Perella Weinberg Reports Full Year and Fourth Quarter 2023 Results
- Full year revenues increased by 3% from a year ago
- Strong balance sheet with $338 million in cash and short-term investments and no debt
- Added seven partners and seven managing directors in 2023
- Returned $65 million to equity holders in 2023
- GAAP pre-tax loss of $(113) million for the full year
- GAAP diluted EPS of $(1.33) for the full year
Insights
The reported full-year revenue growth of 3% and a 16% increase in fourth-quarter revenues year-over-year indicate a resilient performance by Perella Weinberg Partners (PWP), particularly noteworthy given the challenging market conditions. The firm's revenue diversification, with an uptick in mergers and acquisition activity, is a positive sign for investors looking for stability in earnings. However, the GAAP pre-tax loss and the adjusted-to-GAAP discrepancies reveal significant non-operational costs, which could raise concerns about underlying profitability and efficiency.
From a capital management perspective, PWP's strong balance sheet, characterized by a significant cash reserve and absence of debt, positions the firm well for future strategic opportunities or economic downturns. The share repurchase program and consistent dividend payments demonstrate a shareholder-friendly capital allocation strategy, potentially enhancing shareholder value. Nonetheless, the compensation costs, which form a high percentage of the revenues, may warrant scrutiny for their sustainability and impact on future profit margins.
The investment in talent, with the addition of senior bankers, indicates PWP's strategic focus on expanding its client coverage and accelerating growth. This move could potentially lead to increased market share and a broader revenue base in the long run. The firm's growing transaction backlog and leading roles in recent transactions suggest a robust pipeline that could translate into future revenue streams.
However, the increased legal spend and higher non-compensation expenses, including costs associated with office renovations and technology investments, may affect the firm's operational efficiency. While these investments might enhance long-term productivity, they also require careful monitoring to ensure that they do not erode profit margins. The one-time tax benefit recognized due to the release of a tax reserve at a foreign subsidiary is a non-recurring event that investors should consider when evaluating the firm's effective tax rate and net income.
The Settlement with the SEC regarding the recordkeeping of business communications on 'off-channel' messaging applications is a significant matter. It reflects the heightened regulatory scrutiny facing financial firms and the associated costs could impact PWP's short-term financials. Investors should be aware of the potential for such regulatory issues to recur, which could lead to further expenses or impact the firm's reputation.
Moreover, the effective tax rate for adjusted if-converted net income and the one-time tax benefit are critical factors in assessing the firm's tax strategy and its impact on net income. Understanding the nature of these tax positions and the likelihood of similar benefits in the future is crucial for evaluating the sustainability of the firm's tax rate and its implications for after-tax profitability.
Financial Overview - Full Year
- Revenues of
$649 Million , Up3% From a Year Ago - Adjusted Pre-tax Income of
$55 Million , GAAP Pre-tax Loss of$(113) Million - Adjusted EPS of
$0.45 ; GAAP Diluted EPS of$(1.33)
Financial Overview - Fourth Quarter
- Revenues of
$213 Million , Up16% From a Year Ago - Adjusted Pre-tax Income of
$11 Million , GAAP Pre-tax Loss of$(44) Million - Adjusted EPS of
$0.08 ; GAAP Diluted EPS of$(0.49)
Talent Investment
- Continue to Add Senior Bankers to Expand Client Coverage Footprint and Accelerate Growth
- Added Seven Partners and Seven Managing Directors in 2023
Capital Management
- Strong Balance Sheet with
$338 Million of Cash and Short-Term Investments and No Debt - Repurchased 4 Million Shares and Equivalents in 2023
- Returned
$65 Million in total to equity holders in 2023 - Declared Quarterly Dividend of
$0.07 Per Share
“We are pleased with our 2023 financial performance, having delivered year-over-year revenue growth in challenging market conditions, demonstrating that we are a trusted and valued partner to our clients in any environment. We begin 2024 with positive momentum, evidenced by our growing transaction backlog and our leading role in recently announced transactions,” stated Andrew Bednar, Chief Executive Officer. |
NEW YORK, Feb. 08, 2024 (GLOBE NEWSWIRE) -- Perella Weinberg Partners (the “Firm” or “PWP”) (NASDAQ:PWP) today reported financial results for the full year and fourth quarter ended December 31, 2023.
