Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | GREENHILL & CO INC | |
Entity Central Index Key | 0001282977 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,388,112 | |
Emerging Growth Company | false | |
Smaller Reporting Company | false | |
Entity Shell Company | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents ($9.7 million and $3.8 million restricted from use at June 30, 2019 and December 31, 2018, respectively) | $ 109,720 | $ 156,374 |
Advisory fees receivable, net of allowance for doubtful accounts of $0.4 million and $0.0 million at June 30, 2019 and December 31, 2018, respectively | 43,260 | 61,793 |
Other receivables | 12,285 | 2,595 |
Property and equipment, net of accumulated depreciation of $46.3 million and $45.0 million at June 30, 2019 and December 31, 2018, respectively | 6,621 | 7,185 |
Operating lease right-of-use asset | 31,432 | 0 |
Goodwill | 205,896 | 205,922 |
Deferred tax asset, net | 42,995 | 43,706 |
Other assets | 17,437 | 8,125 |
Total assets | 469,646 | 485,700 |
Liabilities and Equity | ||
Compensation payable | 26,438 | 56,922 |
Accounts payable and accrued expenses | 13,161 | 17,167 |
Current income taxes payable | 1,677 | 7,486 |
Operating lease obligations | 34,295 | 0 |
Secured term loan payable | 366,481 | 319,479 |
Contingent obligation due selling unitholders of Cogent | 0 | 18,293 |
Deferred tax liability | 4,766 | 3,990 |
Total liabilities | 446,818 | 423,337 |
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 46,653,102 and 45,001,788 shares issued as of June 30, 2019 and December 31, 2018, respectively; 20,800,103 and 20,404,996 shares outstanding as of June 30, 2019 and December 31, 2018, respectively | 467 | 450 |
Restricted stock units | 56,911 | 71,596 |
Additional paid-in capital | 884,646 | 846,721 |
Exchangeable shares of subsidiary; 257,156 shares issued as of June 30, 2019 and December 31, 2018; 0 and 32,804 shares outstanding as of June 30, 2019 and December 31, 2018 | 0 | 1,958 |
Retained earnings | 32,645 | 63,427 |
Accumulated other comprehensive income (loss) | (35,977) | (35,705) |
Treasury stock, at cost, par value $0.01 per share; 25,852,999 and 24,596,792 shares as of June 30, 2019 and December 31, 2018, respectively | (915,864) | (886,084) |
Stockholders’ equity | 22,828 | 62,363 |
Total liabilities and equity | $ 469,646 | $ 485,700 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents, restricted from use | $ 9,687 | $ 3,781 |
Advisory fees receivable, allowance for doubtful accounts | 400 | 0 |
Property and equipment, accumulated depreciation | $ 46,300 | $ 45,000 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 46,653,102 | 45,001,788 |
Common stock, shares outstanding (shares) | 20,800,103 | 20,404,996 |
Exchangeable shares of subsidiary, shares issued (shares) | 257,156 | 257,156 |
Exchangeable shares of subsidiary, shares outstanding (shares) | 0 | 32,804 |
Treasury stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Treasury stock, shares (shares) | 25,852,999 | 24,596,792 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Advisory revenues | $ 55,585 | $ 88,051 | $ 106,155 | $ 174,820 |
Investment revenues | 499 | 445 | 1,124 | 1,219 |
Total revenues | 56,084 | 88,496 | 107,279 | 176,039 |
Expenses | ||||
Employee compensation and benefits | 46,065 | 48,438 | 91,127 | 97,646 |
Occupancy and equipment rental | 5,646 | 5,508 | 11,052 | 10,797 |
Depreciation and amortization | 645 | 717 | 1,312 | 1,480 |
Information services | 2,652 | 2,652 | 5,008 | 4,969 |
Professional fees | 1,926 | 2,247 | 4,552 | 5,170 |
Travel related expenses | 3,363 | 3,492 | 6,859 | 6,797 |
Other operating expenses | 2,155 | 5,986 | 7,998 | 10,708 |
Total operating expenses | 62,452 | 69,040 | 127,908 | 137,567 |
Total operating income (loss) | (6,368) | 19,456 | (20,629) | 38,472 |
Interest expense | 10,621 | 5,594 | 16,472 | 10,855 |
Income (loss) before taxes | (16,989) | 13,862 | (37,101) | 27,617 |
Provision (benefit) for taxes | (4,292) | 3,349 | (9,018) | 10,736 |
Net income (loss) | $ (12,697) | $ 10,513 | $ (28,083) | $ 16,881 |
Average shares outstanding: | ||||
Basic (shares) | 23,925,310 | 26,992,652 | 24,231,448 | 28,545,545 |
Diluted (shares) | 23,925,310 | 27,921,821 | 24,231,448 | 29,224,878 |
Earnings (loss) per share: | ||||
Basic (usd per share) | $ (0.53) | $ 0.39 | $ (1.16) | $ 0.59 |
Diluted (usd per share) | $ (0.53) | $ 0.38 | $ (1.16) | $ 0.58 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (12,697) | $ 10,513 | $ (28,083) | $ 16,881 |
Currency translation adjustment, net of tax | (1,326) | (6,405) | (272) | (7,239) |
Comprehensive income (loss) | $ (14,023) | $ 4,108 | $ (28,355) | $ 9,642 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Restricted Stock Units | Common stock, par value $0.01 per share | Restricted stock unitsRestricted Stock Units | Additional paid-in capital | Exchangeable shares of subsidiary | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock, at cost, par value $0.01 per share |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | $ (7,645) | ||||||||
Retained earnings, beginning of the period, as adjusted | 29,950 | ||||||||
Beginning Balance at Dec. 31, 2017 | $ 438 | $ 80,512 | $ 800,806 | $ 1,958 | 37,595 | $ (22,222) | $ (690,785) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock issued | 10 | 39,443 | |||||||
Restricted stock units recognized, net of forfeitures | 15,243 | ||||||||
Restricted stock units delivered | (39,912) | ||||||||
Exchangeable shares of subsidiary delivered | 0 | ||||||||
Dividends | (3,117) | ||||||||
Net income (loss) | $ 16,881 | 16,881 | |||||||
Currency translation adjustment, net of tax | (7,239) | ||||||||
Repurchased | $ (7,500) | (119,401) | |||||||
Ending Balance at Jun. 30, 2018 | 102,565 | 448 | 55,843 | 840,249 | 1,958 | 43,714 | (29,461) | (810,186) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | 0 | ||||||||
Retained earnings, beginning of the period, as adjusted | 34,631 | ||||||||
Beginning Balance at Mar. 31, 2018 | 447 | 54,871 | 834,692 | 1,958 | 34,631 | (23,056) | (725,538) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock issued | 1 | 5,557 | |||||||
Restricted stock units recognized, net of forfeitures | 6,780 | ||||||||
Restricted stock units delivered | (5,808) | ||||||||
Exchangeable shares of subsidiary delivered | 0 | ||||||||
Dividends | (1,430) | ||||||||
Net income (loss) | 10,513 | 10,513 | |||||||
Currency translation adjustment, net of tax | (6,405) | ||||||||
Repurchased | (84,648) | ||||||||
Ending Balance at Jun. 30, 2018 | 102,565 | 448 | 55,843 | 840,249 | 1,958 | 43,714 | (29,461) | (810,186) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | 0 | ||||||||
Retained earnings, beginning of the period, as adjusted | 63,427 | ||||||||
Beginning Balance at Dec. 31, 2018 | 62,363 | 450 | 71,596 | 846,721 | 1,958 | 63,427 | (35,705) | (886,084) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock issued | 17 | 37,925 | |||||||
Restricted stock units recognized, net of forfeitures | 21,674 | ||||||||
Restricted stock units delivered | (36,359) | ||||||||
Exchangeable shares of subsidiary delivered | (1,958) | ||||||||
Dividends | (2,699) | ||||||||
Net income (loss) | (28,083) | (28,083) | |||||||
Currency translation adjustment, net of tax | (272) | ||||||||
Repurchased | $ (13,100) | (29,780) | |||||||
Ending Balance at Jun. 30, 2019 | 22,828 | 467 | 56,911 | 884,646 | 0 | 32,645 | (35,977) | (915,864) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | 0 | ||||||||
Retained earnings, beginning of the period, as adjusted | 46,695 | ||||||||
Beginning Balance at Mar. 31, 2019 | 462 | 47,214 | 880,924 | 1,958 | 46,695 | (34,651) | (910,485) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock issued | 5 | 3,722 | |||||||
Restricted stock units recognized, net of forfeitures | 11,656 | ||||||||
Restricted stock units delivered | (1,959) | ||||||||
Exchangeable shares of subsidiary delivered | (1,958) | ||||||||
Dividends | (1,353) | ||||||||
Net income (loss) | (12,697) | (12,697) | |||||||
Currency translation adjustment, net of tax | (1,326) | ||||||||
Repurchased | (5,379) | ||||||||
Ending Balance at Jun. 30, 2019 | $ 22,828 | $ 467 | $ 56,911 | $ 884,646 | $ 0 | $ 32,645 | $ (35,977) | $ (915,864) |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Treasury stock, par value (usd per share) | 0.01 | 0.01 |
Common stock, par value $0.01 per share | ||
Common stock, par value (usd per share) | 0.01 | 0.01 |
Treasury stock, at cost, par value $0.01 per share | ||
Treasury stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income (loss) | $ (28,083) | $ 16,881 |
Non-cash items included in net income (loss): | ||
Depreciation and amortization | 2,336 | 2,632 |
Net investment gains | (75) | 149 |
Restricted stock units recognized, net | 21,674 | 15,243 |
Deferred taxes, net | 1,353 | 6,069 |
Non-cash portion of loss on refinancing | 1,759 | 0 |
Loss on fair value of contingent obligation | 575 | 3,591 |
Loss (gain) on sales of property and equipment | 0 | (777) |
Changes in operating assets and liabilities: | ||
Advisory fees receivable | 18,533 | (34,655) |
Other receivables and assets | (18,926) | (6,789) |
Payment of contingent obligation due selling unitholders of Cogent | (5,724) | 0 |
Compensation payable | (30,105) | 14,181 |
Accounts payable and accrued expenses | 3,200 | (4,292) |
Current income taxes payable | (5,809) | 2,540 |
Net cash provided by (used for) operating activities | (39,292) | 14,773 |
Investing activities: | ||
Distributions from investments | 0 | 2 |
Purchases of property and equipment | (743) | (1,623) |
Sales of property and equipment | 0 | 1,357 |
Net cash used in investing activities | (743) | (264) |
Financing activities: | ||
Proceeds from refinancing of secured term loan, net | 48,248 | 0 |
Repayment of secured term loan | (8,750) | (8,750) |
Payment of contingent obligation due selling unitholders of Cogent | (13,144) | 0 |
Dividends paid | (3,076) | (3,117) |
Purchase of treasury stock | (29,780) | (119,401) |
Net cash used in financing activities | (6,502) | (131,268) |
Effect of exchange rate changes | (117) | (1,601) |
Net decrease in cash and cash equivalents | (46,654) | (118,360) |
Cash and cash equivalents, beginning of the period | 156,374 | 267,646 |
Cash and cash equivalents, end of the period | 109,720 | 149,286 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 5,851 | 11,309 |
