Good day, and welcome to the Greenhill first quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Patrick Suehnholz, Director of Investor Relations. Please go ahead. Thank you. Good afternoon, thank you all for joining us today for Greenhill's first quarter 2023 financial results conference call. I am Patrick Suehnholz, Greenhill's Head of Investor Relations. Joining me on the call today 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. Thank you, Patrick. Our revenue was $49.7 million for the first quarter, 9% better than last year's first quarter, but considerably lower than we would like as a result of what was obviously a very difficult operating environment. While the pace of transactions has been slower than usual the past couple of quarters, given volatile markets, difficult credit conditions, and economic uncertainty, we are encouraged by the level of engagement we are seeing, particularly with regard to M&A interest from our corporate clients. It's worth noting that our firm is of a relatively small size, where our revenue trajectory can differ meaningfully from either results of competitors or overall changes in market activity. Accordingly, consistent with what I said on our last call, we expect our revenue improvement over last year to grow significantly in the second quarter, leading to our best first half in recent years. As markets continue to stabilize, credit conditions improve, and global deal activity rebounds from what are very low year-to-date levels, we are well-positioned to benefit in quarters to come. On the cost side, our compensation costs were elevated to just over $60 million for the quarter, largely as a result of the timing of the recognition of an accounting charge related to incentive compensation. However, already in the second quarter, our absolute dollars of compensation expense will decline significantly back to a normal level. As those costs decline and greater revenue materializes, our objective is to bring our compensation ratio down toward our target range by year-end, just as we've done in the past few years. Meanwhile, our non-compensation costs at just under $15 million were higher than last year's as a result of higher travel expenses as client travel has continued to normalize post the pandemic and some one-off costs related to relocating our London office. Even with these, the level of non-compensation expense remained within our target range. Looking ahead, the London relocation expenses are now behind us, and we will not be burdened by the duplicative rent we had as we made major office moves in London and in New York over the past few years. It is early in the year to draw many conclusions about our business performance by region, sector, or type of advice, but I can make a few points based on our early results and current pipeline. By region, we expect strong performances in Australia, Canada, and Spain, as well as improved performances in the U.S. and U.K. By sector, industrials is our largest focus area, and that should be a productive area this year. Mining and energy is another very active area for us, including newer green energy technologies. Our healthcare and consumer teams are also quite busy. By type of advice, corporate M&A is where we see the most opportunity. Relative to most of our competitors, we should benefit in the current market from having less of a reliance on financial sponsors than most. We are also seeing restructuring activity pick up from the low level last year when credit conditions were favorable for much of the year. While we don't expect anything like the pandemic period boom in restructurings, we believe we could be at the beginning of a longer period of robust restructuring activity, given the current economic circumstances than was the case in the brief pandemic era restructuring boom. Our capital advisory team continues to take on attractive new fund placement projects amid what is a challenging fundraising environment and should generate increased revenue as the year goes on. Notwithstanding that financial sponsors are not a particularly large portion of the M&A market at the moment, given challenging credit market conditions, winning more business from this client group, which has enormous dry powder to be deployed once market conditions have stabilized, continues to be our central strategic initiative for the future growth of our business. We believe our industry sector expertise, our cross-border capabilities, and our ability to access public companies are all advantages as we work to build this business. Turning to our balance sheet, we ended the quarter with $58.8 million in cash and debt of $270.1 million. The end of the first quarter usually marks our low point in terms of liquidity, given the timing of bonuses, deferred compensation payments, and tax withholding on restricted stock vesting. During the quarter, we repaid $1.8 million in principal reduction on our debt pursuant to a contractually required excess cash flow payment. During the quarter, we also repurchased 577,349 shares and share equivalents, mostly the latter in the form of tax withholding on the vesting of restricted stock, that was for a total of $7.9 million. Our board of directors also approved our usual quarterly dividend of $0.10 per share. Our term loan matures in just under one year from today. Our plan is to refinance or extend that loan in the relatively near term at such time as we believe market conditions are optimal for that. As I said last quarter, our primary focus is now on deleveraging, given the increased cost of debt. We may pay down some principal at the time of refinancing or extending our loan and in any event, aim to deleverage significantly over the next few years. I will end with a brief note on recruiting. We've recruited two new managing directors for the year to date, including one mentioned in our press release today. We remain in dialogue with many other candidates in what appears to be an active market for senior banking talent, and we aim to add several more managing directors in the weeks and months to come. With that, I'm happy to take any questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Devin Ryan with Citizens JMP Securities. Please go ahead. All right. Good afternoon, Scott and Patrick, how are you? Good. How are you? Good. This first question just on the outlook here. Obviously, good to hear about the continued expectation for the best first half in years. You know, clearly the bar, I guess, is pretty low, just given kind of the cadence of first halves for