Greenhill & Co. Reports First Quarter 2023 Results
-
Quarterly revenues of
$49.7 million 9% from prior year’s first quarter
-
Compensation costs for the quarter up
29% from the same period in 2022, largely as a result of the timing of an accounting charge for incentive compensation
-
Non-compensation costs were within our target range but increased
14% for the quarter due to higher travel expenses and one-off relocation costs for our newLondon office
-
Repaid
$1.8 million
-
Repurchased 577,349 shares of common stock and common stock equivalents during the quarter for
$7.9 million
The Firm’s first quarter 2023 revenues compare to revenues of
The Firm’s revenues and net income can fluctuate materially depending on the number, size and timing of completed transactions on which it advised and other factors. Accordingly, the revenues and net income in any particular period may not be indicative of future results.
“Our first quarter revenue showed modest improvement from last year’s level despite what was obviously a very challenging operating environment. But notwithstanding what was a relatively quiet revenue quarter, we are seeing a level of engagement, particularly with our corporate clients, that feels stronger than recent M&A market commentary has been suggesting. We are also seeing restructuring activity accelerate from last year’s slow pace. Accordingly, we expect our year to date revenue improvement to grow significantly in the second quarter, leading to our best first half in recent years. On the cost side, our compensation costs were elevated for the quarter as a result of the timing of an accounting charge for incentive compensation. But already in the second quarter the absolute dollar level of compensation will fall to a more typical level, and our compensation ratio should do likewise as these costs decline and higher revenue materializes. Looking further ahead, we are well positioned to benefit as markets continue to stabilize, credit conditions improve, a more robust level of deal activity develops and costs normalize,” Scott L. Bok, Chairman and Chief Executive Officer, commented.
Revenues
Revenues were
Recruiting Update
Today we are announcing the recruitment of Jakub Mleczko (most recently Managing Director at Perella Weinberg Partners) who will join our
The Firm remains in dialogue with numerous other Managing Director candidates and continues to see opportunities to grow senior banker headcount.
Including all Managing Directors whose recruitment we have announced to date, we have 78 client-facing Managing Directors. As of January 1, 2023, we had 79 such Managing Directors.
Expenses
Operating Expenses
Our total operating expenses for the first quarter of 2023 were
The following table sets forth information relating to our operating expenses.
|
For the Three Months Ended March 31, |
||
|
2023 |
|
2022 |
|
(in millions, unaudited) |
||
Employee compensation and benefits expenses |
|
|
|
% of revenues |
|
|
|
Non-compensation operating expenses |
14.9 |
|
13.1 |
% of revenues |
|
|
|
Total operating expenses |
75.5 |
|
60.0 |
% of revenues |
|
|
|
Total operating income (loss) |
(25.8) |
|
(14.5) |
Operating profit margin |
NM |
|
NM |
Compensation and Benefits Expenses
Our employee compensation and benefits expenses were
Our compensation expense is generally based upon revenues and can fluctuate materially in any particular period depending upon changes in headcount, amount of revenues recognized, as well as other factors. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in a future period.
Non-Compensation Operating Expenses
For the three months ended March 31, 2023, our non-compensation operating expenses of
Non-compensation expenses as a percentage of revenues for the three months ended March 31, 2023 were
Our non-compensation operating expenses can vary as a result of a variety of factors such as changes in headcount, the amount of recruiting and business development activity, the amount of office expansion, the amount of client reimbursed expenses, the impact of currency movements and other factors. Accordingly, the non-compensation operating expenses in any particular period may not be indicative of the non-compensation operating expenses in future periods.
Interest Expense
For the three months ended March 31, 2023, we incurred interest expense of
The rate of interest on our borrowing is based on LIBOR and can vary from period to period. Accordingly, the amount of interest expense in any particular period may not be indicative of the amount of interest expense in future periods. There can be no certainty that our borrowing rate will not increase in future periods as a result of the transition from LIBOR to SOFR or another alternative rate.
Provision for Income Taxes
For the three months ended March 31, 2023, we recognized an income tax benefit of
The effective tax rate can fluctuate as a result of variations in the relative amounts of income earned and the tax rate imposed in the tax jurisdictions in which we operate. Accordingly, the effective tax rate in any particular period may not be indicative of the effective tax rate in future periods.
