Good morning and welcome to the Perella Weinberg Partners Full Year and Fourth Quarter 2021 Earnings Conference Call. During today's discussion, our call will be placed on listen-only mode. And following management's prepared remarks, the conference call will be open for questions from the research community. This conference call is being recorded. At this time, I'd like to turn the conference over to Taylor Reinhardt, Head of Investor Relations. Please go ahead.

Thank you, operator and welcome to our full year and fourth quarter 2021 earnings call. Joining me today are Peter Weinberg, Chief Executive Officer; and Gary Barancik, Chief Financial Officer. A replay of this call will be available through the Investors page of the company's website approximately two hours following the conclusion of this live broadcast through March 30, 2022. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, February 17, 2022 and have not been updated subsequent to the initial earnings call. Before we begin, I'd like to note that this call may contain forward-looking statements, including PWP'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 PWP'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. PWP has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8-K which can be found on the company's website. I will now turn the call over to Peter Weinberg to discuss our results.

Thanks very much, Taylor and good morning to everybody and thank you for joining us for our full year and fourth quarter 2021 earnings call. Gary and I are going to provide prepared remarks for around 15 minutes and then we're going to open it up for Q&A. This morning, we reported record full year results with revenues of $802 million and adjusted net income of $161 million, a 54% increase and more than a fourfold increase, respectively, over the prior year period. 2021 was a transformational year for PWP with our public listing in June representing an important milestone in the ongoing growth and development of our global platform. Our commitment to both providing trusted and high-quality advice to clients and delivering long-term value to shareholders is driving our continued execution and the focused investment in our future. The results achieved in 2021 underscore the strength of our platform and showcase the benefits of past investment which enabled this level of performance. In 2021, we experienced a broad-based rise in M&A activity levels across our industries and geographies. This is evidenced by an increase in the number of completed transactions as well as an increase in fee discipline across those transactions. We experienced robust activity in the healthcare, industrials, consumer and financial sectors. The activity was balanced across large cap, mid-market and emerging growth corporates with a strong showing amongst financial sponsors across all sectors of our business. While the DNA of PWP was historically skewed toward corporate clients, the financial sponsor community has become an increasingly important market participant and today represents a significant client base for the firm. There remains an enormous amount of dry powder waiting to be deployed and the line between strategic and sponsor is blurring, creating opportunities we've not seen before. We continue…

Thank you, Peter. As Peter mentioned, total revenues for 2021 were $802 million, up 54% over the prior year period. This included revenue in the fourth quarter of $199 million, up 5% year-over-year. The period-over-period growth for both the full year and the fourth quarter reflects high levels of M&A advisory activity across several service lines, sectors and geographies. The increase in revenues for the full year period can be attributed to both an increase in the number of advisory transaction completions and the average fee size per client, particularly in mergers and acquisition advice as compared to the same period in 2020. The increase in revenues for the fourth quarter of 2021 was primarily driven by an increase in average fee size per client as compared to the prior year period. The M&A advisory driven increase in revenues for both the full year and fourth quarter was partially offset by a reduction in restructuring and liability management fees as compared to the prior year periods. The year-over-year decrease was most noticeable for the fourth quarter period as the fourth quarter of 2020 represented peak levels of restructuring and liability management activity for the firm. Our fourth quarter results did not include any transaction fee revenue from closings in the first quarter of 2022, in line with the prior year period. This compares to a recognized revenue amount of $29 million in the third quarter of 2021 from transactions that closed early in the fourth quarter, in line with relevant accounting principles. And my following comments will focus on non-GAAP metrics which we believe are relevant in assessing the financial performance of the business. Our GAAP measures and a reconciliation of GAAP to adjusted results can be found in our earnings press release which is on our website. On the…

Thanks very much, Gary. To wrap up, we had an exceptional 2021. And as I mentioned last quarter, we are a growth company, confident in our prospects going forward. As we continue to invest in our client-centric model, our platform will become stronger and even more balanced, allowing us to execute more efficiently and profitably. Irrespective of the market environment, we remain committed to serve and support our clients with trusted strategic and financial advice across our platform with our integrated model, allowing us to pivot and allocate our resources as needed. With that, we'll now turn it back to the operator to open the line for your questions. Thank you.

[Operator Instructions] Our first question comes from Devin Ryan of JMP Securities.

Great. Good morning, Peter and Gary. How are you?

Good morning, Devin.

