraged that. We've also had some additional expenses just in terms of recruiting and hiring, which is also a good thing from a longer term perspective. I think we feel like on the travel front, we may be back now to more normalized pre-pandemic levels on that. So we expect, as I guess noted in my comments, that these non-coms could be in sort of the range that we've seen in Q2. We will, yeah, I mean, I think, you know, as, you know, we go forward here, continue to think about what is the outlook, you know, how does that impact margin from a non-comp perspective and try to make decisions, you know, as we typically do based on the outlook. But, you know, at current times, you know, I wouldn't say that we're doing anything all that different than we have in the past.
spk01: Yeah, and I would just add, Mike, obviously we're, You know, we're focused on long-term growth. So when it comes to spending related to production and clients and seeing clients, I mean, I'm very encouraged that that's picked back up. Relative to other kind of spending, I mean, obviously, we're very conscious. Revenues are down quite a bit from last year. So, yeah, we're very focused on it.
spk07: Cool. Great. Thanks a lot, guys.
spk06: It appears there are no further questions at this time.
spk09: I'd like to turn the conference back to Mr. Abraham for any additional or closing remarks.
spk01: Okay. Thank you, Operator, and thanks, everyone. We look forward to updating you on our third quarter results end of October. Have a great day. Thank you.
spk09: And this concludes today's call. Thank you for your participation. You may now disconnect.
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