Focus Financial Partners Inc (FOCS) 2023 Q1 法說會逐字稿

Good morning, everyone. Before we begin, let me remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that Focus' results may, of course, differ from these statements. These statements are based on assumptions made by and information currently available to Focus Financial Partners and involve risks and uncertainties that could cause the results of Focus to materially differ from these statements.

大家，早安。在開始之前，請允許我提醒您，在本次電話會議期間，我們可能會做出一些前瞻性陳述。我們提請您注意，福克斯的結果當然可能與這些陳述不同。這些陳述基於 Focus Financial Partners 所做的假設和當前可獲得的信息，涉及可能導致 Focus 的結果與這些陳述存在重大差異的風險和不確定性。

Focus has made filings with the SEC, which lists some of the factors that may cause its results to differ materially from these statements. And finally, Focus assumes no duty and does not undertake to update any such forward-looking statements.

Focus 已向 SEC 提交了文件，其中列出了一些可能導致其結果與這些聲明存在重大差異的因素。最後，焦點不承擔任何責任，也不承諾更新任何此類前瞻性陳述。

In addition, due to our pending merger with Clayton, Dubilier & Rice, we will not be taking questions following Rudy and Jim's prepared remarks and will not be providing earnings guidance for the second quarter of 2023.

此外，由於我們即將與 Clayton, Dubilier & Rice 合併，我們不會在 Rudy 和 Jim 準備好的發言後回答問題，也不會提供 2023 年第二季度的盈利指引。

With that, I will turn it over to our Founder and CEO, Rudy Adolf. Rudy?

接下來，我將把它交給我們的創始人兼首席執行官魯迪·阿道夫 (Rudy Adolf)。魯迪？

Thanks, Rusty. Good morning, everyone, and thank you for joining us today. This morning, we announced our first quarter results with $557.5 million of revenues, adjusted net income, excluding tax adjustments per share of $0.69 and tax adjustments per share of $0.20. While slightly below our expectations, our financial performance continued to reflect the resiliency of our business despite the challenging backdrop during the quarter.

謝謝，魯斯蒂。大家早上好，感謝您今天加入我們。今天早上，我們公佈了第一季度業績，收入為 5.575 億美元，調整後淨利潤，不包括每股 0.69 美元的稅收調整和每股 0.20 美元的稅收調整。儘管略低於我們的預期，但儘管本季度面臨充滿挑戰的背景，我們的財務業績仍然反映了我們業務的彈性。

Our partners continue to deliver excellent service to their clients and manage their business as well, remaining agile during the quarter. Providing highly personalized, integrated advice is extremely valuable to their clients, especially during periods of volatility. According to Echelon Partners, industry M&A transaction volumes rebounded in the first quarter from a slower fourth quarter last year. They noted that buyers' demand and seller supply is strong, and they anticipate activity to increase as the year progresses.

我們的合作夥伴繼續為其客戶提供優質服務並管理其業務，並在本季度保持敏捷。提供高度個性化的綜合建議對客戶來說非常有價值，尤其是在波動時期。 Echelon Partners 的數據顯示，今年第一季度行業併購交易量較去年第四季度的放緩有所反彈。他們指出，買家的需求和賣家的供應都很強勁，他們預計隨著時間的推移，活動將會增加。

Year-to-date, our M&A activity has been strong with 16 closed transactions, including 2 new partner firms and 14 mergers on behalf of our partners. Our differentiated ability to source, structure and execute these transactions remains a core element of our value proposition to growth-oriented firms. With the largest M&A team in the independent wealth management space, we continue to bring industry-leading scale to benefit our partner firms and their clients through acquisition.

今年迄今為止，我們的併購活動一直很強勁，已完成 16 筆交易，其中包括 2 家新的合作夥伴公司和代表我們的合作夥伴進行的 14 筆合併。我們在尋找、構建和執行這些交易方面的差異化能力仍然是我們對成長型公司價值主張的核心要素。憑藉獨立財富管理領域最大的併購團隊，我們繼續保持行業領先的規模，通過收購使我們的合作夥伴公司及其客戶受益。

As I have mentioned before, we believe that the flight to comprehensive, unconflicted advice will continue to accelerate due to last year's market correction, leading to substantial growth in client assets managed by the RA industry as experienced in prior cycles. Our partners continue to take advantage of our value-added programs designed to give them an edge in meeting their clients' growing and highly personalized needs. By leveraging our scale and dedicated resources, our partners can deliver ever-increasing value to their advisers and clients, which are essential catalysts for retention, referrals and organic growth.

