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Press Release: Greenhill & Co. Reports Fourth Quarter Earnings Per Share Of $2.71 And Full Year 2020 Earnings Per Share Of $1.36

· 02/04/2021 16:05
For the Three Months For the Year Ended Ended December 31, December 31, 2020 2019 2020 2019 (in millions, unaudited) Employee compensation and benefits expenses $46.5 $44.4 $194.1 $178.9 % of revenues 33 % 42 % 62 % 59 % Non-compensation operating expenses 14.1 21.0 62.3 76.2 % of revenues 10 % 20 % 20 % 25 % Total operating expenses 60.6 65.4 256.4 255.2 % of revenues 43 % 61 % 82 % 85 % Total operating income 80.1 41.3 55.2 45.8 Operating profit margin 57 % 39 % 18 % 15 %-- Record quarterly revenue and earnings per share, resulting in significant full year profitability and accelerated debt reduction -- Quarterly revenues of $140.7 million, up 32% from prior year fourth quarter -- Annual revenues of $311.7 million, up 4% from prior year -- Compensation ratio of 33% for the fourth quarter in order to reduce the ratio to 62% for the full year -- Operating profit margin of 57% for the fourth quarter, 18% for the full year -- Accelerated debt reduction with $20 million discretionary repayment in fourth quarter -- Board authorized up to $50 million of purchases of shares and share equivalents -- Recruited additional Managing Director to expand our coverage of the Latin American sector

Greenhill & Co. Reports Fourth Quarter Earnings Per Share Of $2.71 And Full Year 2020 Earnings Per Share Of $1.36

PR Newswire

NEW YORK, Feb. 4, 2021

NEW YORK, Feb. 4, 2021 /PRNewswire/ --

Greenhill & Co., Inc. (NYSE: GHL) today reported revenues of $140.7 million, net income of $63.3 million and diluted earnings per share of $2.71 for the fourth quarter of 2020.

The Firm's fourth quarter 2020 revenues compare to revenues of $106.7 million for the fourth quarter of 2019, which represents an increase of $34.0 million, or 32%. The Firm's fourth quarter 2020 net income and diluted earnings per share compare to net income of $24.1 million and diluted earnings per share of $1.05 for the fourth quarter of 2019, an increase of $39.2 million, or 162%, in net income and of $1.66, or 158%, in diluted earnings per share.

For the year ended December 31, 2020, revenues of $311.7 million compare to $301.0 million for 2019, which represents an increase of $10.7 million, or 4%. For 2020, net income of $31.3 million and diluted earnings per share of $1.36 compare to net income of $11.0 million and diluted earnings per share of $0.45 for 2019, an increase of $20.3 million, or 185%, in net income and of $0.91, or 202%, in diluted earnings per share.

The Firm's revenues and net income can fluctuate materially depending on the number, size and timing of completed transactions on which it advised and other factors. Accordingly, the revenues and net income in any particular period may not be indicative of future results.

"We are pleased that we generated increased revenue and solid profitability for the full year, driven by the strong fourth quarter performance we had been signaling. The resilience of our business in the face of the pandemic and related restrictions on economic activity is a function of our increasingly diversified revenue sources. We generated strong revenue in European M&A and from our substantially enlarged U.S. restructuring business, while also benefiting from an expanding range of financing advisory assignments. Together those more than offset the many sectors and regions that saw a quiet 2020. Our results further benefited from reduced non-compensation costs, declining interest expense and lower taxes. Looking ahead, we see the current economic and market environment as favorable for all our businesses. We expect increased revenue productivity from the many areas that made modest revenue contributions in 2020, our non-compensation costs should remain well below historic levels, and our interest expense should continue to decline further as we repay debt. The plan we established when we announced our recapitalization in 2017 remains on track, and with approximately half of the economics of our Firm now owned by employees our team has every incentive to maximize the value potential for the benefit of all shareholders," Scott L. Bok, Chairman and Chief Executive Officer, commented.

