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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________________________________________________________________________________________________________________________________________
FORM 10-Q
_____________________________________________________________________________________________________________________________________________________________________
(Mark One)
| | | | | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 001-39558
_____________________________________________________________________________________________________________________________________________________________________
PERELLA WEINBERG PARTNERS
(Exact Name of Registrant as Specified in its Charter)
_____________________________________________________________________________________________________________________________________________________________________
| | | | | |
Delaware | 84-1770732 |
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
767 Fifth Avenue New York, NY | 10153 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 287-3200
_____________________________________________________________________________________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Class A Common Stock, par value $0.0001 per share | | PWP | | Nasdaq Global Select Market |
Warrants, each whole warrant exercisable for one share of Class A common stock | | PWPPW | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x | Smaller reporting company | x |
| | Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 1, 2022, the registrant had 40,753,026 shares of Class A common stock, par value $0.0001 per share, and 45,689,988 shares of Class B common stock, par value $0.0001 per share, outstanding.
Perella Weinberg Partners
Table of Contents
On June 24, 2021 (the “Closing Date” or the “Closing”), Perella Weinberg Partners (formerly known as FinTech Acquisition Corp. IV (“FTIV”)) consummated its previously announced business combination pursuant to that certain Business Combination Agreement, dated as of December 29, 2020 (the “Business Combination Agreement”). As contemplated by the Business Combination Agreement, (i) FTIV acquired certain partnership interests in PWP Holdings LP (“PWP OpCo”), (ii) PWP OpCo became jointly-owned by Perella Weinberg Partners, PWP Professional Partners LP (“Professional Partners”) and certain existing partners of PWP OpCo, and (iii) PWP OpCo serves as Perella Weinberg Partners’ operating partnership as part of an umbrella limited partnership C-corporation (Up-C) structure (collectively with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). Unless the context otherwise requires, all references to “PWP,” the “Company,” “we,” “us” or “our” refer to Perella Weinberg Partners and its consolidated subsidiaries.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements regarding the expectations regarding the combined business are “forward-looking statements.” In addition, words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include:
•any projected financial information, anticipated growth rate, and market opportunity of the Company;
•the ability to maintain the listing of the Company’s Class A common stock and warrants on Nasdaq following the Business Combination;
•our public securities’ potential liquidity and trading;
•our success in retaining or recruiting partners and other employees, or changes related to, our officers, key employees or directors following the completion of the Business Combination;
•members of our management team allocating their time to other businesses and potentially having conflicts of interest with our business;
•factors relating to the business, operations and financial performance of the Company, including:
◦whether the Company realizes all or any of the anticipated benefits from the Business Combination;
◦whether the Business Combination results in any increased or unforeseen costs or has an impact on the Company’s ability to retain or compete for professional talent or investor capital;
◦global economic, business, market and geopolitical conditions, including the impact of public health crises, such as the ongoing rapid, worldwide spread of a novel strain of coronavirus and the pandemic caused thereby (collectively, “COVID-19”), as well as the impact of recent hostilities between Russia and Ukraine;
