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Edited Transcript of GHL earnings conference call or presentation 29-Apr-19 8:30pm GMT

Q1 2019 Greenhill & Co Inc Earnings Call

NEW YORK May 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Greenhill & Co Inc earnings conference call or presentation Monday, April 29, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Patrick J. Suehnholz

Greenhill & Co., Inc. - Director of IR and COO of Investment Banking & Principal

* Scott Lee Bok

Greenhill & Co., Inc. - Chairman & CEO

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Conference Call Participants

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* Brennan Hawken

UBS Investment Bank, Research Division - Executive Director and Equity Research Analyst of Financials

* Devin Patrick Ryan

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* James Francis Mitchell

The Buckingham Research Group Incorporated - Research Analyst

* Jeffery J. Harte

Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research

* Michael Anthony Needham

BofA Merrill Lynch, Research Division - Associate

* Michael C. Brown

Keefe, Bruyette, & Woods, Inc., Research Division - Associate

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Presentation

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Operator [1]

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Good day, and welcome to the Greenhill First Quarter 2019 Earnings Call and Webcast. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Patrick Suehnholz, Director of Investor Relations. Please go ahead.

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Patrick J. Suehnholz, Greenhill & Co., Inc. - Director of IR and COO of Investment Banking & Principal [2]

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Thank you. Good afternoon, and thank you all for joining us today for Greenhill's First Quarter 2019 Financial Results Conference Call. I am Patrick Suehnholz, Greenhill's Head of Investor Relations. Joining me today on the call is Scott Bok, our Chairman and Chief Executive Officer.

Today's call may include forward-looking statements. These statements are based on our current expectations regarding future events that, by their nature, are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions. The firm's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date on which they are made.

I would now like to turn the call over to Scott Bok.

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [3]

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Thank you, Patrick. We reported first quarter revenue of $51.2 million and a loss of $0.64 per share. The low level of revenue was a function of both a lack of large transaction closings during the quarter for our firm and a generally slower pace of deal activity in the market as a whole. Our sense is that the sharp decline in equity values and the closing of financing markets in the fourth quarter had a significant impact on M&A activity, particularly early in the first quarter and particularly outside the U.S. In fact, we had revenue increases for the quarter in every region but Europe, with a very weak start in Europe relative to a particularly strong quarter there a year ago more than offset those increases as well. More recently however, with equity values back near all-time highs and the financing markets reopened, we've seen a rebound in deal activity and our current pipeline leads us to expect a solid revenue performance for the full year.

In particular, we see the potential for increased revenue over last year from clients in North America, Australia and Latin America as well as a continued strong performance from our capital advisory business. While Europe is off to a slow start this year, last year's record performance demonstrated the strength of our franchise in that market, and we expect that to again become evident as the year goes on.

Finally, it's worth noting that given all our recruiting over the past year or so, about 20% of our Managing Director group has still been with us only a short period of time and generally, has yet to have had a material revenue impact.

Apart from the shortfall in revenue, our other metrics were broadly consistent with the first quarter of last year. Our compensation costs were slightly lower than last year but resulted in a higher-than-usual compensation ratio given the lower revenue level. Our non-compensation operating expenses were slightly higher than last year but again, the ratio was significantly higher as a result of the revenue level. Both cost ratios should return to their historic range at a more typical revenue level.

Our tax rate for the quarter was 24%. And I note that our non-compensation costs and taxes were both impacted by nonrecurring items that are highlighted in our press release.

In terms of capital returns, during the first quarter, we purchased 436,885 shares of common stock in the open market plus 499,786 share equivalents via tax withholding on restricted stock that vested during the quarter. Together, these repurchases were at an average price of $26.05 per share. We also declared a dividend of $0.05 per share.

Since quarter end, we completed the refinancing of our outstanding debt in a manner that reduced our cost of borrowing, increased the scale of our potential share repurchases and increased our flexibility to return further capital to shareholders via additional share repurchases or dividend increases in the future. Specifically, our loan size was increased to $375 million. Our borrowing rate was reduced by 50 basis points to LIBOR-plus 325 basis points. The maturity date of the debt was pushed out 5 years from the date of this new financing to 2024. Our scheduled annual amortization payments were reduced by half to 5%. The size of our currently remaining share repurchase authority was increased such that it now stands at $75 million. And our flexibility to make future share repurchases beyond that and/or to increase our dividend was significantly enhanced. As has been the case throughout the 18-plus months since we started our share repurchase plan, we will be opportunistic as to how we expend these funds, with a dual objective of maximizing the number of shares we repurchase while also maintaining a strong and liquid balance sheet.