Cash paid for taxes, net of refunds | $ 5,410 | $ 2,998 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Greenhill & Co., Inc. and subsidiaries (the “Company” or “Greenhill”) is a leading independent investment bank that provides financial and strategic advice on significant domestic and cross-border mergers and acquisitions, restructurings, financings, capital raisings and other strategic transactions to a diverse client base, including corporations, partnerships, institutions and governments globally. The Company acts for clients located throughout the world from our global offices in the United States, Australia, Brazil, Canada, Germany, Hong Kong, Japan, Spain, Sweden, and the United Kingdom. The Company’s wholly-owned subsidiaries provide advisory services in various jurisdictions. Our most significant operating entities include: Greenhill & Co., LLC (“G&Co”), Greenhill & Co. International LLP (“GCI”), Greenhill & Co. Europe LLP (“GCE”) and Greenhill & Co. Australia Pty Limited (“Greenhill Australia”). G&Co is engaged in investment banking activities principally in the United States. G&Co is registered as a broker-dealer with the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”), and is licensed in all 50 states and the District of Columbia. GCI and GCE are engaged in investment banking activities in the United Kingdom and Europe, respectively, and are subject to regulation by the U.K. Financial Conduct Authority (“FCA”). Greenhill Australia engages in investment banking activities in Australia and New Zealand and is licensed and subject to regulation by the Australian Securities and Investment Commission (“ASIC”). The Company also operates in other locations throughout the world, which are subject to regulation by other governmental and regulatory bodies and self-regulatory authorities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Financial Information These condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP), which require management to make estimates and assumptions regarding future events that affect the amounts reported in our financial statements and these footnotes, including investment valuations, compensation accruals, income tax expense related to the Tax Cuts and Jobs Act, and other matters. Management believes that the estimates used in preparing its condensed consolidated financial statements are reasonable and prudent. Actual results could differ materially from those estimates. Certain reclassifications have been made to prior year information to conform to current year presentation. The condensed consolidated financial statements of the Company include all consolidated accounts of Greenhill & Co., Inc. and all other entities in which the Company has a controlling interest after eliminations of all significant inter-company accounts and transactions. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC. The condensed consolidated financial information as of December 31, 2018 has been derived from audited consolidated financial statements not included herein. The results of operations for interim periods are not necessarily indicative of results for the entire year. Revenue Recognition Advisory Revenues The Company recognizes revenue when (or as) services are transferred to clients. Revenue is recognized based on the amount of consideration that management expects to receive in exchange for these services in accordance with the terms of the contract with the client. To determine the amount and timing of revenue recognition, the Company must (1) identify the contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The Company generally recognizes advisory fee revenues for mergers and acquisitions engagements at the earlier of the announcement date or transaction date, as the performance obligation is typically satisfied at such time. Upfront fees and certain retainer fees are generally deferred until the announcement or transaction date as they are considered constrained (subject to significant reversal) prior to the announcement or transaction date. Fairness opinion fees are recognized when the opinion is delivered. The Company recognizes advisory fee revenues for financing advisory and restructuring engagements as the services are provided to the client, based on terms of the engagement letter. In such arrangements, the Company’s performance obligations are to provide financial and strategic advice throughout an engagement. The Company recognizes revenues for capital advisory fees when (1) the commitment of capital is secured (primary capital raising transactions) or the sale or transfer of the capital interest occurs (secondary market transactions) and (2) the fees are earned from the client in accordance with terms of the engagement letter. Upfront fees and certain retainer fees are deferred until the commitment is secured or the sale or transfer of the capital interest occurs, as the fees are considered constrained (subject to significant reversal) prior to such time. As a result of the deferral of certain fees, deferred revenue (also known as contract liabilities) was $5.5 million and $5.6 million as of June 30, 2019 and December 31, 2018 , respectively. Deferred revenue is included in accounts payable and accrued expenses in the condensed consolidated statements of financial condition. During the six months ended June 30, 2019 and June 30, 2018 , the Company recognized $3.2 million and $8.1 million , respectively, of advisory fee revenues that were included in the deferred revenue (contract liabilities) balance at the beginning of each respective period. The Company’s clients reimburse certain expenses incurred by the Company in the conduct of advisory engagements. Client reimbursements totaled $1.4 million and $2.2 million for the three months ended June 30, 2019 and 2018 , respectively, and $2.5 million and $3.4 million for the six months ended June 30, 2019 and 2018 . Such reimbursements are reported as advisory revenues and operating expenses with no impact to operating income in the condensed consolidated statements of operations. Investment Revenues Investment revenues consist of interest income and gains (or losses) on the Company’s investments in certain merchant banking funds. The Company recognizes revenue on its investments in merchant banking funds based on its allocable share of realized and unrealized gains (or losses) reported by such funds. Cash and Cash Equivalents The Company’s cash and cash equivalents consist of (i) cash held on deposit with financial institutions, (ii) cash equivalents and (iii) restricted cash. The Company maintains its cash and cash equivalents with financial institutions with high credit ratings. The Company considers all highly liquid investments with a maturity date of three months or less, when purchased, to be cash equivalents. Cash equivalents primarily consist of money market funds and other short-term highly liquid investments with original maturities of three months or less and are carried at cost, plus accrued interest, which approximates the fair value due to the short-term nature of these investments. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. See “Note 3 — Cash and Cash Equivalents”. Advisory Fees Receivable Receivables are stated net of an allowance for doubtful accounts. The estimate for the allowance for doubtful accounts is derived by the Company by utilizing past client transaction history and an assessment of the client’s creditworthiness. The Company recorded bad debt expense of $0.1 million and $0.3 million for the three month periods ended June 30, 2019 and June 30, 2018 , respectively, and $0.4 million and $0.3 million for the six month periods ended June 30, 2019 and June 30, 2018 , respectively. Included in the advisory fees receivable balance at June 30, 2019 and December 31, 2018 were $15.9 million and $20.0 million , respectively, of long term receivables related to primary capital advisory engagements which are generally paid in installments over a period of three years . Credit risk related to advisory fees receivable is disbursed across a large number of clients located in various geographic areas. The Company controls credit risk through credit approvals and monitoring procedures but does not require collateral to support accounts receivable. Goodwill Goodwill is the cost in excess of the fair value of identifiable net assets at the acquisition date. The Company tests its goodwill for impairment at least annually. An impairment loss is triggered if the estimated fair value of an operating unit is less than the estimated net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill is translated at the rate of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Any translation gain or loss is included in the foreign currency translation adjustment, which is included as a component of other comprehensive income (loss) in the condensed consolidated statements of changes in stockholders’ equity. Other Assets Included in other assets in the condensed consolidated statements of financial condition are the Company’s investments in merchant banking funds, which are recorded under the equity method of accounting based upon the Company’s proportionate share of the estimated fair value of the underlying merchant banking fund’s net assets. Other assets also include prepaid compensation awards that require a future service period and are subject to clawbacks if the individual ceases employment prior to a determined date. The awards are amortized over the required service period, which generally does not exceed one year. Other prepaid expenses, rent deposits, intangible assets and other tangible assets are also included in other assets. Compensation Payable Included in compensation payable are discretionary compensation awards comprised of accrued cash bonuses and long-term incentive compensation, consisting of deferred cash retention awards, which are non-interest bearing, and generally amortized ratably over a three to five year service period after the date of grant. Restricted Stock Units The Company accounts for its share-based compensation payments by recording the fair value of restricted stock units granted to employees as compensation expense. The restricted stock units are generally amortized ratably over a three to five -year service period following the date of grant. Compensation expense is determined based upon the fair value of the Company’s common stock at the date of grant. In certain circumstances the Company issues share-based compensation, which is contingent on achievement of certain performance targets. Compensation expense for performance-based awards begins at the time it is deemed probable that the performance target will be achieved and is amortized into expense over the remaining service period. The Company includes a forfeiture estimate in the aggregate compensation cost to be amortized. As the Company expenses the awards, the restricted stock units recognized are recorded within stockholders’ equity. The restricted stock units are reclassified into common stock and additional paid-in capital upon vesting. The Company records as treasury stock the repurchase of stock delivered to its employees in settlement of tax liabilities incurred upon the vesting of restricted stock units. The Company records dividend equivalent payments on outstanding restricted stock units eligible for such payment as a dividend payment and a charge to stockholders’ equity. Earnings per Share The Company calculates basic earnings per share (“EPS”) by dividing net income by the sum of (i) the weighted average number of shares outstanding for the period and (ii) the weighted average number of shares deemed issuable due to the vesting of restricted stock units for accounting purposes. See “Note 7 — Equity”. The Company calculates diluted EPS by dividing net income by the sum of (i) basic shares per above and (ii) the dilutive effect of the common stock deliverable pursuant to restricted stock units for which future service is required. Under the treasury stock method, the number of shares issuable upon the vesting of restricted stock units included in the calculation of diluted EPS is the excess, if any, of the number of shares expected to be issued, less the number of shares that could be repurchased by the Company with the proceeds to be received upon settlement at the average market closing price during the reporting period. See “Note 8 — Earnings per Share”. Provision for Taxes The Company accounts for taxes in accordance with the accounting guidance for income taxes which requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities. The Company follows the guidance for income taxes in recognizing, measuring, presenting and disclosing in its financial statements uncertain tax positions taken or expected to be taken on its income tax returns. Income tax expense is based on pre-tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions. The recognition or derecognition of income tax expense related to uncertain tax positions is determined under the guidance, and the Company’s policy is to treat interest and penalties related to uncertain tax positions as part of pre-tax income. Deferred tax assets and liabilities are recognized for the future tax attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period of change. Management applies the “more-likely-than-not criteria” when determining tax benefits. Foreign Currency Translation Assets and liabilities denominated in foreign currencies have been translated at rates of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Income and expenses transacted in foreign currency have been translated at average monthly exchange rates during the period. Translation gains and losses are included in the foreign currency translation adjustment, which is included as a component of other comprehensive income (loss) in the condensed consolidated statements of changes in stockholders’ equity. Foreign currency transaction gains and losses are included in the condensed consolidated statements of operations in other operating expenses. Financial Instruments and Fair Value The Company accounts for financial instruments measured at fair value in accordance with accounting guidance for fair value measurements and disclosures which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the pronouncement are described below: Basis of Fair Value Measurement Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities that are subject to these disclosures. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. Transfers between levels are recognized as of the end of the period in which they occur. See “Note 4 — Fair Value of Financial Instruments”. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the life of the assets. Amortization of leasehold improvements is computed using the straight-line method over the lesser of the life of the asset or the remaining term of the lease. Estimated useful lives of the Company’s fixed assets are generally as follows: Equipment – 5 years Furniture and fixtures – 7 years Leasehold improvements – the lesser of 10 years or the remaining lease term Business Information The Company’s activities as an investment banking firm constitute a single business segment, with substantially all revenues generated from advisory services, which includes engagements relating to mergers and acquisitions, financing advisory and restructuring, and capital advisory services. The Company earns less than 1% of its revenues from interest income and investment gains (losses) on investments. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which requires the recognition of lease assets and lease liabilities for operating leases, among other changes. The Company adopted this standard on January 1, 2019 utilizing a modified retrospective approach. The Company elected to apply practical expedients provided in the standard that allowed the Company to not reassess whether expired or existing contracts are or contain leases, not reassess lease classification for expired or existing leases (e.g., pre-existing operating leases are classified as operating leases under the new standard), and not reassess initial direct costs for existing leases. The impact of adopting ASU 2016-02 was an increase of $38.1 million to the Company’s assets and liabilities for the operating lease right-of-use assets and operating lease obligations on the condensed consolidated statement of financial condition as of January 1, 2019. Upon adoption, the Company also reclassified $3.2 million of deferred rent from accounts payable and accrued expenses to operating lease obligations on the condensed consolidated statement of financial condition. Differences in the operating lease right-of-use asset and operating lease obligations are due to straight-lining rent expense and the resulting deferred rent. There was no net impact to the condensed consolidated statement of operations. In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” codifying ASC 606, Revenue Recognition - Revenue from Contracts with Customers, which supersedes the guidance in former ASC 605, Revenue Recognition. The Company adopted this standard on January 1, 2018 utilizing the modified retrospective approach and applied the standard to contracts that were not completed at this time. Upon adoption, certain revenues that were previously recognized as services were provided changed to either point in time recognition or over the term of an engagement. This change in the Company’s revenue recognition policy created deferred revenues (also known as contract liabilities) that will be recognized at a point in time as performance obligations are met. The cumulative effect of adopting this ASU on January 1, 2018 was a net decrease to retained earnings of $7.6 million . Accounting Developments In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU will change how companies measure credit losses on most financial instruments, including accounts receivable. Companies will be required to estimate lifetime expected credit losses, which is generally expected to result in earlier recognition of credit losses. The Company is currently evaluating the impact of the future adoption of ASU 2016-13 on the Company’s consolidated financial statements. The standard is effective for the Company on January 1, 2020 under a modified retrospective approach. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 6 Months Ended |
Jun. 30, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents The carrying values of the Company’s cash and cash equivalents are as follows: As of June 30, As of December 31, 2019 2018 (in thousands) (unaudited) Cash $ 47,656 $ 80,400 Cash equivalents 52,377 72,193 Restricted cash - letters of credit 9,687 3,781 Total cash and cash equivalents $ 109,720 $ 156,374 In June 2019, the Company delivered a security deposit in the form of a $5.9 million standby letter of credit to the landlord of a new office lease. Under certain circumstances, the Company will be entitled to periodically reduce the amount of the letter of credit amount down ultimately to approximately $3.5 million from and after the fifth anniversary of the rent commencement. See “Note 10 — Leases”. The carrying value of the Company’s cash equivalents approximates fair value. See “Note 4 — Fair Value of Financial Instruments”. Letters of credit are secured by cash held on deposit. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities are classified in their entirety based on their lowest level of input that is significant to the fair value measurement. As of June 30, 2019 , the Company had Level 1 assets measured at fair value. As of December 31, 2018 , the Company had Level 1 assets and Level 2 liabilities measured at fair value. Assets Measured at Fair Value on a Recurring Basis The following tables set forth the measurement at fair value on a recurring basis of the investments in money market funds, short-term cash instruments and U.S. government securities. The securities are categorized as a Level 1 asset, as their valuation is based on quoted prices for identical assets in active markets. See “Note 3 — Cash and Cash Equivalents”. Assets Measured at Fair Value on a Recurring Basis as of June 30, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2019 (in thousands, unaudited) Assets Cash equivalents $ 52,377 $ — $ — $ 52,377 Total $ 52,377 $ — $ — $ 52,377 Assets Measured at Fair Value on a Recurring Basis as of December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2018 (in thousands) Assets Cash equivalents $ 72,193 $ — $ — $ 72,193 Total $ 72,193 $ — $ — $ 72,193 Liabilities Measured at Fair Value on a Recurring Basis In connection with the acquisition in April 2015 of Cogent Partners, LP and its affiliates (“Cogent,” now known as the secondary capital advisory business), the Company agreed to pay to the sellers in the future $18.9 million in cash and 334,048 shares of Greenhill common stock if certain agreed revenue targets are achieved (the “Earnout”). The cash payment and the issuance of common shares related to the Earnout were to be made if secondary capital advisory revenues of $80.0 million or more were earned during either the two year period ending on the second anniversary of the closing or the two year period ending on the fourth anniversary of the closing. The revenue generated by the secondary capital advisory business for the first two year period ended March 31, 2017 was slightly less than required to achieve the Cogent earnout. The Earnout for the second two year period ended March 31, 2019 was achieved, and in accordance with terms of the purchase agreement, the contingent consideration was paid in April 2019. The fair value of the contingent cash consideration was valued on the date of the acquisition at $13.1 million and was remeasured quarterly based on a probability weighted present value discount that the revenue target may be achieved. At June 30, 2019 , no contingent cash consideration liability remained after the payment in the second quarter of 2019. Additionally, there was no impact on operating expense subsequent to March 31, 2019 because the liability was recognized in full. Due to the remeasurement of the Earnout, for the three month period ended June 30, 2018 , the Company recognized an increase in other operating expenses of $2.7 million . For the six month periods ended June 30, 2019 and June 30, 2018 , the Company recognized increases in other operating expenses of $0.6 million and $3.6 million , respectively. See “Note 7 - Equity” and “Note 8 — Earnings per Share”. The following tables set forth the measurement at fair value on a recurring basis of the contingent cash consideration due to the selling unitholders of Cogent related to the Earnout prior to its settlement in April 2019. The liability arose as a result of the acquisition of Cogent and was categorized as a Level 3 liability. Through March 31, 2019, the liability was remeasured each quarter based on the probability of achieving the target revenue threshold and weighted average discount rate as discussed below. In the third quarter of 2018, the liability was transferred to Level 2 as the only remaining fair value input was the present value discount. Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2018 (in thousands) Liabilities Contingent obligation due selling unitholders of Cogent $ — $ 18,293 $ — $ 18,293 Total $ — $ 18,293 $ — $ 18,293 Changes in Level 3 liabilities measured at fair value on a recurring basis for the three and six month periods ended June 30, 2018 are as follows: Opening Balance as of April 1, 2018 Total realized and unrealized gains (losses) included in Net Income Unrealized gains (losses) included in Other Comprehen-sive Income Purchases Issues Sales Settlements Closing Balance as of June 30, 2018 Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 (in thousands, unaudited) Liabilities Contingent obligation due to selling unitholders of Cogent $ 14,673 $ (2,681 ) $ — $ — $ — $ — $ — $ 17,354 $ (2,681 ) Total $ 14,673 $ (2,681 ) $ — $ — $ — $ — $ — $ 17,354 $ (2,681 ) Opening Balance as of January 1, 2018 Total realized and unrealized gains (losses) included in Net Income Unrealized gains (losses) included in Other Comprehen-sive Income Purchases Issues Sales Settlements Closing Balance as of June 30, 2018 Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 (in thousands, unaudited) Liabilities Contingent obligation due to selling unitholders of Cogent $ 13,763 $ (3,591 ) $ — $ — $ — $ — $ — $ 17,354 $ (3,591 ) Total $ 13,763 $ (3,591 ) $ — $ — $ — $ — $ — $ 17,354 $ (3,591 ) Realized and unrealized gains (losses) are reported as a component of other operating expenses in the condensed consolidated statements of operations. Valuation Processes - Level 3 Measurements - The Company utilizes a valuation technique based on a present value method applied to the probability of achieving a range of potential revenue outcomes. The valuation was conducted by the Company. The Company updates unobservable inputs each reporting period and has a formal process in place to review changes in fair value. Sensitivity Analysis - Level 3 Measurements - The significant unobservable inputs used in determining fair value are the discount rate and forecast revenue information. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement, respectively. Significant increases (decreases) in the forecast revenue information would result in a higher (lower) fair value measurement, respectively. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the other inputs. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties At June 30, 2019 and December 31, 2018 , the Company had no amounts receivable from or payable to related parties. Prior to June 2018, the Company subleased airplane and office space to a firm owned by the Chairman of the Company. The Company recognized rent reimbursements of less than $0.1 million for each of the three and six month periods ended June 30, 2018 . |
