# Perella Weinberg Partners: Form 10-Q for the period ended Sep 30, 2023

- Company: [Perella Weinberg Partners](/companies/pwp.md) (CIK 1777835)
- Form: 10-Q
- Filed: 2023-11-07
- Accepted by EDGAR: Nov 7, 2023, 16:10 ET
- Period: 2023-09-30
- Accession: 0001777835-23-000132
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1777835/000177783523000132/pwp-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1777835/000177783523000132/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $139.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $436.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$26.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$71.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$191.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $552.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$2.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$6.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.27 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.84 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.05 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.16 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 86,647,697 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 86,593,581 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$12.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $45.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $10.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2023-09-30 | $126.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-09-30 | $634.2m | us-gaap:Assets |
| Total liabilities | at 2023-09-30 | $369.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $144.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,992 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” and elsewhere in this Form 10-Q.*

### Executive Overview

We are a leading global independent advisory firm that provides strategic and financial advice to clients across a range of the most active industry sectors and international markets. Our wide range of global clients include large public multinational corporations, mid-sized public and private companies, individual entrepreneurs, private and institutional investors, creditor committees and government institutions.

PWP OpCo serves as the Company’s operating partnership as part of an umbrella limited partnership C-corporation (Up-C) structure and is jointly owned by Perella Weinberg Partners, Professional Partners and certain other partners of PWP OpCo. The Company shareholders are entitled to receive a portion of PWP OpCo’s economics through their ownership interests in shares of Class A common stock of Perella Weinberg Partners, which holds PWP OpCo Units. The non-controlling interest owners of PWP OpCo receive a portion of its economics through their ownership of PWP OpCo Units.

For further information regarding our business, refer to “Part I. Item 1. Business” and “Part I. Item1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 28, 2023.

### Business Environment

Economic and global financial market conditions impact our financial performance. Today’s market environment for an advisory business remains challenging, even though client dialogues are increasingly active.

Our core advisory services benefit from macroeconomic changes that impact our client base and lead them to consider business combinations, acquisitions and divestitures, capital raises and restructurings, and we continue to invest in our platform to achieve scale, accelerate growth, and deliver value in anticipation of a rebound in activity levels.

See “Risk Factors” included in our Annual Report on Form 10-K for a discussion of some of the factors that can affect our performance.

### Key Financial Measures

### Revenues

We operate in a highly competitive environment, and each revenue-generating engagement is separately solicited and negotiated. Our fee-paying client engagements are not predictable, and we may experience fluctuations in revenues from quarter to quarter. To develop new business, we maintain an active business dialogue with existing and potential clients, and we expect to add new clients each year through expanding our relationships, hiring senior advisory professionals, and receiving introductions from our relationship network. However, we also lose clients each year due to various factors, such as sales or mergers, changes in clients’ senior management, and competition from other financial services firms.

Our revenue recognition is often tied to the completion of a transaction, which can be delayed or terminated due to various reasons, including failure to obtain regulatory or board approval, failure to secure financing, or adverse market conditions. Larger transactions may take longer to close, adding unpredictability to the timing of revenues. Despite our efforts, we may receive lower advisory fees or no fee at all if a transaction is not completed. Other barriers to the completion of restructuring transactions include a lack of anticipated bidders, failure to obtain court approval, or a failure to reach an agreement with creditors. In such cases, our advisory fees may be limited to monthly retainer fees plus the reimbursement of expenses.

We do not present our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our holistic approach to client service. For instance, a traditional M&A engagement may require additional advisory services, such as capital markets or capital solutions advice or a private capital raise, which may call for cross-functional expertise from our professionals. We focus on dedicating the necessary resources and expertise to each engagement, regardless of product lines, to achieve the desired outcome for our clients. Consequently, tracking the type of advisory service offered in each instance is not practical.

### Operating Expenses

Our operating expenses are classified as (i) total compensation and benefits expenses including equity-based compensation and (ii) non-compensation expenses.