Revenues
For the twelve months ended December 31, 2023, revenues were
For the fourth quarter of 2023, revenues were
Expenses
Twelve Months Ended December 31, | |||||||||||||||
2023 | 2022 | ||||||||||||||
GAAP | Adjusted | GAAP | Adjusted | ||||||||||||
Operating expenses | (Dollars in Millions) | ||||||||||||||
Total compensation and benefits | $ | 608.9 | $ | 454.6 | $ | 545.5 | $ | 421.1 | |||||||
% of Revenues | 94 | % | 70 | % | 86 | % | 67 | % | |||||||
Non-compensation expenses | $ | 154.8 | $ | 144.0 | $ | 133.7 | $ | 123.1 | |||||||
% of Revenues | 24 | % | 22 | % | 21 | % | 19 | % |
Twelve Months Ended
GAAP total compensation and benefits were
GAAP non-compensation expenses were
Three Months Ended December 31, | |||||||||||||||
2023 | 2022 | ||||||||||||||
GAAP | Adjusted | GAAP | Adjusted | ||||||||||||
Operating expenses | (Dollars in Millions) | ||||||||||||||
Total compensation and benefits | $ | 215.1 | $ | 162.7 | $ | 167.1 | $ | 134.1 | |||||||
% of Revenues | 101 | % | 76 | % | 91 | % | 73 | % | |||||||
Non-compensation expenses | $ | 41.5 | $ | 38.9 | $ | 35.6 | $ | 32.1 | |||||||
% of Revenues | 20 | % | 18 | % | 19 | % | 18 | % |
Three Months Ended
GAAP total compensation and benefits were
GAAP non-compensation expenses were
Provision for Income Taxes
Perella Weinberg Partners currently owns
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 subject to U.S. corporate income tax. For the twelve months ended December 31, 2023, the effective tax rate for adjusted if-converted net income was
Balance Sheet and Capital Management
As of December 31, 2023, PWP had
During the twelve months ended December 31, 2023, PWP returned
During the twelve months ended December 31, 2023, PWP made
The Board of Directors has declared a quarterly dividend of
Conference Call and Webcast
Management will host a webcast and conference call on Thursday, February 8, 2024 at 9:00 am ET to discuss PWP’s financial results for the full year and fourth quarter ended December 31, 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) 518-9848
- Conference ID: PWPQ423
Replay
A replay of the call will also be available two hours after the live call through February 15, 2024. To access the replay, dial (800) 723-0498 (Domestic) or (402) 220-2652 (International). The replay can also be accessed on the Investors section of PWP’s website at https://investors.pwpartners.com/.
For those who listen to the rebroadcast of the call, we remind you that the remarks made are as of February 8, 2024, and have not been updated subsequent to the initial earnings call.
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.
Contacts
For Perella Weinberg Investor Relations: investors@pwpartners.com
For 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 Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues | $ | 212,678 | $ | 183,148 | $ | 648,652 | $ | 631,507 | |||||||
Expenses | |||||||||||||||
Compensation and benefits | 165,521 | 127,241 | 426,572 | 391,333 | |||||||||||
Equity-based compensation | 49,600 | 39,842 | 182,375 | 154,158 | |||||||||||
Total compensation and benefits | 215,121 | 167,083 | 608,947 | 545,491 | |||||||||||
Professional fees | 13,094 | 8,922 | 39,640 | 34,824 | |||||||||||
Technology and infrastructure | 8,612 | 7,670 | 34,462 | 30,084 | |||||||||||
Rent and occupancy | 6,033 | 7,387 | 26,891 | 24,898 | |||||||||||
Travel and related expenses | 5,396 | 4,187 | 19,030 | 13,034 | |||||||||||
General, administrative and other expenses | 3,877 | 4,801 | 20,103 | 20,215 | |||||||||||
Depreciation and amortization | 4,511 | 2,641 | 14,679 | 10,694 | |||||||||||
Total expenses | 256,644 | 202,691 | 763,752 | 679,240 | |||||||||||
Operating income (loss) | (43,966 | ) | (19,543 | ) | (115,100 | ) | (47,733 | ) | |||||||