I want to start on the capitalization and the buyback. I think -- clearly, good to see the $100 million buyback authorization. And if we can, just to think about how you came up with that level, it's a large number relative to the outstanding Class A shares today? And just more broadly, I heard your comments, Gary, around kind of thinking about excess capital but as you just think about the capitalization of the firm and clearly, the capital that will be generated over the next year, it seems like we'll still be in a position where there's more excess capital created than even that $100 million would satisfy and the current dividend. So just love to maybe dig in a little bit more around how you came up with that number and then other outlooks for capital.

Sure, Devin. Look, I think the $100 million number was really kind of derived from a number of different -- looking at a number of different things. We obviously looked at our current trading volume in the market and what we thought sort of reasonable amount that could be repurchased without impacting the share price as well as where kind of precedent transactions have been done. The size of our program at $100 million is large relative to many, based on our float, our public float but obviously, on a market cap basis, much less so. We're obviously thinking about the business environment, where we think that's going, what we think our cash generation billings would be under kind of a range of different economic scenarios. There are a lot of different variables there. So it's really a number of subjective factors there and we thought that was an appropriate amount that would allow us to have the right amount of flexibility without having such a small amount that we have to go back to the Board very quickly, for example. So, it's really all of those factors. I think, look, we're going to -- in terms of sort of the duration and excess cash and so forth, we're going to really just kind of continue to monitor this over the next many quarters. And obviously, if we determine that we have such cash generation of -- or excess cash generation that we can do more quickly, we'll do that. So that's just something we're going to sort of see as the rest of the year plays out.

Okay, great. Very helpful. And then, I guess a follow-up here for Peter. So you heard the commentary around kind of outlook for the broader advisory market. I think the $6 trillion announced M&A last year was by far a high watermark, so most people expect some moderation there. On the other hand, Perella Weinberg has a lot of partners kind of ramping on the platform, as you mentioned. So you've set a linear path of kind of productivity, kind of progression here. But just how should we think about some of the puts and takes in maybe the intermediate-term outlook for the company as maybe the overall backdrop moderates a bit but on the other hand, you're growing the franchise faster than most of your peers out there?

Yes. Well, look, I mean, as we think, Devin, about 2022, we are in week 7 of 52. So as you know and everyone on this call knows, it's not easy to predict how the year is going to turn out. My comments really earlier about the environment were exactly as you suggested, I think another $6 trillion year is going to be very difficult, just purely based on the storm clouds -- macro storm clouds which are, I feel, just darker than they have been. And that would -- I won't go through every one in detail. But with respect to inflation being less and less transitory and the consensus on the frequency and level of interest rate increases is quite high, antitrust policy taking shape, geopolitical temperatures seem to get higher every day. And so the first comment I really had was about the macro environment. And I think with respect to the firm, we reached a revenue amount in 2021 that was where last year -- early last year, we said we would reach in 2024. And so there was a very significant increase for us. Productivity was, of course, at a peak. And we do have -- 1/3 of our partners are new. And so this is just how we plan the business. We're -- we really are very excited and positive about our growth, mostly because the conversations that we're having with clients and with recruits are just very positive and they continue to be. But that's really how we looked at the year going forward in the context of your question.

Okay, great. I'll leave it there. Thanks a lot. Appreciate it.

Thanks, Devin.

Our next question comes from Michael Brown with KBW.

Great, thanks. Hi, good morning, guys.

Hi, Mike.

So I wanted to start with the -- I guess, follow on to the productivity question, maybe build on Devin's question there. So you obviously had a very strong 2021 and I think you mentioned productivity hit about $14 million per partner. And I believe you mentioned that you expect to return to a, sort of, historical periods. When I look back, the historical range, it looks like it's something closer to $10 million per partner range. So I guess, one, is that what you're expecting from the business going forward? Or is it that you expect to kind of tick down towards that range over time? Just wanted to flesh that out a little bit more.

Yes, I can take that one, Mike. Look, I think that we -- first of all, as we plan for our business, we're not going to plan for extremes. You heard the commentary about kind of what we see in the environment. And even with our own productivity level, while as Peter mentioned, we definitely see long-term productivity trends being very positive as our partners get more mature on the platform. For 2022, what we said was we do think and we're planning for productivity reverting towards more of the historical average levels. Not at, we're obviously in an environment that's much stronger than we were in when we had $10 million of partner productivity. But we are sort of -- we are planning internally that we're going to have something that trends more towards an average. And that's, by the way, probably how we are always going to look at it, particularly a handful of weeks into the year where just visibility at this point is not very good.

Okay, Gary. That's really helpful. So it's not reverting to the historical level. It's ticking down from the peak. And -- okay, that certainly makes sense. And I guess just one follow-up. I wanted to hear a little bit more about the energy space. I think that's an important sector for your company and it seems to be right for more M&A activity. So any comment there on how activity has been lately and your expectations for that piece of the business in 2022?