We ended the quarter with cash of $80.5 million and term loan debt of $319.4 million. As of today, our current cash balance is $125.3 million and our term loan balance is $375 million.

I will end with a brief update on recruiting. In the year-to-date, we've announced the recruitment of 5 Managing Directors. Together, this group will help us open a Singapore office to cover M&A clients from Southeast Asia, enhance our efforts in the shareholder advisory area and extend our industry sector expertise in the building products, industrial and insurance areas. We also entered into a cooperation agreement with a small but highly respected advisory firm in Israel, Goren Capital, in order to better serve clients in that market. Including announced recruits, we currently have 79 client-facing MDs globally, and we expect to add further to that number with additional recruits in the near term, followed by internal promotions at year-end.

Finally, I note that we've posted a revised investor presentation on our website. And with that, I'm happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Today's first question comes from Devin Ryan of JMP Securities.

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Devin Patrick Ryan, JMP Securities LLC, Research Division - MD and Senior Research Analyst [2]

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Maybe just first question here. Appreciate some of the commentary on the backdrop. Just on Europe specifically, I guess we see the volumes in the industry and so we understand the dynamic. Is there anything that you're looking for, whether it be kind of Brexit certainty or any firming of economic data that would, I think be productive to kind of your outlook? Or I guess what's making you feel like things are maybe starting to stabilize or get better? And how should we think about Europe, kind of, on the full year relative to last year, if you can?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [3]

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Sure. Look, I think there is an element of the market environment in Europe and there's also an element just of quarter-to-quarter sort of randomness. I mean a year ago, the first quarter where there still was all the Brexit uncertainty and everything else that might give corporations and boards concern with all -- all that uncertainty was still there and yet we had one of our best quarters ever in Europe last year in the first quarter. So and we had a very strong year throughout the year. And obviously, as I pointed out, had record results in a number of respects in regard to Europe. So I wouldn't draw any conclusions really whatsoever as to what happened in Europe for us in the first quarter. I mean undoubtedly, the situation with Brexit had to have some impact because it has been very much in the news and at a moment when people thought clarity would be developing, it seems like there was almost the opposite of that developing. Getting that behind us, I think, will be a very positive thing for the business in the U.K. and even across continental Europe. But I wouldn't point too firmly at that. I mean I've noticed some comments from others as well, I mean clearly there was a slowdown in activity in Europe. I think some of that is Brexit related, some is economic related but some is just the random movement quarter-to-quarter. And given the fact that it was only -- the year that just ended that we had such great results, I wouldn't read anything too negative into what happened in Europe in the first quarter.

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Devin Patrick Ryan, JMP Securities LLC, Research Division - MD and Senior Research Analyst [4]

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Got it. Okay. So just to be clear, the expectation that kind of full year revenue should still end at a reasonable level or that's the hope that doesn't have anything implied in it that Europe, the trajectory change dramatically or just so we're kind of thinking about the individual pieces because I heard kind of the expectation for obviously better performance in North America?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [5]

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Yes. Look, I think -- I mean I don't want to give sort of a prediction on sort of regional breakdown, but if I had to guess I would say this year is probably a little more heavily weighted to other regions than Europe. Last year was a very, very strong one there. I do think some regions that had a weaker Europe for us last year will do better this year, places like Australia and Latin America. And I do think we'll do better in the U.S. So maybe a little bit more tilted overall toward Europe, but my comment about what we expect for the full year is really an aggregate total figure for the firm. And of course, lots of the things we do particularly the larger fee things we do tend to be cross-border and involve multiple regions anyway. So it's not easy to, sort of, point to one black and white outcome as to one region gets the revenue and one doesn't because very often, our bigger fees cross multiple regions.

