PJT - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the PJT Partners First Quarter 2019 Earnings Call. My name is Katrina, and I'm your event manager. [Operator Instructions]. I would like to advise all parties that conference is being recorded for replay purposes. And now I'd like to hand over to Sharon Pearson, Head of Investor Relations.

Sharon Pearson

Katrina. much, very you Thank Good morning, XXXX Partners Quarter the welcome Conference Call. to Earnings PJT First and

Joining is Financial Officer; and me Chief Helen and today Meates, Paul Taubman, our Chief Officer. Chairman our Executive

those Factors from in uncertainties, over to actual at financial are statements Before detailed I company's XXXX out you during statements, GAAP to I'll outcomes refer forward-looking reconciliations, today meaningful evaluating we in also And release various available I website are that, disclosures of company to available in may are We subject course the duty is assumes update to forward-looking Paul, that contains we website. and want issued that this contained call data want which the make call, a remind this we you to any The and the we these PJT to on pjtpartners.com. that within important which factors could no on believe materially statements. that their conference are to described cause differ and metrics non-GAAP the presentation in and of believe measures, performance. section the Partners indicated the these make turn financial factors also our morning, point to with should Paul. also I these turn statements. over non-GAAP on XX-K, the there press the call the number Form Risk These risks forward-looking contained

Paul Taubman

while revenues a were $XXX million. joining quarter year declined million, from by us slightly and today. placement morning, $X marginally, Revenues were for revenues Good ago. up Advisory the you down thank for

measure in underlying our the prospects time, here continue growth out goals we our and our for years, to each consistently in And have that full for year our quarters. XXXX. growth objectives later our and ability progress of the we When until in confident trajectory today, evident XXXX. year. laid businesses on XXXX our become we would on we noted remain be drivers at results, deliver not we XXXX Sitting As that of communicated, reported our not unchanged, for all we to growth

each our turning businesses in more Now detail. of to

to Turning Restructuring.

We offset through win bankers levels overall Restructuring of Strategic continued on to Advisory rates increased coverage mostly an our lower activity footprint. capitalize expanding Restructuring as

in timing reflecting the Our first for year, quarter run below we the closings. rest Restructuring the was of the the rate expect to of transaction performance see

Restructuring Restructuring continue are Given declines to the in we modest our bankers benign currently which operating, credit expect in XXXX environment revenues.

However, the positive which recent into be our uptick a continued, activity heading previously Restructuring was should has year. in next that highlighted

fewer estate Turning as Hill. real in experienced to In declines Hill offset Park closings in mostly Hill, we Park businesses other the Park quarter. the in strength

Hill down and remain performance, revenues year. While track for year-ago on pipeline were modestly versus we record overall our overall Park is strong another

in in number continues increase size, Strategic verticals our potential mandates, and and Turning in presence mandates, compared a business as Strategic quarter in number of the revenues the increase these in active Strategic of increase prior increased across to In complexity Advisory by measured build industry year. greater momentum The to Advisory, Advisory. of an our to an and an geographies. revenue

has more even our Advisory of financial CamberView to results. proven further be momentum to powerful As than anticipated. first The we addition be reflected a into we better Strategic get expect XXXX, in

enhanced identified a of clients. the franchises. situations touch and In months the relationships just We additional number on opportunities first between year, far have teams with combined many client worked connections just for these opportunities begun together to our of X this have upon X have and larger XX

today's announcement Board reiterate to Before authorization Helen, light has of our to by $XXX over increased our priorities. call that million. I wanted the I the In turn repurchase capital

to becoming combined We X as since program coming increased we in and cash people aggregate, We with managing investing settlements in our highlighted #X continue increasing repurchase X.X repurchase the exchanges announced public equivalent while use over talent million have, implications will tool in attract Since us share million When the managing will over the October authorization of over repurchases, the I to capital to return be open Helen share for highest while XXXX, shares. our to financial These market ownership the we float. our company. intend our consistently with approximately the evaluated priority shares, second A dilution open time. our that open net count affect and enabled Any a our X.X our market and shares repurchased to share we of additional the an opportunities float is program, to PJT. committed float. from our repurchases, also is alongside close our to have results. turn in has talent review we million by time. dilution repurchases now market repurchase call

