On Tuesday, Andersen Group (NYSE:ANDG) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Andersen Group reported a strong financial performance for Q1 2026 with revenues of $240.7 million, marking a 15.7% increase year-over-year, and exceeding prior guidance.

The adjusted EBITDA for the quarter was $72.3 million, reflecting a 26.4% increase, with a margin of 30%.

The company experienced growth across all service lines, with notable performance in Private Client Services, which grew by 18.2%, and revenue per professional increasing by 12.7%.

Despite reporting a GAAP net income of $17.7 million, the net income margin decreased to 7.4% due to $41.2 million in non-cash equity-based compensation expenses related to the IPO.

Future guidance anticipates Q2 revenues between $190 million and $205 million, with full-year revenues projected to reach $980 million to $1 billion, reflecting an 18% growth rate.

The firm plans continued investments in Andersen Consulting and Global Mobility, with several acquisitions completed in Q2 ahead of schedule, contributing to growth strategies.

Management remains optimistic about the company's scalability, pricing power, and long-term growth potential, with ongoing client demand and strategic expansion initiatives.

Full Transcript

OPERATOR

Greetings and welcome to the Andersen Group first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, press Star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Greg Visticka, Managing Director, Investor Relations.

Greg Visticka (Managing Director, Investor Relations)

Thank you. You may begin. Thank you, Diego. Good afternoon everyone and thank you for joining the Andersen call to discuss our first quarter earnings results with Andersen Global Chairman and Chief Executive Officer Mark Vorsetz and CFO Neil Livingston. After their presentation, we will take questions from the analysts. Our call today is scheduled for approximately 45 minutes, but before we begin, our Chief Legal Officer Bill Deckelman will discuss forward looking statements.

Bill Deckelman (Chief Legal Officer)

Bill? Okay, thank you, Greg. Please note that certain statements made on this call are forward looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks and uncertainties are described in our earnings Release and our SEC filings, including our Form 10K for the year ended December 31, 2025. Except as required by law, we undertake no obligation to update any forward looking statements. We will also reference certain non GAAP financial measures today. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and will be available on our website. And with that, Mark, I will turn the call over to you.

Mark Vorsetz (Chairman and Chief Executive Officer)

Thanks, Bill. Good day to everybody. This is Mark Vorsetz. I'm going to keep my comments real short and then I'm going to turn over to Neil to talk about our guidance for the balance of the year. We had a. I want, first of all, I want to thank the investors who have been, who have been along with us on this ride and we definitely appreciate the support. Also want to thank our partners and our people. We had a very solid first quarter. Neil had circulated a little bit ago the release on our earnings. Our revenue came in at a little under 241 million. That was an increase of 15.7%. That does not include any inorganic growth on the acquisitions that we have completed. That was about 4.5% better than what we had included in the projections that we had provided to the analysts. The financial performance was broad based. If you look at, if you look at the 10Q, you'll see that we were up across all four major areas of our tax service lines. All were up more than double digits each, at least 12% in growth. An important statistic I want to highlight, and we'll talk about this more on future calls, is revenue per professional. For me, that's probably the number one metric that I focus on. We had excellent growth in that area in the first quarter at 12.7%. A combination of some moderate improvement in productivity and also moderate improvement in pricing. A little bit of that as we're edging forward is on the technology side and we're making very good progress in that area. On the adjusted EBITDA numbers, we came in at around 72.3. That was an increase of 26.4% over first quarter last year. And the adjusted EBITDA number was the margin was 30%. That includes about a $7.4 million loss in global mobility and consulting. We are starting to get more traction in those areas, but as we had anticipated, we're going to lose money in both of those practices this year. That's part of our continued investment in expansion. Without that loss, our adjusted EBITDA number would have been 33%. So I think very strong across the board. Those are my comments on our financials for the first quarter and I'm going to turn it over to Neil. He can fill in some additional details and he'll talk about guidance for the balance of the year. Mark, thanks very much.

