Greenhill & Co Inc (GHL) 2014 Q4 法說會逐字稿

Good day, and welcome to the Greenhill fourth quarter and full year earnings conference call and webcast.

(Operator Instructions)

Please note this event is being recorded. I would now turn the conference over to Mr. Chris Grubb, Chief Financial Officer. Mr. Grubb, the floor is yours, sir.

Thank you. Good afternoon, and thank you all for joining us today for Greenhill's fourth quarter and full year 2014 financial results conference call. I am Chris Grubb, 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 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 these 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, Chris. The summary of the fourth-quarter and full-year 2014 for us, is that it was a relatively flat revenue year, with fourth-quarter advisory revenue down 1% from the prior year, and full-year advisory revenue down 2% from the prior year. Total revenue for the year was down slightly more, due to a loss early in the year, as we liquidated some of the last pieces of our investment portfolio. Our pre-tax profit margin for the fourth quarter was 31%, bringing our full-year pretax profit margin to 25%, the same strong level we achieved in 2012 and 2013.

We had fourth-quarter earnings per share of $0.51, and full-year earnings per share of $1.43. Between dividends and share repurchases, we again returned a lot of capital to shareholders in 2014, resulting in a share count that is roughly flat versus a year ago, and a bit below where we stood after our 2004 IPO. Overall, we view this as a solid financial performance for 2014. Equally important, we believe our brand and reputation continue to grow. Our team continued to develop, and we are well-positioned for increased success going forward.

For years, we have talked about having four core objective for the firm. In 2014, we again achieved three of those. Maintaining a pretax margin, counting all GAAP costs at the top of our peer group, maintaining a strong dividend and maintaining a flat share count. We've accomplished each of those objectives for years, and there is no change to our focus on them going forward. So there's no need to dwell on those.

What I will spend another minute on is the fourth objective, which is increasing our market share of the global advisory fee pool. The first point to make on that topic is that after achieving this objective for several consecutive years, we fell short this year, with a relatively flat revenue performance. While this is obviously disappointing, it's not possible to draw a trend line using a single data point. And we don't regard this result as reflective of our longer-term growth potential.

We remain highly confident in our unique business model, brand and team, and believe the seeds we sowed in 2014 will bear fruit in future years. Recognizing that 2014 revenue is only a single data point, let me nevertheless give you a better sense of why our revenue came out as it did.

First, while the M&A market clearly improved in 2014, the improvement was fairly modest. The number of completed transactions was up only 7% for the year, and completed transaction volume was up 16%. Second, that market improvement was heavily focused on in the US. We worked hard to build a truly global business model, with typically half our revenue coming from clients outside the US, and we absolutely believe that strategy is the best for long-term success in the transaction advisory business. But obviously, that diversity cost us revenue in years when transaction activity is heavily concentrated in the US, as it was in 2014.

And a factor that exacerbated that issue in recent months is the strength of the US dollar, which obviously has the effect of shrinking the value of foreign fees to us. The combined effect of these factors is seen in the somewhat larger than usual revenue contribution from North American clients in 2014.

A final factor worth mentioning is simply the random nature of large, complex transactions. Specifically, through much of the year, we though we would have a meaningful increase in completed large fee assignments, which I would define as $10 million fees or greater. But in the end, we saw a small decrease in those.

On the positive side, we got to a flat revenue outcome nonetheless, as a result of a 9% increase, versus the prior year, in the number of clients who paid the firm at least $1 million in fees. As an aside, if there was any recurring theme to the expected transactions that did not materialize, it was that the target's equity price was seen as over-valued, particularly once an acquisition premium was factored in. That should not be a huge surprise, given the run-up in public company equity valuations over the past five or so years.

Now, let me turn to a deeper look at what we did achieve in 2014, and what that should mean going forward. First, we continue to be very pleased with the quality and growth of our client base. In 2014, we advised many quality new clients for the first time on transaction announcements, including AA Limited in the UK, Anixter, Boart Longyear, Cerner, Dillards, London Stock Exchange, MannKind, Nippon TV, Reckitt Benckiser, and Voya Financial. Equally important, we advised on new transactions for an equally impressive list of past transaction clients, including Actavis, Alcoa, AT&T, Gannett, Tesco, TUI and Validus.

Second notwithstanding the points I made earlier, we continue to be very pleased with our global footprint. In Europe, our 2014 results were very similar to the prior year, and we believe we are well positioned to benefit as the market continues to rebound there.

As we've noted in the past, for many years prior to the financial crisis, we earned roughly the same revenue from European clients as from North American clients, and we believe the quality of our brand, and the size and quality of our client base and our advisory team in that market, are better than they've ever been. We simply need that client base to become more active, which we believe it is in the process of doing, as markets and economies continue the healing process from the financial crisis.