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Devin Patrick Ryan, JMP Securities LLC, Research Division - MD and Senior Research Analyst [6]

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Okay. Terrific. And then just a follow-up here. Good to see the debt refinance and the terms there. Just as we're thinking about the repurchase today, the $75 million that's remaining, so obviously, you had specific kind of plan previously and then it was kind of an accelerated stock buyback. And then I guess just trying to think about how you guys are viewing the current authorization and whether it's just purely opportunistic, so if the stock were to, say, dislocate from the current level significantly that you would step in and be really aggressive? Or do you -- should we think about this more as like kind of a traditional repurchase where there will be considerations of time, price but not that there's any real sense of urgency even if the stock were to come in maybe to a different level than where it is now?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [7]

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I'm not sure I really can be too much more specific on that. I mean with the refinancing, we got 2 things in relation to the repurchase. One is we got a larger amount for just the initial repurchase as part of our overall plan. So there's $75 million left on that. And we'll be -- as I said, we're going to balance the desire to get as many shares as cheap as possible with a desire to maintain ongoing sort of strong balance sheet throughout and figure out how we use that. But that's different I think from sort of a typical share repurchase plan. What's -- the other positive thing about refinancing has been in addition to that $75 million, we also were able to get significantly increased flexibility for the future, in the right moments to be able to buy back more shares or pay dividends, not in some sort of extraordinary amount but enough that the repurchase is not sort of a onetime thing, where you work through it and then you're finished until the debt is repaid down the road. So I think, as I talked I think on the last call, we do intend to deleverage but when we see a moment like we've just been through, we think our shares are still significantly undervalued and we think the financing markets are very, very attractive as they certainly became in recent weeks, for us to increase to some degree, our ability to buy back shares was the prudent thing to do for our shareholders and for the firm. And so we'll be thoughtful about how we use the last $75 million. And the good news is that, that's not even the end of it if you want to look on sort of a multiyear view that we have more flexibility built into the new facility.

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Operator [8]

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And our next question today comes from Jeff Harte of Sandler O'Neill.

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Jeffery J. Harte, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [9]

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A couple for me. One just on kind of numbers or details. So with the term loan outstanding now, how should we be thinking of interest expense, kind of, in 2Q '19 and going forward, assuming you don't draw down on the revolver?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [10]

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I would not assume we're going to drawdown on the revolver. The only reason we have a small revolver associated with larger facility is that, that seems to be the way the leveraged loan market works, that typically the market wants you to have a revolver. So we put that in place at the time of the original borrowing 21 months or so ago with no intention of really ever drawing down on that. So I think for interest expense, I would just look at the -- going forward at the LIBOR-plus 325 basis points. And the debt will get repaid, albeit on a slower scheduled pace than what we had before. And if the Fed cuts rates 25 basis points, we'll be paying a little bit less, and if they raise them eventually, we'll pay a little bit more, but I think it is pretty straightforward. I wouldn't look for the debt amount to change other than to decline in line with the scheduled amortization payments. So kind of from here to the maturity for that.

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Jeffery J. Harte, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [11]

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Okay. I mean are there any like transaction-related expenses we should think about amortizing going through anything that would raise it a bit beyond just the LIBOR plus 325?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [12]

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Very modest this time around. I mean for a follow-on offering like this, things like the investment banking and the legal are a lot less than the first time around. So very, very modest.

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Jeffery J. Harte, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [13]

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Okay. And second thought on the revenues. I mean we -- from what we could see visibly, we knew it would be tough quarter, and it was, which isn't terribly surprising. But as we look forward, kind of, what we can see in the pipeline and announcements suggests not a whole lot of a pickup kind of this year or recently but your commentary makes it sound like things are quite a bit stronger. Can you talk a bit to maybe what you're seeing versus what we're seeing in the pipelines?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [14]

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Yes. So I mean I don't again know exactly the databases that you guys use or where exactly they get their information, but to me it's pretty clear. We have seen the pace of announcements, particularly more significant ones for our firm pick up in -- sort of later in the first quarter and into the second quarter. And of course, there's a whole, sort of, shadow pipeline beyond that of things that we can see pretty far advance that you guys, of course, can't see yet. So I think some of what I'm saying is probably clear if you look closely enough at how announcements have evolved in recent weeks. And some of it obviously, at this point, only we can see because it's advanced but not yet announced.