#### Compensation and Benefits Expenses

Our compensation and benefits expenses account for a majority of our operating expenses and are primarily driven by headcount. These expenses consist of base salary, benefits, payroll taxes, cash bonus awards, deferred compensation awards, and amortization of equity-based compensation awards. Compensation is determined by management based on revenues earned, labor market competitiveness, recruitment of new partners, amortization of equity-based awards, and other factors, leading to potential fluctuations in a particular period.

Equity-based awards are subject to a service vesting condition, and in some cases, a market-based performance vesting condition. The expense amortization of Legacy Awards and Professional Partners Awards is allocated to non-controlling interests as these awards have no economic impact on, and do not dilute, PWP shareholders relative to Professional Partners.

#### Non-Compensation Expenses

Our non-compensation expenses include the costs of professional fees, technology and infrastructure, rent and occupancy, travel and related expenses, depreciation and amortization and general, administrative and other expenses. Our non-compensation expenses also include certain co-advisory fees and expenses reimbursed by our clients. Revenues related to co-advisory fees and expenses reimbursed by clients are presented within revenues on our Condensed Consolidated Statements of Operations. Overall, our non-compensation expenses are subject to variability due to multiple factors, including headcount, business needs, and inflation.

#### Non-Operating Income (Expenses)

Non-operating income (expenses) includes the impact of income and expense items that we consider to be non-operational in nature, which typically includes related party income, interest income and expense, and other non-operating gains (losses), including the impact of foreign exchange rate fluctuations. Prior to the completion of the Warrant Exchange Offer on August 23, 2022, non-operating income (expenses) also included the change in fair value of warrant liabilities.

### Results of Operations

The following is a discussion of our results of operations for the respective periods indicated:

*(Dollars in thousands)*

|  | Three Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 | Nine Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Revenues** | $139,003 | $145,379 | (4)% | $435,974 | $448,359 | (3)% |
| **Expenses** |  |  |  |  |  |  |
| Compensation and benefits | 84,872 | 86,260 | (2)% | 261,051 | 264,092 | (1)% |
| Equity-based compensation | 42,892 | 36,999 | 16% | 132,775 | 114,316 | 16% |
| Total compensation and benefits | 127,764 | 123,259 | 4% | 393,826 | 378,408 | 4% |
| Non-compensation expenses | 37,931 | 30,938 | 23% | 113,282 | 98,141 | 15% |
| Total operating expenses | 165,695 | 154,197 | 7% | 507,108 | 476,549 | 6% |
| **Operating income (loss)** | (26,692) | (8,818) | (203)% | (71,134) | (28,190) | (152)% |
| **Non-operating income (expenses)** |  |  |  |  |  |  |
| Related party income | 221 | 740 | (70)% | 770 | 2,248 | (66)% |
| Other income (expense) | 2,542 | 6,083 | (58)% | 1,488 | 11,702 | (87)% |
| Change in fair value of warrant liabilities | — | (6,294) | NM | — | 15,806 | NM |
| **Total non-operating income (expenses)** | 2,763 | 529 | 422% | 2,258 | 29,756 | (92)% |
| **Income (loss) before income taxes** | (23,929) | (8,289) | (189)% | (68,876) | 1,566 | NM |
| Income tax expense (benefit) | (191) | 4,570 | NM | 552 | 10,707 | (95)% |
| **Net income (loss)** | (23,738) | (12,859) | (85)% | (69,428) | (9,141) | (660)% |
| Less: Net income (loss) attributable to non-controlling interests | (21,689) | (13,999) | (55)% | (62,615) | (28,440) | (120)% |
| **Net income (loss) attributable to Perella Weinberg Partners** | $(2,049) | $1,140 | NM | $(6,813) | $19,299 | NM |
| NM = Not meaningful |  |  |  |  |  |  |

### Revenues

The following table provides revenue statistics for the three and nine months ended September 30, 2023 and 2022:

|  | Three Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 | Nine Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Total Advisory Clients | 81 | 78 | 3 | 159 | 151 | 8 |
| Total Clients with Fees Greater than $1.0 million | 29 | 24 | 5 | 90 | 86 | 4 |

For the three months ended September 30, 2023 as compared with the same period in 2022, revenues decreased by 4%. Revenues attributed to mergers and acquisitions were slightly higher in the third quarter of 2023 compared to the same period in 2022, but financing and capital solutions activity decreased as compared to the third quarter of 2022, which contained a particularly large financing fee.