Loan Facilities
Loan Facilities | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Loan Facilities | Loan Facilities In October 2017, as part of a recapitalization plan, the Company entered into a credit agreement with a syndicate of lenders, who lent a face amount of $350.0 million under a five -year secured term loan facility (“2017 Term Loan Facility”) and provided a three -year secured revolving credit facility (“Revolving Loan Facility”) for $20.0 million , which was undrawn at closing. The 2017 Term Loan Facility required quarterly principal amortization payments of $4.375 million beginning March 31, 2018 through September 30, 2018 and thereafter required quarterly principal amortization payments of $8.75 million . On April 12, 2019, the Company refinanced its 2017 Term Loan Facility. The new principal amount of $375.0 million from a new five-year secured term loan facility (“Term Loan Facility”) was used to repay in full the $319.4 million outstanding principal balance of the 2017 Term Loan Facility, pay fees and expenses and resulted in net cash proceeds of $48.3 million , which increased the Company’s cash balance. Under the terms of the 2017 Term Loan Facility, the Company was eligible to repay, refinance or reprice the outstanding principal amount of the loan facility as of April 12, 2019 without any incremental premium or other charge. Borrowings under the Term Loan Facility bear interest at either U.S. Prime plus 2.25% or LIBOR plus 3.25% , which represents a 50 basis point reduction from the applicable borrowing rates of the 2017 Term Loan Facility. Borrowings under the term and revolving loan facilities had a weighted average interest rate for the six months ended June 30, 2019 and June 30, 2018 of 6.08% and 5.55% , respectively. The Term Loan Facility requires quarterly principal amortization payments of $4.7 million (or $18.8 million annually), beginning September 30, 2019 through March 31, 2024, with the remaining outstanding balance due at maturity on April 12, 2024. In addition, beginning for the year ended December 31, 2019, the Company may be required to make annual repayments of principal on the Term Loan Facility within ninety days of year-end of up to 50% of its annual excess cash flow as defined in the credit agreement based on a calculation of net leverage. The Company is also required to repay certain amounts in connection with the non-ordinary course sale of assets, receipt of insurance proceeds, and the issuance of debt obligations, subject to certain exceptions. The Revolving Loan Facility was not refinanced and the amount, interest rate and maturity remained unchanged from the original terms. The Term Loan Facility and Revolving Loan Facility are both guaranteed by the Company’s existing and subsequently acquired or organized wholly-owned U.S. restricted subsidiaries (excluding any registered broker-dealers) and secured with a first priority perfected security interest in certain domestic assets and 100% of the capital stock of each U.S. subsidiary and 65% of the capital stock of each non-U.S. subsidiary, subject to certain exclusions which, for the avoidance of doubt, such security interest shall not include any assets of regulated subsidiaries that are not permitted to be pledged by law, statute or regulation, including cash held by regulated subsidiaries and any other capital required to meet and maintain regulatory capital requirements. The credit facilities contain certain covenants that limit the Company’s ability above certain permitted amounts to incur additional indebtedness, make certain acquisitions, pay dividends and repurchase shares. The Term Loan Facility does not have financial covenants and the Revolving Loan Facility is subject to a springing total net leverage ratio financial covenant, subject to certain step downs, if the Company’s borrowings under the Revolving Loan Facility exceed $12.5 million . The Company is also subject to certain other non-financial covenants. At June 30, 2019 , the Company was compliant with all loan covenants. In conjunction with the refinancing of the 2017 Term Loan Facility in April 2019, the Company incurred fees of $5.7 million , of which $2.7 million has been recorded as deferred financing costs and $3.0 million was expensed. In addition, as a result of the refinancing, $1.8 million of previously deferred fees, or fees in aggregate $4.8 million , were charged to expense and recorded as interest expense in the condensed consolidated statements of operations. The deferred financing costs incurred in connection with the refinancing along with the remaining unamortized costs from the October 2017 borrowings, as of April 2019, of $9.0 million are being amortized into interest expense over the remaining life of the obligation and recorded as a reduction in the carrying value of the Term Loan Facility in the condensed consolidated statement of financial condition. The Company incurred incremental interest expense of $0.4 million and $0.6 million related to the amortization of deferred financing costs for the three months ended June 30, 2019 and June 30, 2018 , respectively. The Company incurred incremental interest expense of $1.0 million and $1.2 million related to the amortization of such costs for the six months ended June 30, 2019 and June 30, 2018 , respectively. As of June 30, 2019 , the Term Loan Facility had a principal balance of $375.0 million and its carrying value was $366.5 million and no amounts were outstanding under the Revolving Loan Facility. At June 30, 2019 , the carrying value of the Term Loan Facility, excluding the unamortized debt issuance costs that are presented as a reduction to the debt principal balance, approximated fair value. As the borrowing is not accounted for at fair value, the fair value is not included in the Company’s fair value hierarchy in “Note 4 — Fair Value of Financial Instruments,” however, had the borrowing been included, it would have been classified in Level 2. During the six months ended June 30, 2019 , the Company made mandatory principal payments on the Term Loan Facility of $8.8 million . All mandatory repayments of the Term Loan Facility will be applied without penalty or premium. Voluntary prepayments of borrowings under the Term Loan Facility will be permitted. In the event that all or any portion of the Term Loan Facility is prepaid or refinanced or repriced through any amendment prior to April 13, 2020, such prepayment, refinancing, or repricing would be at 101.0% of the principal amount so prepaid, refinanced or repriced. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Equity | Equity On June 19, 2019, a dividend of $0.05 per share was paid to stockholders of record on June 5, 2019. For the six months ended June 30, 2019 , total dividend payments of $0.10 per share were paid to stockholders and dividend equivalent payments of $0.6 million were paid to holders of restricted stock units. During the six months ended June 30, 2018 , total dividend payments of $0.10 per share were paid to stockholders and dividend equivalent payments of $0.6 million were paid to or accrued for holders of restricted stock units. During the six months ended June 30, 2019 , the Company repurchased 737,190 common shares through open market transactions at an average price of $22.60 , for a total cost of $16.7 million . Additionally, during the six months ended June 30, 2019 , 1,275,051 restricted stock units vested and were settled in shares of common stock of which the Company is deemed to have repurchased 519,017 shares at an average price of $25.27 per share for a total cost of $13.1 million in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units. During the six months ended June 30, 2018 , the Company repurchased 4,886,382 common shares through a modified Dutch auction tender an open market transactions at an average price of $22.87 , for a total cost of $111.8 million . Additionally, during the six months ended June 30, 2018 , 1,065,587 restricted stock units vested and were settled in shares of common stock, of which the Company is deemed to have repurchased 397,580 shares at an average price of $18.99 per share for a total cost of $7.5 million in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units. In connection with the acquisition of Cogent, the Company issued 779,454 shares of common stock on the acquisition date, April 1, 2015. In addition, the Company agreed to issue 334,048 shares of common stock shortly after the second or fourth anniversary of the Acquisition if a revenue target was achieved. The revenue target was met in the quarter ended September 30, 2018 and the common stock related to the Earnout was issued to the sellers of Cogent in April 2019 shortly after the fourth anniversary of the acquisition date. The fair value of the contingent issuance of common shares was valued on the date of the acquisition at $11.9 million and was recorded as additional paid in capital in the condensed consolidated statements of financial condition. Upon delivery of the shares in April 2019, the par value of the shares was transferred to common stock in the condensed consolidated statement of financial condition. See “Note 4 — Fair Value of Financial Instruments” and “Note 8 — Earnings per Share”. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The computations of basic and diluted EPS are set forth below: For the Three Months Ended June 30, For the Six Months Ended June 30, 2019 2018 2019 2018 (in thousands, except per share amounts, unaudited) Numerator for basic and diluted EPS — net income (loss) $ (12,697 ) $ 10,513 $ (28,083 ) $ 16,881 Denominator for basic EPS — weighted average number of shares 23,925 26,993 24,231 28,546 Add — dilutive effect of: Restricted stock units — (1) 929 (2) — (1) 679 (2) Denominator for diluted EPS — weighted average number of shares and dilutive securities 23,925 27,922 24,231 29,225 Earnings (loss) per share: Basic EPS $ (0.53 ) $ 0.39 $ (1.16 ) $ 0.59 Diluted EPS $ (0.53 ) $ 0.38 $ (1.16 ) $ 0.58 The weighted average number of shares and dilutive potential shares for the three and six months ended June 30, 2019 include 334,048 shares of common stock, which were issued to certain selling unitholders of Cogent in April 2019, due to the achievement of the Earnout for the two year period ended March 31, 2019. Such shares were not included in the weighted average number of shares and dilutive potential shares for the three and six months ended June 30, 2018 because the Earnout had not been achieved during that period. See “Note 4 — Fair Value of Financial Instruments” and “Note 7 — Equity”. ____________________ (1) As a result of the loss in the periods, all unamortized restricted stock units, or 3,526,114 units, were antidilutive in the periods. The incremental shares that could be included in the diluted EPS calculation in future periods will vary based on a variety of factors, including the future share price and the amount of unrecognized compensation cost. The incremental shares included, if any, would be less than the number of unamortized restricted stock units. If not for the loss in the periods, 190,930 and 407,823 restricted stock units would have been included in the denominators of diluted EPS for the three and six months ended June 30, 2019 , respectively. (2) Excludes 563,778 and 619,235 unamortized restricted stock units that were antidilutive under the treasury stock method for the three and six months ended June 30, 2018 , respectively, and thus were not included in the above calculation. The incremental shares that could be included in the diluted EPS calculation in future periods will vary based on a variety of factors, including the future share price and the amount of unrecognized compensation cost. The incremental shares included, if any, would be less than the number of unamortized restricted stock units. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to U.S. federal, foreign, state and local corporate income taxes and its effective tax rate varies depending on the jurisdiction in which the income is earned. The Company is required to record a charge or benefit in its income tax provision for the tax effect of the difference between the grant date value of restricted stock units and the market value of such awards at the time of vesting. The provisions for income taxes for the six months ended June 30, 2019 and 2018 include net charges of $0.8 million and $4.4 million , respectively, related to the tax effect of the vesting of restricted stock units at a market value below their grant price. Based on the Company’s historical taxable income and its expectation for taxable income in the future, management expects that its largest deferred tax asset, which relates principally to compensation expense deducted for book purposes but not yet deducted for tax purposes, will be realized as offsets to future taxable income. Any gain or loss resulting from the translation of deferred taxes for foreign affiliates is included in the foreign currency translation adjustment incorporated as a component of other comprehensive income (loss), net of tax, in the condensed consolidated statements of changes in stockholders’ equity and the condensed consolidated statements of comprehensive income. The Company is subject to the income tax laws of the United States, its states and municipalities, and those of the foreign jurisdictions in which the Company operates. These laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. Management must make judgments in assessing the likelihood that a tax position will be sustained upon examination by the taxing authorities based on the technical merits of the tax position. In the normal course of business, the Company may be under audit in one or more of its jurisdictions in an open tax year for that particular jurisdiction. As of June 30, 2019 , the Company does not expect any material changes in its tax provision related to any current or future audits. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company leases office space for its operations around the globe. Certain leases include options to renew, which can be exercised at the Company’s sole discretion. The Company determines if a contract contains a lease at contract inception. Operating lease assets represent the Company’s right to use the underlying asset and operating lease liabilities represent the Company’s obligation to make lease payments. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company generally does not include options to renew as it is not reasonably certain at contract inception that the Company will exercise the option(s). The Company uses the implicit rate when readily determinable and its incremental borrowing rate when the implicit rate is not readily determinable. The Company’s incremental borrowing rate is determined using its secured borrowing rate and giving consideration to the currency and term of the associated lease as appropriate. The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation when determinable and are recognized in operating lease assets in the condensed consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Straight-lining rent expense creates deferred rent, which is included in operating lease liabilities on the condensed consolidated statement of financial position, and results in differences in the operating lease right-of-use asset and operating lease obligations. On May 16, 2019, the Company entered into a new Office Lease (the “Lease”) for its new principal executive offices in New York, N.Y. Rental payments are scheduled to commence on November 1, 2020 and shall continue for a term of 15 years and 3 months. The Lease is not included in operating lease right-of-use assets and operating lease obligations on the condensed consolidated statement of financial condition as the Company does not yet have the right to use the premises. All of the Company’s leases are operating leases and have remaining lease terms ranging from less than 1 year to 15.3 years. The Company incurred operating lease cost, excluding property taxes, utilities and other ancillary costs, of $3.8 million and $7.7 million for the three and six months ended June 30, 2019 , respectively, which is included in occupancy and equipment rental in the condensed consolidated statements of operations. As of June 30, 2019 , the undiscounted aggregate minimum future rental payments are as follows: (in thousands) 2019 (remainder) $ 7,890 2020 14,759 2021 12,243 2022 10,712 2023 10,070 Thereafter 98,239 Total lease payments $ 153,913 Less: minimum future rental payments for which the lease has not commenced (115,870 ) Total lease payments for which the Company has a right-of use-asset and corresponding liability 38,043 Less: Interest (3,748 ) Present value of operating lease liabilities $ 34,295 The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows: As of June 30, 2019 Weighted average remaining lease term in years 11.6 Weighted average discount rate 5.8 % As of December 31, 2018 , the approximate aggregate minimum future rental payments required as presented under the historical leasing standard in ASC 840 were as follows (in thousands): 2019 $ 15,872 2020 13,535 2021 5,153 2022 3,768 2023 3,000 Thereafter 4,629 Total $ 45,957 |
Regulatory Requirements
Regulatory Requirements | 6 Months Ended |
Jun. 30, 2019 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Regulatory Requirements | Regulatory Requirements Certain subsidiaries of the Company are subject to various regulatory requirements in the United States, United Kingdom, Australia and certain other jurisdictions, which specify, among other requirements, minimum net capital requirements for registered broker-dealers. G&Co is subject to the SEC’s Uniform Net Capital requirements under Rule 15c3-1 (the “Rule”), which specifies, among other requirements, minimum net capital requirements for registered broker-dealers. The Rule requires G&Co to maintain a minimum net capital of the greater of $5,000 or 1/15 of aggregate indebtedness, as defined in the Rule. As of June 30, 2019 , G&Co’s net capital was $22.6 million , which exceeded its requirement by $21.0 million . G&Co’s aggregate indebtedness to net capital ratio was 1.1 to 1 at June 30, 2019 . Certain distributions and other capital withdrawals of G&Co are subject to certain notifications and restrictive provisions of the Rule. As approved by FINRA in 2018, effective as of January 1, 2019, Greenhill Cogent, LP merged with G&Co, with G&Co being the sole surviving entity. The capital requirements did not change as a result of the merger. GCI, GCE and the European affiliate of GC LP are subject to capital requirements of the FCA. Greenhill Australia is subject to capital requirements of the ASIC. We are also subject to certain capital regulatory requirements in other jurisdictions. As of June 30, 2019 , GCI, GCE, Greenhill Australia, and our other regulated operations were in compliance with local capital adequacy requirements. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluates subsequent events through the date on which the financial statements are issued. On July 30, 2019 , the Board of Directors of the Company declared a quarterly dividend of $0.05 per share. The dividend will be payable on September 18, 2019 to the common stockholders of record on September 4, 2019 . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Financial Information | Basis of Financial Information These condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP), which require management to make estimates and assumptions regarding future events that affect the amounts reported in our financial statements and these footnotes, including investment valuations, compensation accruals, income tax expense related to the Tax Cuts and Jobs Act, and other matters. Management believes that the estimates used in preparing its condensed consolidated financial statements are reasonable and prudent. Actual results could differ materially from those estimates. Certain reclassifications have been made to prior year information to conform to current year presentation. The condensed consolidated financial statements of the Company include all consolidated accounts of Greenhill & Co., Inc. and all other entities in which the Company has a controlling interest after eliminations of all significant inter-company accounts and transactions. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC. The condensed consolidated financial information as of December 31, 2018 has been derived from audited consolidated financial statements not included herein. The results of operations for interim periods are not necessarily indicative of results for the entire year. |
Revenue Recognition | Revenue Recognition Advisory Revenues The Company recognizes revenue when (or as) services are transferred to clients. Revenue is recognized based on the amount of consideration that management expects to receive in exchange for these services in accordance with the terms of the contract with the client. To determine the amount and timing of revenue recognition, the Company must (1) identify the contract with the client, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The Company generally recognizes advisory fee revenues for mergers and acquisitions engagements at the earlier of the announcement date or transaction date, as the performance obligation is typically satisfied at such time. Upfront fees and certain retainer fees are generally deferred until the announcement or transaction date as they are considered constrained (subject to significant reversal) prior to the announcement or transaction date. Fairness opinion fees are recognized when the opinion is delivered. The Company recognizes advisory fee revenues for financing advisory and restructuring engagements as the services are provided to the client, based on terms of the engagement letter. In such arrangements, the Company’s performance obligations are to provide financial and strategic advice throughout an engagement. The Company recognizes revenues for capital advisory fees when (1) the commitment of capital is secured (primary capital raising transactions) or the sale or transfer of the capital interest occurs (secondary market transactions) and (2) the fees are earned from the client in accordance with terms of the engagement letter. Upfront fees and certain retainer fees are deferred until the commitment is secured or the sale or transfer of the capital interest occurs, as the fees are considered constrained (subject to significant reversal) prior to such time. As a result of the deferral of certain fees, deferred revenue (also known as contract liabilities) was $5.5 million and $5.6 million as of June 30, 2019 and December 31, 2018 , respectively. Deferred revenue is included in accounts payable and accrued expenses in the condensed consolidated statements of financial condition. During the six months ended June 30, 2019 and June 30, 2018 , the Company recognized $3.2 million and $8.1 million , respectively, of advisory fee revenues that were included in the deferred revenue (contract liabilities) balance at the beginning of each respective period. The Company’s clients reimburse certain expenses incurred by the Company in the conduct of advisory engagements. Client reimbursements totaled $1.4 million and $2.2 million for the three months ended June 30, 2019 and 2018 , respectively, and $2.5 million and $3.4 million for the six months ended June 30, 2019 and 2018 . Such reimbursements are reported as advisory revenues and operating expenses with no impact to operating income in the condensed consolidated statements of operations. |