Looking elsewhere around the world, our revenue in Australia was down for a variety of local reasons. We believe our business there is better positioned than ever to benefit from a more active transaction environment when it comes. In Japan, we had a relatively quiet year. But we have already announced three significant transactions for Japanese clients just this month, so feel very good about our opportunity there. Finally, in Brazil, we only got a team fully in place by around midyear, but we've landed many engagements, and believe we have strong potential in that market, as general transaction activity improves.

By industry, we continue to show good breadth and diversity in 2014. As listed in our press release, we completed 17 transactions in the fourth quarter, across a range of industries. For the full year, general industrials, healthcare, communications and media, and consumer retail all achieved good levels of activity, with technology lagging results achieved in recent years.

In terms of types of advice, M&A buy side revenue was up, while M&A sell side revenue declined, due to little more than the natural randomness of the deal business. As alluded to above, we had some significant sell side assignments we thought would end in successful transactions that, at least for the last year, did not get to the finish line.

Restructuring activity remained quiet through most of the year, due to the robust debt financing environment, but financing advisory was an increasingly active area for us, with several spinoff, IPO advisory, and other financing assignments globally.

Finally, it's worth highlighting that our capital advisory or fund placement business achieved a strong revenue outcome for the full year, with flat year-over-year results, despite a considerably smaller team that was heavily focused on capital raising for the real estate sector. We believe we are a player in that area, and we will look to build on that success during 2015.

Looking forward, it is far too early to predict what, in terms of transaction activity, and the resulting revenue opportunity, is in store for 2015. But we agree with most market commentators that the outlook for improved M&A activity remains positive. We also believe the opportunity for independent advisors like Greenhill continues to grow. The quality of our brand, and of our team, has never been stronger. And we are well-positioned to benefit globally, as transaction activity improves in each of our primary regions of focus.

But regardless of how things develop in the near term, we remain focused for the long term on the factors that have differentiated us for many years. We are 100% focused on independent, conflict-free advisory work. We operate as a truly global firm, with all our operations wholly owned, and all our personnel integrated into a unified global team.

We appear to focus more than others on larger transactions, which we believe benefits us from both a branding and a profitability point of view. And we operate our business in a disciplined manner, with regard to expenses and capital management, for the benefit of our shareholders. Now, I'll turn it over to Chris.

Thank you, Scott. Now, I will go into a bit more detail on compensation costs, non-compensation costs, dividends and share repurchases, and only confirm here that there are no updates on our very modest remaining principal investments. Starting with compensation. For the fourth quarter, we achieved a compensation ratio of 49%, bringing our full-year compensation ratio to 54%, which is consistent with the prior-year.

As we have commented previously, we have consistently achieved our annual goal of a GAAP compensation ratio that is the lowest among our close peers, driven by the hyperactivity of our people, and we expect that will again be the case for the full year 2014.

Looking ahead to 2015, there are modest changes in our expectations for some of the components of compensation expense. But in aggregate, our current run rate suggests no material change to our total fixed compensation costs. And we will continue to manage the business going forward, with a focus on employee productivity, GAAP compensation expense, and pretax profitability.

Turning to non-compensation costs. Our fourth-quarter non-comp costs were $15.1 million, similar to the quarterly level achieved throughout the year. On a full-year basis, we had non-compensation costs of $60.2 million, effectively flat with the prior-year. Looking forward, there will continue to be some variances each quarter. But likewise, our current run rate suggests no material change to our 2015 full-year non-comp costs.

Moving to dividends and share repurchases. Our dividend this quarter was again $0.45 per share, consistent with the quarterly distribution made over the last several years. And on a full-year basis, our dividend was again $1.80 per share. Given the very modest capital needs inherent in our business model, we used much of the remainder of our cash flow to repurchase shares.

For 2014, we repurchased approximately 740,000 shares, an average cost of $48.92 per share, for a total cost of $36.2 million. Which kept our share count effectively flat with the prior year, and below the shares outstanding, at the time of our 2004 IPO, despite much stock-based compensation, and our 2010 acquisition in Australia. This lack of dilution compares very favorably to both our large and small competitors.

We again ended the year in a net cash position, with cash of $50.9 million, and debt of $35.6 million. Our Board of Directors has authorized the repurchase of up to $75 million of our common stock through the end of 2015. Now, let me turn it back to Scott.

Before we take questions, I want to touch very briefly on the personnel announcements we've made recently. Earlier this month, we announced the addition of Joe Dilg as a Vice Chairman, to be based in our Houston office. Joe was most recently with the Houston based law Vinson and Elkins, where for many years, he previously served as managing partner. He will focus primarily on the energy sector, expanding our ability to advise on both M&A and restructuring transactions in that industry. Joe brings significant experience advising on large domestic and international M&A opportunities, and is a strong addition to the team.