For the nine months ended September 30, 2023 revenues decreased by 3% from the nine months ended September 30, 2022. There was a slight increase in mergers and acquisition activity period-over-period while financing and capital solutions revenues were lower due to a large financing fee and restructuring fee in the prior year period.

### Operating Expenses

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

*(Dollars in thousands)*

| Expenses | Three Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 | Nine Months Ended September 30, 2023 | 2022 | 2023 vs. 2022 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Compensation and benefits | $84,872 | $86,260 | (2)% | $261,051 | $264,092 | (1)% |
| % of Revenues | 61% | 59% |  | 60% | 59% |  |
| Equity-based compensation | $42,892 | $36,999 | 16% | $132,775 | $114,316 | 16% |
| % of Revenues | 31% | 25% |  | 30% | 25% |  |
| Total compensation and benefits | $127,764 | $123,259 | 4% | $393,826 | $378,408 | 4% |
| % of Revenues | 92% | 85% |  | 90% | 84% |  |
| Non-compensation expenses | $37,931 | $30,938 | 23% | $113,282 | $98,141 | 15% |
| % of Revenues | 27% | 21% |  | 26% | 22% |  |
| Total operating expenses | $165,695 | $154,197 | 7% | $507,108 | $476,549 | 6% |
| % of Revenues | 119% | 106% |  | 116% | 106% |  |

#### Compensation and Benefits Expenses

The increase in total compensation and benefits expenses for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily due to a higher year-to-date compensation margin. The increase was also driven by additional equity-based awards granted during the first quarter of 2023, as well as Business Realignment costs of $6.4 million incurred during the current period. These costs included separation and transition benefits and the acceleration of equity-based compensation amortization (net of forfeitures) for terminated employees.

The increase in total compensation and benefits expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily due to a higher year-to-date compensation margin. Also, Business Realignment costs of $11.5 million were incurred for the nine months ended September 30, 2023 and higher equity-based compensation was a result of awards granted during the first quarter of 2023, both contributing to the overall increase. Approximately $18 million of additional Business Realignment costs are expected to be incurred during the remainder of 2023, which is based on our current assumptions, and actual results may differ materially if unanticipated costs are incurred related to the Business Realignment.

#### Non-Compensation Expenses

The increase in non-compensation expenses for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 included a $2.1 million increase in professional fees primarily related to increased legal spend partially offset by decreased recruiting and consulting fees, a $1.4 million increase in general, administrative, and other expenses primarily due to bad debt expense offset by lower D&O insurance, a $1.2 million increase in travel-related expenses due to increased costs of airfare and lodging and increased headcount, and a $0.7 million increase in technology and infrastructure primarily related to certain investments. As a result of the New York and London office renovations and relocation, rent and occupancy slightly increased due to certain overlapping rent costs as well as increased lease operating costs and depreciation and amortization expense increased $1.2 million as leasehold improvements and other related assets were placed into service.

The increase in non-compensation expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 included a $4.8 million increase in travel-related expenses due to increased costs of airfare and lodging and increased headcount and a $3.4 million increase in technology and infrastructure primarily related to certain investments. The $3.3 million increase in rent and occupancy and $2.1 million increase in depreciation and amortization expense was due to overlapping rent and increased lease operating costs and new assets being placed into service, respectively, from the office renovations and relocation. Professional fees increased slightly due to increased legal spend offset by decreased consulting and recruiting fees. General, administrative and other expenses also increased marginally driven by increased VAT and bad debt expense offset by lower D&O insurance.

### Non-Operating Income (Expenses)

For the three months ended September 30, 2023, non-operating income of $2.8 million included $1.9 million of interest income and $1.9 million of gains from foreign exchange rate fluctuations, both reported within other income (expense). This other income was partially offset by a charge related to a settlement reached with the staff of the SEC in connection with the self-reporting of our practices relating to recordkeeping of business communications on “off-channel” messaging applications (the “Settlement”). Pursuant to the Settlement, Perella Weinberg Partners LP, Tudor, Pickering, Holt & Co. Securities LLC, and Perella Weinberg Partners Capital Management LP, collectively, agreed to pay $2.5 million in the aggregate to the SEC on a joint and several liability basis. The Company recognized a charge of $1.25 million related to the Settlement, with the remainder recognized by Perella Weinberg Partners Capital Management LP. For the prior year period, non-operating income of $0.5 million included $6.1 million of other income, largely comprised of gains from foreign exchange rate fluctuations, plus related party income, partially offset by a $6.3 million loss from the change in fair value of warrant liabilities prior to the Warrant Exchange Offer.

