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Greenhill & Co. Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
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10qk

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Greenhill & Co. Inc. (GHL) filed Quarterly Report for the period ended 2010-06-30.

Greenhill & Co. Inc. has a market cap of $2.04 billion; its shares were traded at around $69.4 with a P/E ratio of 40.82 and P/S ratio of 6.84. The dividend yield of Greenhill & Co. Inc. stocks is 2.59%. Greenhill & Co. Inc. had an annual average earning growth of 11.8% over the past 5 years.GHL is in the portfolios of John Keeley of Keeley Fund Management, Ron Baron of Baron Funds, Murray Stahl of Horizon Asset Management, Kenneth Fisher of Fisher Asset Management, LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Our non-compensation expenses were $14.9 million in the second quarter of 2010, compared to $11.7 million in the second quarter of 2009, representing an increase of $3.2 million or 27%. Non-compensation expenses for the second quarter of 2010 include operating costs from the Australian business, which we acquired April 1, 2010, of approximately $1.4 million and additional costs of $0.7 million for the amortization of acquired intangible assets associated with that acquisition. As compared to the second quarter of 2009, the remainder of the increase in costs resulted from higher travel, occupancy and other costs related to the increase in personnel and the addition of new offices, as well as increased interest expense due to higher average borrowings outstanding.

The amount of management fees that we will earn during the transition period in 2010 is expected to decline from prior years because the investment period for GCP II terminated in June 2010, resulting in a reduction in the amount of management fees payable by investors in GCP II. As a result of the termination of the commitment period in June 2010, we expect our annualized management fee revenue related to GCP II will decline from approximately $12.0 million to approximately $3.7 million. For the year ended December 31, 2010 we expect that we will recognize approximately $7.5 million of management fees related to GCP II. During the transition period GCP Capital has a preferred economic interest in the first $10 million of profits of GCP II LLC and accordingly, the excess of management fee revenue over the

At June 30, 2010 we had unfunded commitments to the existing merchant banking funds of approximately $31.0 million of which we expect up to $24.3 million will be drawn down in the next few years. We expect that approximately $1.5 million of the firms unfunded commitment to GCP II of $8.2 million may be drawn down for follow-on investments through June 2012, the termination date of extended commitment period, with the remaining commitment to be undrawn. Our unfunded commitments to GSAVP and GCP Europe were $4.0 million and $18.8 million as of June 30, 2010 and may be drawn on through September 2011 and December 2012, respectively. In connection with our separation from the merchant banking business we have agreed, subject to certain conditions, to commit up to $7.5 million to future funds managed by GCP Capital.

During the second quarter of 2010 the firm repurchased 42,000 shares of its common stock in open market purchases at an average price of $65.02. In July 2010 the firm repurchased an additional 139,550 shares of its common stock in open market purchases at an average price of $69.17. As of July 31, 2010 we had remaining authorization to repurchase up to $87.6 million. Additionally, during the six months ended June 30, 2010, the firm is deemed to have repurchased 283,629 shares of its common stock at an average price of $79.05 per share in conjunction with the payment of tax liabilities in respect of stock delivered to its employees in settlement of restricted stock units. We expect to fund repurchases of our common stock from our employees in conjunction with the payment of tax liabilities incurred on vesting of restricted stock units.

In the first six months of 2010, our cash and cash equivalents decreased by $36.9 million from December 31, 2009. We used $1.4 million in operating activities as we used $34.7 million generated from net income (after giving effect to the non-cash items) to fund a net decrease in working capital of $36.1 million (principally from the payments of year-end bonuses and taxes). We used $7.1 million in investing activities, including $11.7 million in new investments in our merchant banking funds and other investments and $1.2 million for the build-out of new office space, partially offset by distributions from investments of $5.9 million. We used $28.0 million for financing activities, including $22.5 million for the repurchase of our common stock from employees in conjunction with the payment of tax liabilities in settlement of restricted stock units, $2.7 million in open market repurchases of our common stock, and $27.7 million for the payment of dividends, partially offset by $18.3 million of net borrowing from our revolving loan facility and $7.5 million of net tax benefits from the delivery of restricted stock units.

In the first six months of 2009, our cash and cash equivalents decreased by $7.8 million from December 31, 2008. We generated $20.0 million in operating activities as we used $47.5 million from net income (after giving effect to the non-cash items) to fund a net decrease in working capital of $27.5 million (principally from the payments of year-end bonuses and taxes). We used $2.0 million in investing activities, including $8.2 million in new investments in our merchant banking funds and other investments and $1.7 million for the build-out of new office space, partially offset by distributions from investments of $7.9 million. We used $27.5 million for financing activities, including $7.7 million for the repurchase of our common stock from employees in conjunction with the payment of tax liabilities in settlement of restricted stock units and $27.7 million for the payment of dividends, partially offset by $6.9 million of net borrowing from our revolving loan facility.

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