Earnings call transcript: Perella Weinberg Partners beats Q1 2025 forecasts

Perella Weinberg Partners (PWP) surpassed Wall Street expectations in Q1 2025, reporting earnings per share (EPS) of $0.28 compared to the forecasted $0.21. The company also achieved record first-quarter revenues of $212 million, exceeding the anticipated $199.01 million. According to InvestingPro data, the company maintains a "Fair" overall Financial Health Score of 2.48 out of 5, with particularly strong cash flow metrics. Despite these positive results, the stock saw a slight premarket decline, down 0.81% to $17.11, reflecting broader market uncertainties.

Key Takeaways

• Perella Weinberg Partners reported a 100% year-over-year increase in Q1 revenues, marking the highest first-quarter revenue in its history.
• The company ended the quarter with $111 million in cash and no debt, highlighting strong financial health.
• A quarterly dividend of $0.70 per share was declared, reinforcing shareholder returns.
• The stock experienced a modest premarket decline, despite strong earnings results.

Company Performance

Perella Weinberg Partners demonstrated robust performance in Q1 2025, with revenues doubling from the previous year. This growth was primarily driven by increased transaction fees in the U.S. and Europe, as the company capitalized on its advisory services in restructuring, liability management, and financing. The firm’s strategic focus on client-centric models and expanding its managing director team in key sectors contributed to its impressive results.

Financial Highlights

• Revenue: $212 million, up 100% year-over-year
• Earnings per share: $0.28, compared to the forecast of $0.21
• Adjusted compensation margin: 67%
• Cash reserves: $111 million, with no debt
• Quarterly dividend: $0.70 per share

Earnings vs. Forecast

Perella Weinberg Partners exceeded analyst expectations with an EPS of $0.28 against a forecast of $0.21, resulting in a surprise of approximately 33.3%. The company’s revenue also surpassed projections by $12.99 million. This significant earnings beat reflects the firm’s strong operational execution and strategic positioning in a challenging market environment.

Market Reaction

Despite the positive earnings report, Perella Weinberg’s stock fell 0.81% in premarket trading to $17.11. This movement may be attributed to broader market uncertainties and investor caution. With a beta of 1.68, the stock shows higher volatility than the broader market. The stock remains within its 52-week range, with a high of $27.03 and a low of $11.68. Analyst consensus suggests significant upside potential, with price targets ranging from $15.50 to $29.00. InvestingPro analysis indicates the stock is currently fairly valued, with additional ProTips available for subscribers.

Outlook & Guidance

Looking ahead, Perella Weinberg Partners anticipates an acceleration in transaction activity as policy uncertainties diminish. The company projects a single-digit increase in non-compensation expenses for the full year and maintains confidence in its long-term growth prospects. The expected tax rate is set at 29.5%. InvestingPro’s Research Report provides detailed analysis of PWP’s growth trajectory, one of 1,400+ comprehensive company reports available to subscribers.

Executive Commentary

CEO Andrew Bednar emphasized the firm’s adaptability and client-focused approach, stating, "Disruption creates opportunity." He highlighted the importance of long-term client relationships, noting, "Our client relationships are measured by a lifetime and not by a transaction timeline."

Risks and Challenges

• Market volatility and policy uncertainties could impact transaction volumes.
• Litigation-related expenses remain a concern, with over $10 million incurred in Q1.
• The competitive landscape requires continuous adaptation and strategic recruitment.

Q&A

During the earnings call, analysts focused on the slowdown in the M&A environment and regional differences between the U.S. and Europe. Questions also addressed the company’s compensation ratio and non-compensation expenses, as well as its recruiting strategy in light of increased market volatility.

Full transcript - Perella Weinberg Partners (PWP) Q1 2025:

Operator: Please be advised that today’s call is being recorded.

I would now like to turn the call over to Taylor Reinhart, Head of Communications and Marketing. You may begin.

Taylor Reinhart, Head of Communications and Marketing, Parella Weinberg: Thank you, operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer and Alex Scottchalk, Chief Financial Officer. Before we begin, I’d like to note that this call may contain forward looking statements, including Parella Weinberg’s expectations of future financial and business performance and conditions and industry outlook. Forward looking statements are inherently subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward looking statements and are not guarantees of future events or performance. Please refer to Peral of Weinberg’s most recent SEC filings for a discussion of certain of these risks and uncertainties.