For the nine months ended September 30, 2023, non-operating income of $2.3 million included related party income and other income, largely comprised of $4.6 million of interest income earned primarily on cash and U.S. Treasury securities, partially offset by the $1.25 million charge recognized by the Company related to the Settlement and a $1.4 million non-operating loss on investment. In the prior year period, non-operating income of $29.8 million included a $15.8 million gain from the change in fair value of warrant liabilities, related party income, and other income, the largest component of which was a $10.8 million gain from foreign exchange rate fluctuations primarily related to U.S. dollar-denominated cash and intercompany receivables held by our foreign subsidiaries.

### Income Tax Expense (Benefit)

The Company’s income tax benefit and effective tax rate were $0.2 million and 0.8%, respectively, for the three months ended September 30, 2023 compared to income tax expense and an effective tax rate of $4.6 million and (55.1)%, respectively, for the three months ended September 30, 2022.

The Company’s income tax expense and effective tax rate were $0.6 million and (0.8)%, respectively, for the nine months ended September 30, 2023 compared to income tax expense and an effective tax rate of $10.7 million and 683.7%, respectively, for the nine months ended September 30, 2022.

The Company’s overall effective tax rate in each of the periods described above varies from the U.S. federal statutory rate primarily because (i) a portion of the Company’s income is allocated to non-controlling interests held in PWP OpCo in which the majority of any tax liability on such income is borne by the holders of such non-controlling interests and reported outside of the condensed consolidated financial statements, (ii) a portion of the Company’s compensation expense is non-deductible for tax purposes and (iii) during the nine months ended September 30, 2023, the Company recognized a previously unrecognized tax benefit at one of its foreign subsidiaries as a result of the favorable resolution of an inquiry from a taxing authority, which caused the Company to change its assessment of the technical merits of this tax position

The significant changes in the effective tax rate between the third quarter of 2023 and the third quarter of 2022, and also between the nine months ended September 30, 2023 and the nine months ended September 30, 2022, were due to the relative size of our permanent differences in relation to pre-tax income (loss) in the respective periods, as well as the recognition of a previously unrecognized tax benefit at one of the Company’s foreign subsidiaries during the nine months ended September 30, 2023.

### Cash Flows

Our operating cash flows are primarily influenced by the amount and timing of receipt of advisory fees, which generally have net terms of 30 days, and the payment of operating expenses, including payments of incentive compensation to our employees. We pay a significant portion of incentive compensation during the first quarter of each calendar year with respect to the prior year’s results. Generally, our investing and financing cash flows are primarily influenced by the payment of dividends, distributions to partners, investments in U.S. Treasury securities, purchases of fixed assets, share repurchases, and withholding payments for vesting of PWP Incentive Plan Awards.

A summary of our operating, investing and financing cash flows is as follows:

*(Dollars in thousands)*

| Cash Provided By (Used In) Operating Activities | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net income (loss) | $(69,428) | $(9,141) |
| Non-cash charges and other operating activity adjustments | 155,335 | 110,496 |
| Other operating activities | (98,389) | (200,047) |
| Total operating activities | (12,482) | (98,692) |
| **Investing Activities** | 26,274 | (147,406) |
| **Financing Activities** | (59,981) | (102,641) |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,224 | (10,523) |
| Net increase (decrease) in cash, cash equivalents and restricted cash | (44,965) | (359,262) |
| Cash, cash equivalents and restricted cash, beginning of period | 174,166 | 504,775 |
| Cash, cash equivalents and restricted cash, end of period | $129,201 | $145,513 |