We expect to add further to our energy team going forward, and we are also looking to add senior talent this year in a variety of other areas. We also announced the promotion of four new managing directors, consistent with our goal of developing talent internally, in addition to being a destination for lateral moves by the top senior bankers in our industry. Over time, we think this homegrown and home trained talent will play a huge role in the future success of this firm. With that, we're happy to take any questions.

(Operator Instructions)

Ashley Serrao, Credit Suisse

Good morning, guys -- good afternoon. Scott, I think this is the first time in a while where you've explicitly spoken to the full-year revenue outlook as early as the first quarter. So I had a two-part question.

First, I wanted to clarify whether you were speaking about the firm as a whole? Or just those regions and activities mentioned in the press release? And two, how conservative do you think you're being with this outlook? Should the revenue generation be expected to be more front end or back end loaded?

First of all, I think you might be reading between the lines to see too much of an outlook about the future. Obviously, we've made some statements about various parts of the business. But as I said just a moment ago, that it's really too early in the year to know how the M&A market is really going to develop. And how that is going to -- what that is going to present, in terms of a revenue opportunity for us. And as I said, I think we agree with pretty much all the market commentators that activity should be better this year. We certainly feel good about the several transactions we announced in the first few weeks of this year.

We do have some regions of the world where I have to believe it's going to get a lot better. In part -- large part because of the base off which it is going to be compared. For example, I mentioned Japan, where we have three significant announcements already this month. But I'm certainly not making any grand prediction about exactly where M&A market will evolve this year. I tend to think positive, but hard to know. We obviously live in a volatile economic and market world, and we'll see how things develop in months to come.

Okay. I guess then on hiring, I was curious to know what specific areas you're looking to invest in? And also, if you could just share your updated thoughts on the size of the firm, please?

Look, I still think there is just a huge opportunity for us to grow the firm over time, to literally multiples of its current size. Over time, as you know, we have been very opportunistic in our growth. We don't really tend to look for people of a specific type at any one time. Right now, probably, we have a lot of focus on energy. We think there's going to be a lot of restructuring opportunities there in particular, and certainly, M&A over time, as well.

We are looking all over the place. We're talking to people in Australia. We're talking to people in Europe. We're talking to people in the US. Sometimes, it's about expanding our geographic reach. Sometimes, it's about adding new industry sector specialties. And sometimes, it's about adding different types of advice.

But there is no particular area. I would frankly like to see us grow in a number of areas over the course of the next several months.

Okay. Thanks for taking the questions.

Sure.

Devin Ryan, JMP Securities.

Good afternoon. A couple for me here. First, on the FX impacts. And you noted that that was one of the items that impacted results in 2014. But it seems that pressure has only been intensifying so far in 2015.

So is it fair to think about the firm as digging out of a bit of a hole, all else equal, for 2015, just based on the rally in the dollar? And so I'm just trying to think about that dynamic versus, are there any offsets? I know there are some on the expense side. But maybe that the stronger dollar could drive more activity in certain sectors, with US companies looking abroad? And I don't know if you're seeing any of that type of activity.

Yes. Look, I wouldn't look at it as digging out of any big hole. The dollar has been strengthening for some type. Obviously, it has really moved up in recent weeks. But it moved up material over the course of last year. And the effects are obvious.

So take a simple one like Australia. There were times when our revenue was really peaking over there, when we were taking Aussie dollar fees and converting them at $1.10. And right now, we're converting them at $0.80. So the team over there can be doing the same jobs, same fee, and it obviously means a lot less to us, in US dollar terms. Same thing happened, by the way, when our UK revenue peaked. If you look back to before the financial crisis, there were times the sterling was more like $2. So we're converting a GBP1 into $2. Now we convert it at more like $1.50.

So I think the impact has already been felt last year. So I don't think it's a big new phenomenon for 2015. You are right that there is an expense offset to a fair amount of it. Obviously, people get paid in local currencies, and you pay rent in local currencies, and so on. And I do think you raise an interesting point, that there likely should be, and I think we are seeing some that could be interesting. US companies making acquisitions overseas taking advantage of a very strong dollar, and stay tuned. I think you'll see a number of those over time.

Got it. Helpful. And then just coming back to the headcount conversation. And increasing market share, obviously, can also be achieved just by adding good bankers. And that being said, it seems like the cost to recruit has only been increasing here in recent years.

And so, I know it's a balance, and you guys have always been very opportunistic around recruiting. But is there a point where it makes sense to maybe pay it forward a bit more than you currently are? And get more aggressive around what you're willing to pay to really aggressively expand market share? Or is it still -- be a bit more passive and see what comes to you?

