Focus Financial Partners Inc (NASDAQ:FOCS) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 08:30 am ET


Focus Financial Partners Inc (NASDAQ:FOCS) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. I would like to welcome everyone to the Focus Financial Partners 2019 Third Quarter Earnings Call. Joining today's call are Rudy Adolf, Founder and CEO; Jim Shanahan, Chief Financial Officer; Rusty McGranahan, General Counsel; and Tina Madon, Head of Investor Relations and Corporate Communications. [Operator Instructions]

Rusty McGranahan

Good morning, everyone. Before we begin, let me remind you that during the course of this call we may make a number of forward-looking statements. We call your attention to the fact that Focus's results may, of course, differ from these statements. These statements are based on assumptions made by and information currently available to Focus Financial Partners and involve risks and uncertainties that could cause the results of Focus to materially differ from these statements. Focus has made filings with the SEC, which for some of the factors that may cause its results to differ materially from these statements. And finally, Focus assumes no duty and does not undertake to update any such forward-looking statements.

With that, I'll turn it over to our Founder and CEO, Rudy Adolf, Rudy?

Rudy Adolf

Thanks, Rusty. Good morning everyone and thank you for joining our call. We appreciate your interest in Focus. We delivered excellent results in the third quarter of this year capping a very strong first nine months. For both periods, our business generated year-over-year growth well above our 20% annual targets for revenue and adjusted income per share. We further increased our market share and grow revenues and earnings growth to industry-leading levels. We have an outstanding portfolio of partner firms that excel in client service and retention. With over half of our firms already forming platforms for industry consolidation, our portfolio of partner firms are making solid progress against their strategic initiatives, which are centered on building scale to accelerate revenue growth and ensure high client in principle retention. More of our partner firms are also accelerating their scale and growth through mergers.

We are pleased with how well the subsequent integrations have gone, if this is essential to achieving IRRs in excess of 20%. Based on our September 30th capital structure, we estimate that the portfolio firms that have been with us for at least two years has delivered a weighted average levered IRR of more than 25% since inception if same firms continue to sustain a weighted average revenue cable of more than 13%, reflecting a combination of solid growth from mergers into organic sources. Our scale of over 200 billion inclined assets enables us to provide value to our partner firms across all elements of their businesses. We're engaged with them on a number of strategic hires, particularly next-generation advisory and senior management talent.

We also work in the more than 20 operational and technology enhancements, defining new marketing and business development initiatives for over 20 firms and expanding our cash credit programs through focused line solutions. Additionally, we are placing an emphasis on enhanced business intelligence and sharing of best practices. We have closed 34 deals year-to-date taking advantage