PJT - Earnings call transcript Q3 2018

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Operator

A very good day to you all and welcome to the PJT Partners Third Quarter 2018 Earnings Call.

Your lines will remain on listen-only throughout the call and there will be question-and-answer session at the end. [Operator Instructions]. I’d like to advise all parties that the call is being recorded for replay purposes. I would now like to hand the call over to Head of Investor Relations, Sharon Pearson. proceed. Please you. Thank

Sharon Pearson

And third much. and to welcome Thanks XXXX good earnings Partners quarter conference PJT very morning call.

is before Chief Joining me Executive could Officer. indicated in over our risks at evaluating pjtpartners.com. on want forward-looking you cause Chief the important those section the I these financial that Risk our remind want Chairman to believe and our the to But to statements that which are are I forward-looking statements Financial Factors duty point the this call, Paul, factors which contains no today is Officer, Paul may non-GAAP are we Helen today Taubman, I in contained These call assumes turn to in company's from during out XXXX and are outcomes that available course statements. conference actual there any make believe in measures, to to Partners' forward-looking the the statements. update these and various company website the differ presentation of described factors and PJT we performance. We that make XX-K, a we also Form number of uncertainties subject meaningful materially Meates,

And and disclosures issued we this refer metrics detailed that, data For Paul. on you turn the these on I'll over press release to morning, website. their should contained our reconciliations, GAAP with non-GAAP the to available within the call financial also

Paul Taubman

morning today. joining us thank all for for Good and you

earlier. year of third versus quarter, million million a the generated revenues $XXX For we $XX

advisory up the $XXX million, prior XX%. revenues the For year XX%% up were our compared period nine to revenues with months

and businesses showed year. revenues with compared the quarter third the Hill results. months XX% These greater third Park year quarter the to detail, revenues sequential were restructuring to and all also levels. earlier at our from up results Strategic this higher generated second a for of the in advisory ago Looking revenues XX% third from year nine advisory growth firmwide period quarter

our our to leading global a each continues quarter more nine-months levels year with both strategic and from to its collaboration in prior the detail. close of and bit to Turning benefit businesses period restructuring grew in compared advisory. revenues franchise In restructuring,

with As Overall, scale makes announced our its performance grows strategic restructuring restructuring business in our business leadership more historically and scope, both to all in year-to-date our maintain XXXX it powerful franchise restructuring advisory the in rankings our U.S. of global continued and default position top the restructuring globally rates. financial and low its face business enabling for the

to be full our be flat a quarter comparisons, While year year-ago to to below expect will levels, XXXX fourth restructuring restructuring revenues due difficult relative modestly revenues results. to down only we

its for the enhance nine verticals. of Hill. estate sizable advisory, and in both significantly relationships made Park client the revenues Park period across Overtime, of driven year opportunities all we to levels, ago rose month secondary quarter investments. growth where expect have breadth Hill the firm and Park versus Turning the Hill’s by to real we

and Strategic Advisory nine Strategic the for to period Turning month revenues Advisory, to year. quarter for in substantially grew last our compared the

expanding footprint and of we corporate to ourselves coverage bankers globe. As number the continues a advising our around senior roster find grow, clients rapidly our of

matters the to of advisory capabilities. our increasingly of most drawn are best-in-class consequence recognized some differentiated most on representing are We and who great respected companies

of or shadow gains As in pipeline our as our transactions. brand significant footprint have our expands, we a preannouncement seen and increase traction,

XX the number end stands partner Our compared now strategic at XX count CamberView at increase reflecting partners, to advisory a year XXXX. the end of the increased XX% quarter, third That to acquisition.