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Jeffery J. Harte, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [15]

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Okay. And finally on comp expense. I guess given the revenues, I was a little surprised to see how high the comp dollar amount was. Should we be thinking of the $45 million as just kind of your maybe minimum level? Or is this a function of revenues will get better so you're going to, kind of, keep accruing to have the tower amount on what you have?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [16]

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I think it's more of the latter. The amount is less than it was for the year ago first quarter by $4 million, I think. And clearly, it should be given a lower level of revenue. But still, if you take a full year point of view, we sort of accrue on that basis what we think we would end up having to spend in compensation dollars as the year plays out. Obviously, it's easier if you're going to have a weak quarter in the year for it to be one late in the year and set up early in the year because you don't end up with sort of outlier comp ratio. If you have a year in which your weak quarter is the third or fourth quarter, nobody really notices it. But I think we did sort of a prudent level of comp expense with a view toward how we think the whole year will play out.

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Operator [17]

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And our next question today comes from Jim Mitchell, Buckingham Research.

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James Francis Mitchell, The Buckingham Research Group Incorporated - Research Analyst [18]

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Maybe just on the noncomp side. You guys -- you're opening up the Singapore office, you're obviously expanding headcount. So is there any change because the noncomp numbers were little even ex the Cogent charge were a little bit higher than kind of what you had kind of alluded to last year kind of in the low 70s I think, being kind of flattish with it last year, starting off a little higher. So how should we think about the noncomp trajectory this year?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [19]

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I think still consistent with what we've said before. I mean any given quarter, as you can imagine, there are lots of small things that are some sort of one-offs. And this quarter clearly our results are what they are as a result of the revenues. So I didn't want to kind of overdo it in terms of trying to explain small adjustments and things like that. But there's the -- let's talk about the Cogent earnout, which obviously that's the last quarter, that's relevant. We had some foreign currency things, we had some headhunting fees, a whole bunch of little stuff that sort of added up. I mean legal expenses can be quite different one quarter to another. So it's a bunch of little stuff. Going forward, yes, we will open a Singapore office. At the same time, we're likely to move offices in New York, and we expect we'll have some savings as a result of that. There seems to be pretty good market and -- for making a move in Midtown Manhattan right now and we're getting more efficient space that works for us. So there are pluses and minuses, but I think what we've said in the past, we still stand by for noncomp.

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James Francis Mitchell, The Buckingham Research Group Incorporated - Research Analyst [20]

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Okay. And maybe a follow-up on the buyback capacity. Do you have any, with the cash on hand of $125 million with a $75 million buyback, do you feel like you have to pace that? Or is there any constraints other than stock liquidity? Do you have to worry about a certain amount of cash level? Like say you have an opportunity near term, can you be aggressive? Or how do we think about what the flexibility of that $75 million is? And maybe just if you can help me remember what the amount of stock you issue per year for employees, just so I can kind of think about what kind of a net basis that could be?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [21]

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I don't want to say more than we have because we just like -- the simple answer is we just -- we're -- obviously, we're obviously trying to buy back shares on a manner to get as most shares as possible. That's in all the -- that's in the interest of all the ongoing shareholders. In terms of the balance sheet, I would just point out that our seasonal low, by a considerable margin, in terms of cash is the end of the first quarter, right. That you pay your taxes, you have your RSU vesting, you pay your bonuses. And so the cash tends to grow from March 31 throughout the year all the way until almost the next March 31. So I think we've got flexibility to do what's right, but we're going to be thoughtful about how we do it. I think we did a good job over the last 18 or 20 months where there were periods that share price ran up quite a bit we stopped, there were periods it got very low, we got aggressive, and we're going to try to continue to do the same going forward.

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James Francis Mitchell, The Buckingham Research Group Incorporated - Research Analyst [22]

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Okay. Fair enough. And maybe one last question on the revenue comment. You talked about a solid performance for the full year. Just -- I just don't want to make sure -- I just want to make sure that we're not confused. Are you thinking that, that was a pretty -- a good year in 2018 that you can match that? Or just mean it's still going to be reasonably solid. I just want to make sure I understand what you're thinking?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [23]

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I wouldn't want to get overly specific on that but look, I don't think 2018 was some sort of upside aberration. I think our -- there were lots of parts of our firm that didn't really contribute that much to the great result last year. We've got lots of new MDs who joined us 2 years ago and 1 year ago and are just becoming productive. So I certainly don't see 2018 as some sort of an outlier year that should be hard for us to build on to higher numbers going forward. But I'm not going to make a specific statement about exactly where I think the 2019 revenue comes out, whether it's a bit more, a bit less, the same. I think it's early in the year. But the main message is that we feel good about the backlog we've got, we feel good about the book of assignments, and we feel very good about market conditions in terms of where stock prices are, where credit markets are after a pretty weak period very late in the year. And so we add that all up to say we feel pretty good about how the whole year should come out.