#### Nine Months Ended September 30, 2023

The Company’s cash and restricted cash were $129.2 million as of September 30, 2023, which was a decrease of $45.0 million from December 31, 2022. Cash, restricted cash and short-term marketable debt securities (U.S. Treasuries) were $199.2 million as of September 30, 2023, a decrease of $115.1 million from December 31, 2022. The Company’s net loss for the nine months ended September 30, 2023 included non-cash charges and other adjustments, largely comprised of equity-based awards vesting expense, depreciation and amortization, and non-cash operating lease expense. The Company’s net operating cash outflow was predominantly due to the payment of the prior year’s annual bonus compensation. Investing activities resulted in a net inflow as a result of the maturities of investments of certain U.S. Treasury securities. This inflow was partially offset by additional investments of excess cash in U.S. Treasury securities and the purchase of fixed assets largely related to the New York and London office renovations and relocation. Financing activities resulted in a net outflow primarily related to the repurchase of shares pursuant to the stock repurchase program, withholding payments for vesting of PWP Incentive Plan Awards, distributions to partners, and the payment of dividends.

#### Nine Months Ended September 30, 2022

Cash and restricted cash were $145.5 million as of September 30, 2022, which was a decrease of $359.3 million from $504.8 million as of December 31, 2021. The Company reported a net loss of $9.1 million for the nine months ended September 30, 2022 which includes $110.5 million of non-cash charges and other adjustments, largely comprised of equity-based awards vesting expense, depreciation and amortization, the change in fair value of warrant liabilities, foreign currency revaluation and non-cash operating lease expense. This operating cash inflow was offset by working capital needs predominantly due to the payment of the annual bonus compensation in the first quarter of the year as well as payments for lease liabilities, resulting in a net operating outflow of cash of $98.7 million during the nine months ended September 30, 2022. Investing activities resulted in a net outflow of $147.4 million largely attributable to investments of cash in treasury securities as well as the purchases of fixed assets. Financing activities resulted in a net outflow of $102.6 million primarily related to the repurchase of shares pursuant to the stock repurchase program, distributions to partners, withholding payments for vesting of PWP Incentive Plan Awards and the payment of dividends.

### Liquidity and Capital Resources

### General

We regularly monitor our liquidity position, including cash and cash equivalents, working capital assets and liabilities, commitments and other liquidity requirements. Our primary sources of liquidity are our cash balances, our investments in short-term marketable debt securities, the net cash generated from operations and the available borrowing capacity under our Revolving Credit Facility.

Our current assets are primarily composed of cash, investments in short-term marketable securities, receivables related to fees earned from providing advisory services, certain prepaid expenses and certain amounts due from related parties. Our current liabilities are primarily composed of accrued employee compensation, accounts payable and other accrued expenses. We generally pay a significant portion of our annual incentive compensation, in the form of cash bonuses, during the first quarter of each calendar year with respect to the prior year’s results. Therefore, levels of cash and/or investments in short-term marketable securities generally decline during the first quarter of each year after our annual incentive compensation has been paid to our employees and typically builds over the remainder of the year. The Company makes quarterly partner tax distributions as required under the PWP OpCo LPA. Additionally, we intend to pay dividends throughout each year and intend to continue our share repurchases under the share repurchase program described below. The Company has utilized its option to net settle shares upon the vesting of PWP Incentive Plan Awards in order to remit required employee withholding taxes by using cash on hand as well as purchasing shares of Class A common stock pursuant to the stock repurchase program described below.

We evaluate our cash needs on a regular basis in light of current market and business conditions and regulatory requirements. Cash includes both cash and interest-bearing money market accounts and cash equivalents are defined as short-term highly liquid investments that have original maturities of three months or less from the date of purchase. As of September 30, 2023 and December 31, 2022, the Company had cash balances of $126.6 million and $171.6 million, respectively, maintained in U.S. and non-U.S. bank accounts, of which most bank account balances exceeded the U.S. Federal Deposit Insurance Corporation (“FDIC”) and U.K. Financial Services Compensation Scheme (“FSCS”) coverage limits. Additionally, as of September 30, 2023 and December 31, 2022, the Company held investments in short-term marketable debt securities, consisting entirely of U.S. Treasury securities, of $70.0 million and $140.1 million.