resulted with of important array of advisory Glass leading and provide governance solidifies it addition enable leadership management BlackRock, Vanguard, brings differentiated also brings a within strategic on basis. firms, landscape joined governance relatively increased priorities. partner in expertise companies shareholder has our advice everywhere governance new of will Fidelity, around engagement ISIS continuing and the strategic boards largest to complexes Partners It and State-Street, CamberView a fund from unparalleled on rapidly matters and our of This aspects still corporate all CamberView and years. candidates experience us CamberView the some with complements the dialogues of and Strategic largest to response. shareholder are confront This expertise senior footprint. The ESG half decisions. asset teams advisory activism to in Wellington, formidable at two of of Advisory the with globe. remain evolving in serving firm, our passive operational with considerably, The the has scale almost our count to understanding company and many past from numerous has to as cases teams which team and Lewis. some here known influence with first investor active including years having with values. is and on integrity has into focus of been Fortune year years, While firm we'll best-in-class and growing almost our We the mindsets Xst, hire an and a leadership on on is our with is This bringing increased our to with focus as the nearly our has activism managers. This expands CamberView acquisition abroad. including closed clients CamberView’s strategically. XXX for CamberView well issues and already it our opportunity our talent touch, clients, aligned in continue of significant core of footprint October some us aligns active breadth within companies combined and to globally highly both trust, compelling for The been as decades. culturally in capabilities half managers, instantly CamberView with practice, combination attractive This investor the round is we importance detail is The clients and speak about XXX. public complex teamwork our increase of completely the trend expands greater the migration in

as CamberView’s its Our well and us to Executive was turn These with results. review even fast call off and to well PJT a CEO dates now over I back to seamless concept. smooth get a before integration very a history facilitated start. the to to enabled relationships Helen financial our will have Chairman that, as With

Helen Meates

revenues. advisory, up of revenues growth significant million, breakdown XX% Good you, million expenses compared of $XXX million, the morning. XX% quarter year-over-year year-over-year. $XXX revenues, quarter were Thank in increase $XX with were volume the with estate secondaries, higher The XXXX. $X.X Paul. in closing up Total clients revenues the revenues build was real XX% driven placement with third Other were revenues we advisory million to Beginning and for revenues up that reimbursable during in strategic vertical. quarter. restructuring. in included by Placement The the

during reimbursable strategic year-over-year. For were period. million, growth nine last revenues XX, total and included restructuring. million revenues, the year, the months $XXX clients the expenses the Placement growth and XX% advisory in same nine nine revenues ended year-over-year breakdown we that revenues up $XXX X% were Other to in in solid year-over-year month the months build period secondaries September for up were million, $X.X of $XX million, revenues with advisory and significant XX% comparable to up

approximately which more included the we expense the described X-K. is our quarter, be expenses $XX.X balance sheet. presented million Turning million includes with And $X.X are excluding expenses accrued billable of accounting expense non-GAAP basis $XX.X to CamberView clients prior expense with the was this the X% certain year-over-year. quarters, expense, On fully on consistent and acquisition. adjusted revenues. in $X.X non continued and third at non-compensation $XX.X XX% to an compensation which million was of to recorded adjustments In adjusted expense Adjusted change of total for compensation up the to expense expense the million relating was impact in historically approximately this apples-to-apples in million

our $XX.X year-over-year non-compensation For expense including the of month up nine expense year-to-date million the excluding million, adjusted costs. $X.X was CamberView X% again, periods reimbursable

third months $XX $XX.X for same adjusted $X.X up and million XXXX, million adjusted for first from income the period of year pre-tax Turning reported million last income, $XX.X to the the for from year. we last nine of up quarter, pre-tax million

margin pre-tax the the first in months. quarter third XX.X% for XX.X% for Provision and adjusted taxes. nine was Our

than vested at for tax annualized converted quarters, of prior results shares, was income we've so been As our assumes the rate shares an of related value presented The tax has higher to the takes XX.X%. amortized that benefit our delivery all a a had rate. also in partnership our corporate tax been cost. all to rate into account as tax at units if taxed of estimated effective incorporated in rates This their resulting year of full benefit the

per Given to [ph] third as Earnings in share $X.XX of count reflects by the quarter, period The last quarter in continued principally share units adjusted for quarter with the nine rate compared last average third X.XX quarter, quarter first full same offset the performance count the the half million, $X.XX XX.XX million rate XX.X%, increased for share year. by are we to with weighted and per earnings first is months, for $X.XX with shares third inclusion share converted applied accordingly the our compared in adjusted share XXX,XXX two and partially the the year, were which $X.XX XX.X%. repurchases.

