Good morning, and welcome to the Perella Weinberg Partners First Quarter 2025 Earnings Conference Call. Currently, all callers have been placed in a listen-only mode, and following management's prepared remarks, the call will be open for your questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you need to remove yourself from the queue, press star 2. At any time, if you should need operator assistance, press star 0. 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.

Thank you, Operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer, and Alex Gottschalk, Chief Financial Officer. Before we begin, I'd like to note that this call may contain forward-looking statements, including Perella Weinberg's expectations of future financial and business performance and conditions and industry outlook. forward-looking statements are inherently subject to risk 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 perello weinberg's most recent sec filings for 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 Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8K, which can be found on the company's website. I will now turn the call over to Andrew Bednar to discuss our results.

Thank you, Taylor. and good morning. Today we reported first quarter revenues of $212 million, 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 start of 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 08 and 09 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 and pending 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 start of 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 solidified 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.

Thank you, Andrew. Our revenues of $212 million included $23 million related to closings that occurred within the first few days of the second quarter, in which in accordance with relevant and 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 million for the quarter included more than $10 million 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 a tax benefit resulting from stock compensation awards besting 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 million to equity holders, including over $14 million in open market repurchases and nearly $29 million 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 million shares of Class A common stock and 26 million partnership units outstanding. We ended the quarter with $111 million in cash and no debt. This morning, we declared a quarterly dividend of $0.07 per share. With that operator, please open the line for questions.

And at this time, if you wish to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2. 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.

Hello. Yep, we can hear you now.

Oh, hey. Sorry about that. Hey, good morning. I think my phone cut for a second. Question on the M&A environment. Yeah, obviously a lot of uncertainty right now. I'm just curious how much of maybe the recent slowdown is because, you know, 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.

Yeah, thanks for the question, Devin. As I said in the upfront remarks, broadly across the firm and the M&A business, we see clients pausing and not terminating. And so I think we have, you know, 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&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 instant to tap the brakes, and that's what we see. I do think because there's not a slowdown in the interest in M&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, 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 action. So we're anticipating this to look a bit more like coming out of COVID than slogging through the sort of March 22 timeframe.

Great. Thanks, Andrew. And a follow-up on the non-M&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.

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, but they need help in connection with financings or in connection with balance sheet management, we quickly mobilize 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. We saw an even further increase in the business in that month.

All right. I will leave it there, but appreciate it. Thanks, Evan.

Thank you. And our next question comes from the line of Brendan O'Brien with Wolf Research. Please go ahead. Our line is open.

And thanks for taking my question. I heard the comments that one, you saw pretty balanced growth across the U.S. and Europe. But we've been hearing a lot more positive on the M&A backdrop in Europe relative to the U.S. So I just want to get a sense of how commerce.

Sorry, Brendan, I'm not hearing that very well. I'm not sure, operator, if we can help his line.

Please stand by. I'll see if I can turn the volume up here some.

Thank you. Brendan, you want to try again?

Yeah, can you hear me now? Yeah, that's perfect. Okay, great. Sorry about that. Yeah, 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 one queue, 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.

Yeah, 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 30 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.

That's helpful, Color. And for my follow-up, I just want to touch on recruiting. You know, last year you spoke about plans or hopes to see an acceleration hiring this year, and obviously it sounds like you've gotten out to a good start. You know, but while the preference is obviously for a stronger revenue backdrop, I would imagine that, you know, the current volatility and slowdown in M&A could also 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.

Yeah, 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.

Thank you for taking my questions. Thank you.

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

Good morning. 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 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?

Yep. Alex, do you want to go ahead and take that?

Yep, 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, you know, as the year progresses and we measure our performance and we have better visibility on our pace of recruiting, you know, 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 and continue committed to doing that.

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?

Sure, James. I think I mentioned in my upfront remarks that that litigation spend, which was directly related to the trial, which has concluded was over $11 million 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-com. Thanks a lot.

Thank you. This concludes It's the Q&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.

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 Peralta 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, and thank you again for joining today.

This concludes the Parello Weinberg Partners first quarter 2025 earnings call and webcast. You may disconnect your line at this time and have a...