Helen Meates

expenses Other were in same in million down year-over-year, a $XX the our $X last as compared a U.K. of result with Placement year. offsetting declines slightly Advisory from Thank entity million, $XXX the foreign both Restructuring first in from last fewer primarily the breakdown quarter related the in Total well the morning. revenues revenues, during period million year, Advisory XXXX. revenues declines with of quarter Beginning for $XXX revenues million, fluctuations Advisory. down year-over-year year-over-year, to as slightly Secondary approximately you, were revenues. revenues down to Strategic in quarter. Paul, decrease good currency with were The up reimbursable and $XXX quarter closings million, growth were as

will Going forward, be Other more levels. that revenue line with expect we in historical

adjustments, described primarily to presented X-K. expense in expenses with acquisition, adjustments which fully more Turning CamberView to Consistent amortization non-GAAP assets. expenses. compensation includes prior intangible quarters, these some And adjustments our we are relating of with the transaction-related certain and the

our $XX compensation expense expense. ratio adjusted first the the XXXX $XX current First, quarter compared year. estimates or for represents ratio of XX% million first revenues was revenues best in with of also quarter XX% full compensation for XXXX. Adjusted or the million for compensation This the

approximately And activity non-comp non-compensation non-compensation XXXX. of rate expense run the European in Turning half increased with costs additional our expense. and higher million. We with believe travel resulting representative business CamberView primarily quarter with London up additional committed to quarter additional in first rate million in from the Total is related million Away of the XXXX, we first expense for adjusted $XX the compared and CamberView, we've year-on-year for from expense, reflects expense quarterly of first for aggregate $X.X Approximately quarter our non-comp space recently the our adjusted the had with on was our efforts, increase associated to increased taking success the year. of headcount. fairly $X expense run acquisition.

of converted adjusted presented with income. units adjusted pretax income to pretax first XXXX. taxes, million results XX.X% our compared first and margin prior of We all as quarters, pretax was million as adjusted the to XX.X% shares. for The reported in partnership quarter been the if we compared Turning $XX.X had quarter $XX.X with year, for our last provision

also into than the their was first the year was shares value resulting benefit tax Had effective XXXX benefit taxed With the share. only tax So rate relating quarter, of quarter. for of benefit, which at rate the full at first rate been per cost. quarter. first higher we the full tax effective would benefit tax annualized delivery in is lower assumed of we prior the a quarter a for an rate. in the tax account of the during our amortized in this all have income to impact that takes corporate XX.X% years. the rate This The XX.X%, in tax assumes vested Earnings applied and the

On first the with earnings per if-converted share first last the compared in count. for $X.XX adjusted year. quarter Our quarter were share $X.XX

quarter, count the average was our For shares. XX.X million weighted share

During for XX,XXX of of And settlement partnership obligations. done the and will XXX,XXX approximately past, the employee we've the net receipt units cash. units. exchange we exchanges currently of of as quarter, in through these share exchange first notices combination We're repurchased tax we for approximately a shares in equivalent

of buyback funded authorization with top provide remaining flexibility internally-generated authorized authorization. new will to Paul will increase hand previous As million This mentioned, under manage be on cash million additional our with in the and program $XXX us Board $XX the The dilution capacity on time. over funds.

share. back I'll paid will a dividend A XX, now of Paul. record of June The approved it shareholders has to $XX On investments; working $XX and the balance with million funded capital in in the debt. net quarter million in sheet, ended the $X.XX on And dividend to Board equivalents we Class on and June $XXX X. per cash common cash, turn million be finally, short-term

Paul Taubman

Thank you, Helen.

Turning outlook. to our XXXX

our We a we through lens, and strategy and of have premier sustaining building firm. multiyear year progress on viewed always as global our a advisory execute

growth uniquely balance idiosyncratic our our are We of story the and build-out. Strategic a Advisory early-stage of given businesses

enable out market continued clients The these Advisory of and We integration and businesses as of that have advise. recognize we benefit. further increasingly Strategic value-added value franchise, to our holistic, Hill our our the also leading our Park differentiated our expand us businesses seen Restructuring X shares build will as

confident will and As XXXX we your questions. growth now And we we have in said take with highly our that, remain previously, for beyond. trajectory

Operator

[Operator Instructions].