Our liquidity is highly dependent upon cash receipts from clients, which generally require the successful completion of transactions. Accounts receivable generally have net terms of 30 days. Accounts receivable were $68.9 million, net of a $2.2 million allowance for credit losses balance as of September 30, 2023. Accounts receivable were $67.9 million, net of a $1.1 million allowance for credit losses balance as of December 31, 2022.

### Line of Credit

The Company has a Revolving Credit Facility with Cadence Bank with an available line of credit of $50.0 million. Additionally, up to $20.0 million of incremental revolving commitments above the $50.0 million commitment amount may be incurred under the Credit Agreement. On June 30, 2023, the Company amended the Credit Agreement in order to provide for Term SOFR as the replacement benchmark rate for LIBOR, and to make certain other technical changes to the Credit Agreement related thereto. As of September 30, 2023, the Company had no outstanding balance related to the Revolving Credit Facility and no incremental revolving commitments were incurred. For further information on the Revolving Credit Facility, refer to Note 10—Debt in the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q.

Based on current market conditions, we believe that our cash on hand, the investments in short-term marketable debt securities, the net cash generated from operations and the available borrowing capacity under our Revolving Credit Facility will be sufficient to meet our operating needs and commitments for the next twelve months; however, if these sources of liquidity are not sufficient, we may seek additional debt or equity financing.

### Share Repurchase Program

The Company’s board of directors approved a stock repurchase program under which the Company is authorized to repurchase up to $200.0 million of the Company’s Class A common stock with no requirement to purchase any minimum number of shares. During the nine months ended September 30, 2023, the Company purchased 2,376,683 shares, at a cost of $22.5 million. No shares were repurchased during the three months ended September 30, 2023. As of September 30, 2023, $108.8 million remains of the $200 million share repurchase authorization.

### Other Commitments and Contractual Obligations

#### Regulatory Capital

We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, record-keeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. Refer to Note 6—Regulatory Requirements in the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q for further information. These regulations differ in the United States, United Kingdom, Canada, France and other countries in which we operate a registered broker-dealer or regionally similar construct. The license or regulatory framework under which we operate in each such country is meant to comply with applicable laws and regulations to conduct an advisory business. We believe that we provide each of our subsidiaries with sufficient capital and liquidity, consistent with their business and regulatory requirements to effectively operate in each jurisdiction.

#### Exchange Rights

In accordance with the PWP OpCo LPA, PWP OpCo Unitholders (other than the Company) may exchange these units for (i) shares of Class A common stock on a one-for-one basis or (ii) cash from an offering of shares of Class A common stock with the form of consideration determined by the Company. See Note 9—Stockholders’ Equity in the notes to the condensed consolidated financial statements included elsewhere in the Form 10-Q for further information.

#### Sponsor Share Surrender and Share Restriction Agreement

Concurrent with the Business Combination Agreement, FTIV, PWP OpCo and certain other parties entered into the Sponsor Share Surrender and Share Restriction Agreement with the Sponsor, which was amended on May 4, 2021. See Note 11—Stockholders' Equity in the notes to the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for further information.

#### Tax Receivable Agreement

In connection with the Business Combination, the Company entered into a tax receivable agreement with PWP OpCo, Professional Partners and ILPs that provides for payment of 85% of the amount of cash savings, if any, in U.S. federal, state and local and foreign income taxes that the Company is deemed to realize as a result of (a) each exchange of interests in PWP OpCo for cash or stock of the Company and certain other transactions and (b) payments made under the tax receivable agreement. See Note 16—Related Party Transactions in the notes to the condensed consolidated financial statements included elsewhere in the Form 10-Q for further information as well as the expected timing of payments.

#### Leases and Capital Expenditures

We have various non-cancelable operating leases in connection with the leases of our office spaces and equipment. See Note 4—Leases in the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q for further information as well as the expected timing of payments. The Company signed new lease agreements for the London office and the New York office spaces, which expand our square footage meaningfully in both locations in order to accommodate our anticipated growth. This expansion increased our contractual obligations as well as required capital contributions towards construction of these spaces (mitigated in part by free rent periods and tenant improvement allowances). Construction of the London space was completed in February 2023 and completion of the New York space is expected by the end of 2023. As of September 30, 2023, the Company estimates spending approximately $12 million to complete the construction of the New York space, net of tenant improvement allowances.

