Focus Financial Partners Inc.

Focus reported Q1 revenue of $557.5 million, up 3.9% year over year, versus guidance of $560 million to $570 million. Adjusted EBITDA was $132.5 million, down 1.9% year over year excluding merger-related expenses, with an adjusted EBITDA margin of 23.8%. Adjusted net income, excluding tax adjustments, was $0.69 per share, down 29.6% year over year, and tax adjustments per share were $0.20, up 11.1% year over year. Real estate-related performance fees were $9.1 million, and management fees were $124.6 million, or 22.3% of revenues. As of March 31, LTM cash flow available for capital allocation was $303.9 million, debt outstanding was approximately $2.7 billion, and net leverage was 4.41x. The company said it would not provide Q2 2023 earnings guidance due to the pending merger with CD&R.

Rudy Adolf framed the quarter as evidence that the business model remains resilient despite a challenging backdrop. He emphasized that clients want “highly personalized, integrated advice” in volatile markets and said the company’s scale and M&A capabilities remain key differentiators. His tone was constructive and confident, stressing long-term growth, partner value-added programs, and the belief that demand for comprehensive advice will accelerate.

Jim Shanahan focused on the financial details and explained that the quarter came in slightly below expectations because of lower-than-anticipated non-market correlated revenues and slightly lower real estate performance fees. He highlighted the company’s recurring revenue base and said cash flow remained resilient, citing $303.9 million of LTM cash flow available for capital allocation, $26.1 million of cash earn-out payments, and $12.5 million of deferred acquisition consideration paid in Q1. He also noted leverage of 4.41x and said the company had over $850 million of available firepower, while in April it entered into $500 million of forward starting interest rate swaps at approximately 3.17% plus a 325 basis point spread.

There was no analyst Q&A because management said it would not take questions due to the pending merger with Clayton, Dubilier & Rice. As a result, the call focused on prepared remarks and no additional concerns or follow-up answers were discussed.