正如我之前提到的，我們相信，由於去年的市場調整，轉向全面、無衝突建議的趨勢將繼續加速，從而導致 RA 行業管理的客戶資產大幅增長，正如之前週期所經歷的那樣。我們的合作夥伴繼續利用我們的增值計劃，旨在使他們在滿足客戶不斷增長和高度個性化的需求方面具有優勢。通過利用我們的規模和專用資源，我們的合作夥伴可以為其顧問和客戶提供不斷增加的價值，這是保留、推薦和有機增長的重要催化劑。

While market conditions remain unsettled, our diverse and growing global partnership creates a number of scale advantages, reinforcing the sustainability of our strong growth over the long term and our differentiated value proposition in this industry.

儘管市場狀況仍不穩定，但我們多元化且不斷發展的全球合作夥伴關係創造了許多規模優勢，增強了我們長期強勁增長的可持續性以及我們在該行業的差異化價值主張。

With that, let me turn the call over to Jim. Jim?

接下來，讓我把電話轉給吉姆。吉姆？

Good morning, everyone. Our business remains resilient, supported by a diverse recurring revenue stream, variable management fee structure and the economic alignment we have with our partners. We are executing well, and we remain confident that we are well-positioned to capitalize on our industry's substantial forward growth opportunity.

大家，早安。在多樣化的經常性收入來源、可變的管理費結構以及我們與合作夥伴的經濟協調的支持下，我們的業務保持彈性。我們的執行情況良好，並且我們仍然有信心能夠充分利用行業巨大的未來增長機會。

Now let's turn to our Q1 P&L. Our revenues for the quarter were $557.5 million, up 3.9% year-over-year but slightly below our guidance of $560 million to $570 million. This was primarily due to lower-than-anticipated non-market correlated revenues. Our Q1 results also reflected $9.1 million in real estate-related performance fees, slightly below our $10 million guidance. Our Q1 adjusted EBITDA was $132.5 million, 1.9% lower year-over-year, excluding the expenses associated with the merger process. Our adjusted EBITDA margin was 23.8%, marginally below our estimate of approximately 24%. The revenue shortfall versus expectations that I just mentioned earlier contributed to the variance in our margin.

現在讓我們看看第一季度的損益表。我們本季度的收入為 5.575 億美元，同比增長 3.9%，但略低於我們 5.6 億至 5.7 億美元的指導值。這主要是由於非市場相關收入低於預期。我們第一季度的業績還反映了 910 萬美元的房地產相關績效費用，略低於我們 1000 萬美元的指導。第一季度調整後 EBITDA 為 1.325 億美元，同比下降 1.9%，不包括與合併流程相關的費用。我們調整後的 EBITDA 利潤率為 23.8%，略低於我們約 24% 的估計。我之前提到的收入與預期的差距導致了我們利潤率的差異。

Our Q1 adjusted net income, excluding tax adjustments per share was $0.69, a decline of 29.6% year-over-year. This reduction reflects the effect of higher interest expense on our borrowings. Our Q1 tax adjustments per share was $0.20, 11.1% higher year-over-year, reflecting our tax-efficient acquisition activity associated with the high M&A transaction volume for the period.

我們第一季度調整後每股淨利潤（不包括稅收調整）為 0.69 美元，同比下降 29.6%。這一減少反映了利息支出增加對我們藉款的影響。我們第一季度的每股稅務調整為 0.20 美元，同比增長 11.1%，反映了我們與該期間高併購交易量相關的節稅收購活動。

Our Q1 M&A activity reflected our continued strong momentum. We closed 12 transactions in Q1, including 1 new partner firm and 11 mergers on behalf of our partner firms. So far in Q2, we have closed 3 mergers on behalf of our partner firms and 1 new partner firm. The partner firm we closed on January 1 added revenues of approximately $1.2 million and adjusted EBITDA of approximately $400,000 to our quarterly results. Additionally, Westcourt Capital, the new partner firm that we closed on May 1, is expected to add $11.1 million in annual acquired base earnings.

我們第一季度的併購活動反映了我們持續強勁的勢頭。我們在第一季度完成了 12 筆交易，包括 1 家新的合作夥伴公司和代表我們的合作夥伴公司進行的 11 項合併。到目前為止，第二季度，我們已經代表合作夥伴公司完成了 3 項合併，並完成了 1 家新合作夥伴公司的合併。我們於 1 月 1 日關閉的合作夥伴公司為我們的季度業績增加了約 120 萬美元的收入，調整後的 EBITDA 約 40 萬美元。此外，我們於 5 月 1 日關閉的新合作夥伴公司 Westcourt Capital 預計將增加 1110 萬美元的年度收購基本收益。

Now let's turn to our Q1 expenses and cash flow. Management fees were $124.6 million or 22.3% of our revenues, lower sequentially by 1.9%, reflecting the contractual economic arrangements we have with our partners. Our noncash equity compensation expense was 1.4% of our Q1 revenues, in line with our expectations. As of March 31, our LTM cash flow available for capital allocation was $303.9 million, reflecting the resiliency of our cash flows during a volatile market year. We paid cash earn-out obligations of $26.1 million in Q1. We also paid $12.5 million in deferred acquisition consideration in Q1.

