Focus Financial Partners, Inc (FOCS) reported second quarter 2022 results at the top end of guidance. Adjusted Earnings Per Share (EPS) was $0.99, an increase of 17.9% from a year ago. Here are five things you should know about this earnings call:
- Total 2Q22 revenue of $539.2 million increased 26.8% year-over-year (YoY), and 15% organically YoY (above the 11%-14% guidance). This compares to 1Q22’s 22% organic revenue growth rate. Revenue growth from FOCS’s existing partner firms of about $64.0 million was the main driver of 2Q22’s revenue growth, with most of this increase from higher wealth management fees which included the effect of mergers. The balance of the increase was from revenue from new partner firms acquired in the last twelve months.
- M&A activity: YTD in 2022, the firm has 14 closed or pending transactions: with three new partner firms announced and 11 mergers. During 2Q22, FOCS closed on four mergers and one partner firm acquisition. The company continues to believe that 2022 will be one of its best years in M&A, with deal volume increasing as current market volatility eases.
- On July 1, 2022, the firm closed on partner firm acquisition Octogone Holding. Octogone is FOCS’s first Swiss partner, an important part of its international strategy as the Swiss market consolidates. In a separate deal, on August 1, FOCS closed on Icon Wealth Partners (Icon), another partner firm acquisition. The firm sees Icon, a premier firm with $1.6 billion in client assets, expanding its presence in the fast-growing Texas market.
- FOCS believes that its diversified revenue supports its results during this volatile time in financial markets. Approximately 23.3% of FOCS’s 2Q22 revenue were non-market correlated, including family office services, trust and estate planning, and credit. Furthermore, the company’s partner firms have their own asset allocation strategies, which creates further diversification within the 76.7% of revenue that is market correlated.
- Forward guidance: The firm sees its business as resilient despite the market backdrop and higher risks. It continues to expect 2022 revenue growth of about 20%, but updated its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) guidance down, from about 20% growth to a range of 16%-18%. FOCS continues to see a large opportunity in international and expects to expand outside of the U.S., particularly in the ultra-high net-worth segment. The international market represents an incremental multi-trillion opportunity that “lends well to a decentralized partner structure.”
To learn more visit – Focus Financial Partners Announces Second Quarter 2022 Results
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