Revenues

Fourth Quarter

Revenues were $140.7 million in the fourth quarter of 2020, which was our highest revenue quarter in Firm history, compared to $106.7 million in the fourth quarter of 2019, an increase of $34.0 million, or 32%. The increase in our revenues in the fourth quarter of 2020, as compared to the same period in 2019, principally resulted from an increase in merger and acquisition transaction completion fees and restructuring advisory fees, partially offset by a reduction in private capital advisory fees and lower transaction announcement and opinion fees.

Full Year

For the year ended December 31, 2020, revenues were $311.7 million compared to $301.0 million in 2019, an increase of $10.7 million, or 4%. The increase in our 2020 revenues, as compared to 2019, resulted from an increase in the number and scale of merger and acquisition transaction completion fees, particularly in Europe, and restructuring advisory fees, partially offset by a reduction in private capital advisory fees and lower transaction announcement and opinion fees.

During the first quarter of 2020, we announced the recruitment of Fernando Soriano (most recently a Senior Managing Director at Evercore, where he was head of Latin America), who joined the Firm as Co-Head of Latin America, based in New York.

In January 2021, as part of our annual evaluation and promotion process, the Firm named three new client-facing Managing Directors: Dean Rodrigues (London - Corporate Advisory), Jochen Schmitz (New York - Financing Advisory and Restructuring) and Andrew Stace (London - Corporate Advisory). With these promotions and including all Managing Directors we have announced to date, we currently have 70 client-facing Managing Directors.

Expenses

Operating Expenses

Fourth Quarter

Our total operating expenses for the fourth quarter of 2020 were $60.6 million compared to $65.4 million for the fourth quarter of 2019. The decrease in total operating expenses of $4.8 million, or 7%, resulted from a decrease in our non-compensation expenses, partially offset by an increase in our compensation and benefits expenses, both as described in more detail below. Our operating profit margin was 57% for the fourth quarter of 2020 as compared to 39% for the same period in 2019.

Full Year

For the year ended December 31, 2020, total operating expenses were $256.4 million compared to $255.2 million in 2019. The slight increase of $1.2 million principally resulted from an increase in our compensation and benefits expenses, nearly offset by a decrease in our non-compensation expenses, both as described in more detail below. Our operating profit margin was 18% for 2020 as compared to 15% in 2019.

The following table sets forth information relating to our operating expenses.

Compensation and Benefits Expenses

Fourth Quarter

Our employee compensation and benefits expenses in the fourth quarter of 2020 were $46.5 million, which reflected a 33% ratio of compensation to revenues. This amount compared to $44.4 million for the fourth quarter of 2019, which reflected a 42% ratio of compensation to revenues. The increase of $2.1 million, or 5%, was principally attributable to an increase in the amount of accrued year-end bonuses. The ratio of compensation to revenues for the fourth quarters of both 2020 and 2019 were set at a lower than normal level in order to bring our full year compensation ratio closer to our target level.

Full Year

For the year ended December 31, 2020, our employee compensation and benefits expenses were $194.1 million, which reflected a 62% ratio of compensation to revenues. This amount compared to $178.9 million for 2019, which reflected a 59% ratio of compensation to revenues. The increase in expense of $15.2 million, or 8%, was principally attributable to higher incentive compensation. The increase in the ratio of compensation to revenues for 2020 as compared to 2019 principally resulted from an increase in the amount of accrued year-end bonuses.

Our compensation expense is generally based upon revenues and can fluctuate materially in any particular period depending upon changes in headcount, amount of revenues recognized, as well as other factors. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in a future period.

Non-Compensation Operating Expenses

Fourth Quarter

Our non-compensation operating expenses were $14.1 million in the fourth quarter of 2020 compared to $21.0 million in the same period in 2019, representing a decrease of $6.9 million, or 33%. The decrease in non-compensation operating expenses principally resulted from lower travel costs as a result of the global pandemic, reduced occupancy costs following the move to our new headquarters space, lower professional fees, a decrease in the amount of foreign currency exchange loss and a decrease in the charge for uncollectible accounts. Non-compensation operating expenses as a percentage of revenues for the fourth quarter of 2020 were 10% compared to 20% for the same period in 2019.

Full Year

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February 04, 2021 16:05 ET (21:05 GMT)