I certainly wouldn't describe us as passive. Just when I think back on how I spent recent weeks and months in talking to lots to people. So I -- and all over the world. So I don't think we're all that passive. Look, we do have a profit orientation to our firm. We're not just buying revenue, unless it really makes sense economically for our shareholders.

But at the same time, I would really hasten to add that I don't think the way we do things economically has restrained our growth. What really restrains our ability to hire, and what allows us to hire lots of people in some environments and fewer in others, is really just how many people are available who we think are a really good fit for our firm.

And that is both, when it comes to capabilities, they can't be a sales-oriented banker who needs a whole suite of products to sell. They need to be thought of by their clients as a true, trusted advisor. And second is the cultural piece. They have to really fit into our very collegial, team-oriented group here. And that's really what drives it. There are markets when lots of those people shake loose, and markets when fewer. But I don't view us as New York Yankees, a la George Steinbrenner trying to use money, necessarily, to get whoever the people are who want to be bought at the highest price.

Okay, that is helpful. I know you don't have set targets of, to the prior question, in terms of where headcount should be. But is there a number where you would be happy, if we brought in five senior bankers or seven or -- this year? That would be a very successful recruiting year, and that's what we'd like to do. Is there any number that you can provide that -- where you would be happy?

For me to be happy, it would have to be certainly more -- materially more than five. I think five, if you look, it's probably an average over time. Maybe it's probably something like that. Obviously, it is varied a lot from 2 or 3, up to 12 or 13 or 14, if you look back to the early days of the financial crisis. So if we did five, I would say that's normal. If we did more than that, I would say I was probably happier about it.

Got it. And then -- apologize if you addressed this. But just that the comment on expectations for that restructuring revenues. Is the improvement driven more by just coming off of a small base, and hopefully things pick up here? Or is it what you're seeing in the credit backdrop? And that's actually translating to a specific engagements that you expect to incur that are already occurring?

It's a little bit of both. Look, there are areas of our firm -- and I think this is where a lot of the upside lies -- there are areas of our firm that were really relatively quiet last year. And it is not going to take a fabulous result to show some improvement. I mentioned Japan as one -- as a small one of those. Restructuring would probably be another one of those. I mentioned that we did quite a lot in equity financing advisory, but really not that much in debt restructuring.

We have seen some new assignments that give us encouragement that more is to come. And obviously, the credit market, certainly in some spaces, including energy, are getting tighter. So we tend to think that will lead to a lot more opportunities over time.

Okay. Great. Thanks a lot.

Thank you.

Brennan Hawken, UBS

Good afternoon, guys. Quick question. So did you say that there were four promotes here in 2014? Did I hear that correctly, or is that after the year end, when those folks were promoted?

We always do it as of January 1. So we announced that -- I guess probably internally, people find out a little before. And -- but we do the broad memo internally, and let the public know in January, and it's effective January 1.

Okay, great. And then, where did MD headcount finish the year in 2014? I don't think I -- if you mentioned, I'm sorry. I might've missed that.

I don't have it off the top of my head. High 60s, I would say. Something like that.

Okay. So probably not materially different than 2013?

I think that's right. Yes.

Okay, good deal. And you made reference to a change in the structure of the comp, I think. Could you expand on that? Are you thinking of changing like deferral schedules or something? What did you mean by that?

Now we -- and look, sometimes people that are -- we didn't mean anything by it, really, that you're suggesting. Sometimes analysts, like yourself, have asked a very granular question about the elements of what add up to GAAP compensation. The base salaries, the RUSE amortization, cash bonuses, recruiting payments for upfront grants, and so on.

And what we're saying is that the pieces of that -- sure, they evolve a little bit every year. But we don't see, in today's run rate, any material change in some of the compensation structure or the overall fixed compensation costs that we enter each year with.

Okay. So sticking with that, roughly $130 million per year for fixed comp expense on a GAAP basis is how we should still think about it?

I think that's a good way to think about it. There are -- as I said, there are small movements within that. And of course, over the course of the year, it will depend on how much recruiting we do, things like that. Obviously, if we succeed in lots of recruiting, some of those people will get stock grants. And depends on when they join it, how much amortized of the first year. But the number you gave is a reasonably good estimate, which is consistent with what we've said in the last two years.

Okay, cool. And then last one for me. When you think about Europe, and that market, how do think that the QED announcement could impact deal outlook in the region here in the coming year?

I am probably not smart enough, and maybe nobody is, to know exactly the answer to that question. But look, I think QED -- but look, you can debate the effectiveness of it. But I think there is no question it has driven higher asset valuations around the world. It's done it pretty much everywhere. And I think, if you want to worry, as certainly we always would, about downside risk to economic meltdowns, there's got to be a lot less downside risk, if the central banks are pouring a lot of money into the economy.

