Greenhill & Co., Inc. (



Q4 2011 Earnings Call

January 25, 2012 04:30 am ET


Richard Lieb - CFO

Scott Bok - CEO


Howard Chen - Credit Suisse

Devin Ryan - Sandler O'Neill

Joel Jeffrey - KBW

Michael Wong - Morningstar Equity Research



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Good afternoon and welcome to the Greenhill fourth quarter and full-year 2011 earnings call and webcast. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Richard J. Lieb, Chief Financial Officer. Mr. Lieb, please go ahead.

Richard Lieb

Thank you. Good afternoon and thank you all for joining us today for Greenhill’s fourth quarter and full-year 2011 financial results conference call. I'm Richard Lieb, Greenhill's Chief Financial Officer and joining me on the call today is Scott Bok, our 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.

Scott Bok

Thank you, Richard. As we did in our press release I want to start today’s call by thanking everyone who expressed their condolences and heartfelt support following the recent loss of two of our managing directors. Jeff Buckalew and Rakesh Chawla as well as Jeff’s wife and two children in a tragic airplane accident last month. This is a painful loss for their families and all who knew them, not least their fellow Greenhill colleagues who had worked closely with Jeff for 15 years and Rakesh for eight years.

While we continue to miss them both very deeply on a personal as well as professional level, I can assure you that everyone at Greenhill is determined to press ahead. The strong culture that they helped to build the Greenhill is strengthened furthered by our shared greed of their loss will see us through this difficult time.

And with that I would like to turn to discussing our latest results. We are very pleased with all aspects of our results for both the quarter and the full year. Our advisory revenue was up 51% for the quarter and 21% for the full year despite what I am sure everyone would agree was a very challenging deal environment. Our total revenue which reflects the value movements in our remaining principle investments in addition to our advisory revenue was up meaningfully for the quarter and modestly for the full year.

Our pre-tax profit margin was 34% for the quarter and 26% for the year and our earnings per share of $0.67 in Q4 mean that in EPS terms we were up about 11 times versus the prior year’s quarter and 41% for the full year. Note that all the cost and profitability figures we cite exclude $7 million of expense that is the acceleration of past year’s restricted stock grants that were made to our two partners who passed away.

You will recall that we have consistently talked about having four main objectives for the firm. One to increase our market share of the global pool of advisory fees; Two, to consistently achieve the highest profit margin among our closest peers; Three, to maintain the strong dividend policy; and Four, to maintain a flat or even declining share count. I will focus on the first of these and then turn it back Richard for the others.

In terms of increasing our market share, we are pleased with our growth in advisory revenue, both in absolute and relative terms as well as the increasing diversity of our sources of revenue. Our 20% growth for the year came despite quite a challenging M&A environment which worsened materially starting in August. That strong growth also came in spite of some very important announced transactions we were involved in that failed to get to the finish line.

Our solid revenue performance for the quarter and full year should go a long way toward clearing up several misconceptions that developed about us over the course of the last year. Namely the league tables are indicative of financial performance, that setbacks and one or two deals can determine the financial outcome for an entire year and then an occasional quite quarter is indicative of the long-term strength of the franchise.

The facts are that league tables can be highly misleading that every year we will have big transaction losses as well as big wins and this is simply not a business where there is going to be quarterly consistency. But should be important for shareholders and employees alike is the long-term growth and profitability of Greenhill which is best measured over periods of at least a year and by that measure we feel very good about our performance.

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