Non-operating income (expenses) | |||||||||||||||
Related party income | 162 | 557 | 932 | 2,805 | |||||||||||
Other income (expense) | (140 | ) | (4,000 | ) | 1,348 | 7,702 | |||||||||
Change in fair value of warrant liabilities | — | — | — | 15,806 | |||||||||||
Total non-operating income (expenses) | 22 | (3,443 | ) | 2,280 | 26,313 | ||||||||||
Income (loss) before income taxes | (43,944 | ) | (22,986 | ) | (112,820 | ) | (21,420 | ) | |||||||
Income tax expense (benefit) | (1,532 | ) | (380 | ) | (980 | ) | 10,327 | ||||||||
Net income (loss) | (42,412 | ) | (22,606 | ) | (111,840 | ) | (31,747 | ) | |||||||
Less: Net income (loss) attributable to non-controlling interests | (32,002 | ) | (21,185 | ) | (94,617 | ) | (49,625 | ) | |||||||
Net income (loss) attributable to Perella Weinberg Partners | $ | (10,410 | ) | $ | (1,421 | ) | $ | (17,223 | ) | $ | 17,878 | ||||
Net income (loss) per share attributable to Class A common shareholders | |||||||||||||||
Basic | $ | (0.23 | ) | $ | (0.03 | ) | $ | (0.40 | ) | $ | 0.41 | ||||
Diluted | $ | (0.49 | ) | $ | (0.28 | ) | $ | (1.33 | ) | $ | (0.46 | ) | |||
Weighted-average shares of Class A common stock outstanding | |||||||||||||||
Basic | 44,884,305 | 42,638,357 | 43,273,939 | 43,837,640 | |||||||||||
Diluted | 87,329,418 | 87,442,255 | 86,779,052 | 89,755,632 |
GAAP Reconciliation of Adjusted Results (Unaudited) (Dollars in Thousands, Except Per Share Amounts) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Total compensation and benefits—GAAP | $ | 215,121 | $ | 167,083 | $ | 608,947 | $ | 545,491 | |||||||
Equity-based compensation not dilutive to investors in PWP or PWP OpCo(1) | (13,999 | ) | (18,633 | ) | (68,647 | ) | (74,616 | ) | |||||||
Public company transaction related incentives(2) | (12,702 | ) | (14,317 | ) | (48,435 | ) | (49,737 | ) | |||||||
Business realignment costs(3) | (25,768 | ) | — | (37,265 | ) | — | |||||||||
Adjusted total compensation and benefits | $ | 162,652 | $ | 134,133 | $ | 454,600 | $ | 421,138 | |||||||
Non-compensation expense—GAAP | $ | 41,523 | $ | 35,608 | $ | 154,805 | $ | 133,749 | |||||||
TPH business combination related expenses(4) | (1,645 | ) | (1,645 | ) | (6,580 | ) | (6,580 | ) | |||||||
Business Combination transaction expenses(5) | (1,017 | ) | (1,832 | ) | (3,392 | ) | (2,752 | ) | |||||||
Warrant Exchange transaction expenses(6) | — | — | — | (1,301 | ) | ||||||||||
Settlement related expenses(7) | — | — | (809 | ) | — | ||||||||||
Adjusted non-compensation expense(8) | $ | 38,861 | $ | 32,131 | $ | 144,024 | $ | 123,116 | |||||||
Operating income (loss)—GAAP | $ | (43,966 | ) | $ | (19,543 | ) | $ | (115,100 | ) | $ | (47,733 | ) | |||
Equity-based compensation not dilutive to investors in PWP or PWP OpCo(1) | 13,999 | 18,633 | 68,647 | 74,616 | |||||||||||
Public company transaction related incentives(2) | 12,702 | 14,317 | 48,435 | 49,737 | |||||||||||
Business realignment costs(3) | 25,768 | — | 37,265 | — | |||||||||||
TPH business combination related expenses(4) | 1,645 | 1,645 | 6,580 | 6,580 | |||||||||||
Business Combination transaction expenses(5) | 1,017 | 1,832 | 3,392 | 2,752 | |||||||||||
Warrant Exchange transaction expenses(6) | — | — | — | 1,301 | |||||||||||
Settlement related expenses(7) | — | — | 809 | — | |||||||||||
Adjusted operating income (loss) | $ | 11,165 | $ | 16,884 | $ | 50,028 | $ | 87,253 | |||||||
Income (loss) before income taxes—GAAP | $ | (43,944 | ) | $ | (22,986 | ) | $ | (112,820 | ) | $ | (21,420 | ) | |||
Equity-based compensation not dilutive to investors in PWP or PWP OpCo(1) | 13,999 | 18,633 | 68,647 | 74,616 | |||||||||||
Public company transaction related incentives(2) | 12,702 | 14,317 | 48,435 | 49,737 | |||||||||||
