- Quarterly revenues of $81.1 million, down slightly from prior
year’s third quarter
- Year to date revenues of $162.6 million, down 19% from the same
period in 2021 due to fewer transaction completions
- Compensation ratio of 56% for the quarter; 83% for the year to
date period, which is elevated as a result of lower year to date
revenues
- Non-compensation costs for the quarter down 7% and year to date
down 3% despite increased travel and entertainment expenses
- Operating margin of 28% for the quarter
- Diluted earnings per share of $0.67 for the quarter and a loss
per share of $0.91 year to date
Greenhill & Co., Inc. (NYSE: GHL) today reported revenues of
$81.1 million, net income of $14.2 million and diluted earnings per
share of $0.67 for the quarter ended September 30, 2022.
The Firm’s third quarter 2022 revenues compare to revenues of
$88.6 million in the third quarter of 2021, which represents a
decrease of $7.5 million. The Firm’s third quarter 2022 net income
and earnings per share compare to net income of $20.1 million and
diluted earnings per share of $0.85 for the third quarter 2021.
For the nine months ended September 30, 2022, revenues of $162.6
million compare to $200.8 million for the comparable period in
2021, a decrease of $38.2 million. For the first nine months of
2022, a net loss of $16.6 million and a loss per share of $0.91
compare to net income of $13.4 million and diluted earnings per
share of $0.55 for the same period in 2021.
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 quarterly results are consistent with our commentary on the
past two quarterly investor calls, when we said that we expected
the year to play out similarly to the past three years, when a weak
first half revenue result was followed by a much stronger second
half performance, resulting in a respectable full year outcome. We
continue to show appropriate discipline on costs, and thus are
focused on delivering another year of solid cash flow generation.
We continue to see our stock as significantly undervalued and,
after a pause in the third quarter while our revenue expectations
were confirmed despite turbulent markets, we recently began
repurchasing shares,” Scott L. Bok, Chairman and Chief Executive
Officer, commented.
Revenues
Revenues were $81.1 million in the third quarter of 2022
compared to $88.6 million in the third quarter of 2021, a decrease
of $7.5 million, or 8%. The decrease principally resulted from a
decline in financing advisory and restructuring completion fees,
offset in part by an increase in merger and acquisition transaction
completion fees.
For the nine months ended September 30, 2022, revenues were
$162.6 million compared to $200.8 million in 2021, a decrease of
$38.2 million, or 19%. The decrease principally resulted from a
decline in restructuring completion and retainer fees.
As of October 31, 2022, we have 79 client-facing Managing
Directors. As of January 1, 2022, we also had 79 such Managing
Directors.
Expenses
Operating Expenses
Our total operating expenses for the third quarter of 2022 were
$58.2 million, which compared to $58.3 million of total operating
expenses for the third quarter of 2021. The slight decrease in
total operating expenses of $0.1 million resulted from a decrease
in our non-compensation operating expenses, partially offset by an
increase in compensation and benefits expenses, each as described
in more detail below. Our operating profit margin was 28% for the
third quarter of 2022 as compared to 34% for the same period in
2021.
For the nine months ended September 30, 2022, our total
operating expenses were $175.1 million, which compared to $172.4
million of total operating expenses for the first nine months of
2021. The increase in total operating expenses of $2.7 million, or
2%, resulted from an increase in our compensation and benefits
expenses, partially offset by a decrease in our non-compensation
operating expenses, each as described in more detail below.
The following table sets forth information relating to our
operating expenses.
For the Three Months Ended September
30,
For the Nine Months Ended September
30,
2022
2021
2022
2021
(in millions, unaudited)
Employee compensation and benefits
expenses
$45.3
$44.4
$135.3
$131.5
% of revenues
56%
50%
83%
65%
Non-compensation operating expenses
12.9
13.9
39.8
40.9
% of revenues
16%
16%
24%
20%
Total operating expenses
58.2
58.3
175.1
172.4
% of revenues
72%
66%
108%
86%
Total operating income (loss)
23.0
30.4
(12.4)
28.4
Operating profit margin
28%
34%
NM
14%
Compensation and Benefits Expenses
Our employee compensation and benefits expenses were $45.3
million in the third quarter of 2022 as compared to $44.4 million
for the third quarter of 2021. The increase in expense of $0.9
million, or 2%, was principally due to growth in professional
headcount and a market driven increase in salaries. The ratio of
compensation to revenues was 56% for the third quarter of 2022 as
compared to 50% for the same period in the prior year. The ratio of
compensation to revenues in the third quarters of 2022 and 2021
were adjusted lower than our annual targeted ratio in order to
reduce the year to date ratio toward our targeted year end
ratio.