◦the Company’s dependence on and ability to retain working partners and other key employees;
◦the Company’s ability to successfully identify, recruit and develop talent;
◦risks associated with strategic transactions, such as joint ventures, strategic investments, acquisitions and dispositions;
◦conditions impacting the corporate advisory industry;
◦the Company’s dependence on its fee-paying clients and fluctuating revenues from its non-exclusive, engagement-by-engagement business model;
◦the high volatility of the Company’s revenue as a result of its reliance on advisory fees that are largely contingent on the completion of events which may be out of its control;
◦the ability of the Company’s clients to pay for its services, including its restructuring clients;
◦the Company’s ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to the Company’s business, including actual, potential or perceived conflicts of interest and other factors that may damage its business and reputation;
◦strong competition from other financial advisory and investment banking firms;
◦potential impairment of goodwill and other intangible assets, which represent a significant portion of the Company’s assets;
◦the Company’s successful formulation and execution of its business and growth strategies;
◦the outcome of third-party litigation involving the Company;
◦substantial litigation risks in the financial services industry;
◦cybersecurity and other operational risks;
◦the Company’s ability to expand into new markets and lines of businesses for the advisory business;
◦exposure to fluctuations in foreign currency exchange rates;
◦assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity;
◦extensive regulation of the corporate advisory industry and U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy and laws (including the treatment of carried interest);
◦other risks and uncertainties described under the section entitled “Risk Factors” included in Amendment No. 1 to our Annual Report on Form 10-K/A.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Website Disclosure
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains an internet site where reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC are available. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov and on our website at https://investors.pwpartners.com/ free of charge as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. Our website is https://pwpartners.com/. Although we refer to our website in this report, the contents of our website are not included or incorporated by reference into this report. All references to our website in this report are intended to be inactive textual references only.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Perella Weinberg Partners
Condensed Consolidated Statements of Financial Condition
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
| | | | | | | | | | | |
| |
| | | |
| June 30, 2022 | | December 31, 2021 |
Assets | | | |
Cash and cash equivalents | $ | 150,286 | | | $ | 502,773 | |
Restricted cash | 2,738 | | | 2,002 | |
Investments in short-term marketable debt securities | 114,819 | | | — | |
Accounts receivable, net of allowance | 38,883 | | | 46,914 | |
Due from related parties | 3,638 | | | 4,225 | |
Fixed assets, net of accumulated depreciation and amortization | 12,711 | | | 10,362 | |
Intangible assets, net of accumulated amortization | 29,062 | | | 32,352 | |
Goodwill | 34,383 | | | 34,383 | |
Prepaid expenses and other assets | 24,395 | | | 24,313 | |
Right-of-use lease assets | 99,670 | | | 39,912 | |
Deferred tax assets, net | 29,582 | | | 21,091 | |
Total assets | $ | 540,167 | | | $ | 718,327 | |
Liabilities and Equity | | | |
Accrued compensation and benefits | $ | 98,375 | | | $ | 311,500 | |
Deferred compensation programs | 5,512 | | | 11,221 | |
Accounts payable, accrued expenses and other liabilities | 33,816 | | | 31,048 | |
Deferred revenue | 4,570 | | | 7,845 | |
Lease liabilities | 102,155 | | | 43,448 | |
Warrant liabilities | 5,706 | | | 27,805 | |
Amount due pursuant to tax receivable agreement | 21,220 | | | 14,108 | |