And if you want to think about, are people going to feel better about their businesses? And therefore go out and want to expand them, and do acquisitions, and try to do things that are interesting and strategic, I think that the margin -- that kind of activity all becomes more likely, in a market where central banks are flooding the market with liquidity.

Okay. And I'm sorry, just one more quick one here. Is it possible to expand on the strong start that you expect here in 2015? Is that -- you made reference to some deals not falling in in 2014. Does it have to do with that? Or does it have to do with a change that you are seeing in your pipeline?

I think -- again, I will say this a little bit like the question from Ashley earlier. I think I'm being very careful not to make any sort of grand prediction about 2015. I have spoken, and we always do, on our first quarterly call of the calendar year, focused really on the full year that just passed. What does that mean? What we take away from that?

Yes, I made the point that we may -- thought, as many times throughout the course of the year, would be quite a bit better year. Some of the things we thought would happen didn't happen. Certainly, we hope some of those things will come back, and end up getting done this year. But I'm not, at this point, making any sort of grand prediction about what 2015 looks like. As I said, we think M&A should get better, like everyone else seems to think that. But what exactly that means, in terms of revenue opportunity, we will have to wait and see.

Okay, I wasn't trying to beat a dead horse. Thanks.

Thank you.

Alex Blostein, Goldman Sachs

Good afternoon. So just drilling a little bit deeper in the advisory business, you mentioned in prepared remarks, and I think in the press release as well, that a number of businesses really drove a bulk of the growth in for you guys this year. Some of the fundraising business, et cetera. Maybe just a reminder, I guess, what -- where those businesses stand today? And what kind of growth from -- and that we should anticipate next year? So things aside from the more traditional M&A business.

As certainly I indicated even earlier this year, when we narrowed our focus in fundraising to real estate, we felt like we had a -- really, a world-class team there. And it is not number one, probably number two, in that space. And we're very pleased with how the year came out for those guys. And they feel good about what they're working on, and what exactly that means, in terms of what gets done. Obviously that depends on exact fund sizes, and how many things close this year, and so on. But we certainly like our competitive position a lot in that market.

In terms of other types of advice, like I said, we had a pretty good year in equity financing advisory stuff. We had a less active year in debt financing and restructuring, bankruptcy-type work. We did some, but not as much as we have, probably, in most years. And so, if credit markets do tighten up a little bit, maybe not just in energy, but even more broadly over time, that that should be a good thing for that business. And look, for us, the big driver is always going to be M&A. Those other businesses and activities are very, very important.

They often serve the same kind of client base. They help us build relationships with blue-chip companies. But clearly, the biggest driver for us is M&A activity. And (inaudible) M&A activity in the US and Europe, and to a lesser extent, Australia. That really is what drives the revenue outcome for us.

I got you. And then just a quick numbers question. Clearly, a good job keeping the share count essentially flat for a number of years here. As we look out for 2015 and beyond, any sense of how many shares you guys need to repurchase to keep the same dynamic? The same kind of similar amount as you did this year? Or does that number fluctuate?

It fluctuates, in part based on a lot of things. Obviously, if people go, sometimes we claw back RSUs that are forfeited. When we hire people, we have to give them RSUs. And that leads to more shares being issued over time. So we try to buy those back. So obviously, the amount of money -- we focus more on how many dollars we're going to spend. Obviously, you can buy back more stock at lower prices than you can at higher prices.

So I wouldn't want to try to do a calculation. I think people can probably get a broad sense from running the numbers themselves. But our goal, over time, has been to have a roughly flat share count. We've done it for 10 1/2 years. We are going to try to do it for 111/2.

Makes sense. Great. Thanks.

Thank you.

Joel Jeffrey, KBW

Good afternoon. So I will apologize in advance, but I am going to beat a dead horse a little bit here. Just in terms of the quote that was attributed to Bob in the press release, the stronger start to 2015. Is that in regard -- versus the end of last year or year over year?

That would be -- I mean look, that is referring -- yes, that is clearly referring to the beginning of last year. And I think that's pretty clear. If you look at our -- the weight last year evolved, one of the real issues for us, and -- as I said, we are reasonably content with where we ended up, given all the relevant factors. But as we point out in that same quote, our first-half revenue run rate was a lot smaller than our second-half revenue run rate.

So we were digging ourselves out of a hole with a very weak first couple of quarters. We did manage to dig ourselves out of that hole, and get back to basically a flat outcome. But what we're saying there is that we think we will do a little better at the beginning of this year than we did last year.

Okay. And then, just in terms of the recent market volatility that's going on, I'm just wondering if you've seen that have any negative impact on early stage discussions between acquirers and sellers?