Securities. Your Ryan from first question JMP is from Devin

Devin Ryan

today. to strong the you presence Europe, the there, peers, guys footprint calls of relatively overall -- question business we've PJT. in a compared is and First it's on and slow some fees just heard on large Obviously, concerning Today relatively already, of your Europe. from in have

this is of earnings? So then fourth than talked the theme thinking expectation into I'm of today heading the How of, the just you're year, what any we in seeing what what fits business? the with about months curious, as quarter ago kind whether year kind this different well? few Europe whether maybe into, seeing you're full were And you for

Paul Taubman

around practice, large have Thanks a in to And of about of it of to When relative but to U.S. European either we companies our that, judicious European attractive business, rest focused in but relative have competitors. all targets it are they opportunity the to are is a our presence our for and be for operations the Advisory we the own And the share still elsewhere. that many and but to their to of globe we and build the small or on, Strategic as domicile, that aspirations quite way. growth see result U.S. gain continue question. it's companies think do they of may tremendous

like. they're in strategic in that many the the Europe. been you the of context respects, of Europe, have headquartered we've in many in transactions So Europe some seen elsewhere corporations a elections strong in involved of look even Brexit outcome, that interest an companies, you at global are And in these with, if uncertain and

industry particularly a not there around into are a is focus, concerned think, cross-border many that and of of of we're our but, have have that the decline. industry their been unite than about we playing said Having with this. game. has So no opportunities that to perspective, a globe slowing And doubt we unique our global on presence. them rather verticals take I clients. macro of with We're that opportunities involved bankers And many are there have behalf the built longer where the a from activity, us that, we out that for knit

it just kept what to relative us last I is year. done think steady it's

Devin Ryan

it. Got

a of slower particularly just little sounds another any helpful. is a record. I'm the very expectation areas bit, of there little expecting Park across a kind just That's are it's kind I Okay. into comments strong dig a appreciate follow-up or, guess, we Hill. that the context, curious It's big I comment? some is that a growth the the broad-based year-over-year or the in commentary year here if pipeline like strong. on heard I but by business particularly you're business, it that are for bit start, of on business. that A of

Paul Taubman

be the we closings, tends Park Well, verticals And the that of said these record themselves it said largely results also the real fact year, previously is results. to we we of business forecast growth and And Hill Park and be there visibility as But Hill drivers remains cycle I enjoyed quarter-to-quarter. the for here identified upon timing effect. the And advisory that, we lumpy business that, to sit our year. think, clarity is last to dependent of long-tail today, have this is in would great because the we've notwithstanding our estate in, none year. have that as difficult of secondary because greatest as achieved in commentary record fundraisers

Devin Ryan

Got it.

Great. Okay.

connectivity. of, the last Just me CamberView, for on one kind

I group. mentioned, on situations in with you've kind XX think, the You PJT CamberView's that team of already legacy worked

with kind -- just how situations, getting more existing So much context those numbers, you existing of kind relationships relationships, -- the bringing more on kind going CamberView into bit rough CamberView. many able of CamberView of what Just kind were were of curious in brought You are versa? and little momentum to in or just what's with of even new on I'm of kind you on do your how relationships? kind vice

Paul Taubman

of whether for have a more Sure. of the to looking I have capabilities have was where this dialogue last to value a and and range in think, more greatest the needs different number serve it buckets bring we've those where appreciation and secure us needs new other we're through, to joint or take therefore, And better attractive tremendous brought their that, will clients. create and able fold to to our new proposition that evidence greater of broader with relationship, in the our the do better will one, And the to anything been working they now have the the side time But untapped we're driven traditional opportunity relationships, that is, that all clients would an touch an mean, CamberView able client situations that neither enriching for bear because we're existing near to made capabilities of Then broaden our be is that have appear, you the clients potential. of those that firm, working themselves. seeing get new the really be PJT even term, for coming than where and PJT know now beginning fruit. previously we that the really a probably not with number as CamberView clients bringing the We're talking which not is as stickiness. expanding many clear have we about are expect I to clients. team and been relationships, which or either with seamlessly, firm CamberView and for discussion we've a may so more the developing which mandates bankers is together second either here. retained then a about the And we're relationships. Advisory very And clients. are to And there's by company previously there client One our that, Strategic in talking last value there situations side. into part, enormous, delivery colleagues on we're shine

Operator

Richard Sachs. next Your Goldman from question is Ramsden,

Salvatore Saroni

today. This is Richard in for Saroni filling Sal

quarter, Regarding the any this increase forward, your A quarter? going for shares buyback million elaborate intentions your not can $XXX this on you buyback you particularly authorization in program repurchase do considering simply the Class