Investment Revenues | Investment Revenues Investment revenues consist of interest income and gains (or losses) on the Company’s investments in certain merchant banking funds. The Company recognizes revenue on its investments in merchant banking funds based on its allocable share of realized and unrealized gains (or losses) reported by such funds. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company’s cash and cash equivalents consist of (i) cash held on deposit with financial institutions, (ii) cash equivalents and (iii) restricted cash. The Company maintains its cash and cash equivalents with financial institutions with high credit ratings. The Company considers all highly liquid investments with a maturity date of three months or less, when purchased, to be cash equivalents. Cash equivalents primarily consist of money market funds and other short-term highly liquid investments with original maturities of three months or less and are carried at cost, plus accrued interest, which approximates the fair value due to the short-term nature of these investments. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. See “Note 3 — Cash and Cash Equivalents”. |
Advisory Fees Receivables | Advisory Fees Receivable Receivables are stated net of an allowance for doubtful accounts. The estimate for the allowance for doubtful accounts is derived by the Company by utilizing past client transaction history and an assessment of the client’s creditworthiness. The Company recorded bad debt expense of $0.1 million and $0.3 million for the three month periods ended June 30, 2019 and June 30, 2018 , respectively, and $0.4 million and $0.3 million for the six month periods ended June 30, 2019 and June 30, 2018 , respectively. Included in the advisory fees receivable balance at June 30, 2019 and December 31, 2018 were $15.9 million and $20.0 million , respectively, of long term receivables related to primary capital advisory engagements which are generally paid in installments over a period of three years . Credit risk related to advisory fees receivable is disbursed across a large number of clients located in various geographic areas. The Company controls credit risk through credit approvals and monitoring procedures but does not require collateral to support accounts receivable. |
Goodwill | Goodwill Goodwill is the cost in excess of the fair value of identifiable net assets at the acquisition date. The Company tests its goodwill for impairment at least annually. An impairment loss is triggered if the estimated fair value of an operating unit is less than the estimated net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill is translated at the rate of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Any translation gain or loss is included in the foreign currency translation adjustment, which is included as a component of other comprehensive income (loss) in the condensed consolidated statements of changes in stockholders’ equity. |
Other Assets | Other Assets Included in other assets in the condensed consolidated statements of financial condition are the Company’s investments in merchant banking funds, which are recorded under the equity method of accounting based upon the Company’s proportionate share of the estimated fair value of the underlying merchant banking fund’s net assets. Other assets also include prepaid compensation awards that require a future service period and are subject to clawbacks if the individual ceases employment prior to a determined date. The awards are amortized over the required service period, which generally does not exceed one year. Other prepaid expenses, rent deposits, intangible assets and other tangible assets are also included in other assets. |
Compensation Payable | Compensation Payable Included in compensation payable are discretionary compensation awards comprised of accrued cash bonuses and long-term incentive compensation, consisting of deferred cash retention awards, which are non-interest bearing, and generally amortized ratably over a three to five year service period after the date of grant. |
Restricted Stock Units | Restricted Stock Units The Company accounts for its share-based compensation payments by recording the fair value of restricted stock units granted to employees as compensation expense. The restricted stock units are generally amortized ratably over a three to five -year service period following the date of grant. Compensation expense is determined based upon the fair value of the Company’s common stock at the date of grant. In certain circumstances the Company issues share-based compensation, which is contingent on achievement of certain performance targets. Compensation expense for performance-based awards begins at the time it is deemed probable that the performance target will be achieved and is amortized into expense over the remaining service period. The Company includes a forfeiture estimate in the aggregate compensation cost to be amortized. As the Company expenses the awards, the restricted stock units recognized are recorded within stockholders’ equity. The restricted stock units are reclassified into common stock and additional paid-in capital upon vesting. The Company records as treasury stock the repurchase of stock delivered to its employees in settlement of tax liabilities incurred upon the vesting of restricted stock units. The Company records dividend equivalent payments on outstanding restricted stock units eligible for such payment as a dividend payment and a charge to stockholders’ equity. |
Earnings per Share | Earnings per Share The Company calculates basic earnings per share (“EPS”) by dividing net income by the sum of (i) the weighted average number of shares outstanding for the period and (ii) the weighted average number of shares deemed issuable due to the vesting of restricted stock units for accounting purposes. See “Note 7 — Equity”. The Company calculates diluted EPS by dividing net income by the sum of (i) basic shares per above and (ii) the dilutive effect of the common stock deliverable pursuant to restricted stock units for which future service is required. Under the treasury stock method, the number of shares issuable upon the vesting of restricted stock units included in the calculation of diluted EPS is the excess, if any, of the number of shares expected to be issued, less the number of shares that could be repurchased by the Company with the proceeds to be received upon settlement at the average market closing price during the reporting period. See “Note 8 — Earnings per Share”. |
Provision for Taxes | Provision for Taxes The Company accounts for taxes in accordance with the accounting guidance for income taxes which requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities. The Company follows the guidance for income taxes in recognizing, measuring, presenting and disclosing in its financial statements uncertain tax positions taken or expected to be taken on its income tax returns. Income tax expense is based on pre-tax accounting income, including adjustments made for the recognition or derecognition related to uncertain tax positions. The recognition or derecognition of income tax expense related to uncertain tax positions is determined under the guidance, and the Company’s policy is to treat interest and penalties related to uncertain tax positions as part of pre-tax income. Deferred tax assets and liabilities are recognized for the future tax attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period of change. Management applies the “more-likely-than-not criteria” when determining tax benefits. |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities denominated in foreign currencies have been translated at rates of exchange prevailing at the end of the periods presented in accordance with the accounting guidance for foreign currency translation. Income and expenses transacted in foreign currency have been translated at average monthly exchange rates during the period. Translation gains and losses are included in the foreign currency translation adjustment, which is included as a component of other comprehensive income (loss) in the condensed consolidated statements of changes in stockholders’ equity. Foreign currency transaction gains and losses are included in the condensed consolidated statements of operations in other operating expenses. |
Financial Instruments and Fair Value | Financial Instruments and Fair Value The Company accounts for financial instruments measured at fair value in accordance with accounting guidance for fair value measurements and disclosures which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the pronouncement are described below: Basis of Fair Value Measurement Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities that are subject to these disclosures. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. Transfers between levels are recognized as of the end of the period in which they occur. See “Note 4 — Fair Value of Financial Instruments”. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the life of the assets. Amortization of leasehold improvements is computed using the straight-line method over the lesser of the life of the asset or the remaining term of the lease. Estimated useful lives of the Company’s fixed assets are generally as follows: Equipment – 5 years Furniture and fixtures – 7 years Leasehold improvements – the lesser of 10 years or the remaining lease term |
Business Information | Business Information The Company’s activities as an investment banking firm constitute a single business segment, with substantially all revenues generated from advisory services, which includes engagements relating to mergers and acquisitions, financing advisory and restructuring, and capital advisory services. The Company earns less than 1% of its revenues from interest income and investment gains (losses) on investments. |