The forward looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward looking statements. During the call, there will also be a discussion of some metrics, which are non GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. Parella Lineberg has reconciled these items to the most comparable GAAP measures in the press release filed with today’s Form eight ks, which can be found on the company’s website. I will now turn the call over to Andrew Bednar to discuss our results.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Thank you, Taylor, and good morning. Today, we reported first quarter revenues of $212,000,000 up more than 100% year over year and representing the highest first quarter revenue in our history. Our results were up across the firm with revenue in The U. S. And in Europe up twofold, driven by larger fees per transaction, which resulted from our continued focus on client coverage and business selection.

Policy action from the U. S. Government at the April and related reactions have not stopped deal announcements, but have slowed them down. Our clients are in an adjustment stage and are awaiting clarity on ultimate tariff and trade policy. Once the range of uncertainty narrows, we expect transaction activity to accelerate as we experienced in both ’eight and ’nine and COVID periods.

Unlike these prior market dislocations, however, we have not seen clients today broadly terminating processes or walking away from deals just pausing, which is encouraging. Our client engagement dashboard stats, which include new business reviews, client calls and requests for meetings are at all time highs, and our pipeline is very strong. Our announced impending backlog, however, has declined from record levels. In the current fog, we see two bright spots. First, our restructuring, liability management and financing advisory business experienced a meaningful uptick in demand from the April.

And second, recruiting, where in the first quarter, we added a managing Director focused on transportation, leasing and logistics, and we have a healthcare partner, a software partner, a Managing Director in financials and a Managing Director in industrials slated to join us in the coming months. Disruption creates opportunity. This is a time to showcase the strength of our firm and lean into growth initiatives. Our client centric model allows us to quickly pivot our resources to deliver the services our clients need, from advising on their most transformative strategic initiatives to their most pressing financial needs. Our client relationships are measured by a lifetime and not by a transaction timeline.

And it’s in times like these that we gain and solidify their trust. Our brand and our team are stronger than ever, and we are exceptionally well positioned. I remain very confident in our long term prospects. With that, I’ll now turn the call over to Alex to review our financial results and capital management in more detail.

Alex Scottchalk, Chief Financial Officer, Parella Weinberg: Thank you, Andrew. Our revenues of $212,000,000 included $23,000,000 related to closings that occurred within the first few days of the second quarter, in which in accordance with relevant accounting principles were recorded in the first quarter. Our adjusted compensation margin was 67% of revenues and in line with our full year 2024 accrual. The compensation margin was set based on assumptions at the end of the quarter and may be adjusted as business conditions and investment decisions progress in the coming months and through year end. Our adjusted non compensation expense of $49,000,000 for the quarter included more than $10,000,000 of litigation related costs, which was the primary driver of the year over year and quarter over quarter increases.

Our prior guidance of a single digit increase in non comp expense for the full year 2025 remains our best estimate at this time. Shifting to taxes, our adjusted if converted effective tax rate for the first quarter reflects the tax benefit resulting from stock compensation awards vesting at a higher price than granted. Excluding this impact, the adjusted tax rate would have been 29.5% in line with our tax rate expectation for the remainder of the year. Turning to capital management. In the first quarter, we returned $121,000,000 to equity holders, including over $14,000,000 in open market repurchases and nearly $29,000,000 related to unit exchanges.

We will continue to deploy capital for open market buybacks as opportunities arise in addition to repurchases in connection with ordinary course RSU vestings and quarterly unit exchanges with a continued focus on proactively managing our share count. At the end of the first quarter, we had 62,000,000 shares of Class A common stock and 26,000,000 partnership units outstanding. We ended the quarter with $111,000,000 in cash and no debt. This morning, we declared a quarterly dividend of $07 per share. With that operator, please open the line for questions.

Operator: We’ll take our first question from Devin Ryan with Citizens Bank. Please go ahead. Your line is open. Please go ahead, Devin Ryan. Your line is open.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes, we can hear you now.