Paul Taubman

equivalence this couple XXX,XXX share equivalent things. the a over say I I'd quarter. we it's is, repurchased, think, of of One --

returning those when at across and the it reducing really opportunities. dilution, to look and all we shareholders So we repurchasing of think capital about

same So in shares. time of we we share number that protect the would in in from point in that this arrow of out shares at our in excess issued repurchases, CamberView fewer we all acquisition March, and spent look because very and sizable a is were the made October of either last the or that, of we a repurchased of simply of Xst when another quiver. shares reduce I in issue until we of you year, the first And quarter $XXX CamberView of add of our where to at repurchases wanted million XXst spent lot we cash the all just the what share explicit share year the equivalent you well think equivalence transaction. I fourth quarter this the up, if

be a at generate most we'll look beyond, time, continue another but point overarching with and repurchase and cash at us move we're we're that that. And and to best the efficient approach So implement think, second this in will it's the constantly ways that cash to shares remains to going I mode we in of opportunistic the way we quarter as excess to year, stages for the build just unchanged. into later

Salvatore Saroni

Placement then in as cycle? the the and current Good. particularly headcount Strategic Restructuring you we And can That's least of a of follow-up helpful. environment, economic you're later as verticals, enter the currently Advisory quite discuss you separately, it? the Okay. this as how about as growth at then And that, to competitiveness recruiting stages observing think in do effectively

Paul Taubman

of talent always start another I best-in-class our we're for which franchise looking second with level. that advance is to Well, the part that, can

result be have quota. our and to we you should At a looking franchises. that, some same by do the X that explicit And enhance to franchises. recognize that's we'll as of limited that always So time, expect we not leading augment

about in in things the a we stages of may of economic be deteriorating a One early may the of credit stages super we is, an cycle, late Restructuring be while cycle.

more the over colleagues, and we And Advisory greater therefore, as our more of So, our time and see to capacity partners than Strategic today. opportunity those. glove prosecuted with in with is more hand have it deal being and Restructuring flex we more endeavors Restructuring significantly are

can the the advance sticker always we think, lookout for is, are be franchise. bumper our I individuals So on who

And larger and with continues large And it increasingly, able lost ours model like mandates. clients with overall to the light firms the We have to working plenty And far the is model following, competitive balance not in heats us I the resonate on say been nature. ways and independent up that. further to for banks. the individuals more in marketplace which is as which capitalize because more on would if or resonates that sheet clients. of complex secure advisory have Restructuring as

we that to continue positioned be So you're larger going from to time, that see to comfortable of how very with some smaller talent. expect firms, over migration we're to we're for firms and talent destination

Operator

Your from Mike Needham, next Bank is of question America.

Michael Needham

identify impacting the First have to people just things adding the like to question that? collaboration, in platform, your is more seeing, you're able slowdown the I market you apart Have M&A been environment. on any from business momentum

Paul Taubman

it's how tell if at business, to all. hard It's our affecting

you're deeply it's no it's macro done a that I secular think of a sense M&A response. a said downs. also have procyclical there business market to cyclical that and the lot has ups from I've and a And doubt in perspective tailwind. competitive some But is as this as consistently, going is

you if positioning. So reduce begin or get transformative responses reduced, activity to look more value-enhancing their own if the think the causes their follow-on strategic the at front-end, transactions, it then of to about companies competitors just competitive as

figure We than little near-term why sit that's that's So bit because when in just we're to the a go bias the value with -- little guardrail easier we're flow to bit a to is enormous the little We see today we footprint, overall alpha a a think look on where bit guardrail. And this more a not volatile, And since there get firms it expand player ourselves thing, easier more recruit. little you differentiate with of to the makes you as grows, looking more that's that we'll From a challenged, to there's terms probably M&A on good Advise game. bit it share. our clients. kind like at business upside to ours more little think a choppier, think and longer-term we makes upside have be market we it playing We're perspective, monster our market a this the an and believe the of more downside a and standing sometimes activity. just see an of downside out. therefore, and to we from looking this time little and from market easier gets bit and the

where It's near think to would going that us. troubling in term, And it's to it's cliff. a flat market assumed from not do today off said little bit. up But I'd always if this really me little sit down? a I you we've say bit. we cool don't probably fall a you very or So it's to the down that expect

Michael Needham

then Restructuring And the sense. makes That business. for Okay.