For the nine months ended September 30, 2022, our employee
compensation and benefits expenses were $135.3 million compared to
$131.5 million for the same period in 2021. The increase in expense
of $3.8 million, or 3%, was principally attributable to headcount
growth and higher salary levels of our professional staff. The
ratio of compensation to revenues for the nine month period in 2022
was 83% as compared to 65% for the same period in 2021. The
increase in the ratio of compensation to revenues for the nine
month period in 2022 as compared to the same period in 2021
resulted from the effect of spreading slightly higher compensation
and benefits expenses over lower revenues.
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 September 30, 2022, our
non-compensation operating expenses of $12.9 million decreased $1.0
million, or 7%, as compared to $13.9 million in the same period in
2021. The decrease principally resulted from the benefit of foreign
currency gains and lower professional fees, partially offset by
higher costs for business travel and entertainment and increased
occupancy cost during the build out of a new London office.
Non-compensation expenses as a percentage of revenues for the
three months ended September 30, 2022 and 2021 remained constant at
16%.
For the nine months ended September 30, 2022, our
non-compensation operating expenses of $39.8 million decreased $1.1
million, or 3% as compared to $40.9 million in the comparable
period in 2021. The decrease principally resulted from the benefit
of foreign currency gains compared to foreign currency losses in
the same period in the prior year, partially offset by increased
travel and entertainment costs.
Non-compensation expenses as a percentage of revenues for the
nine months ended September 30, 2022 were 24% compared to 20% for
the same period in 2021. The increase in non-compensation expenses
as a percentage of revenues resulted from the effect of spreading
lower non-compensation costs over much lower revenues in the first
nine months of 2022 as compared to the same period in 2021.
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 September 30, 2022, we incurred
interest expense of $4.4 million as compared to $3.0 million for
the same period in 2021. The increase of $1.4 million principally
related to higher market borrowing rates in the third quarter of
2022 compared to the same period in 2021, offset in part by lower
borrowings outstanding.
For the nine months ended September 30, 2022, we incurred
interest expense of $10.4 million, an increase of $1.1 million as
compared to $9.3 million for the same period in 2021. The increase
related to higher average market borrowing rates, offset in part by
lower average borrowings outstanding as a result of accelerated
debt repayments made during 2021.
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 September 30, 2022, we recognized an
income tax expense of $4.4 million, reflecting an effective tax
rate of 24%. This compared to an income tax expense for the three
months ended September 30, 2021 of $7.2 million, reflecting an
effective tax rate of 26%. The decrease in the provision for income
taxes in the third quarter of 2022 as compared to the same period
in the prior year was attributable to lower pre-tax income and a
slightly lower effective tax rate due to the generation of a
greater proportion of earnings in the relatively low tax
jurisdiction of the U.K. in 2022 as compared to 2021.
For the nine months ended September 30, 2022, due to our pre-tax
loss we recognized an income tax benefit of $6.2 million, which
included an additional benefit of $0.8 million related to the tax
effect of the vesting of restricted stock units at a market price
higher than the grant price. This compared to income tax expense
for the nine month period ended September 30, 2021 of $5.7 million,
which included a charge of $0.7 million related to the tax effect
of the difference between the grant price value and the market
price value of restricted stock awards at the time of the vesting.
Excluding these benefits/charges, the effective tax rates for the
nine month periods ended September 30, 2022 and 2021 would have
been 24% and 26%, respectively. The lower effective rate for the
nine months ended September 30, 2022 is principally the result of a
greater portion of earnings expected to be generated in the U.K. in
2022 as discussed above.