Total liabilities | 271,354 | | | 446,975 | |
Commitments and Contingencies (Note 18) | | | |
Class A common stock, par value $0.0001 per share (1,500,000,000 shares authorized, 48,785,205 issued and 41,344,998 outstanding at June 30, 2022; 1,500,000,000 shares authorized, 43,649,319 issued and 42,649,319 outstanding at December 31, 2021) | 5 | | | 4 | |
Class B common stock, par value $0.0001 per share (600,000,000 shares authorized, 45,689,988 issued and outstanding at June 30, 2022; 600,000,000 shares authorized, 50,154,199 issued and outstanding at December 31, 2021) | 5 | | | 5 | |
Additional paid-in-capital | 203,861 | | | 158,131 | |
Retained earnings (accumulated deficit) | (8,834) | | | (18,075) | |
Accumulated other comprehensive income (loss) | (5,334) | | | (1,746) | |
Treasury stock, at cost (7,440,207 and 1,000,000 shares of Class A common stock at June 30, 2022 and December 31, 2021, respectively) | (57,287) | | | (12,000) | |
Total Perella Weinberg Partners equity | 132,416 | | | 126,319 | |
Non-controlling interests | 136,397 | | | 145,033 | |
Total equity | 268,813 | | | 271,352 | |
Total liabilities and equity | $ | 540,167 | | | $ | 718,327 | |
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
4
Perella Weinberg Partners
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Revenues | $ | 151,104 | | | $ | 255,520 | | | $ | 302,980 | | | $ | 425,322 | |
Expenses | | | | | | | |
Compensation and benefits | 90,587 | | | 164,404 | | | 177,832 | | | 273,874 | |
Equity-based compensation | 36,427 | | | 7,065 | | | 77,317 | | | 13,222 | |
Total compensation and benefits | 127,014 | | | 171,469 | | | 255,149 | | | 287,096 | |
Professional fees | 7,419 | | | 12,220 | | | 17,722 | | | 17,948 | |
Technology and infrastructure | 7,521 | | | 7,141 | | | 15,077 | | | 14,097 | |
Rent and occupancy | 5,378 | | | 6,593 | | | 11,107 | | | 13,295 | |
Travel and related expenses | 3,641 | | | 1,215 | | | 5,935 | | | 1,876 | |
General, administrative and other expenses | 6,491 | | | 3,674 | | | 11,766 | | | 5,878 | |
Depreciation and amortization | 2,653 | | | 3,722 | | | 5,596 | | | 7,602 | |
Total expenses | 160,117 | | | 206,034 | | | 322,352 | | | 347,792 | |
Operating income (loss) | (9,013) | | | 49,486 | | | (19,372) | | | 77,530 | |
Non-operating income (expenses) | | | | | | | |
Related party income | 950 | | | 1,565 | | | 1,508 | | | 3,774 | |
Other income (expense) | 3,845 | | | 526 | | | 5,756 | | | (1,328) | |
Change in fair value of warrant liabilities | 10,094 | | | 948 | | | 22,100 | | | 948 | |
Loss on debt extinguishment | — | | | (39,408) | | | — | | | (39,408) | |
Interest expense | (69) | | | (3,596) | | | (137) | | | (7,464) | |
Total non-operating income (expenses) | 14,820 | | | (39,965) | | | 29,227 | | | (43,478) | |
Income (loss) before income taxes | 5,807 | | | 9,521 | | | 9,855 | | | 34,052 | |
Income tax benefit (expense) | (3,141) | | | (521) | | | (6,137) | | | (2,545) | |
Net income (loss) | 2,666 | | | 9,000 | | | 3,718 | | | 31,507 | |
Less: Net income (loss) attributable to non-controlling interests | (6,599) | | | 21,499 | | | (14,441) | | | 44,006 | |
Net income (loss) attributable to Perella Weinberg Partners | $ | 9,265 | | | $ | (12,499) | | | $ | 18,159 | | | $ | (12,499) | |
Net income (loss) per share attributable to Class A common shareholders (1) | | | | | | | |
Basic | $ | 0.21 | | | $ | (0.29) | | | $ | 0.40 | | | $ | (0.29) | |
Diluted | $ | 0.00 | | | $ | (0.32) | | | $ | (0.01) | | | $ | (0.32) | |
Weighted-average shares of Class A common stock outstanding (1) | | | | | | | |
Basic | 44,584,181 | | | 42,956,667 | | | 45,247,373 | | | 42,956,667 | |
Diluted | 90,688,871 | | | 94,013,583 | | | 91,953,077 | | | 94,013,583 | |
(1)For the three and six months ended June 30, 2021, net income (loss) per share of Class A common stock and weighted-average shares of Class A common stock outstanding is representative of the period from June 24, 2021 through June 30, 2021, the period following the Business Combination, as defined in Note 1—Organization and Nature of Business. For more information, refer to Note 15—Net Income (Loss) Per Share Attributable to Class A Common Shareholders.