I would say no. I can't think of anything specifically. And a general answer I've often given to that question over the years is that I really think that M&A discussions that are of the type we tend to work on: public companies, pretty big deals, very strategically important. I don't think CEOs are watching share prices every day, or currency rates every day, to decide, do I want to do that acquisition or not?

So they -- look, if you have wild volatility, it can make a difference to people, certainly. And if the volatility gets people scared about what it might mean about economies, and so on, that can have an impact. But I don't think the stock market gyrations you've seen recently are going to have a huge -- would have had a huge impact on early state dialogues.

Great. And then just lastly for me, I appreciate the color you gave, in terms of the impact of the rising dollars had on certain non-US revenues. But just curious if you could get possibly a little bit more color, in terms of that decline you saw in -- at the percentage of revenues from outside the US? Can you give us some sense of how much might have been attributable to the stronger dollar versus this declines in overall business activity in those markets?

No, I think that's too specific. And by the way, I haven't even calculated it myself. It even depends on what day things close. And you end up booking revenue, and what are the FX rate those days. The bigger factor by far, and you can see from the M&A statistics, is that things picked up in the US a lot more than they did elsewhere. All I said, really, was that the FX exacerbated that problem a little bit further, by taking the fees you were able to generate overseas, and translating them into dollars at less attractive exchange rates.

Great, thanks for taking my questions.

Sure.

Douglas Sipkin, Susquehanna.

Yes, thank you. Good afternoon. So just wanted to follow up on a couple of items. First off, just looking at the balance sheet, it looked like you guys had a nice jump sequentially. I'm pretty sure that some of that is how you guys receive the money on the fund placement business that takes more time.

Is that what drove that? So I guess what I'm looking at is the cash levels. They're the highest they have been in a while. So it that process of -- I believe it takes 12 to 24 months to get all that money?

No, I don't think you're reading that right. But yes, you are correct, fundamentally, that you often get paid for fund placement fees over -- sometime, an even longer period than that. I think it like sometimes goes on as far as three years, in terms of the way people pay. They tend to link it to when the GP, the general partner, collects management fees. They then want to pay the cost of raising that capital. So -- but I don't think there's been a significant change in -- as you're suggesting.

Okay. I guess, can you give us -- and if it's a no, that's fine -- the actual receivable number?

That's always in the 10-Q. That will have a detail of the receivables. So I would say just wait for that.

Okay, no problem. Shifting gears, obviously, I saw you guys made a solid energy acquisition -- excuse me, an energy hire. And I'm -- just looking at the biography, I guess, it was -- it seemed like it was a little bit more of a lawyer background, legal background. And I'm wondering, does that have anything to do with the way you guys are thinking about the energy market? Maybe coming at it a little bit more from a restructuring standpoint, here? Given what we've seen in oil prices? Or is it really just a coincidence that the hire was more from a legal background?

I would call it sort of a lucky coincidence, if you will. I think what we wanted, as one piece of the expansion puzzle in energy, was to have somebody who was just incredibly well-known, well-respected and well-connected in Houston.

And you are right that he has a little bit of a legal background, since he did it for about 37 years at Vinson and Elkins. But I don't think he ever did anything else. So yes, he is a hard core lawyer who was a managing partner at one of the -- Certainly, I would say one of the two leading firms in energy, and in Texas. Maybe one or two firms might quibble with that, but that's the way I would see it. And a guy like that is going to know everybody who is important in Houston, which is really important to us.

I think what's -- you could call it a bit of a lucky coincidence that I think -- I would tend to suspect that, in the energy business, there will be more restructuring opportunities in the coming months, perhaps, than M&A. Just on the theory that, given what's happened with oil prices, I can't believe there are going to be a lot of enthusiastic sellers. There may be the strapped sellers, but I can't imagine a lot of enthusiastic ones, and -- except in very particular circumstances.

So I think lawyers often are the gateway to restructuring opportunities, in a way that maybe they are less likely to be the gateway to M&A opportunities. So I think he should really pay off, in that respect.

Okay, great. And then just finally -- and I apologize if you addressed it earlier. The fund placement business, it looks like the revenue is generally flattish with 2013. So maybe the great -- the solid growth rates you guys have had for a couple of years may be steadying out a little bit. I know you guys, long term, feel very good about that business. Maybe just a little bit more on what you're seeing into 2015 and 2016?

I know it still feels like the private equity firms were seeing exits, and returning money, and that whole process was starting. Are you sensing that maybe that slowing down a little bit, with some of the volatility in the market? Which could, in theory, hurt that fund placement business?

I think right now, we're at a point in the cycle that's actually very good for that business. You can debate what future returns are going to be. But I think the bottom line is that, whether you're talking real estate funds or private equity funds, they've invested a lot of capital quite recently. That capital has generally shown very good returns. Obviously, look at what's happened to equity markets and real estate markets. And so people are coming back to raise the next fund a lot more quickly than maybe you would've expected.