Business realignment costs(3) | 25,768 | — | 37,265 | — | |||||||||||
TPH business combination related expenses(4) | 1,645 | 1,645 | 6,580 | 6,580 | |||||||||||
Business Combination transaction expenses(5) | 1,017 | 1,832 | 3,392 | 2,752 | |||||||||||
Warrant Exchange transaction expenses(6) | — | — | — | 1,301 | |||||||||||
Settlement related expenses(7) | — | — | 809 | — | |||||||||||
Adjustments to non-operating income (expenses)(9) | 38 | 38 | 2,763 | (15,657 | ) | ||||||||||
Adjusted income (loss) before income taxes | $ | 11,225 | $ | 13,479 | $ | 55,071 | $ | 97,909 | |||||||
Income tax expense (benefit)—GAAP | $ | (1,532 | ) | $ | (380 | ) | $ | (980 | ) | $ | 10,327 | ||||
Tax impact of non-GAAP adjustments(10) | 3,329 | 1,813 | 8,594 | 5,959 | |||||||||||
Adjusted income tax expense (benefit) | $ | 1,797 | $ | 1,433 | $ | 7,614 | $ | 16,286 | |||||||
Net income (loss)—GAAP | $ | (42,412 | ) | $ | (22,606 | ) | $ | (111,840 | ) | $ | (31,747 | ) | |||
Equity-based compensation not dilutive to investors in PWP or PWP OpCo(1) | 13,999 | 18,633 | 68,647 | 74,616 | |||||||||||
Public company transaction related incentives(2) | 12,702 | 14,317 | 48,435 | 49,737 | |||||||||||
Business realignment costs(3) | 25,768 | — | 37,265 | — | |||||||||||
TPH business combination related expenses(4) | 1,645 | 1,645 | 6,580 | 6,580 | |||||||||||
Business Combination transaction expenses(5) | 1,017 | 1,832 | 3,392 | 2,752 | |||||||||||
Warrant Exchange transaction expenses(6) | — | — | — | 1,301 | |||||||||||
Settlement related expenses(7) | — | — | 809 | — | |||||||||||
Adjustments to non-operating income (expenses)(9) | 38 | 38 | 2,763 | (15,657 | ) | ||||||||||
Tax impact of non-GAAP adjustments(10) | (3,329 | ) | (1,813 | ) | (8,594 | ) | (5,959 | ) | |||||||
Adjusted net income (loss) | $ | 9,428 | $ | 12,046 | $ | 47,457 | $ | 81,623 |
GAAP Reconciliation of Adjusted Results (Unaudited) (Dollars in Thousands, Except Per Share Amounts) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Adjusted net income (loss) | $ | 9,428 | $ | 12,046 | $ | 47,457 | $ | 81,623 | |||||||
Less: Adjusted income tax expense (benefit) | (1,797 | ) | (1,433 | ) | (7,614 | ) | (16,286 | ) | |||||||
Add: If-converted tax impact(11) | 3,543 | 3,504 | 14,994 | 27,656 | |||||||||||
Adjusted if-converted net income (loss) | $ | 7,682 | $ | 9,975 | $ | 40,077 | $ | 70,253 | |||||||
Weighted-average diluted shares of Class A common stock outstanding | 87,329,418 | 87,442,255 | 86,779,052 | 89,755,632 | |||||||||||
Weighted average number of incremental shares from assumed vesting of RSUs and PSUs(12) | 4,059,875 | 1,011,068 | 2,186,189 | 369,413 | |||||||||||
Weighted-average adjusted diluted shares of Class A common stock outstanding | 91,389,293 | 88,453,323 | 88,965,241 | 90,125,045 | |||||||||||
Adjusted net income (loss) per Class A share—diluted, if-converted | $ | 0.08 | $ | 0.11 | $ | 0.45 | $ | 0.78 | |||||||
Key metrics: (13) | |||||||||||||||
GAAP operating income (loss) margin | (20.7)% | (10.7)% | (17.7)% | (7.6)% | |||||||||||
Adjusted operating income (loss) margin | 5.2 | % | 9.2 | % | 7.7 | % | 13.8 | % | |||||||
GAAP compensation ratio | 101 | % | 91 | % | 94 | % | 86 | % | |||||||
Adjusted compensation ratio | 76 | % | 73 | % | 70 | % | 67 | % | |||||||
GAAP effective tax rate | 3 | % | 2 | % | 1 | % | (48)% | ||||||||
Adjusted if-converted effective tax rate | 32 | % | 26 | % | 27 | % | 28 | % |
Notes to 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 that closed on June 24, 2021 (the “Business Combination”) and amortization of PWP Professional Partners LP (together with its successors and assigns, as applicable, “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. The legacy awards were fully amortized as of September 30, 2023.