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
5
Perella Weinberg Partners
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Net income (loss) | $ | 2,666 | | | $ | 9,000 | | | $ | 3,718 | | | $ | 31,507 | |
Foreign currency translation gain (loss) | (5,177) | | | 316 | | | (7,279) | | | 544 | |
Comprehensive income (loss) | (2,511) | | | 9,316 | | | (3,561) | | | 32,051 | |
Less: Comprehensive income (loss) attributable to non-controlling interests | (9,228) | | | 21,807 | | | (18,131) | | | 44,542 | |
Comprehensive income (loss) attributable to Perella Weinberg Partners | $ | 6,717 | | | $ | (12,491) | | | $ | 14,570 | | | $ | (12,491) | |
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
6
Perella Weinberg Partners
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Shares | | | | | | | | | | | | Accumulated Other Comprehensive Income (Loss) | | | | |
| Partners’ Capital | | Class A Common Stock | | Class B Common Stock | | Treasury Stock | | Class A Common Stock | | Class B Common Stock | | Treasury Stock | | Additional Paid-In Capital | | Retained Earnings (Accumulated Deficit) | | | Non- Controlling Interests | | Total Equity |
Balance at December 31, 2020 | $ | 76,509 | | | — | | | — | | | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (2,326) | | | $ | — | | | $ | 74,183 | |
Net income (loss) | 22,507 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 22,507 | |
Equity-based compensation | 6,157 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,157 | |
Distributions to partners | (9,816) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,816) | |
Other | 384 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 384 | |
Foreign currency translation gain (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 228 | | | — | | | 228 | |
Balance at March 31, 2021 | $ | 95,741 | | | — | | | — | | | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (2,098) | | | $ | — | | | $ | 93,643 | |
Net income (loss) prior to Business Combination | 37,350 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37,350 | |
Equity-based compensation prior to Business Combination | 5,604 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,604 | |
Foreign currency translation gain (loss) prior to Business Combination | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 298 | | | — | | | 298 | |
Distributions to partners | (37,573) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (37,573) | |
Other | (10) | | | — | | | — | | | | | — | | | — | | | | | — | | | — | | | — | | | — | | | (10) | |
Effect of Business Combination | (101,112) | | | 42,956,667 | | | 50,154,199 | | | — | | | 4 | | | 5 | | | — | | | 133,832 | | | — | | | 974 | | | 154,619 | | | 188,322 | |
Net income (loss) after Business Combination | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (12,499) | | | — | | | (15,851) | | | (28,350) | |
Equity-based compensation after Business Combination | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,461 | | | — | | | — | | | — | | | 1,461 | |
Foreign currency translation gain (loss) after Business Combination | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8 | | | 10 | | | 18 | |
Balance at June 30, 2021 | $ | — | | | 42,956,667 | | | 50,154,199 | | | — | | | $ | 4 | | | $ | 5 | | | $ | — | | | $ | 135,293 | | | $ | (12,499) | | | $ | (818) | | | $ | 138,778 | | | $ | 260,763 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
7
Perella Weinberg Partners
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares | | | | | | | | | | | | | | | | |
| Class A Common Stock | | Class B Common Stock | | Treasury Stock | | Class A Common Stock | | Class B Common Stock | | Treasury Stock | | Additional Paid-In Capital | | Retained Earnings (Accumulated Deficit) | | Accumulated Other Comprehensive Income (Loss) | | Non- Controlling Interests | | Total Equity |
Balance at December 31, 2021 | 43,649,319 | | | 50,154,199 | | | (1,000,000) | | | $ | 4 | | | $ | 5 | | | $ | (12,000) | | | $ | 158,131 | | | $ | (18,075) | | | $ | (1,746) | | | $ | 145,033 | | | $ | 271,352 | |