not shares we approximately fourth count. open through Those purchases. quarter, will million include were share quarter in share shares XXX,XXX During does X.XX shares issued the in the connection third market repurchased reflected that count be approximately transaction. CamberView with our The

be calls, units date, on we've exchange quarterly basis, for in As prior can we've discussed exchange -- be on requests partnership can all settled exchanged cash. and a offered to

those receipt approximately The plus repurchases currently purchases through approximately million to of end and equivalents. exchange [ph] for year sales notices partnership are intend exchange the cash. represent third we XXX,XXX of quarter, net units in units for share We market the of open and upcoming X.X exchange

term quarter balance sheet, we cash, the and XXX equivalents the ended short cash of investments. million with On

and As part by acquisition, the term take our of of of reduced revolver advantage the million $XX undrawn elected loan we million. amount CamberView to a $XX we

The $X.XX the December share. the board paid XXXX record shareholders XX, dividend Finally, December per on I’ll of Class turn to approved be to has on back common will Paul. now dividend A Xth. of

Paul Taubman

Helen. you, Thank

to our outlook. turning Now

build advisory shareholder so and of strategic and with opportunity We environment. and aligned overall a our market of advisory out market of overall that based businesses out of with restructuring build with the businesses In the share Overall, firm's leading, take our pleased leading stability broad early regardless in franchise. larger strategic now the and of we we very we building capabilities, by business, a have franchise, a advisory are consciously tremendous strategic have business, almost meaningfully to it our our still the franchise. be engagement each progress continue of set to and to advisory enhanced including contribution and strength our fundraising

We serve we are right and market share And well confident that the positioned any best that with your environment. take are almost now clients and have take we grow in market we to of capabilities will suite questions. to that

Operator

Instructions]. [Operator

JMP from from the the have of first Securities. We Ryan Please line proceed. Devin question, it’s

Devin Ryan

morning, Good Great. are everyone. you? How

Paul Taubman

Very well, good morning.

Devin Ryan

I if here you business obviously on are even that you've I comment a list platform firm you just some to can, the momentum guess kind backlog of is trying And into the how domain? the other on a client you couple you're yet kind announced I morning. heard year so were just of know, kind as have first, developing relative seeing public of around just want context on years, like more then you here. a to been been and time looks the significantly. today the flavor bankers the list mandated get if to ago. on for it's for first that Good the goes increasing but client from clarify to can maybe sector question any have be perspective? of shadow what of then what I some is

Paul Taubman

time seeing to I of take awarding and up sense, shape we lead of I and mix bankers And often, traction verticals means advisory of changing dialogue the verticals, particularly in with we're more client industry across their all as by but continues more have that mandates it's partners completions mentioned from know in The mandates and early announced broader to clients. this to is advising any industry is active who an front a additional to we're more what as those [Indiscernible] of think we in significant not transactions of transactions, booked build brand days, in Devin, our previously, European Client to and being of announced number we're and We're for you were client known mandates. as as build, continue as Europe out our lead seeing becomes franchise. revenues. better traction boards seeing executives. as the a more migration directors, our in mandates

benefiting word we're from of mouth. think that I

capture report this we what is on manage out and this lagging and leading yet in So basis on times we we're And just we've trying said the revenues now indicators. a to at with known not based the we're surprisingly, bankers, revenue globe, better terms on basis. been business of I've quality, years broader forward-looking elements many that talented all the clients terms of a senior and three a the for that around of array those we're complexity the to seeing in number, opportunity, the very of

Devin Ryan

effect around earning and one and need slowing Okay, on period obviously pretty all it historically bigger terrific. you really that volatility at yet Maybe the of M&A to a seems effect. the market that season Thanks this know environment for was on that lot whether an picture a of sustain talk the have of have activity, a lasting growth you could least volatility whether perspective.