Liquidity and Capital Resources
As of March 31, 2023, we had cash and cash equivalents of
During the first quarter of 2023, we repurchased 508,237 restricted stock units from employees at the time of vesting to settle tax liabilities at an average price of
For the twelve month period through January 31, 2024, our Board of Directors has authorized up to
Going forward, we intend to apply our available cash flow primarily to deleveraging, while also maintaining our dividend and making repurchases of common shares and common share equivalents as and when appropriate.
In light of the upcoming maturity of our term loan, we intend to seek to refinance or extend the loan facility in the relatively near term at such time as we believe market conditions are optimal to do so.
Dividend
The Board of Directors of Greenhill & Co., Inc. has declared a dividend of
Investor Presentation
An updated investor presentation highlighting the Firm’s results for the first quarter and other matters relevant for investors has been posted on its website today (www.greenhill.com).
Earnings Call
Greenhill will host a conference call beginning at 4:30 p.m. Eastern Time on Wednesday, May 3, 2023, accessible via telephone and the internet. Scott L. Bok, Chairman and Chief Executive Officer, will review the Firm’s first quarter 2023 financial results and related matters. Following the review, there will be a question and answer session.
Investors and analysts may participate in the live conference call by dialing (888) 317 - 6003 (toll-free domestic) or (412) 317 - 6061 (international); passcode: 5215522. Please register at least 10 minutes before the conference call begins. The conference call will also be accessible as an audio webcast through the Investor Relations section of Greenhill’s website at www.greenhill.com. There is no charge to access the call.
For those unable to listen to the live broadcast, a replay of the call will be available for one month via telephone starting approximately one hour after the call ends. The replay can be accessed at (877) 344 - 7529 (toll-free domestic) or (412) 317 - 0088 (international); passcode: 9866349.
Greenhill & Co., Inc. is a leading independent investment bank entirely focused on providing financial advice on significant mergers, acquisitions, restructurings, financings and capital raising to corporations, partnerships, institutions and governments globally. It acts for clients located throughout the world from its offices in
Cautionary Note Regarding Forward-Looking Statements
The preceding discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear below. We have made statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “predict”, “potential” or “continue”, the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined under ‘‘Risk Factors’’ in our Report on Form 10-K for the fiscal year 2022 as well as other public filings. We are under no duty and we do not undertake any obligation to update or review any of these forward-looking statements after the date on which they are made, whether as a result of new information, future developments or otherwise.
Greenhill & Co., Inc. and Subsidiaries |
|||||||
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||
(In thousands, except share and per share data) |
|||||||
|
For the Three Months Ended March 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
49,678 |
|
|
$ |
45,441 |
|
|
|
|
|
||||
Operating Expenses |
|
|
|
||||
Employee compensation and benefits |
|
60,576 |
|
|
|
46,849 |
|
Occupancy and equipment rental |
|
4,989 |
|
|
|
4,403 |
|
Depreciation and amortization |
|
887 |
|
|
|
620 |
|
Information services |
|
2,356 |
|
|
|
2,300 |
|
Professional fees |
|
1,995 |
|
|
|
1,966 |
|
Travel related expenses |
|
1,923 |
|
|
|
1,120 |
|
Other operating expenses |
|
2,771 |
|
|
|
2,711 |
|
Total operating expenses |
|
75,497 |
|
|
|
59,969 |
|
Total operating income (loss) |
|
(25,819 |
) |
|
|
(14,528 |
) |
Interest expense |
|
5,813 |
|
|
|
2,755 |
|
Income (loss) before taxes |
|
(31,632 |
) |
|
|
(17,283 |
) |
Provision (benefit) for taxes |
|
(8,314 |
) |
|
|
(5,177 |
) |
Net income (loss) |
$ |
(23,318 |
) |
|
$ |
(12,106 |
) |
|
|
|
|
||||
Average shares outstanding: |
|
|
|
||||
Basic |
|
18,315,231 |
|
|
|
18,424,585 |
|
Diluted |
|
18,315,231 |
|
|
|
18,424,585 |
|
Earnings (loss) per share: |
|
|
|
||||
Basic |
$ |
(1.27 |
) |
|
$ |
(0.66 |
) |
Diluted |
$ |
(1.27 |
) |
|
$ |
(0.66 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005920/en/
Patrick Suehnholz
Director of Investor Relations
Greenhill & Co., Inc.
(212) 389-1800
Source: Greenhill & Co., Inc.