Net income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,894 | | | — | | | (7,842) | | | 1,052 | |
Equity-based awards | — | | | — | | | — | | | | | | | | | 22,695 | | | | | — | | | 18,710 | | | 41,405 | |
Distributions to partners | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (15,823) | | | (15,823) | |
Issuance of Class A common stock for vested RSUs | 601,098 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Withholding payments on vested RSUs | — | | | — | | | — | | | — | | | — | | | — | | | (6,075) | | | — | | | — | | | — | | | (6,075) | |
Dividends declared ($0.07 per share of Class A common stock) | — | | | — | | | — | | | — | | | — | | | — | | | 116 | | | (4,229) | | | — | | | — | | | (4,113) | |
Foreign currency translation gain (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,040) | | | (1,062) | | | (2,102) | |
Other | — | | | — | | | — | | | — | | | — | | | — | | | 734 | | | — | | | — | | | 1,265 | | | 1,999 | |
Issuance of Class A common stock and exchange of PWP OpCo Units with corresponding Class B common stock for cash using Offering proceeds (Note 11—Stockholders' Equity) | 3,502,033 | | | (3,498,534) | | | — | | | 1 | | | — | | | — | | | (538) | | | — | | | — | | | — | | | (537) | |
Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 11—Stockholders' Equity) | 337,048 | | | (336,712) | | | — | | | — | | | — | | | — | | | 17 | | | — | | | — | | | — | | | 17 | |
Treasury stock purchase | — | | | — | | | (172,303) | | | — | | | — | | | (1,598) | | | — | | | — | | | — | | | — | | | (1,598) | |
Change in ownership interests | — | | | — | | | — | | | — | | | — | | | — | | | 4,665 | | | — | | | — | | | (4,665) | | | — | |
Balance at March 31, 2022 | 48,089,498 | | | 46,318,953 | | | (1,172,303) | | | $ | 5 | | | $ | 5 | | | $ | (13,598) | | | $ | 179,745 | | | $ | (13,410) | | | $ | (2,786) | | | $ | 135,616 | | | $ | 285,577 | |
Net income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,265 | | | — | | | (6,599) | | | 2,666 | |
Equity-based awards | — | | | — | | | — | | | — | | | — | | | — | | | 18,432 | | | — | | | — | | | 18,525 | | | 36,957 | |
Distributions to partners | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,856) | | | (2,856) | |
Issuance of Class A common stock for vested RSUs | 66,116 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Withholding payments on vested RSUs | — | | | — | | | — | | | — | | | — | | | — | | | (359) | | | — | | | — | | | — | | | (359) | |
Dividends declared ($0.07 per share of Class A common stock) | — | | | — | | | — | | | — | | | — | | | — | | | 134 | | | (4,689) | | | — | | | — | | | (4,555) | |
Foreign currency translation gain (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,548) | | | (2,629) | | | (5,177) | |
Other | — | | | — | | | | | — | | | — | | | | | (8) | | | — | | | — | | | (6) | | | (14) | |
Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 11 - Stockholders’ Equity) | 629,591 | | | (628,965) | | | — | | | — | | | — | | | — | | | 263 | | | — | | | — | | | — | | | 263 | |
Treasury stock purchase | — | | | — | | | (6,267,904) | | | — | | | — | | | (43,689) | | | — | | | — | | | — | | | — | | | (43,689) | |
Change in ownership interests | — | | | — | | | — | | | — | | | — | | | — | | | 5,654 | | | — | | | — | | | (5,654) | | | — | |
Balance at June 30, 2022 | 48,785,205 | | | 45,689,988 | | | (7,440,207) | | | $ | 5 | | | $ | 5 | | | $ | (57,287) | | | $ | 203,861 | | | $ | (8,834) | | | $ | (5,334) | | | $ | 136,397 | | | $ | 268,813 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
8
Perella Weinberg Partners
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Thousands)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
Cash flows from operating activities | | | |
Net income (loss) | $ | 3,718 | | | $ | 31,507 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
Loss on debt extinguishment | — | | | 39,408 | |
Equity-based awards vesting expense | 78,362 | | | 13,222 | |
Depreciation and amortization | 5,596 | | | 7,602 | |
Amortization of debt discounts and deferred financing costs | 74 | | | 2,247 | |
Change in fair value of warrant liabilities | (22,100) | | | (948) | |