There are other markets where it takes not only a very, very long time to raise the fund, but it takes quite a long time to invest it. And so you might do a great job for a client, and they might come back to you five years later. Now, they're coming back a lot more soon -- more quickly than that. So I think, at least for now, obviously, all it takes is a big market dislocation, and people can get worried about investing in illiquid things like private equity and real estate private equity. But for now, that business feels pretty good.

Okay, great. And then just finally, I guess in terms of that business, I guess you guys are comfortable predominantly with the real estate focus. I know you -- I guess maybe internally, you guys have debated growing it again personnel-wise. Any update on there? Or is it status quo right now?

It's (inaudible) status quo right now. But as I said before, we're always looking for opportunities to expand. And we like what we've got. When we do expand, we want to do it in a way that is going to be consistent, in terms of quality and productivity as the team we've got. But no news on that, at this point.

Okay, great. Thanks for taking all my questions, Scott.

Thank you.

Michael Wong, Morningstar.

Good afternoon. Just double checking. Generally, does your debt restructuring capabilities extend to, say, Australia or Brazil, with the personnel that you already have in place?

I would say, to some extent, in Australia. We've worked on some there. Brazil, I would say the team probably would hold themselves out more as M&A experts. It's not to say we wouldn't get involved in -- and are, in fact, involved in some restructuring-type situations. But I think in that particular market, restructuring probably more often needs -- a company needs to raise more equity, often private equity. And certainly, we can help them with that. If you're talking about good old-fashioned Chapter 11 bankruptcy type things, that is something that happens more in the US and Europe. And we think we're well-positioned in those two markets.

Okay. And can you talk a bit more about your dividend, which is one of your core-type goals? As Greenhill is definitely capital-light, and you can have a payout ratio of about 100%. But the high dividend definitely decreases your flexibility, in terms of the method of capital returns, like your capacity for share repurchases.

Look, you're absolutely right. We've always -- clearly, the dividend is a higher priority than share repurchases. So the first money we return to shareholders is always going to be the dividend. And to the extent we have access to cash flow, and we think it's a good opportunity to do it, we buy back shares. But the dividend is clearly the highest priority. You don't want to -- you can't select your dividend the way you can share buybacks. So that's the higher priority.

OK. Thank you.

Thanks.

Jeff Harte, Sandler O'Neill

Good afternoon. A couple for me. First of all, following up on the capital question. I see -- preventing dilution for a while -- for a long time is good. But the buyback -- the amount bought back dipped down again this year. And I look at your net capital position, over $50 million of cash, what, $35 million or so of debt? I'm wondering if you have the appetite to become more aggressive on the buyback? Because it seems like the capacity is there.

There have always been times we've thought about, and even analyzed the possibility of, levering up to buy back stock. And we think our stock is really cheap. But we've said -- concluded, and we have said many times publicly, and I will say again, that we -- one of the things we also -- we don't talk about is a lot, because it's a given. But we value having no net debt.

We just think -- we want to be in investment where people are investing for the profitability, the dividend, the growth potential. And we're just not interested in levering up to try to accelerate returns in some way.

Okay. Even without levering up, just looking at your cash flow generation, and your cash position, it would seem you could be more aggressive on the buyback. I guess I'm wondering if it's -- if that is something you're at least considering doing, with the stock being cheap? Or beyond having to add leverage to do it.

I think we're -- look, maybe there's a little bit, but we try to be prudent about it. At the beginning of the year, we always have a pretty big RSU, [that being] we effectively buyback quite a lot of stock, by just doing the tax withholding on people's RSUs. We always note that in our subsequent press releases. So it's important to end the year with a balance sheet that's ready for that kind of thing.

Okay. And this has been hit a couple times. I hate to hit it again. But the whole, off to a better start in 2015. I guess I'm thinking of it in relation to some of the comments about some of the sell side roles not materializing in 2014, which you were hoping would have. Should we look at that as just having backed the wrong horse in 2014, as far as them not materializing? Or is there still things in the works that have just been delayed that you think actually could still materialize in 2015?

In our business, sadly, there are always delays. (Inaudible) always take longer than you think, and many of them you think are dead, and then they have a way of coming back at some point in the future. But look, as I've said a few times now -- and I know you guys all love to draw me into forecasting, which I'm just not going to be drawn.

But all we are saying is, last year, we essentially had to dig ourselves out of a bit of a hole, because the first half was very weak for us. And we feel like this year is off to a better start than last year was. And I wouldn't -- and look, I would just continue to monitor, see how things develop, see what deals we get announced. And you guys will be able to figure out how you think things might evolve from there.