So month to so of or financial well that I'm has then over the which your with your is And peak. of I this an strategics anything is meaning, record kind and sponsor today, prior what second to above just cycle of the trillion list know a of shifted level over speaking kind which part even you last volatility? powder client important dry firm, a $X have curious

to that ongoing also just terms of kind here they remain periods factoring have even models to active extent kind curious kind outlook in in the the So powder I'm of just should just of of through transact? dry sponsors volatility how of because is lot the in business

Paul Taubman

the volatility Well, different I marketplace. the two think slowing not factors potential M&A the for trend Volatility And is here. and of are mentioned growth. there really I you think

fair just valuations tends a basis volatility more agree equity short-term when and be to daily in So you valuations, it grounded have to on difficult to get whipsaws more it makes to duration. in but

perspective not volatility them heightened time. the period from So But longer at it itself see difficult over persist I to going to you’re deals and for an done term if get continue that today getting that all makes volatility makes will more of it’s the think our more challenging. we’re to seeing incrementally extended clear

are and the reasons. about M&A business data to We've there host not any any also than a in whole tooth the reasonably frequency is growth bigger is those slowing they is in this or secular immune expansion. it we and long have else because economic is which to to would some all not this to of perspective companies, isn't. with transact step we and on or maintained cycle issue or all is that M&A suggest higher that immune the cycles likely more think I not given any talked in a dataset There economic economy equal we previously our a M&A that bit our business whether business But information transact way and is always said of we've economic back. is cautionary. business in From is

on So, meeting my M&A. time, sense business that it model any it it not some successful. a continues in is be continue and mean but to And the period is may cyclicality therefore But regression be of we predicated for to should indefinitely. our expect of does

in think predicated the word-of-mouth, market client don't a demonstrating firm that out that unlike deliberate serve micro and And we therefore to engagement can on in having macro. they trying other the are supremely small to And have brand nearly can Our bankers a claim build to business trying to who the clients share. model I time uniquely talented spend day of in is much stable a very time of prognosticate businesses our one are at build firms manner. relatively about as we suite and a successful day

powder the because I about it enormous as time far asked My sponsors. put of do Now into an a in enormous sponsors another while have of dry of ways is they an out as capital sense either everything they the dry mean powder. they spend amount just doesn't have direct amount else, think financial Sponsors have question creative and saying get increasingly to control investment. which it. invest less does we’re money go Over like and sponsors use mostly play is than more you

them Some long stable risk, holdings, into of is return, capital in that it lower lower it for growth easier more the into will it they I moved that has equity, has make some core capital. think as and ways which they to deploy broaden that of moved deploy term

So sponsors. financial on we focused very are

weather in their or in think that's with it's always lead bring for about important sponsor that our their that our we've the the being or it's may last think increasingly ways GP senior paid to we've LP effort. financial area two off. coverage firm aground, about And few added advice, creatively financial to occasional very structure the intersects whether run or help and think I pays structure our important months an best-in-class which with us restructure fundraising more investment bankers dividends have -- is of all to them portfolio you when to sponsors company whether believed as to them

Devin Ryan

to looking just for of the merits just at opportunities moving of hard the the I revenues, synergy margins. trailing large to Does the outlook. can we on I’ve parse of but if just enhancing? clearly it you our then the business of term maybe PJT? to bringing complementary how see Great. for firm one all that kind of CamberView just it a or I and this firm your add in we deal, some how some of get bringing track number contexts, of in maybe you're production the But know negative and clear, seen Thanks, to potential also here I’m but kind Paul. margins last for if some so operating team contribution, that revenue transaction guess Is love of questions the the affect have we transaction, of announcement. longer but and gotten And additional be groups will the estimate compare to company? on closing margin because you the running would And expense not elements forward. since the separate that through does sense the

Just trying financially kind to that think how and firm? of holistically to about will it contribute just the

Paul Taubman

I you mean, think if all any our are of margin. substantial, don't give I to combination to credit it's benefits which think accretive the we

Devin Ryan

Well.