現在讓我們來看看第一季度的支出和現金流。管理費為 1.246 億美元，占我們收入的 22.3%，環比下降 1.9%，反映了我們與合作夥伴之間的合同經濟安排。我們的非現金股權補償費用佔第一季度收入的 1.4%，符合我們的預期。截至 3 月 31 日，我們可用於資本配置的長期現金流量為 3.039 億美元，反映了我們的現金流量在市場波動期間的彈性。我們在第一季度支付了 2610 萬美元的現金盈利義務。我們還在第一季度支付了 1250 萬美元的遞延收購對價。

Now turning to our balance sheet. We ended Q1 with approximately $2.7 billion of debt outstanding and our net leverage ratio was 4.41x, marginally above our estimate of approximately 4.3x due primarily to the modest shortfall in our adjusted EBITDA versus our expectations. As of March 31, our undrawn Term Loan A, together with our undrawn revolver and cash balance, give us over $850 million of available firepower as we anticipate another strong year of M&A activity.

現在轉向我們的資產負債表。第一季度結束時，我們的未償債務約為 27 億美元，淨槓桿率為 4.41 倍，略高於我們約 4.3 倍的估計，這主要是由於我們調整後的 EBITDA 與我們的預期相比略有下降。截至 3 月 31 日，我們未提取的定期貸款 A，加上未提取的左輪手槍和現金餘額，為我們提供了超過 8.5 億美元的可用火力，因為我們預計併購活動又將強勁。

Additionally, in April, we entered into $500 million in forward starting interest rate swaps. These swaps fix our 1-month term SOFR for $500 million of borrowings at approximately 3.17% plus a spread of 325 basis points for the April 2024 to April 2028 period.

此外，4 月份，我們簽訂了 5 億美元的遠期起始利率互換協議。這些掉期將我們 5 億美元借款的 1 個月期限 SOFR 固定在約 3.17%，加上 2024 年 4 月至 2028 年 4 月期間利差 325 個基點。

In closing, we continue to navigate the ongoing market challenges well and remain highly disciplined in deploying capital. We remain committed to driving substantial growth, enhancing our value-add programs and position ourselves to take advantage of the secular growth opportunity within the global wealth management industry.

最後，我們將繼續妥善應對當前的市場挑戰，並在資本配置方面保持高度紀律。我們仍然致力於推動大幅增長，增強我們的增值計劃，並利用全球財富管理行業的長期增長機會。

I'll now turn the call back to Rudy for closing remarks.

現在我將把電話轉回給魯迪，讓他作結束語。

Thank you, Jim. In closing, I would like to reiterate the strength and resiliency of our business model, our differentiated competitive position and the value of prudent fiduciary advice in volatile market environments. As I have said before, it is an environment like we experienced last year. Our firm's industry leadership and the value of what they do really shows, positioning them for a solid growth and performance as financial markets recover.

謝謝你，吉姆。最後，我想重申我們業務模式的實力和彈性、我們差異化的競爭地位以及在動蕩的市場環境中審慎信託建議的價值。正如我之前所說，這與我們去年經歷的環境一樣。我們公司的行業領導地位和他們所做的事情的價值真正展現出來，使他們能夠隨著金融市場的複蘇而實現穩健的增長和業績。

Rajini, Lenny and I could not be prouder of our incredible partnership and the quality of the business, the Focus team together with our partners has built over the last 18 years. We look forward to continuing to grow and evolve the company and to capitalizing on the substantial growth opportunities that lie ahead of us. Now as Rusty said, given our pending merger with Clayton, Dubilier & Rice, we won't be opening up the lines for Q&A. However, we want to thank everyone for their time and interest in Focus.

Rajini、Lenny 和我對 Focus 團隊與我們的合作夥伴在過去 18 年裡建立的令人難以置信的合作夥伴關係和業務質量感到非常自豪。我們期待著公司繼續發展和發展，並利用擺在我們面前的巨大增長機會。現在，正如 Rusty 所說，鑑於我們即將與 Clayton, Dubilier & Rice 合併，我們不會開放問答線路。不過，我們要感謝大家花時間關注 Focus。