Okay. And finally, you mentioned Japan -- parts of Asia could be off -- could have a better year. It's actually been, for the industry, a pretty strong start to the year for Asia, as far as deal announcements. And you've had a few in Japan. Have you noticed any kind of a geographic or regional shift there? That things have really been stepping up in Asia?

I think it's too early to draw any conclusions. I know there were a couple of gigantic deals out of Hong Kong that we had nothing to do with. But with the Hong Kong billionaire who invested a lot in real estate and infrastructure whose name slips my mind right now. But that, I think, is really skewing whatever M&A volume stats you are looking at for the year to date.

And yes, there have been some interesting transactions in Japan, but not nearly of that size. But it's too early to try to draw any conclusions about how M&A is going to look regionally over the next year. I wouldn't even want to draw (inaudible) look globally over the course of the year. Other than to say as I did, that I think most people expected to be somewhat better than the last year.

Okay. Thank you.

Thanks.

Steven Chubak, Nomura

Questions have been asked and answered. Thank you very much.

Okay, thank you. I appreciate that efficiency.

Vincent Hung, Autonomous Research

Good evening. A few questions. The first one is, so your revenues are down 2% year on year, but when I look at the global M&A revenue pool, it was up 18% year on year. And I know we've talked on this call about the various regions that had the weaknesses year on year. But is anything Greenhill-specific? Or was there anything you have been trying to investigate into, as to why you've lost market share? Such as like diminishing brand recognition in board rooms?

Look, I don't think there's anything fundamental like that. And I think I've made the points that are relevant. Yes, after several consecutive years of market share growth, clearly we did have a flat outcome last year. There are reasons for that related to the global nature of our business. We're not as concentrated in the US as some are, and that is where the action really was. And there's also just the randomness of, some years, you get more -- a higher percentage of your deals, and get them done more quickly. And in others -- years, you don't. But I certainly wouldn't want to try, as I said, to draw any trend line based on the one data point.

Okay. And last year, it seemed to have been characterized by a lot of notable departures. I just want to get a sense for how you view the mood of employees internally? Because this may be an unfair statement, but I guess from my external viewpoint, I see a stock price that performed poorly in the last few years. Market share declines, people have left, comp per head is down. And the comp [strategy], to me, seems like there's a lot more higher deferrals than appears. So I just get the feeling that we're setting ourselves up for more employee attrition this year.

Certainly, I don't think so. I think morale is actually quite good, both for the people that are here, and some of the people we have talked to about joining us. And compensation is fine. No, I don't think there's anything to it. I don't think our deferrals are unusually high. And so we've make the point that our fixed compensation expense, of which a significant piece is deferrals, are consistent with last year. No, I don't share that concern.

Okay. And just the last question. Do you think you should be more aggressive on hiring? Because when I look at the kind of people that your boutique peers have hired, they are very high-caliber. And it seems to have worked for them. So clearly, the question is, the talent is out there. So maybe you guys need to be more aggressive?

Look, I'm not going to try to run the firm, in a long-term strategic sense, to try to drive short-term stock price performance. There are moments when the stock market likes one strategy, maybe, different than another. But we're here building a firm. It's been around for almost 20 years. It's been public for almost 11 years. It's been great success.

And we're going to continue to run it in the way that we think will make it the greatest success for the next 10 years, without, frankly, worrying about what short-term investors may want us to do in any particular year. And so we're focused very much on the quality of people we bring in. And the fact that they will fit into it with a very close-knit culture. And that really is what drives our hiring, more than some decision that maybe hiring more people might move the stock price.

Okay. Thanks very much.

Thank you.

Ashley Serrao, Credit Suisse

Scott, as we come closer to the fifth anniversary of Caliburn, do you still expect the final tranche of (inaudible) deferred to be canceled?

I do, yes. They will not achieve the second -- I think that's been clear for a long time, by the way. But they will not achieve the second earn-out. They achieved the first one, and no shares were paid out a long time, I guess, after the third anniversary. We're now on the brink of the fifth anniversary. And as has been clear for quite some time, they won't hit that. So those shares won't be -- those common shares won't be issued.

Okay. And just another question. I've read a couple of articles on just Detroit, and the bankruptcy there, and the judges reviewing fees. I was just wondering if there's any exposure for you? Or just more in general for the industry?

In Detroit, there is none for us. That assignment is over. That bankruptcy is ended. We're content with how things worked out for us. I would caution that, in any bankruptcy situation, there is always some risk, right to the very end, about how judges will look at fees. But we're content with how we have been treated in all the things we have been working on recently.

Okay. Thanks for taking my questions.

Okay. Thank you. And I think that's the last call, including a little double dipping by Credit Suisse there. So we look forward to talking with you all again in a quarter. Thanks.

And we thank you, sir, and to the rest of the management team, for your time. The conference call is now concluded. Again, we thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you, and take care, everyone.