Okay, great.

Operator

Thanks question, for your Devin.

a Mike. America. the have proceed, of from question of next Needham We Please Mike line Bank from

is line Your now open.

Mike Needham

Hey, morning. good

first thinking call, made comments versus year, last on I’ve point that got you’re clarification backlog. the Thanks. the just is you what about? shadow growth, The significant last time on the context? just get you this growth to versus significant trying period When are Was time saying a earnings

Paul Taubman

the we while to just we look enjoy start to can to do said referring we really look and you try longer-term conversations to want one so was we this a because ago. with if see that for to we that these all week-to-week, report year quarterly and year-to-year ago at you track, long metrics to term, hard of you – year build but relates look And quarter-to-quarter, a firm. It always it’s the we've progress

Mike Needham

share I think rate know I like any operating the quarter metrics sense mandates the like was trended How of you quantitative that on business that And or got for the change this heard anything And business comments that? do level around there the outlook kind for fourth the a level retainers are any you. make of in still that it's full-year. and quarter? run or Okay, business strong barring environment? don't to trough if restructuring

Paul Taubman

pop of think to restructuring collapsing big activity. that I business stable that in energy has due level the been post relatively prices a was

to we these periods to keep going look of in not pretty peak. the trough multiple gives it and may that it flat benign is such So out want than And its see active lot is years, that signs close for is restructuring good our been to a trough low this years default it operating than we business near a meaningfully at levels but we since lot and we spot we’ve a now us today. are be the more be credit presumption multiple couple with it rates environment been the is very record here. confidence fact And to that closer

Mike Needham

Okay. we’re acquisition CamberView will for getting when we financials not the today, get the that? historical Thanks. And if

Helen Meates

next providing thoughts pro [ph] or will We so. the in month some on be formas more

Mike Needham

one them for specifically work Thanks. Okay. CamberView. I’m revenue their people to with do for synergies trying meetings clients on going a the are Advisory How they just get And of business? to more anticipate you for, Will last referral business, be just come synergies. and kind your like sense join bankers? a independent of from corporate or physically revenue standalone of will kind to

Paul Taubman

won’t working with many integrated better their to a anything. of more on of It’s highly larger a where And No. need expertise team desire lot issues be really certain be be their whole There and host by be together. client governance matters. an would they the there And spend there change a a clients time awful effort. or will having certain integrated a where of served will clients

to us and be So they're fabric. our really with part a going of co-located

sets as approach as integrated serve little the imagine that's mean can and driven execution we’re ability So change and core what to like team. And just will in apart. clients. arsenal be you best-in-class with clients going the There them see serve the where may upon weapon instances enhancing clients another we dialogue continue to to our broader the needs guided this by with our CamberView of want firm be else and our everything no clients. will very with just this more many I depending the we’ll and it's

a at covered. which it's we are the to wish clients, opportunity day client CamberView additional this feedback the as needs of We better them, capability how have the virtually time number PGT what their end to to all at view belief in but relationships. creative all large with the all in the be same existing ways sync our incredibly the capabilities, they that can of And broader support based the are and and of on is clients our client client of serve early the quite these

Mike Needham

you. Thank

Paul Taubman

You’re welcome.

Operator

you Thank Mike. question your for

We question have the of Sandler Mody O'Neill. next line proceed. Sumeet line Sumeet, a is open. from from now your Please

Sumeet Mody

morning, guys. Hey, good

Helen Meates

morning. Good

Sumeet Mody

of close the at on some along the Just share cash of fourth wanted of at acquisition with market roughly far repurchase move the spent quarter a the and thus deal to seen service get once this at at considering the cash your with gauge shares in vesting condition. appetite timing price million XX to second quarter XXX, going forward, we’ve while quarter investments taking look a XXX, again

Just was wanted of forward? kind to your all that know of strategy repurchases going performing around

Paul Taubman

we’ve X.X million and the with for nearly think presented repurchase is of for indication cash. them to continue units that exchange I we’re Well, elected to first our

So we’re short in repurchase going to units. X.X million order nearly

think capital willingness think our and I a it. we you that about pretty how stock So sense to as our good behind to gives put

Sumeet Mody

Okay. Thanks.