you guys. Just maybe love to push out a little bit further, I know you don't have a crystal ball, but just based on some of your other comments, Scott, can you maybe just frame out what the environment feels like today relative to maybe a year ago, which would maybe, clearly conditions could change, but maybe gives us some sense of kind of the, the full year view, and, you know, the data we're tracking, at least for 2Q would suggest the comments you made about 2Q makes sense? I'm just trying to look out a little bit further. Thanks. Yeah, sure. Fair enough. Look, I think, you know, there's kind of two things. There's the environment and then there's kind of what we see internally, right? We're a small enough firm that we're not, you know, we're not like an index fund that's going to track, you know, M&A volume up and down over the course of a cycle. I think there's no doubt we're in, you know, what's a challenging market for M&A transactions. If you look at the data, you know, sort of announcements or, you know, deal volume or whatever, you know, year to date versus, you know, even the last decade or more, it's certainly at a low end of the range. We feel like the, you know, what we're focused on, you know, a lot of work for major public companies that are well capitalized, don't have a lot of challenges in terms of arranging financing for transactions. We feel like that's a good niche to be in. You know, and very specifically, we're looking at a pipeline where, you know, frankly, there's kind of a surprising number of quite large transactions that are quite far advanced. You know, obviously, you won't see a lot of those both announced and closed in the second quarter, which means that, you know, we think we're gonna carry a fair amount of, you know, high-quality backlog into the latter part of the year and beyond. I, you know, I think net-net, we're certainly when we look at our own pipeline, we are more optimistic than most others, I think, sound in the market these days. I think that's just a function of, you know, if you're a firm many times our size, you're gonna be really beholden to how the whole market is doing. Whereas for us, if, you know, if you have, you know, if your clients, and your client focus tends to be one where there's a lot of activity bubbling behind the scenes, then you know you can be a veteran outlier, and that's where we think we are. Got it. Okay. Just to dig in a little bit on that. You know, I get the kind of the corporate piece, and you mentioned there's some kinda large chunky deals in there as well in terms of what you're working on. Are you seeing kind of the activity being broad-based, or is it really specific just to kinda idiosyncratic transactions or certain geographies? Just love to get a little more flavor for that as well. I think it's fairly broad-based. I mean, we're seeing, you know, I highlighted some of the regions, but I mean, certainly our, you know, some of the things we're excited about in our pipeline, there's, you know, there's a good mix between the U.S. and Europe and, you know, Australia is a smaller market, but we're quite excited with what's what's happening down there as well. We've, you know, we're active in the mining space, which, where there's been some good activity and, you know, Canada continues to be a good market for us. I think in most sectors and most regions, you know, it feels pretty good right now. There's the, you know, I'd say in sort of, fossil fuel type energy, I think things are challenged just by the extreme volatility in oil prices and even more natural gas prices. You know, in sort of the greener energy technologies and pretty much in every other sector we're involved in, you know, it's a, it's a pretty good mix. It's not there's one or two sectors or one or two regions where we're seeing, good activity. Okay, great. last one, just on the incentive charge, the accounting there. I didn't quite follow exactly what happened. Just if you can just give us some more background, if you can, whether that also, i s any, you know, pull forward of future expense as well. Yeah. Look, I think it's a one-off in the sense that it's just a, you know, the way you pay people and how things vest and so on can sometimes lead to sort of compensation expense being sort of clustered in a particular quarter. You know, given that it wasn't a real strong revenue quarter, it sort of sticks out more than it otherwise would have. You will see our absolute dollars of comp go all the way back to a very, very normal level in Q2 and over the course of the rest of the year. I think this will all get lost in the, you know, in a year that will look very, very different in the other three quarters in this regard. Got it. Thanks, Scott. I'll hop back in the queue, a couple more of I'll let others ask. Thanks. Okay, thank you. The next question comes from Matt Moon with KBW. Please go ahead. Hi, good afternoon. Just wanted to touch on the post-SIVB operating environment. Specifically curious on your thoughts on kind of the medium-term implications of the recent events impacting the commercial banking sector and, you know, how we should be thinking about potential trickle-down impacts to your business in the sector overall, just kinda given the potential for banks to hold a larger proportion of capital, for example, in highly liquid assets, among other factors. Kind of somewhat related, how have your views kind of evolved on the upcoming restructuring cycle, if at all, since these events? Would love to hear your thoughts there. Okay. Good question. Look, I think what's happened in the bank market recently is has sort of two separate impacts. One, I think, somewhat neutral, and one I think actually positive. If you look at our M&A business, I don't see much impact at all. I mean, I would say an overwhelming majority of the M&A deals we work on, the financing is coming from the biggest banks in America and around the world. I mean, I don't think the loss of regional banks, you know, the ones that have failed, I can't even remember an M&A deal we did that was financed by one of them. I don't think I see any real impact on M&A, you know, ability to do M&A deals. As I said, our business is a little more skewed toward better capitalized, you know, larger companies anyway that probably tend to almost always bank with those larger places. I do think it probably helps us on the restructuring side because You know, I don't think we're gonna see a wave of like massive companies going bankrupt or near bankrupt, but I think in sort of the