Neil Livingston (Chief Financial Officer)

Good afternoon, everyone, and thanks for joining us today. It's Neil Livingston here, chief Financial Officer. This is our second earnings call as a public company and we very much appreciate the ongoing interest from the analysts and investors alike. As Mark's noted, I will cover our financial performance for the most recent quarter in some detail and then provide updated guidance for the next quarter and also for the full year 2026. So let me start with revenue. As Mark has noted, revenue for the first quarter 26 was 240.7 million. That was an increase of 32.7 million, equating to 15.7% growth over the same quarter last year. Also, as Mark noted, that exceeded the midpoint of the guidance that we had provided on our last earnings call. Where you may recall, we indicated quarter revenue of between 230 and 235 million. So we exceeded that by approximately 8.2 million. Also, Mark noted revenue across all of our key service lines, Private Client Services, Business Tax, Alternative Investment Funds and Valuation Services all increased for the quarter. Our largest service line, Private Client Services, reported strong revenue growth of 18.2% for the quarter, resulting in that service line representing approximately 51.2% of revenues, up from 50.1% in the same quarter of 2025. Also pleasingly and linking to Mark's comments about investment, revenue increased in both Andersen Consulting and Global Mobility being our newer practice areas where we continue to invest in alignment with our expansion strategy. At a regional level, all of the three regions recorded increases in revenue, with the east region in particular reporting strong revenue growth of 22.4% for the quarter. The growth was driven by a balanced mix of drivers with no large one time or project related items for the quarter. And just to reconfirm, there were no inorganic or MA revenue there was no inorganic or MA revenue recorded in the first quarter of 2026. In terms of the underlying business drivers, the strong top line performance is driven by a number of factors. At a macro level, obviously this very much links to our business model and client selection criteria. At an operational level, I would note a couple of points. Firstly, that we continue to maintain favorable operating leverage whereby annual revenue growth has consistently outpaced the growth in our core operating costs, highlighting platform scalability and opportunities for margin expansion, we have continually demonstrated good pricing power illustrated by revenue per hour which increased 8% and as Mark noted, revenue per professional which increased 13% for 1Q26 compared to the same quarter in 25. Also, while we're on pricing, the 3% tech charge that we shared previously that was introduced for client contracts signed in the first quarter of 2026, I'd say that has met, if not exceeded our internal expectations and it will provide a meaningful source of incremental revenue for 2026 which will be reflected in the revised full year guidance I'll provide later on the call. In terms of headcount, our capacity to support clients increased by 2.8% in the quarter or 62 additional colleagues. That's in line with expectations for single digit growth and enabling ongoing tight control of staffing costs. Within that, the ratio of managing directors to non managing directors remained stable during the quarter. In terms of client groups, our active client groups increased 3.5% for the quarter and the number of client engagements that we undertook for Those client groups increased 2%, confirming the ongoing growth in demand for the firm's services. Turning now to net income, so on a GAAP basis, our net income for the quarter was 17.7 million with a net income margin 7.4%. That compares to net income of 50.6 million and a net income margin of 24.3% for the same quarter of 2025. The reduction in net income and net income margin was Primarily attributable to 41.2 million of non cash equity based compensation expense associated with the equity granted in connection with the IPO and the reorganization. These expenses did not exist in the first quarter of 2025 when the firm privately held. In addition, interest expense increased 6 million for the quarter. This is due to the related party notes issued as part of the IPO reorganization and Transaction costs increased by 2.6 million in the first quarter as compared to the previous year in support of the firm's ongoing inorganic expansion plans. This equated to net income per share EPS of $0.04 on a basic and $0.03 on a diluted basis. Let me pivot now to the non GAAP measures and again Comparing to the first quarter of 2025 14% the adjusted net income margin was 26.1% compared to 26.5% in 2025. Looking at adjusted EBITDA, the adjusted EBITDA for the first quarter of 2026 was 72.3 million as that compares to 57.2 million for 2025, an increase of 26%. This again exceeded the midpoint of the guidance provided on our last earnings call where we indicated adjusted EBITDA between 55 and 60 million, so we exceeded that by approximately 15 million or 26%. The adjusted EBITDA margin for Q1 was 30%. That compares to 27.5% in the prior year. That exceeded the midpoint of the guidance provided where we had indicated an ebitda margin between 25 to 26%. So a healthy 4.5% or 450 basis point excess. I'll briefly cover costs, balance sheet and cash flow Cost of services increased by approximately 41% for the first quarter. SGA increased approximately 36% in the first quarter. The majority of these increases was again attributable to the 41 million of non cash equity based compensation expense that I mentioned previously which did not occur in the first quarter of 2025. As a reminder, these equity based compensation charges are non cash and non dilutive as no incremental equity was issued as part of these awards. In terms of the firm's balance sheet, the balance sheet remains liquid and provides significant flexibility to support growth. As of March 31, 2026, our current assets comprised cash and cash equivalents of approximately 207 million and accounts receivable including both billed and unbilled services net of allowances for credit losses of approximately 214 million. On the short term liability side of the balance sheet, we had accrued payroll and benefits of approximately 50 million and distributions and short term notes payable of approximately 85 million at the end of the quarter. The firm had no third party debt and we continue to maintain a conservative stance towards the use of financial leverage. We believe that our existing cash and cash equivalents, the cash flow from operations and the net proceeds from the IPO remain sufficient to meet our working capital investment and other general corporate funding requirements for the foreseeable future. I'll pivot now towards the outlook and forward guidance. We are going at some pace here, hopefully leaving time for questions. Looking ahead, we are providing updated guidance on today's call which obviously reflects our current best judgment. For the second quarter of 2026 we are expecting revenue in the range of 1,190 to 205 million, equating to a growth of approximately 13% 1,3%. We are anticipating a net loss for the quarter and negative EPS that is due to seasonality and principally the aforementioned non cash equity based compensation expenses. Looking to the full year, we currently expect revenue in the range of 980 million to 1 billion, equating to a growth rate of approximately 18%. We are anticipating positive net income and EPS for the full year, we expect adjusted EBITDA in the range of 225 to 250 million with an adjusted EBITDA margin in the range of 23 to 25%. As we've announced separately, the firm has closed several acquisitions in the second quarter approximately one quarter ahead of schedule. Based on this and the additional acquisition the business concluded in the full year numbers which I mentioned previously, we'll be updating the impact of closed acquisitions and business combinations on both our GAAP and non GAAP financial metrics in conjunction with our second quarter financial results. A final point which is on seasonality. Just as a reminder to everybody, our business is seasonal with a significant share of full year revenue and net income historically generated in the third quarter. This creates some uncertainty in projecting full year results which is reflected in our updated guidance. As before, our guidance is based on multiple assumptions including macroeconomic conditions, levels of client demand, staffing, investment, the impact of AI integration of acquired firms and so forth. These assumptions are of course dynamic and subject to change. In closing, I'd say on behalf of the team, we are extremely proud to announce a back to back set of quarterly financial results that exceeds our previously issued guidance and the base case projections published by most of the analysts who cover our stock. Moreover, these financial results provide a solid foundation for ongoing value creation over the medium term. So thank you very much for listening and with that, we'd be happy to take any questions or Mark, if you'd like to make any summary comments.

