Perella Weinberg Reports Third Quarter 2023 Results

Financial Overview - Third Quarter

• Revenues of $139 Million, Down 4% From a Year Ago
• Adjusted Operating Income Margin of 8.5%, GAAP Operating Loss Margin of (19.2)%
• Adjusted EPS of $0.12; GAAP Diluted EPS of $(0.27)
  

Financial Overview - Nine Months

• Revenues of $436 Million, Down 3% From a Year Ago
• Adjusted Operating Income Margin of 8.9%, GAAP Operating Loss Margin of (16.3)%
• Adjusted EPS of $0.37; GAAP Diluted EPS of $(0.84)
  

Talent Investment and Strategic Actions

• Continue to Add Senior Bankers to Expand Client Coverage Footprint and Accelerate Growth
• Year-To-Date Added Six New Partners and Seven New Managing Directors
• Additional Partner Expected to Join Firm in the Fourth Quarter and a Further Partner in 2024
  

Capital Management

• Strong Balance Sheet with $197 Million of Cash and Short-Term Investments and No Debt
• Year-to-Date Returned $57 Million, Including Repurchases of 3.9 Million Shares and Equivalents
• Declared Quarterly Dividend of $0.07 Per Share
  

NEW YORK, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Perella Weinberg Partners (the “Firm” or “PWP”) (NASDAQ:PWP) today reported financial results for the third quarter ended September 30, 2023.

Revenues

For the third quarter of 2023, revenues were $139.0 million, a decrease of 4% from $145.4 million for the third quarter of 2022. Revenues attributed to mergers and acquisition activity were up slightly period-over-period, while financing and capital solutions revenues were lower as compared to the third quarter of 2022 which contained a particularly large financing fee.

For the nine months ended September 30, 2023, revenues were $436.0 million, a decrease of 3% from $448.4 million for the nine months ended September 30, 2022. Revenues attributed to mergers and acquisition activity were up slightly period-over-period, while financing and capital solutions revenues were lower due to a large financing fee and restructuring fee in the year ago period.

Expenses

Three Months Ended

GAAP total compensation and benefits were $127.8 million for the third quarter of 2023, compared to $123.3 million for the third quarter of 2022. Adjusted total compensation and benefits were $93.0 million for the third quarter of 2023 as compared to $93.0 million for the same period a year ago. The increase in GAAP total compensation and benefits was due to a higher compensation margin combined with the impact of business realignment costs associated with employee reductions undertaken year-to-date to improve compensation alignment and to provide for greater flexibility to advance strategic opportunities. The stability in adjusted total compensation and benefits was due to a higher compensation margin on a slightly lower revenue base.

GAAP non-compensation expenses were $37.9 million for the third quarter of 2023, compared with $30.9 million for the third quarter of 2022. Adjusted non-compensation expenses were $34.3 million for the third quarter of 2023, compared with $27.8 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 legal spend, a step-up in depreciation expense tied to New York and London office renovations and relocation, an increase in travel and related expenses, a bad debt reserve in the third quarter of 2023, and technology investments.

In the third quarter of 2023, we reached a settlement with the staff of the U.S. Securities and Exchange Commission (the “SEC”) in connection with the self-reporting of our practices relating to recordkeeping of business communications on “off-channel” messaging applications (the “Settlement”). Pursuant to the Settlement, Perella Weinberg Partners LP, Tudor, Pickering, Holt & Co. Securities LLC and Perella Weinberg Partners Capital Management LP, collectively, agreed to pay $2.5 million in the aggregate to the SEC on a joint and several liability basis. The Firm paid the SEC $1.25 million in satisfaction in part of the total settlement amount, with the remainder paid by Perella Weinberg Partners Capital Management LP. GAAP non-compensation expenses also included certain additional expenses related to the Settlement.

Nine Months Ended

GAAP total compensation and benefits were $393.8 million for the nine months ended September 30, 2023, compared to $378.4 million for the nine months ended September 30, 2022. Adjusted total compensation and benefits were $291.9 million for the nine months ended September 30, 2023 as compared to $287.0 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.

GAAP non-compensation expenses were $113.3 million for the nine months ended September 30, 2023, compared with $98.1 million for the nine months ended September 30, 2022. Adjusted non-compensation expenses were $105.2 million for the nine months ended September 30, 2023, compared with $91.0 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 an increase in travel and related expenses, legal spend, and technology investments, and 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 renovation and relocation, partially offset by a reduction in recruiting spend, co-advisory and other consulting fees, and lower D&O insurance costs versus the prior year period. GAAP non-compensation expenses also include certain expenses related to the Settlement.

Provision for Income Taxes

Perella Weinberg Partners currently owns 50.24% 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 nine months ended September 30, 2023, the effective tax rate for adjusted if-converted net income was 26%. This tax rate includes 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 September 30, 2023, PWP had $196.6 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 September 30, 2023, PWP returned $10.5 million in aggregate to our equity holders through (i) the net settlement of 366,031 share equivalents to satisfy tax withholding obligations at an average price per share of $10.66 and (ii) the payment of $6.6 million in pro rata distributions to limited partners which allowed PWP to pay its dividends of $3.6 million on Class A common stock.

During the nine months ended September 30, 2023, PWP returned $57.5 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 1,544,022 share equivalents to satisfy tax withholding obligations at an average price per share of $10.17 and (iii) the payment of $19.3 million in pro rata distributions to limited partners which allowed PWP to pay its dividends of $10.1 million on Class A common stock.

During the nine months ended September 30, 2023, PWP made $3.0 million of cash payments related to the business realignment. Current expectations include future cash payments of approximately $16 million related to the business realignment, which are expected to be paid within the next 12 months.

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 December 8, 2023 to Class A common stockholders of record on November 24, 2023.

Conference Call and Webcast

Management will host a webcast and conference call on Tuesday, November 7, 2023 at 9:00 am ET to discuss PWP’s financial results for the third quarter ended September 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) 343-4136
• International: (203) 518-9814
• Conference ID: PWPQ323
  

Replay

A replay of the call will also be available two hours after the live call through November 14, 2023. To access the replay, dial (800) 839-2488 (Domestic) or (402) 220-7224 (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 700 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.

Additional Information

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investors section of PWP’s website at https://investors.pwpartners.com/.

Contacts

For Perella Weinberg Investor Relations: [email protected]
For Perella Weinberg Media: [email protected]

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.

^{* Throughout this release, adjusted figures represent Non-GAAP information. 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. GAAP diluted net income (loss) per share attributable to Class A common shareholders and Adjusted net income (loss) per Class A share—diluted, if—converted will be referred to as “GAAP Diluted EPS” and “Adjusted EPS,” respectively.}