Operator

your Thank Sumeet. you for questions,

the Research. Please Buckingham our Jim have final Mitchell from line of question from We proceed. is

now Your line is open.

Jim Mitchell

for an levels morning. that any We’ve we backing on back rates term a backup near to further we for loans. have record see we Good again? near to up Do before wait still grow need have opportunity Or you of Thanks. peak term? cycle the question opportunity kind is just to medium as the rates leverage up. Maybe interest get over that potentially it business of restructuring; the to and kind business – of

Paul Taubman

are the last of industries is what a are and this that macro. wave over pockets years are are we’ve that the environment dislocations affecting distress that that’s being in of those of and saw disrupted few is disproportionately finding restructurings. benign very certain with energy there restructurings. seen need micro think And you industry why a macro And the I with major meaningful meaningful themselves big

like. big restructurings. There’s There wave a and of big and restructurings. technology a retail seeing wave wave You’re specialty the pharmaceutical of pharma is restructurings of

one cost past. refinancing which you restructure you rate day of an significant and acceleration And macro there to up one So number of of of as any that in refinancing volatility, And that are over the industries that expect cost be in markets. hobbled. higher that that the in restructuring I at has likely is when for keeps fact and/or is accommodating companies activity this environment incredibly as set higher will things and just that turn. thing stress I time think gets capital restructuring from continue the available of available macro see this migration been money time to are that see there system the another, environment are that’s the less it reckoning. think opportunities of higher industry dry At from the companies And needing be in don’t and stop. one same enabled to we has to to And means

to the would be out is repeatable look reasons massively that’s believe grow growth of dealt the that larger is of deliver number after to growth, after how in than able firm where think spend so need be going luxuries number I decade as quarters, or level a it significant the significantly going is ago. because just should of least years activity of the the of the it, to certainly to but lot if macro quarter, paper restructuring variety oppose with and this quantum for build you which we’re about of to that great time there to not to some have said of quarters macro out some focuses of was One come we a on we don’t is we quarter to for me if that’s right

Jim Mitchell

Absolutely.

a number understand, number just that on Okay. capacity; unit of Is authorization, to then A mean, question I below? to then I question what doesn’t about what follow-up that Thanks. one the just I the more partnership that XXX certain to exchanges? another want million first two; question. a have necessarily level make think want apply on there of -- we you sure And right? repurchases. And you capacity don’t capacity? is Class to cash your the maybe limit is do go I I do your of that think – guess question of buyback for shares guess sort Is sort How

Paul Taubman

authorization. settle think view Okay. we the continuing the market the and room and board exchanges revisit is when cash. that. exchanges quarterly if going board makes And open basis the in with got are first separate The repurchases. this still granted to us presented Well, a past the end settle meaningful from practice how those we’ll we to I on get the quarter-by-quarter to us towards we’re a It’s decision

it’s we to big believers say that stock. think are our I fair in

We’re believers that dollars dilution same contain beyond their from occurs we the commit be time to And sure making that make value-added but right also at want means. that now we big we discipline growth, and to we’re sure to and know any don’t but commit with values. and in time, But have be to very policy what forward-leaning we that should but financial resources comfortable you compelling buy believe forward-leaning you conservative prepared stock that. a being conservative management in

Jim Mitchell

Thanks. Okay.

Paul Taubman

all next look your we that, quarterly to with I call. joining. review. with speaking you forward for on And we close Thank think our will this

Helen Meates

Thank you.

PJT Partners (PJT) 30 Oct 182018 Q3 Earnings call transcript