to senior team bench a additions. You Can you think person. step that the Restructuring as about there a I lost changed I how account little actually up? the has evolved increased talk while departure, were X leadership partner of that and ago, in you despite people have think

out So and is that hire just promotions or did go people? you

Paul Taubman

ability in now continue about with we're in have comfortable our The there their an emerging we the the that deep we be we've are time, have made Advisory. as ago, alongside huge to in franchise. which own our incredibly have long indications, XX business, that all we're good and awfully business. Restructuring talent Restructuring winning seem an believers believers in seen of about, by the been we're bench business. talented enormously their collaboration, who working in for leaders power the our Look, and individuals we decisions franchise, to enhancing And we business to months that, who've uptick more team, in the in and that with huge fact very grow rights. We feel this we and leadership fact our The

Helen Meates

has and internal increased promotes. number of And Mike, partners that's result a of the

Michael Needham

running it. rate. couple right points of Got for level level that's that for a go-forward And And then before. talked of Is Okay. But the you tax I last XX% below have kind one, taxes? you it? been what Helen, think about the maybe,

Helen Meates

delivery That's reason were assumption. more the we vested an as on had we shares. of And correct. historically of That is our below the impact running

sit that our view the year today. So as full is for we here

Operator

is Mody, O'Neill. question Sumeet next Sandler Your from

Sumeet Mody

deployment. capital on Just appreciate the commentary

here. follow-up a Just quick

about bolt-ons could hole filled Now hiring? either like where for versus appetite that the us, behind think opportunities those. are best of you And maybe months be we what's by a future have X CamberView the

Paul Taubman

to big leadership the long working of culture set are leadership of talked position, We it of a in of being our and significant having in organically. big the practice ours, European enough with believers our history as to New a their X extraordinarily align that were with we but needle building San with London, growing in that offices. circumstances, be York, presence. offices, the combined we've office an Francisco in integrate, have small firm, and consequential moving small their with They confluence where and X quite where out enough business, about that was to fortuitous only CamberView X

So as this our always that's and hire was. never, preference organically. to is and never we've and we said, but say every strong now individuals CamberView But do game what up to changing, then, that's something comes

focused organically. we're very So committed to on and grow continuing

Operator

Your Buckingham Research. from final question is Mitchell, Jim

James Mitchell

my Most Maybe asked of restructuring questions follow-up and have the quick a been on answered. side. just

pretty been it's remained the as advisories, really your a a synergies -- little the the you guess, that bit. that get solid, well, as ticked driving driver? said has segments just the or the think -- of -- I up with thought Or that the may Can seeing makes You you sense. industry I main do Is about that, are that I some whole? how guess, any distress you the kind of activity

Paul Taubman

there. is Yes. a mean, there I lot

environment. have models all refinance in change said low So certainly put have a of and threatening and that you you by rates, a low into and a you not GDP, to the which opportunity and disrupted, opportunities overall Restructuring. get recessionary lot a around that, And standard. dislocation is benign, you right? credit macro market or lot still historic itself what's and may while as it Having very accommodative is and moving there's on business creates -- positive of contraction any going Restructuring. of in be micro, anyone's rates to The definition by in in interest We're the macro plentiful have default where

by with of better prior community have with not before away evidence, doing consistently a go identify GDP by there's a of lot did pharma, deep and have the So those what world as fueling what And because not to there relationships source And that force sponsored their identified a in macro that there was, TMT lot mean business lot reasonably sector they of, transactions front-end lot energy bring is And business by energy, are activity. owners. time, that now, help. they is by, Restructuring believe nothing a variability whole things there pockets that services, did market? that disruption observed seeing industry financial think and sales a in constraints longer the the they that Then without our event. every a rolled I of credit industry, out sector. them industry what were I that And to of a changing, in a the best-in-class that because expertise well share was, of no those and those we time overnight. of while over melt is over we're of may you was we've look happens is and of numbers business are but consistently issue leading advantaged. day got happens And goes lot the And like. your Restructuring lot good, okay, It and we've

James Mitchell

it I with PE doesn't saying? you're be could go the but guys, of That's imagine makes area That that an that sense. time, growth over the perceived time. conflict what away would over

Paul Taubman

work calling Well I That -- hard no think the immediately. a on is little effort focus think don't as it some historic you I'd conflict market, but new it's there consistent that no takes is and if that become immediately, all just and different. of historic if in addressable beneficiary -- say coverage. and I there goes walk the away

Paul Taubman

X to Well, time. appreciate you morning much. to participating Thank listening to in right. and speaking months' everyone All we this our you forward results. look And very

PJT Partners (PJT) 1 May 192019 Q1 Earnings call transcript