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 September 30, 2022, we had cash and cash equivalents of
$64.3 million and term loan debt with an outstanding principal
balance of $271.9 million. The remaining principal balance of the
term loan is due at maturity on April 12, 2024 and may be repaid
further in advance of maturity without penalty.
During the third quarter of 2022, we repurchased 28,691
restricted stock units from employees at the time of vesting to
settle tax liabilities at an average price of $8.35 per share, for
a total cost of $0.2 million. During the first nine months of 2022,
we repurchased 812,094 restricted stock units from employees at the
time of vesting to settle tax liabilities at an average price of
$16.83 per share, for a total cost of $13.7 million.
Additionally, in the first nine months of 2022 we repurchased in
the open market 1,130,208 shares of our common stock at an average
price of $14.84 per share for a total cost of $16.8 million.
In aggregate for the year, as of September 30, 2022, we have
repurchased 1,942,302 shares of our common shares and common stock
equivalents at an average price of $15.67, for a total cost of
$30.4 million. In addition, during October 2022 we repurchased
167,309 shares at $6.49 per share for a total cost of $1.1
million.
For the twelve month period through January 31, 2023, our Board
of Directors has authorized up to $70 million in purchases of
shares and share equivalents (via tax withholding on vesting of
restricted stock units). As of October 31, 2022, we have $43.3
million remaining under that authorization. Going forward, we
intend to take a balanced approach to our use of available cash,
allocating funds for a combination of deleveraging, share
repurchases and dividends depending on such factors as our
financial position, capital requirements, results of operations and
outlook, as well as any legal, tax, regulatory or contractual
constraints and any other factors deemed relevant.
Dividend
The Board of Directors of Greenhill & Co., Inc. has declared
a dividend of $0.10 per share to be paid on December 21, 2022 to
common stockholders of record on December 7, 2022.
Investor Presentation
An updated investor presentation highlighting the Firm’s results
for the third 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, November 2, 2022, accessible via
telephone and the internet. Scott L. Bok, Chairman and Chief
Executive Officer, will review the Firm’s third quarter 2022
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: 4557071. 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: 2242982.
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 New York, Chicago, Frankfurt, Hong Kong, Houston,
London, Madrid, Melbourne, Paris, San Francisco, Singapore,
Stockholm, Sydney, Tokyo and Toronto.
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 2021 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
September 30,
For the Nine Months Ended
September 30,
2022
2021
2022
2021
Revenues
$
81,145
$
88,646
$
162,635
$
200,807
Operating Expenses
Employee compensation and benefits
45,265
44,390
135,277
131,473
Occupancy and equipment rental
4,954
4,628
13,796
13,625
Depreciation and amortization
635
722
1,880
2,302
Information services
2,504
2,476
7,140
7,161
Professional fees
1,774
2,431
5,971
6,331
Travel related expenses
1,541
815
4,210
1,523
Other operating expenses
1,492
2,822
6,782
9,994
Total operating expenses
58,165
58,284
175,056
172,409
Total operating income (loss)
22,980
30,362
(12,421
)
28,398
Interest expense
4,369
2,985
10,382
9,271
Income (loss) before taxes
18,611
27,377
(22,803
)
19,127
Provision (benefit) for taxes
4,400
7,233
(6,176
)
5,724
Net income (loss)
$
14,211
$
20,144
$
(16,627
)
$
13,403
Average shares outstanding:
Basic
17,935,848
19,046,407
18,197,533
19,387,582
Diluted
21,095,880
23,751,697
18,197,533
24,192,080
Earnings (loss) per share:
Basic
$
0.79
$
1.06
$
(0.91
)
$
0.69
Diluted
$
0.67
$
0.85
$
(0.91
)
$
0.55
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102006044/en/
Patrick Suehnholz Director of Investor Relations Greenhill &
Co., Inc. (212) 389-1800
Grafico Azioni Greenhill (NYSE:GHL)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Greenhill (NYSE:GHL)
Storico
Da Gen 2024 a Gen 2025