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Operator [24]

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And our next question today comes from Michael Brown of KBW.

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Michael C. Brown, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [25]

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So I mean obviously we saw the announcement last week about the 4 key hires and 5 year-to-date. So a good start to the year on the hiring front. And so I just wanted to circle back and see if you're still kind of shooting to add about 10% net MD growth? Is that kind of the right target for the year? Or given that strong start, will you be able to maybe comment a little bit above that target?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [26]

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I think that's still a very good target. Conceivably, we can do a little bit better. But I think it will be in that range. I mean that's not sort of intended to be a terribly precise figure. But I think given the start we've had, given some ones that are in the recruiting pipeline pretty far along as well as some others but I think follow later in the year, I feel very good about getting to that 10% net figure that we talked about.

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Michael C. Brown, Keefe, Bruyette, & Woods, Inc., Research Division - Associate [27]

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Okay. That's fair. And then one of the key hires you made was in the shareholder advisory business. And so given its growing importance we're, kind of, hearing that across yourself and through your peers, can you kind of frame how large that business has grown relative to your total revenues? And then how maybe it's grown over the past couple of years as kind of the fees from that capability have become more important?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [28]

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Yes. Look, I don't see -- I think it's a very important form of advice to give clients, and it's one that we had given in the past, albeit not with sort of a dedicated standalone group with a specific leader and so on. But we're clearly investing more and trying to build on that for going forward. But I don't see it as an entirely distinct revenue line. The real upside opportunity -- there are fees to be made for simply advising on, an activist appears and maybe no transaction ever happens. Where the more significant payoff by far comes along is that the shareholder advisory assignment gives you the chance to get closer to the company, to get on the inside and very often, of course, in these activist situations, there can be a transaction, there can be a divestiture of noncore assets, there can be a sale of a whole company, there can be a whole variety of things that could come out of that, sometimes closely related, sometimes almost disconnected but happened to happen at the same time. So to us, this is a service that gets us closer to our clients, that gets us into more client boardrooms, that positions us to win more significant transaction business down the road. Along the way, we think we'll get some -- paid some nice advisory fees for to the advice we give on the shareholder topic. But the real payoff is going to be sort of blurred into the M&A business because it kind of relates to transactions that come out of the initial advice.

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Operator [29]

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And our next question today comes from Brennan Hawken of UBS.

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Brennan Hawken, UBS Investment Bank, Research Division - Executive Director and Equity Research Analyst of Financials [30]

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I know you touched on this before a little bit on the comp side from a previous question. But just wanted to follow up on that. I know you've been so busy with recruiting and adding a lot of MDs. So I just wanted to try to get a sense about operating leverage and in the environment where we see some revenue acceleration. As you say, you're expecting, you've got the pipeline building, the backlog that's strong. Are we going to be looking at an expense base that's a little bit more fixed, just given some of the activity that you've been doing on the recruiting front for comp? Or how should -- or is the operating leverage not really going to be that much different?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [31]

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I think the operating leverage is not going to be that different. I mean had we -- last year, of course, we ended up for the first time literally in a 24-year history with 4 quarters in a row almost identical in a revenue sense. If our first quarter in the revenue sense looked like one of those quarters, we wouldn't even be talking about our comp ratio. We would've been right in the normal range and nobody would have noticed anything, wouldn't have been a topic to discuss. So I think that there has always been sort of a floor below which comp can't go because you want to obviously attract and retain and motivate your people. And so there is -- at that kind of low end of revenue, it does become fixed. But at sort of more normal and higher levels of revenue, I think there is a lot of operating leverage that goes with it. And we've benefited from that in the past and expect we will again.

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Brennan Hawken, UBS Investment Bank, Research Division - Executive Director and Equity Research Analyst of Financials [32]

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Okay. Great. And I know you gave some qualitative descriptions, and I know you referenced earlier that there's some of the detail in the release, but I -- the only number I could find in the noncomp front was on the Cogent piece. But is the -- was the other pieces that you had highlighted, did they just not sum up to an amount that's kind of material enough to quantify? Or is there any -- can you help us maybe get a sense for what kind of upward pressure some of those other unusual items that you had called out, how much upper pressure they might have put on the noncomp side, that would be helpful. Sorry to follow up on that.