Non-cash operating lease expense | 7,694 | | | 8,624 | |
Deferred taxes | (1,217) | | | (1,030) | |
Other | 1,176 | | | (390) | |
Decrease (increase) in operating assets: | | | |
Accounts receivable, net of allowance | 4,691 | | | (43,509) | |
Due from related parties | 587 | | | (637) | |
Prepaid expenses and other assets | 1,336 | | | (12,635) | |
Increase (decrease) in operating liabilities: | | | |
Accrued compensation and benefits | (209,313) | | | (1,383) | |
Deferred compensation programs | (2,813) | | | 348 | |
Accounts payable, accrued expenses and other liabilities | (1,246) | | | 1,063 | |
Deferred revenue | (2,966) | | | (6,676) | |
Lease liabilities | (8,819) | | | (8,984) | |
Net cash provided by (used in) operating activities | (145,240) | | | 27,829 | |
Cash flows from investing activities | | | |
Purchases of fixed assets | (3,959) | | | (451) | |
Gross purchases of investments in short-term marketable debt securities | (115,001) | | | — | |
Other | — | | | (978) | |
Net cash provided by (used in) investing activities | (118,960) | | | (1,429) | |
Cash flows from financing activities | | | |
Proceeds from Business Combination, including PIPE Investment | — | | | 355,021 | |
Payment of Business Combination costs | — | | | (20,570) | |
| | | |
Principal payment on Revolving Credit Facility | — | | | (27,690) | |
Redemption of Convertible Notes | — | | | (160,930) | |
Redemption of partners’ interests | — | | | (104,540) | |
Proceeds from the Offering, net of underwriting discount | 36,526 | | | — | |
Exchange of PWP OpCo Units and corresponding Class B common stock for cash using Offering proceeds | (36,526) | | | — | |
Payment of offering costs | (798) | | | — | |
Distributions to partners | (18,679) | | | (47,389) | |
Dividends paid on Class A and Class B common stock | (6,569) | | | — | |
Withholding payments for vested RSUs | (6,434) | | | — | |
Treasury stock purchases | (44,740) | | | — | |
Debt issuance costs | — | | | (361) | |
| | | |
Net cash provided by (used in) financing activities | (77,220) | | | (6,459) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (10,331) | | | 668 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (351,751) | | | 20,609 | |
Cash, cash equivalents and restricted cash, beginning of period | 504,775 | | | 330,908 | |
Cash, cash equivalents and restricted cash, end of period | $ | 153,024 | | | $ | 351,517 | |
Supplemental disclosure of non-cash activities | | | |
| | | |
| | | |
Pending broker-to-broker trades | $ | 2,364 | | | $ | — | |
Non-cash paydown of Partner promissory notes | $ | 2,567 | | | $ | — | |
Lease liabilities arising from obtaining right-of-use lease assets | $ | 67,876 | | | $ | 5,215 | |
Accrued dividends and dividend equivalents on unvested RSUs | $ | 2,721 | | | $ | — | |
Deferred tax effect resulting from exchanges of PWP OpCo Units, net of amounts payable under tax receivable agreement | $ | 1,061 | | | $ | — | |
Accrued treasury stock purchases | $ | 547 | | | $ | — | |
Net assets of deconsolidated affiliate | $ | — | | | $ | 394 | |
Supplemental disclosures of cash flow information | | | |
Cash paid for income taxes | $ | 8,925 | | | $ | 2,272 | |
Cash paid for interest | $ | 63 | | | $ | 5,452 | |
The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)
9
Perella Weinberg Partners
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)
Note 1—Organization and Nature of Business
Perella Weinberg Partners and its consolidated subsidiaries, including PWP Holdings LP (“PWP OpCo”) (collectively, “PWP” and the “Company”), is a global independent advisory firm that provides strategic and financial advice to a wide range of clients. The Company’s activities as an investment banking advisory firm constitute a single business segment that provides a range of advisory services related to mission-critical strategic and financial decisions, mergers and acquisitions advice and execution, capital markets advisory, shareholder and defense advisory, capital structure and restructuring, underwriting, equity research and private capital raising.