Devin Ryan, Analyst, Citizens Bank: Sorry about that. Yes, hey, good morning. I think my phone cut for a second. Just a question on the M and A environment. Obviously, lot of uncertainty right now.

I’m just curious how much of maybe the recent slowdown is because your companies are changing plans because their business outlook is more uncertain. So maybe they’re less interested in buying an asset or selling their business versus simply market conditions are volatile. And so when market conditions settle down, that should reignite activity that’s maybe sitting on the sideline?

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes. Thanks for the question, Devin. As I said in the upfront remarks, broadly across the firm in the M and A business, we see clients pausing and not terminating. And so I think we have clearly a slowdown in announcements. You can see that across the board in the sector as well as for Power business, but not a slowdown in the interest in M and A.

And I think this is just a natural moment with the volatility, as you mentioned, and I think an increasing range of uncertainty. We always have uncertainty, but I think the range of uncertainty here is particularly broad at this moment. And so when you’re driving in the fog, I think it’s a natural instinct to tap the brakes and that’s what we see. I do think because there’s not a slowdown in the interest in M and A that once you get some clarity, some more clarity, I don’t think you need complete clarity, but once you get more clarity, there’s a I think an opportunity to be able to transact again and plan again and that’s when we’ll see. I think a pretty sharp response to more clarity from the policy actions.

So we’re anticipating this to look a bit more like coming out of COVID than sliding through the sort of March 2022 timeframe.

Devin Ryan, Analyst, Citizens Bank: Great. Thanks, Andrew. And a follow-up on the non M and A businesses. Can you give us any sense of percentage of contribution in the quarter? And then for restructuring specifically, your team seems like they’re doing quite well there.

And I’m curious if you can frame kind of how much the productivity improvements are a function of just the environment being more active versus perhaps the firm gaining market share and how you feel about just more broadly market share in that business? Thanks.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yeah. We feel great about the broad liability management business. I think our team is doing a terrific job. I think the brand is gaining a lot of traction in that marketplace. We’ve been building that now for many, many years, and you tend to get the benefits of compounding, which we’re seeing now.

I think the market is quite conducive to the broad liability management service when you have these periods of volatility and moments where capital markets are quite challenging, you tend to seek help. And so that’s a very good driver of our business. We don’t break out the elements of our revenue, as you know, Devin, so I won’t go to answering that question. But as you know, we’re a very client centric model. And when our clients need more than their strategic help that they need help in connection with financings or in connection with balance sheet management, we quickly mobilized our team to address client needs.

So that business has done very well. We continue to see strength coming into the year and we saw a real pickup beginning during the volatility in April. Saw an even further increase in the business in that month.

Devin Ryan, Analyst, Citizens Bank: All right. Terrific. I will leave it there, but appreciate it.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Thanks, Kevin.

Operator: Thank you. And our next question comes from the line of Brandon O’Brien with Wolfe Research. Please go ahead. Your line is open.

Brandon O’Brien, Analyst, Wolfe Research: Thanks for taking my question. Heard the comments that 1Q and you saw pretty balanced growth across The U. And Europe, but we’ve been hearing more positive on the M and A backdrop in to the split. So I just want to get a sense of how commerce or by region and whether you’re seeing relative strength?

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Sorry, Brendan. I’m not hearing that very well. I’m not sure, operator, if we can help his line.

Operator: Please standby. I will see if I can turn the volume up here some.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Thank you. Brendan, you want to try again?

Brandon O’Brien, Analyst, Wolfe Research: Yes. Can you hear me now? Sorry.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes. That’s perfect. Thank you.

Brandon O’Brien, Analyst, Wolfe Research: Okay. Great. Sorry about that. Yes. So I was just asking on activity in Europe relative to The U.

S. I heard that you saw pretty balanced trends across both regions in 1Q, but there’s been a little bit more positivity on the outlook for Europe. So I just want to get a sense as to whether you’re seeing any bifurcation in trends there.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes. We’re seeing Europe much more unified in the wake of the policy actions here since the April timeframe, and we see a greater willingness to think about broad regional transactions and a more accommodative regulatory backdrop in Europe. So I think all of those are encouraging. I think much like The U. S.

