Perella Weinberg Partners Class A Common Stock 2026 Q3 Earnings Call

You may begin. Thank you, operator, and welcome all.

Joining me today are Andrew Bednar, Chief Executive Officer and Chairman, and Alex Gottschalk, Chief Financial Officer and Chief Operating 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 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 Perella 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. Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release included within today's Form 8-K, 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, Kendall, and good morning. Today, we reported third-quarter revenues of $251 million, up 53% from a year ago and up 61% from the second quarter, bringing our year-to-date revenues to $557 million, up 5% from last year. As we discussed last quarter, we anticipated that our revenue would be back half-weighted, and that is exactly what we're seeing. The momentum in our business has moved from pipeline into announcements and is steadily converting into revenue. Our third quarter revenues were our highest since the third quarter of 2024, led by our M&A business, which nearly doubled from the third quarter of last year and is up over 40% year to date. We saw particular strength in our consumer, industrials, energy, and financial institutions businesses.

In restructuring and liability management, revenues are down against a record 2025, but we remain engaged on large and complex situations, and that pipeline continues to build. The two metrics we previously highlighted as the strongest leading indicators of our business also continue to strengthen. Our announced and pending backlog at quarter end was up nearly 3 times from a year ago. Our total booked plus announced and pending backlog as of today is up about 30% year over year. Finally, the number of announcements year to date is up compared to last year, and our current gross backlog under engagement letters is up 40% versus this time last year. Importantly, our strong performance is broad-based. In the third quarter, our fee-paying client count was up 50% from a year ago, and the number of fee events exceeding $5 million was up nearly 80%.

This reflects our investments in internal talent development and our relentless focus on expanding client coverage. on September 1, we closed our acquisition of Gleacher Shacklock. Our combined U.K. business has experienced strong momentum out of the gate, with 6 announced transactions since September, and we see accelerating client dialogue, both demonstrating early validation of our combination thesis. Taken together, the strength of our backlog, the breadth of our client base, and the level of activity across our business give us confidence heading into year-end and into 2027. Developing and attracting top talent remains central to how we grow the firm. This year, we have added 14 partners and 13 managing directors, including the Gleacher Shacklock team, and we intend to continue adding talent that broadens our client coverage and expands our product capabilities consistent with our strategy and our brand.

We remain very excited about our path, and we recognize our duty to you, our shareholders, a responsibility that we take very seriously. Although we regularly evaluate ways to improve our position, we have never made a decision to sell the firm, nor have we ever initiated any sale process. We have been building this firm for the long term. We are only 20 years in, and we continue to see tremendous opportunities in front of us. 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 third quarter revenues of $251 million included $55 million related to closings that occurred within the first few days of the fourth quarter, which, in accordance with relevant accounting principles, were recorded in the third quarter. Our adjusted compensation margin for the first 9 months was 67%, in line with last year and with our full year target. The third quarter margin of 62.5% reflects bringing our year-to-date accrual in line with that target. Our adjusted non-compensation expense of $37 million for the quarter was roughly flat with last year. The $6 million increase from last quarter largely reflects the insurance recovery that benefited the second quarter.

For the nine-month period, adjusted non-compensation expenses totaled $106 million, down 14% from last year, driven primarily by lower professional fees. We remain on track for a single-digit percent decrease in full-year adjusted non-compensation expense versus 2025. Our third quarter adjusted tax rate was 29.5% on an if-converted basis. Excluding the benefit from RSU vesting, we continue to expect our underlying adjusted tax rate to be in the low to mid 30% range for the remainder of 2026. Turning to capital management, year to date, we have returned $88 million to equity holders through the net settlement of RSUs, dividends and distributions, and open market repurchases. Share repurchase activity has been temporarily limited as we have prioritized deploying capital towards strategic investments, including the acquisition of Gleacher Shacklock.

At the end of the third quarter, we had 79.5 million shares of Class A common stock and 18 million partnership units outstanding. Finally, we closed the quarter with $150 million in cash and no debt. This morning, we announced a quarterly dividend of $0.07 per share. With that, operator, please open the line for questions.

Good morning. Good morning. Good.