Recently Adopted Accounting Pronouncements and Accounting Developments | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which requires the recognition of lease assets and lease liabilities for operating leases, among other changes. The Company adopted this standard on January 1, 2019 utilizing a modified retrospective approach. The Company elected to apply practical expedients provided in the standard that allowed the Company to not reassess whether expired or existing contracts are or contain leases, not reassess lease classification for expired or existing leases (e.g., pre-existing operating leases are classified as operating leases under the new standard), and not reassess initial direct costs for existing leases. The impact of adopting ASU 2016-02 was an increase of $38.1 million to the Company’s assets and liabilities for the operating lease right-of-use assets and operating lease obligations on the condensed consolidated statement of financial condition as of January 1, 2019. Upon adoption, the Company also reclassified $3.2 million of deferred rent from accounts payable and accrued expenses to operating lease obligations on the condensed consolidated statement of financial condition. Differences in the operating lease right-of-use asset and operating lease obligations are due to straight-lining rent expense and the resulting deferred rent. There was no net impact to the condensed consolidated statement of operations. In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” codifying ASC 606, Revenue Recognition - Revenue from Contracts with Customers, which supersedes the guidance in former ASC 605, Revenue Recognition. The Company adopted this standard on January 1, 2018 utilizing the modified retrospective approach and applied the standard to contracts that were not completed at this time. Upon adoption, certain revenues that were previously recognized as services were provided changed to either point in time recognition or over the term of an engagement. This change in the Company’s revenue recognition policy created deferred revenues (also known as contract liabilities) that will be recognized at a point in time as performance obligations are met. The cumulative effect of adopting this ASU on January 1, 2018 was a net decrease to retained earnings of $7.6 million . Accounting Developments In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU will change how companies measure credit losses on most financial instruments, including accounts receivable. Companies will be required to estimate lifetime expected credit losses, which is generally expected to result in earlier recognition of credit losses. The Company is currently evaluating the impact of the future adoption of ASU 2016-13 on the Company’s consolidated financial statements. The standard is effective for the Company on January 1, 2020 under a modified retrospective approach. |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Cash and cash equivalents | The carrying values of the Company’s cash and cash equivalents are as follows: As of June 30, As of December 31, 2019 2018 (in thousands) (unaudited) Cash $ 47,656 $ 80,400 Cash equivalents 52,377 72,193 Restricted cash - letters of credit 9,687 3,781 Total cash and cash equivalents $ 109,720 $ 156,374 |
Restrictions on Cash and Cash Equivalents | The carrying values of the Company’s cash and cash equivalents are as follows: As of June 30, As of December 31, 2019 2018 (in thousands) (unaudited) Cash $ 47,656 $ 80,400 Cash equivalents 52,377 72,193 Restricted cash - letters of credit 9,687 3,781 Total cash and cash equivalents $ 109,720 $ 156,374 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | Assets Measured at Fair Value on a Recurring Basis as of June 30, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2019 (in thousands, unaudited) Assets Cash equivalents $ 52,377 $ — $ — $ 52,377 Total $ 52,377 $ — $ — $ 52,377 Assets Measured at Fair Value on a Recurring Basis as of December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2018 (in thousands) Assets Cash equivalents $ 72,193 $ — $ — $ 72,193 Total $ 72,193 $ — $ — $ 72,193 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2018 (in thousands) Liabilities Contingent obligation due selling unitholders of Cogent $ — $ 18,293 $ — $ 18,293 Total $ — $ 18,293 $ — $ 18,293 Changes in Level 3 liabilities measured at fair value on a recurring basis for the three and six month periods ended June 30, 2018 are as follows: Opening Balance as of April 1, 2018 Total realized and unrealized gains (losses) included in Net Income Unrealized gains (losses) included in Other Comprehen-sive Income Purchases Issues Sales Settlements Closing Balance as of June 30, 2018 Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 (in thousands, unaudited) Liabilities Contingent obligation due to selling unitholders of Cogent $ 14,673 $ (2,681 ) $ — $ — $ — $ — $ — $ 17,354 $ (2,681 ) Total $ 14,673 $ (2,681 ) $ — $ — $ — $ — $ — $ 17,354 $ (2,681 ) Opening Balance as of January 1, 2018 Total realized and unrealized gains (losses) included in Net Income Unrealized gains (losses) included in Other Comprehen-sive Income Purchases Issues Sales Settlements Closing Balance as of June 30, 2018 Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 (in thousands, unaudited) Liabilities Contingent obligation due to selling unitholders of Cogent $ 13,763 $ (3,591 ) $ — $ — $ — $ — $ — $ 17,354 $ (3,591 ) Total $ 13,763 $ (3,591 ) $ — $ — $ — $ — $ — $ 17,354 $ (3,591 ) |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Computations of Basic and Diluted Earnings Per Share | The computations of basic and diluted EPS are set forth below: For the Three Months Ended June 30, For the Six Months Ended June 30, 2019 2018 2019 2018 (in thousands, except per share amounts, unaudited) Numerator for basic and diluted EPS — net income (loss) $ (12,697 ) $ 10,513 $ (28,083 ) $ 16,881 Denominator for basic EPS — weighted average number of shares 23,925 26,993 24,231 28,546 Add — dilutive effect of: Restricted stock units — (1) 929 (2) — (1) 679 (2) Denominator for diluted EPS — weighted average number of shares and dilutive securities 23,925 27,922 24,231 29,225 Earnings (loss) per share: Basic EPS $ (0.53 ) $ 0.39 $ (1.16 ) $ 0.59 Diluted EPS $ (0.53 ) $ 0.38 $ (1.16 ) $ 0.58 The weighted average number of shares and dilutive potential shares for the three and six months ended June 30, 2019 include 334,048 shares of common stock, which were issued to certain selling unitholders of Cogent in April 2019, due to the achievement of the Earnout for the two year period ended March 31, 2019. Such shares were not included in the weighted average number of shares and dilutive potential shares for the three and six months ended June 30, 2018 because the Earnout had not been achieved during that period. See “Note 4 — Fair Value of Financial Instruments” and “Note 7 — Equity”. ____________________ (1) As a result of the loss in the periods, all unamortized restricted stock units, or 3,526,114 units, were antidilutive in the periods. The incremental shares that could be included in the diluted EPS calculation in future periods will vary based on a variety of factors, including the future share price and the amount of unrecognized compensation cost. The incremental shares included, if any, would be less than the number of unamortized restricted stock units. If not for the loss in the periods, 190,930 and 407,823 restricted stock units would have been included in the denominators of diluted EPS for the three and six months ended June 30, 2019 , respectively. (2) Excludes 563,778 and 619,235 unamortized restricted stock units that were antidilutive under the treasury stock method for the three and six months ended June 30, 2018 , respectively, and thus were not included in the above calculation. The incremental shares that could be included in the diluted EPS calculation in future periods will vary based on a variety of factors, including the future share price and the amount of unrecognized compensation cost. The incremental shares included, if any, would be less than the number of unamortized restricted stock units. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lessee, Operating Lease, Liability, Maturity | As of June 30, 2019 , the undiscounted aggregate minimum future rental payments are as follows: (in thousands) 2019 (remainder) $ 7,890 2020 14,759 2021 12,243 2022 10,712 2023 10,070 Thereafter 98,239 Total lease payments $ 153,913 Less: minimum future rental payments for which the lease has not commenced (115,870 ) Total lease payments for which the Company has a right-of use-asset and corresponding liability 38,043 Less: Interest (3,748 ) Present value of operating lease liabilities $ 34,295 |
Lease, Cost | The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows: As of June 30, 2019 Weighted average remaining lease term in years 11.6 Weighted average discount rate 5.8 % |
Schedule of Future Minimum Rental Payments for Operating Leases | As of December 31, 2018 , the approximate aggregate minimum future rental payments required as presented under the historical leasing standard in ASC 840 were as follows (in thousands): 2019 $ 15,872 2020 13,535 2021 5,153 2022 3,768 2023 3,000 Thereafter 4,629 Total $ 45,957 |
Organization (Details)
Organization (Details) | Jun. 30, 2019state |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of states in which the entity is licensed (state) | 50 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | ||||||||||
Contract with customer, liability | $ 5,500 | $ 5,500 | $ 5,600 | |||||||
Advisory revenues | 55,585 | $ 88,051 | 106,155 | $ 174,820 | ||||||
Provision for doubtful accounts | 100 | 300 | $ 400 | 300 | ||||||
Depreciation and amortization of property and equipment | Depreciation is computed using the straight-line method over the life of the assets. Amortization of leasehold improvements is computed using the straight-line method over the lesser of the life of the asset or the remaining term of the lease. | |||||||||
Operating lease right-of-use asset | 31,432 | $ 31,432 | 0 | |||||||
Minimum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Amortization period of deferred cash retention awards | 3 years | |||||||||
Maximum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Amortization period of deferred cash retention awards | 5 years | |||||||||
Revenue | Maximum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Percent of revenues | 1.00% | |||||||||
Equipment | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Estimated useful lives of fixed assets (in years) | 5 years | |||||||||
Furniture and Fixtures | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Estimated useful lives of fixed assets (in years) | 7 years | |||||||||
Leasehold Improvements | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Estimated useful lives of fixed assets (in years) | 10 years | |||||||||
Restricted Stock | Minimum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Restricted stock units, amortization service period (years) | 3 years | |||||||||
Restricted Stock | Maximum | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Restricted stock units, amortization service period (years) | 5 years | |||||||||
Capital advisory engagements | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Contract with customer, liability, revenue recognized | $ 3,200 | 8,100 | ||||||||
Accounting Standards Update 2016-02 | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Operating lease right-of-use asset | $ 38,100 | |||||||||
Deferred rent | $ (3,200) | |||||||||
Primary Capital Advisory Engagements | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Long term receivables related to private equity and real estate capital advisory engagements | 15,900 | $ 15,900 | 20,000 | |||||||
Installments period (in years) | 3 years | |||||||||
Reimbursement Revenue [Member] | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Advisory revenues | $ 1,400 | $ 2,200 | $ 2,500 | $ 3,400 | ||||||
Retained earnings | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | $ 0 | $ 0 | $ 0 | $ (7,645) | ||||||
Retained earnings | Accounting Standards Update 2014-09 | ||||||||||
Significant Accounting Policies [Line Items] | ||||||||||
Cumulative effect of the change in accounting principle related to revenue recognition | $ (7,600) |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents [Abstract] | ||||
Cash | $ 47,656 | $ 80,400 | ||
Cash equivalents | 52,377 | 72,193 | ||
Restricted cash - letters of credit | 9,687 | 3,781 | ||
Total cash and cash equivalents | $ 109,720 | $ 156,374 | $ 149,286 | $ 267,646 |
Cash and Cash Equivalents - Nar
Cash and Cash Equivalents - Narrative (Details) - Standby Letters of Credit - USD ($) $ in Millions | Jun. 30, 2024 | Jun. 30, 2019 |
Cash and Cash Equivalents [Line Items] | ||
Letters of credit outstanding, amount | $ 5.9 | |
Scenario, Forecast | ||
Cash and Cash Equivalents [Line Items] | ||
Letters of credit outstanding, amount | $ 3.5 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | Apr. 01, 2015 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Revenue target | $ 80,000 | ||||
