Greenhill & Co. (GHL) Misses Q2 EPS by 48c, Revenues Miss

Greenhill & Co. (NYSE: GHL) reported Q2 EPS of ($0.79), $0.48 worse than the analyst estimate of ($0.31). Revenue for the quarter came in at $47.8 million versus the consensus estimate of $53.85 million.

• Quarterly revenues of $47.8 million, down 15% from prior year's second quarter due to impact of the global pandemic on M&A activity
• Total year to date revenues of $114.9 million, 7% higher than the same period in 2019 but also impacted by reduced M&A activity offset by increased restructuring activity
• Compensation expense for quarter and year to date up over prior year due to recent growth in professional headcount, resulting in elevated compensation ratio given the revenue level
• Non-compensation costs for quarter similar to prior year but negatively impacted by a loss on sale of Brazilian business and non-cash expense due to duplicate rent during the build out of our new headquarters location
• Sold our small Brazilian business to our local team for a nominal sum

"Our Firm has continued to remain fully operational during the pandemic, is maintaining active dialogues with clients across our businesses and is both winning new mandates and successfully executing transactions. We have benefited from a very significant increase in restructuring assignments and related retainer fees as a result of the pandemic, offset by a substantial decline in M&A and capital advisory transaction activity. Given the time required for restructuring processes to get to completion, as well as the timing of some of our larger M&A assignments, we expect our current quarter to show improvement sequentially and our fourth quarter to be particularly strong, resulting in a respectable revenue outcome for the full year. We continue to take steps to reduce recurring non-compensation costs, and we will likewise aim to bring down our compensation ratio by year end as we did last year, with the objective and expectation of generating a net profit for the full year despite the economic impact of the pandemic. For next year, we expect a continuation of heavy restructuring activity and should see a significant increase in M&A and capital advisory activity," Scott L. Bok, Chairman and Chief Executive Officer, commented.

For earnings history and earnings-related data on Greenhill & Co. (GHL) click here.

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