#### Business Realignment

We currently estimate that approximately $16 million of cash payments remain related to the Business Realignment, which are expected to be paid within the next 12 months.

### Market Risk and Credit Risk

Our business is not capital-intensive and we do not invest in derivative instruments. We are not subject to significant market risk (including interest rate risk and commodity price risk) or significant credit risk.

### Risks Related to Cash and Cash Equivalents

Our cash and cash equivalents include any short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. Cash is maintained in U.S. and non-U.S. bank accounts. Most U.S. and U.K. account balances exceed the FDIC and FSCS coverage limits. We believe our cash and cash equivalents are not subject to any material interest rate risk, equity price risk, credit risk or other market risk.

### Credit Risk

We regularly review our accounts receivable and allowance for credit losses by considering factors such as historical experience, credit quality, age of the accounts receivable, and the current economic conditions that may affect a client’s ability to pay such amounts owed to the Company. We maintain an allowance for credit losses that, in our opinion, provides for an adequate reserve to cover current expected credit losses. Refer to Note 3—Revenue and Receivables from Contracts with Customers in the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q for further information.

With respect to investments, we manage our credit risk exposure by holding investments primarily with investment grade credit quality. As of September 30, 2023, the Company held investments of $70.0 million in U.S. Treasury securities with maturities of less than 12 months.

### Exchange Rate Risk

The Company is exposed to exchange rate risk as a result of having foreign subsidiaries with non-U.S. dollar functional currencies as well as from entering into transactions and holding monetary assets and liabilities that are not denominated in the functional currency of its operating subsidiaries. Specifically, the reported amounts in our consolidated financial statements may be affected by movements in the rate of exchange between the pound sterling, Euro, and Canadian dollar and our reporting currency, the U.S. dollar. For the nine months ended September 30, 2023 and 2022, the net impact of non-functional currency related transaction gains and losses recorded in Other income (expense) on our Condensed Consolidated Statements of Operations was a $0.3 million loss and $10.8 million gain, respectively, primarily related to U.S. dollar-denominated intercompany receivables held by our foreign subsidiaries as the U.S. dollar value fluctuated period over period. For the nine months ended September 30, 2023 and 2022, the net impact of the fluctuation of foreign currencies recorded in Foreign currency translation gain (loss) within our Condensed Consolidated Statements of Comprehensive Income (Loss) was a $0.7 million gain and $13.4 million loss, respectively. We have not entered into any transactions to hedge our exposure to these foreign currency fluctuations using derivative instruments or other methods but may do so if we deem appropriate in the future.

As of September 30, 2023, we held balances of $32.1 million of non-U.S. dollar denominated currencies, composed of pound sterling, the Euro, and Canadian dollars.

### Critical Accounting Estimates

This Quarterly Report on Form 10-Q should be read together with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company’s Annual Report on Form 10-K filed on February 28, 2023 regarding these critical accounting estimates. For changes to our critical accounting estimates during the nine months ended September 30, 2023, refer to Note 2—Summary of Significant Accounting Policies in the notes to condensed consolidated financial statements included elsewhere in this Form 10-Q.

## Market risk

As filed, 200 characters.

Quantitative and qualitative disclosures about market risk are set forth above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Credit Risk”.

## Controls and procedures

As filed, 2,126 characters.

This Item 4 includes information concerning the controls and controls evaluation referred to in the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) included in this Quarterly Report on Form 10-Q as Exhibits 31.1 and 31.2.

### Management’s Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.

In connection with the preparation of this Quarterly Report on Form 10-Q, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to management, and made known to our principal executive officer and principle financial officer, on a timely basis to ensure that it is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the nine months ended September 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 257 characters.

There have been no material changes or updates to our risk factors that were previously disclosed in “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 28, 2023.

Filed Nov 7, 2023.
Source: SEC EDGAR, the filing index for accession 0001777835-23-000132. Last ingested by Listed: Nov 5, 2026, 18:40 ET. No prices; not investment advice.