Distribution period ending on the second anniversary of the closing (years) | 2 years | ||||
Distribution period ending on the fourth anniversary of the closing (years) | 2 years | ||||
Distribution period ending On March 31 2017 (years) | 2 years | ||||
Distribution period ending On March 31 2019 (years) | 2 years | ||||
Contingent obligation due selling unitholders of Cogent | $ 0 | $ 18,293 | |||
Increase (decrease) in fair value contingent consideration | 575 | $ 3,591 | |||
Cogent Partners, LP | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Maximum contingent consideration | $ 18,900 | ||||
Conditional consideration (shares) | 334,048 | ||||
Contingent obligation due selling unitholders of Cogent | $ 13,100 | ||||
Increase (decrease) in fair value contingent consideration | $ 2,700 | $ 600 | $ 3,600 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Assets/Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent obligation due selling unitholders of Cogent | $ 0 | $ 18,293 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 52,377 | 72,193 |
Total assets measured at fair value on a recurring basis | 52,377 | 72,193 |
Contingent obligation due selling unitholders of Cogent | 18,293 | |
Total liabilities measured at fair value on a recurring basis | 18,293 | |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 52,377 | 72,193 |
Total assets measured at fair value on a recurring basis | 52,377 | 72,193 |
Contingent obligation due selling unitholders of Cogent | 0 | |
Total liabilities measured at fair value on a recurring basis | 0 | |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Total assets measured at fair value on a recurring basis | 0 | 0 |
Contingent obligation due selling unitholders of Cogent | 18,293 | |
Total liabilities measured at fair value on a recurring basis | 18,293 | |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Total assets measured at fair value on a recurring basis | $ 0 | 0 |
Contingent obligation due selling unitholders of Cogent | 0 | |
Total liabilities measured at fair value on a recurring basis | $ 0 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Unobservable Input Reconciliation (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Opening Balance | $ 14,673 | $ 13,763 |
Total realized and unrealized gains (losses) included in Net Income | (2,681) | (3,591) |
Unrealized gains (losses) included in Other Comprehen-sive Income | 0 | 0 |
Purchases | 0 | 0 |
Issues | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Closing Balance | 17,354 | 17,354 |
Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 | (2,681) | (3,591) |
Contingent Consideration Liability | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Opening Balance | 14,673 | 13,763 |
Total realized and unrealized gains (losses) included in Net Income | (2,681) | (3,591) |
Unrealized gains (losses) included in Other Comprehen-sive Income | 0 | 0 |
Purchases | 0 | 0 |
Issues | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Closing Balance | 17,354 | 17,354 |
Unrealized gains (losses) for Level 3 liabilities outstanding at June 30, 2018 | $ (2,681) | $ (3,591) |
Related Parties - Additional In
Related Parties - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | ||||
Receivables (payables) to related parties | $ 0 | $ 0 | ||
Board of Directors Chairman | ||||
Related Party Transaction [Line Items] | ||||
Rent reimbursements | $ 100,000 | $ 100,000 |
Loan Facilities - Narrative (De
Loan Facilities - Narrative (Details) - USD ($) $ in Thousands | Apr. 30, 2019 | Apr. 12, 2019 | Oct. 12, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Apr. 13, 2019 | Dec. 31, 2018 |
Line of Credit Facility [Line Items] | ||||||||||
Proceeds from refinancing of secured term loan, net | $ 48,248 | $ 0 | ||||||||
Secured loan payable | $ 366,481 | $ 366,481 | $ 319,479 | |||||||
Secured Debt | Recapitalization Credit Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Long-term debt, weighted average interest rate, over time (percent) | 6.08% | 5.55% | ||||||||
Unamortized discount | $ 9,000 | |||||||||
Incremental expense related to the amortization of debt issuance costs | 400 | $ 600 | $ 1,000 | $ 1,200 | ||||||
Secured Debt | Recapitalization Credit Agreement | Base Rate | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 2.25% | |||||||||
Secured Debt | Term Loan | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, annual principal payment | $ 8,800 | |||||||||
Secured Debt | Term Loan | Recapitalization Credit Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit, maximum borrowing capacity | $ 350,000 | 375,000 | 375,000 | |||||||
Debt instrument term (years) | 5 years | |||||||||
Quarterly payment of principal | 8,750 | $ 4,375 | ||||||||
Secured loan payable | $ 366,500 | $ 366,500 | ||||||||
Secured Debt | Term Loan | Recapitalization Credit Agreement | Prepaid, Refinanced, or Repriced Prior to April 12, 2019 | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument, redemption price, percentage | 101.00% | |||||||||
Secured Debt | Term Loan | New TLB | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit, maximum borrowing capacity | $ 375,000 | |||||||||
Repayments of lines of credit | 319,400 | |||||||||
Proceeds from refinancing of secured term loan, net | $ 48,300 | |||||||||
Quarterly principal payments | 4,700 | |||||||||
Annual principal payments | $ 18,800 | |||||||||
Annual prepayment of principal, period of time required before year end | 90 days | |||||||||
Annual principal payment, percentage of excess cash flow | 50.00% | |||||||||
Debt expense | $ 5,700 | |||||||||
Deferred financing costs | 2,700 | $ 1,800 | ||||||||
Write off of deferred debt issuance cost | $ 3,000 | $ 4,800 | ||||||||
Secured Debt | Term Loan | New TLB | UNITED STATES | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Capital stock of subsidiary, percentage | 100.00% | |||||||||
Secured Debt | Term Loan | New TLB | Non-US | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Capital stock of subsidiary, percentage | 65.00% | |||||||||
Secured Debt | Term Loan | New TLB | London Interbank Offered Rate (LIBOR) | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (percent) | 3.25% | |||||||||
Reduction from the applicable borrowing rates, percentage | 50.00% | |||||||||
Secured Debt | Revolving Credit Facility | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Covenant, leverage ratio, excess borrowings, minimum | $ 12,500 | |||||||||
Secured Debt | Revolving Credit Facility | Recapitalization Credit Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit, maximum borrowing capacity | $ 20,000 | |||||||||
Debt instrument term (years) | 3 years |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 19, 2019 | Apr. 01, 2015 | Jun. 30, 2019 | Jun. 30, 2018 |
Stockholders Equity Note [Line Items] | ||||
Dividends declared and paid per share (usd per share) | $ 0.05 | $ 0.1 | $ 0.1 | |
Dividend equivalents paid | $ 600 | $ 600 | ||
Purchase of treasury stock | $ 29,780 | $ 119,401 | ||
Cogent Partners, LP | ||||
Stockholders Equity Note [Line Items] | ||||
Business acquisition, equity interest issued or issuable (in shares) | 779,454 | |||
Conditional consideration (shares) | 334,048 | |||
Additional paid-in capital | Cogent Partners, LP | ||||
Stockholders Equity Note [Line Items] | ||||
Contingent consideration classified as equity | $ 11,900 | |||
Restricted Stock Units | ||||
Stockholders Equity Note [Line Items] | ||||
Restricted stock units vested and issued as common stock (shares) | 1,275,051 | 1,065,587 | ||
Repurchased shares for award (shares) | 519,017 | 397,580 | ||
Average repurchase price of shares for award (usd per share) | $ 25.27 | $ 18.99 | ||
Treasury stock, value, acquired, cost method | $ 13,100 | $ 7,500 | ||
Common stock, par value $0.01 per share | ||||
Stockholders Equity Note [Line Items] | ||||
Treasury stock, shares, acquired (shares) | 737,190 | 4,886,382 | ||
Treasury stock acquired, average cost per share (usd per share) | $ 22.60 | $ 22.87 | ||
Purchase of treasury stock | $ 16,700 | $ 111,800 |
Earnings per Share - Reconcilia
Earnings per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 01, 2015 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Numerator for basic and diluted EPS — net income (loss) | $ (12,697) | $ 10,513 | $ (28,083) | $ 16,881 | |
Denominator for basic EPS — weighted average number of shares (shares) | 23,925,310 | 26,992,652 | 24,231,448 | 28,545,545 | |
Add — dilutive effect of: | |||||
Restricted stock units | 0 | 929,000 | 0 | 679,000 | |
Denominator for diluted EPS — weighted average number of shares and dilutive potential shares (shares) | 23,925,310 | 27,921,821 | 24,231,448 | 29,224,878 | |
Earnings per share: | |||||
Basic (usd per share) | $ (0.53) | $ 0.39 | $ (1.16) | $ 0.59 | |
Diluted (usd per share) | $ (0.53) | $ 0.38 | $ (1.16) | $ 0.58 | |
Antidilutive securities excluded from EPS (shares) | 563,778 | 619,235 | |||
Restricted Stock Units | |||||
Earnings per share: | |||||
Antidilutive securities excluded from EPS (shares) | 3,526,114 | ||||
Restricted Stock Units | |||||
Add — dilutive effect of: | |||||
Denominator for diluted EPS — weighted average number of shares and dilutive potential shares (shares) | 190,930 | 407,823 | |||
Cogent Partners, LP | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Conditional consideration (shares) | 334,048 | ||||
Earnings per share: | |||||
Incremental common shares attributable to dilutive effect of contingently issuable shares (shares) | 334,048 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Excess tax benefit | $ 0.8 | $ 4.4 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Lessor, operating lease, term of contract | 15 years 3 months | 15 years 3 months |
Weighted average remaining lease term in years | 11 years 7 months | 11 years 7 months |
Operating lease cost | $ 3.8 | $ 7.7 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Weighted average remaining lease term in years | 1 year | 1 year |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Weighted average remaining lease term in years | 15 years 3 months | 15 years 3 months |
Leases - Operating lease,future
Leases - Operating lease,future rental payments, maturity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
2019 (remainder) | $ 7,890 | |
2020 | 14,759 | |
2021 | 12,243 | |
2022 | 10,712 | |
2023 | 10,070 | |
Thereafter | 98,239 | |
Total lease payments | 153,913 | |
Less: minimum future rental payments for which the lease has not commenced | (115,870) | |
Total lease payments for which the Company has a right-of use-asset and corresponding liability | 38,043 | |
Less: Interest | (3,748) | |
Operating lease obligations | $ 34,295 | $ 0 |
Leases - Weighted average remai
Leases - Weighted average remaining lease term and weighted average discount rate (Details) | Jun. 30, 2019 |
Leases [Abstract] | |
Weighted average remaining lease term in years | 11 years 7 months |
Weighted average discount rate | 5.80% |
Leases - Aggregate Minimum Futu
Leases - Aggregate Minimum Future Rental Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 15,872 |
2020 | 13,535 |
2021 | 5,153 |
2022 | 3,768 |
2023 | 3,000 |
Thereafter | 4,629 |
Total | $ 45,957 |
Regulatory Requirements - Addit
Regulatory Requirements - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Minimum net capital required | $ 5,000 |
Net capital | 22,600,000 |
Excess net capital | $ 21,000,000 |
Aggregate indebtedness to net capital ratio (percent) | 1.1 |
Description of minimum net capital requirements | The greater of $5,000 or 1/15 of aggregate indebtedness |
Minimum capital requirements, portion of aggregate indebtedness | 6.67% |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Jul. 30, 2019$ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividends declared per common share (usd per share) | $ 0.05 |