Sure. Yes. So I think as oil pushes $90 a barrel, I haven't looked this morning where it is but the energy companies, the oil and gas companies are generating enormous amounts of cash flow right now. And with that cash flow, they are deliberating over a number of different uses of that cash. One would be just returning capital to shareholders and other would -- other uses would be M&A. I would say, honestly, now return of capital is probably winning slightly, although not completely. But I will say that -- two things about activity because your point is correct: one is that private companies, now in that space, if you're looking at a possible liquidity event, now is the time. And so we have a lot of dialogue going on with private companies in the energy space. And also, I would say midstream companies are worth more now with more -- with higher prices and just the dynamics of the industry. So it's a very interesting space for us. It's a very significant commitment for us and that's really how I look at the opportunity.

Okay, very interesting color. Thank you.

Our next question comes from Steven Chubak with Wolfe Research.

Good morning, guys. This is Brendan O'Brien filling in for Steven. I guess for Gary, the comps that you exhibited this quarter was certainly a nice surprise. However, given the strong partner growth and your comments suggesting the industry fee pool is likely to contract in 2022. Just wanted to get a sense of how we should be thinking about the trajectory of the comp ratio moving forward?

Yes. We're really not changing our sort of medium-term view on that in terms of the mid-60s. We think in most environments, we think that's reasonable, obviously, at extremes. If the environment were to turn extremely negative, that would have to be revisited. But I think given where we kind of see things right now, I think that's -- we're very comfortable with that guidance that we've given so far.

Great, thanks for that. And then on Europe, optimism has been building on activity in the region since the back half of this -- last year. However, with tensions rising in Ukraine and a number of major elections occurring this year, it feels like the risk of the outlook in the region are increasing, particularly in Continental Europe which is an area of strength for you guys. In light of these risks, I was hoping you could provide some color around what you're seeing in terms of activity in the near term and how that has impacted your outlook there?

Yes. So I think -- I mean, just looking backwards at 2021, the M&A volume in Europe, I believe, was about $1.5 trillion out of the $6 trillion. So it's really -- it's an enormous market now and it's been growing quickly. And as you rightly alluded to, the largest activity is really in the U.K., France and Germany, where we are present. Looking forward, listen, the geopolitical risk is a relevant one in global M&A and you can argue it's particularly relevant there because of it's proximity, at least as it relates to the Ukraine. But I will say a couple of things about Europe which make us very enthusiastic about the opportunity. One is the private equity dry powder is enormous and growing very, very quickly. And so now PE volume is about 1/4 of European M&A volume and that's going to be increasing. So that's a -- it kind of buttresses the case for growing activity there. The availability of capital is still very, very significant, albeit the cost might be higher, it's still there. And frankly, rate increases are lagging more due to structural reasons than anything else. But -- and we're particularly also focused on technology and financial technology and digital infrastructure which are areas in which we've hired in the last year over there. So net-net, I'm very acknowledging and sensitive to the geopolitical issues but we're still bullish on Europe.

That's really color. Thanks for that.

Our next question comes from Ken Worthington with JPMorgan.

Hi, good morning. I guess maybe just one for me. To Peter, to follow up on your outlook for 2022. We've heard that the greater volatility is leading to longer deal close times. I was wondering to what extent that you're seeing this too and maybe either what regions or sectors are longer close times, either more or less pronounced?

Sure, Ken. So I actually think that the major reason why deals are taking longer to close, is less so because of the volatility and more so because of antitrust policy. Essentially, right now, the -- there is no fast track in terms of antitrust review. And so that, by definition, will extend deal times. I think the volatility isn't as much a timing issue, more of an issue as to whether or not people feel that it's an appropriate time to enter the market at all. But I do feel and I've mentioned this a number of times that the -- there's a general comfort level with a very high level of volatility. And so we haven't seen, at least in our experience, that be a specific reason for delays. And I think -- and in terms of your -- the last part of your question, in terms of where those delays will come from, I mean I'm -- linked to my comment on antitrust regulation, I think it could be on very, very large deals, particularly in very sensitive spaces like technology. But otherwise, I mean there were 60,000 M&A deals in 2021. And so there's -- it's a big market. There's a lot of activity there. There are some -- the clouds are there on the horizon, as I've said but we're -- we remain bullish on level of activity generally.

Very helpful. Thank you so much.

And I'm not showing any further questions at this time. And with that, I'd like to hand the call back to Peter Weinberg for closing remarks.

Okay. Thanks, Kevin and thank you all for joining. Call any time and I know we will reconvene as a group after the first quarter. Have a good day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.