Markets, however, particularly in the last thirty days or so, I mean, everybody’s sort of paused and taking a step back and again waiting for a bit more clarity. It doesn’t need to be absolute clarity, but I think a little bit more clarity on where this tariff policy and broad trade relations are going to fall out, I think we’ll start to see again a falling of what I think is a thin layer of ice, not a deep freeze, but a thin layer of ice here that will fall both in The U. S. And in Europe. But we do like the backdrop for Europe, and we think it’s trending very well and appears to be a better trending than what we saw in the last two years.

Brandon O’Brien, Analyst, Wolfe Research: That’s helpful color. And for my follow-up, I just wanted to touch on recruiting. Last year, spoke about plans or hopes to see an acceleration in hiring this year. And obviously, it sounds like you’ve gotten out to a good start. But while the preference is obviously for a stronger revenue backdrop, I would imagine that the current volatility and slowdown in M and A could also recruit result in a better recruiting environment for you.

So I just want to get a sense as to what you’re seeing in the recruiting backdrop today and get an update on your expectations for the full year.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes, you’re exactly right. This is a bit of the yin and yang of the business when you tend to have moments of less activity or slower announcement activity in particular tends to lead to an acceleration in hiring opportunities. So we’re always at the plate and ready to take swings at pitches that we’re going to be given on recruiting. We are constantly adding talent. In this environment, we’re going to see some more talent.

We’re not going to change our criteria, but we are seeing more talent. And as I said on the third quarter call, I think last year, we did want to accelerate our hiring for 2025 irrespective of market. And I think that market has moved more our way than when we started the year given, again, the slower announcement cadence here makes it a bit easier for people to think about a job change. So that’s helpful on the recruiting front.

Brandon O’Brien, Analyst, Wolfe Research: All right. Thank you for taking my questions.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Thank you.

Operator: Thank you. And your next question comes from the line of James Yarrow with Goldman Sachs. Please go ahead. Your line is open.

James Yarrow, Analyst, Goldman Sachs: Good morning and thanks for taking the questions. On the 67% comp ratio you put up for the quarter, could you just give us a little more clarity on what sort of backdrop you baked in into the ratio and then how you’re thinking about the ability to make further progress on the comp ratio for this year and beyond?

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Yes. Alex, do you want to go ahead and take that?

Alex Scottchalk, Chief Financial Officer, Parella Weinberg: Yes. Sure. Thanks, James. Look, so the 67% comp ratio really reflects our best estimate at the end of the quarter and continues to reflect our best estimate at this point in time. Obviously, as the year progresses and we measure our performance and we have better visibility on our pace of recruiting that could adjust.

We’re still early in the year. And I think we’ve demonstrated that we’ve provided some leverage in our comp ratio continue committed to doing that.

James Yarrow, Analyst, Goldman Sachs: Non comps rose 33% year on year in the quarter. Could you just break out how much of the non comps were from the litigation this quarter that you highlighted? And I assume it’s one time in nature. And then could you just update us on your full year non comp guidance relative to the single digit year on year number you gave previously?

Alex Scottchalk, Chief Financial Officer, Parella Weinberg: Sure, James. Yes, I think I mentioned in my upfront remarks that that litigation spend, which was directly related to the trial, is concluded was over $11,000,000 in the quarter. So that is definitely seasonal and not something that we expect to recur in the balance of the quarters for the year. And that single digit increase that we indicated on the last call still remains our best estimate for the year over year increase in non comp.

Brandon O’Brien, Analyst, Wolfe Research: Thanks a lot.

Operator: Thank you. This concludes the Q and A portion of today’s call. I would now like to turn the call back over to Andrew Bednar for any additional or closing remarks.

Andrew Bednar, Chief Executive Officer, Parella Weinberg: Okay. Thank you, operator, and thank you, everyone, for your interest in our firm and for your continued support. I also want to take a moment just to thank the 700 professionals, all my colleagues at Parella Weinberg for their tireless commitment to our mission and their unwavering dedication to our clients whenever and wherever they need us. I look forward to speaking with all of you in a few months, thank you again for joining today.

Operator: This concludes the Perrella Weinberg Partners first quarter twenty twenty five earnings call and webcast. You may disconnect your line at this time and have a wonderful day.

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