smaller and mid-cap type companies that may well bank at some of these regional banks or, you know, other places where credit's gonna get a little bit tighter, you know, it's gonna lead to more, not necessarily bankruptcies, but certainly more restructuring of debt, sometimes out of court, sometimes in court. I think it probably is part of what is making us optimistic about sort of a longer term, not just boom in restructuring, but a longer term period of like, you know, a robust level of activity to keep the team busy and productive. Okay, great. Just another follow-up for me. Just, you know, looking ahead at that term loan that's due in April next year. Appreciate that you've kind of in your prepared remarks committed to continuing to focus additional capital allocation on repaying this debt ahead of maturity. You know, as you know, you'll probably necessitate a refi extension or alternate capital solution. You know, with this in mind, I was just wondering if you could kind of provide more specifics on how you anticipate to address this looming maturity. You know, it's particularly if like the market environment continues to remain challenged in a similar way as we've seen between now and then. Would. Yeah, love to hear your thoughts there as well. Sure. I mean, as far as the environment goes, I mean, from the firms we're talking to about a refinancing, I think the market's actually gotten quite a lot better just recently, certainly than it was at the height of the bank crisis. If you look at, you know, some of the so-called reverse flex that's happening in some of the deals being priced, it feels like it's getting better. I think if you also overlay that with my comments about how we see the, you know, the year playing out in the second quarter and, you know, what we're expecting in terms of a visible pipeline building for the second half, I think we're headed toward a period that will be optimal for us in terms of what our results will look like and what our trailing twelve months kind of metrics will look like that lenders like to look at. I think there's, a very good chance that aligns with what's already a bit of an improving environment. You know, I don't worry about it too much. I focus mostly on our results, and if our results are good, which I think they will be, I think we'll easily get a refinancing done on, you know, the right kind of terms to go forward. But the reason we've just kind of waited maybe a little bit longer than we might have is because of the way we see the quarters playing out, and we'd, you know, rather go to the market in a period of strength, which we think we'll be at soon, rather than, you know, at this immediate moment. Okay, great. Thanks, guys. Okay. The next question comes from James Yaro with Goldman Sachs. Please go ahead. Good afternoon, and thanks for taking my questions. If we just turn to the private fund advisory business, the fundraising backdrop for sponsors has certainly been weaker recently, and I think the outlook remains challenging looking ahead. I understand that you're winning more mandates and the business is performing well at your firm, but maybe you could just speak to the broader market trends in the various verticals in which you participate in that business. Sure. I mean, there's no question that that is, it's a challenging fundraising environment, and I'm, you know, I'm glad that's a very, really a very small part of our business as compared to M&A or restructuring. You know, we're still in the building phase in terms of primary fundraising. We're, you know, we're winning high quality mandates. We're getting closings done, we're raising money, but it's a, it's a slower process than, you know, it is in sort of more typical market conditions. I'd also add that, you know, on the secondary side, things are quite busy, I mean, for kind of the same reason. There are, you know, institutional investors want liquidity that makes them maybe less likely to commit to a new fund, but it maybe makes them more likely to sell a portfolio that they've been invested in over the years. You know, so that part of the business has been pretty active. On the primary side, I think we'll, you know, we'll get to a good place. We'll get these fundraisings done with decent outcomes, but, you know, it's just gonna take longer for any fund, I think, that's out there to raise whatever their target funding is than it would in a, you know, kind of a more normal financing environment. Okay, that's very clear. Thank you. Maybe you could just speak to, on the restructuring side, what parts of the market are driving the positive outlook? You know, is it rescue financings? Is it liability management, traditional Chapter 11, et cetera? I think it's a lot of liability management. You know, I think we probably always try for our clients to help them come to a out-of-court negotiated solution than an in-court bankruptcy solution. I mean, sometimes at the very end, you might put something through bankruptcy just to, you know, put it, get an agreed deal implemented. I would say we're very much in the middle market and with a leaning toward, you know, significant sized companies, but ones that are trying to, you know, either proactively manage their liabilities, or if even if it's a bit more urgent, try to come to a restructuring that they can do out of court. Okay. Thanks so much. Thank you. We have a follow-up from Devin Ryan from JMP. Okay. Hey. Hey, thank you. Yeah, I just wanna come back to the restructuring point. Just given kind of the acceleration in activity, I appreciate we're coming off of a relatively low base here. You know, is the expectation that we'll maybe see some of that revenue, you know, year-over-year coming through in the back half of this year? Or are you seeing it much more as a 2024 story? Just trying to think about the contribution to maybe the full year outlook this year? Thanks. Yes. I think very much this year, and really, in fact, even already in the second quarter, we'll start to see the restructuring pick up versus what was, you know, a very quiet year last. I mean, if you think about a year ago, I mean, credit markets were wide open and very little restructuring activity. I think we'll start to see a positive differential, you know, frankly, in Q2 and going forward from there. Okay, got it. Thanks a lot, Scott. I'll leave it there. I think that's our last question. I appreciate everybody dialing in, and we will look forward to speaking to you again next quarter. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.