(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 resulted in headcount 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. For the three and twelve months ended December 31, 2023, such amortization includes
(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 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 then-outstanding warrants, which the Company commenced on July 22, 2022 (the “Warrant Exchange”).
(7) Certain expenses incurred related to the Settlement.
(8) 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.
(9) For the twelve months ended December 31, 2022, this adjustment includes a gain of
(10) 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.
(11) 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.
(12) 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.
(13) Reconciliations of key metrics from GAAP to Adjusted results are a derivative of the reconciliation of their components.
GAAP Reconciliation of Adjusted Results (Unaudited) (Dollars in Thousands) | |||||||||
Three Months Ended December 31, 2023 | |||||||||
GAAP | Adjustments | Adjusted | |||||||
Professional fees | $ | 13,094 | $ | (1,017 | ) | (1) | $ | 12,077 | |
Technology and infrastructure | 8,612 | — | 8,612 | ||||||
Rent and occupancy | 6,033 | — | 6,033 | ||||||
Travel and related expenses | 5,396 | — | 5,396 | ||||||
General, administrative and other expenses | 3,877 | — | 3,877 | ||||||
Depreciation and amortization | 4,511 | (1,645 | ) | (2) | 2,866 | ||||
Non-compensation expense | $ | 41,523 | $ | (2,662 | ) | $ | 38,861 | ||
Three Months Ended December 31, 2022 | |||||||||
GAAP | Adjustments | Adjusted | |||||||
Professional fees | $ | 8,922 | $ | (1,832 | ) | (1) | $ | 7,090 | |
Technology and infrastructure | 7,670 | — | 7,670 | ||||||
Rent and occupancy | 7,387 | — | 7,387 | ||||||
Travel and related expenses | 4,187 | — | 4,187 | ||||||
General, administrative and other expenses | 4,801 | — | 4,801 | ||||||
Depreciation and amortization | 2,641 | (1,645 | ) | (2) | 996 | ||||
Non-compensation expense | $ | 35,608 | $ | (3,477 | ) | $ | 32,131 | ||
Twelve Months Ended December 31, 2023 | |||||||||
GAAP | Adjustments | Adjusted | |||||||
Professional fees | $ | 39,640 | $ | (4,201 | ) | (3) | $ | 35,439 | |
Technology and infrastructure | 34,462 | — | 34,462 | ||||||
Rent and occupancy | 26,891 | — | 26,891 | ||||||
Travel and related expenses | 19,030 | — | 19,030 | ||||||
General, administrative and other expenses | 20,103 | — | 20,103 | ||||||
Depreciation and amortization | 14,679 | (6,580 | ) | (2) | 8,099 | ||||
Non-compensation expense | $ | 154,805 | $ | (10,781 | ) | $ | 144,024 | ||
Twelve Months Ended December 31, 2022 | |||||||||
GAAP | Adjustments | Adjusted | |||||||
Professional fees | $ | 34,824 | $ | (4,053 | ) | (4) | $ | 30,771 | |
Technology and infrastructure | 30,084 | — | 30,084 | ||||||
Rent and occupancy | 24,898 | — | 24,898 | ||||||
Travel and related expenses | 13,034 | — | 13,034 | ||||||
General, administrative and other expenses | 20,215 | — | 20,215 | ||||||
Depreciation and amortization | 10,694 | (6,580 | ) | (2) | 4,114 | ||||
Non-compensation expense | $ | 133,749 | $ | (10,633 | ) | $ | 123,116 |
(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.
(3) Reflects an adjustment to exclude transaction costs associated with the Business Combination and certain expenses related to the Settlement.
(4) Reflects an adjustment to exclude transaction costs associated with the Business Combination and the Warrant Exchange.
* 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.
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