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [33]

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Yes. No, that's okay. But there were a series of things, I would say, none of which individually are worth noting. And given that we didn't spell it all out in the press release, I wouldn't want to go into more detail. And again, I'm not making sort of excuses on noncomp, it was all bit higher. There are reasons for that. We think those are largely nonrecurring reasons. And we think going forward, we'll be kind of broadly where we indicated in the past. And even with some new office expansions, as I said, because of some other costs we think will go down, we're still comfortable with what we set for the near term. So there's going to be some quarterly variation based on a variety of things, whether it can be legal fees, foreign currency, headhunting fees, et cetera, which can -- all of which can fall on a lumpy way. But there's really nothing specific that's worth quantifying for, let's put it that way.

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Brennan Hawken, UBS Investment Bank, Research Division - Executive Director and Equity Research Analyst of Financials [34]

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Okay. That's fair. And were generally activity-relating noncomp items still running at a decent pace, given the backlog that you highlighted and the fact that there have been some more recent announcements? Was it just the kind of revenue didn't fall great and then yet, there wasn't much relief on the activity front because it's still a reasonably good environment? Is that the right way to think about it or is that too hard?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [35]

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That's the perfect way to think about it. I mean clearly, things like travel and related client activities was very robust throughout the quarter. Because it's sort of like -- at least in my view, the year started very, very weak because November, December was so difficult in terms of financing markets closing, et cetera. But our people were out there actively engaged with clients, and we felt like things really dramatically changed pretty quickly. So by the time you get halfway through the quarter, it felt like, even though the statistics of deal activity weren't quite showing it yet, it felt like it was a good environment for doing transaction. So we -- our clients are certainly interested in doing important strategic things, but there was just a little window there where it was more difficult and people sort of held off.

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Operator [36]

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And our next question today comes from Mike Needham of Bank of America Merrill Lynch.

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Michael Anthony Needham, BofA Merrill Lynch, Research Division - Associate [37]

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So first on the restructuring team. I think you've added a number of people for that group after the senior hire from Rothschild. Is the team getting to a point where you would expect them to produce a material amount of revenue in recession?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [38]

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Absolutely. I mean we're having had historically a fairly small dedicated team, we've got sort of easily 25 professionals fully dedicated to restructuring in New York. We've grown the teams in London as well, including with the new partner who joined just recently who we announced last year. So yes, we've got -- we are well positioned to participate in any sort of uptick in restructuring activity. And I think as most firms would probably tell you, it's -- activity is sort of spotty. It's not like it's nonexistent. It's certainly not like it's booming, especially with financing markets opening again. But I think our team is busy and generating some revenue, but certainly not producing the way we expect it will the next time we get into a more difficult financing environment.

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Michael Anthony Needham, BofA Merrill Lynch, Research Division - Associate [39]

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Okay. And then one more follow-up on the pipeline questions. What part of the business you feel most confident in and kind of the comments you made for the full year? And what part is the most -- kind of the biggest question mark?

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Scott Lee Bok, Greenhill & Co., Inc. - Chairman & CEO [40]

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I feel most confident about the capital advisory business because it's not missed a beat in the last several quarters. It's been record year last year, record year the year before and off to a very strong start this year. But I also feel very good about some of what I would call the smaller markets simply because it's off a low base last year. So like Australia and Latin America have got a very high degree of confidence we'll do better there than this year. For North America, I feel quite positive about that as well. Europe's probably the biggest swing factor in terms of how the year ultimately turns out, and that, as I said, they're off to a slow start there but look for the year we had last year clearly we've got a great team and a great franchise there. And so I guess what I'm saying really is I don't have a huge variation in confidence on the various things. It's -- I think it's going to play out pretty much as I just noted there. And probably, if there's some degree of pickup in the economy in Europe or even some resolution to Brexit, I think we'll have the wind at our back over there more so as well.

Okay. Thank you. And that's our last question, so we thank you all for dialing in, and we will speak again next quarter, if not before. Thanks.

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Operator [41]

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And thank you, sir. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.