Perella Weinberg Partners (formerly known as FinTech Acquisition Corp. IV (“FTIV”)) was incorporated in Delaware on November 20, 2018 as a special purpose acquisition company for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business transaction, one or more businesses or assets. On June 24, 2021 (the “Closing Date” or “Closing”), the Company consummated a business combination pursuant to that certain Business Combination Agreement, dated as of December 29, 2020, by and among FTIV, FinTech Investor Holdings IV, LLC, FinTech Masala Advisors, LLC (together with FinTech Investor Holdings IV, LLC, the “Sponsor”), PWP OpCo, PWP GP LLC, PWP Professional Partners LP (“Professional Partners”), and Perella Weinberg Partners LLC (“Professionals GP”) (the “Business Combination Agreement”). As contemplated by the Business Combination Agreement, (i) FTIV acquired certain partnership interests in PWP OpCo, (ii) PWP OpCo became jointly-owned by Perella Weinberg Partners, Professional Partners and certain existing partners of PWP OpCo, and (iii) PWP OpCo serves as the Company’s operating partnership as part of an umbrella limited partnership C-corporation (Up-C) structure (collectively with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). See Note 3—Business Combination for additional discussion related to the transaction.
The operations of PWP OpCo are conducted through a wholly-owned subsidiary, Perella Weinberg Partners Group LP (“PWP Group”), and its subsidiaries which are consolidated in these financial statements. PWP GP LLC is the general partner that controls PWP OpCo. The limited partner interests of PWP OpCo are held by Investor Limited Partners (the “ILPs”) and Professional Partners. The Company shareholders are entitled to receive a portion of PWP OpCo’s economics through their direct ownership interests in shares of Class A common stock of PWP. The non-controlling interest owners of PWP OpCo receive economics through ownership of PWP OpCo Class A partnership units (“PWP OpCo Units”). See Note 11—Stockholders' Equity for additional information.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements reflect the financial condition, results of operations and cash flows of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All intercompany balances and transactions between the consolidated subsidiaries comprising the Company have been eliminated in the accompanying condensed consolidated financial statements.
The Business Combination was treated as a reverse recapitalization transaction between entities under common control, whereby PWP OpCo was considered the accounting acquirer and predecessor entity and therefore recognized the carrying value of the net assets of FTIV as an equity contribution with no incremental goodwill or intangible assets. The historical operations of PWP OpCo are deemed to be those of the Company. Thus, the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflect (i) the historical operating results of PWP OpCo prior to the Business Combination and (ii) the combined results of the Company following the Business Combination. See Note 3—Business Combination for additional discussion related to the transaction.
Perella Weinberg Partners
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)
These condensed consolidated financial statements and notes thereto are unaudited, and as permitted by the interim reporting rules and regulations set forth by the Securities and Exchange Commission (the “SEC”), exclude certain financial information and note disclosures normally included in annual audited financial statements prepared in accordance with U.S. GAAP. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 included in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A. The condensed consolidated financial statements reflect all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods.
Consolidation
The Company’s policy is to consolidate entities in which the Company has a controlling financial interest and variable interest entities where the Company is deemed to be the primary beneficiary. The Company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) when it has both (i) the power to make the decisions that most significantly affect the economic performance of the VIE and (ii) the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. PWP is the primary beneficiary of and consolidates PWP OpCo, a VIE. As of June 30, 2022 and December 31, 2021, the net assets of PWP OpCo were $260.0 million and $268.5 million, respectively. As of June 30, 2022 and December 31, 2021, the Company did not consolidate any VIEs other than PWP OpCo.
Use of Estimates
The preparation of the condensed consolidated financial statements and related disclosures in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and the assumptions underlying these estimates are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.
In preparing the condensed consolidated financial statements, management makes estimates regarding the following:
•measurement of amount due pursuant to the tax receivable agreement;
•measurement and timing of revenue recognition;
•adequacy of the allowance for credit losses;
•measurement and realization of deferred taxes;
•measurement of equity-based awards;
•evaluation of goodwill and intangible assets;
•fair value measurement of financial instruments; and
•other matters that affect the reported amounts and disclosures of contingencies in the condensed consolidated financial statements.