OPERATOR

No, that's fine. We'll go to questions. Thank you. At this time, we will conduct our Q and A session to get through as many questions as we can in the time remaining. Please limit yourselves to one question and one follow up question. To ask a question, press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And your first question comes from Mark Marcom with Baird. Please state your question.

Mark Marcom (Equity Analyst)

Good afternoon and congratulations on the strong results, Mark and the whole team.

Mark Vorsetz (Chairman and Chief Executive Officer)

I was wondering, can you talk a little bit about, you know, you had very strong growth in private client services. To what extent are you already starting to feel the impact of, you know, all of the various initiatives, you know, that we're reading about, whether it's in California with the potential, you know, billionaire tax, New York, in terms of various proposals to raise taxes, even more moderate states like Virginia or Washington that are now proposing, you know, increased taxes. What are you seeing at this point? Where do you think we are in terms of, you know, potentially leveraging some of those dynamics? Yeah, I don't think, Mark, those are baked into the numbers for the first quarter at all. I would say a lot of people are evaluating alternatives. I'll use the Washington state tax as an example for those that are not familiar with it. The governor had signed legislation on March 31 to create an income tax for anyone who makes over a million dollars at a 9.9% tax rate. Literally. Within two weeks of the signing of that legislation, litigation was filed on the basis that it's unconstitutional about it. Although we have had some clients, particularly in California, that decided last year to relocate. We're really expecting that to the extent that this let these types of legislative acts pass, a lot of that work is going to be in the future. So I wouldn't say that's a material amount of our revenue. I'd say the bigger issue on the Private Client Services practice is we continue to add more clients and larger clients. So I think that's just this morning I had a discussion with a new client that is worth several billion dollars. I'm going to put a younger partner on the job with me to do most of the real work. But we're seeing more and more of those kind of opportunities. And I would say the second thing, and it's just really at a very early stage, is we're doing a little bit better on the integration side. So if you looked at our valuation performance in the first quarter was 17.3% growth rate, just behind Private Client Services. Most of that work is internal feed, it's internal referrals. So I think on the integration side we're making some moderate progress. We have a lot more to do. What's exciting to me about the financial results we announced today is that we have a lot of room for improvement. That's fantastic. And then you mentioned the pricing and the revenue per hour being up nicely. Did the January price increase go through as you expected? Yeah, I think pretty much. I mean, on the pricing side we're coming in about where we had anticipated, I would say where I think for the balance of the year we'll see much greater lift will be on the productivity side, I can tell you that we really have started getting some benefit of that starting around the end of February, but it's improving.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.