PJT - Earnings call transcript Q2 2019

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Operator

Good day everyone and welcome to the PJT Partners Second Quarter 2019 Earnings Call. My name is Katrina, and I’m your event operator. [Operator Instructions].

And now I’ll hand over to Sharon Pearson, Head of Investor Relations. Thank you, Sharon. ahead. go Please

Sharon Pearson

Katrina PJT much, morning, welcome and Thanks Second and Quarter the Partners Call. XXXX to very good Earnings Conference

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

important to Paul, and forward-looking Before point that want differ statements statements. factors of conference These out over make there may subject course to call, the forward-looking I we indicated actual I various during a cause call uncertainties outcomes turn from this materially the are in risks to and that statements. number these could are of to those

I believe contained to that are in We which remind described section XXXX Partners Risk pjtpartners.com. Form XX-K, Factors our factors want these PJT on is you in that available the at website update in no measures, performance. non-GAAP the contains any statements assumes make presentation meaningful and financial the company duty are that evaluating we believe forward-looking also the today company’s which we to

these their also available within website. detailed we morning, the this non-GAAP contained For issued metrics press data you on GAAP should on to financial and disclosures release the refer reconciliations, our

with And turn over call Paul. I’ll the to that,

Paul Taubman

Thank you joining today. all and morning us you, for Good Sharon. thank

when XX% viewed years quarter, even clearer that it XX%. with For wide narrow the didn’t to easy up the ago, that $XXX a let recognized have We increased revenues XX%. firm versus our alone through a XX% to revenues always revenues advisory firm follow, accomplished lens; second ago increased Year-to-date year up firm million revenues all exist. with advisory this isn’t Four the the appreciate XX-day progress. the lens wider we

talent destination for at levels. we all Today, a best-in-class are

their strategic blue growing chip We’re clients of advising most roster important on matters. a

and are announcing geographies. industry in and transactions winning more sectors mandates We

of mind competencies suite in greater resulting a market. and our are and share capabilities broader of to clients a delivering We

Our brand around recognized increasingly is the world.

expressing are high mid-year growth quarters. underlying years confident Today, until but prospects, mid-year. and we as confidence trajectory to the cautioning all in year at ability began deliver beyond. our in growth progress evident meaningful continue that We of continue for mark, the we always, of be ever in XXXX’s our the measure not businesses we As not XXXX each confident and to to be for in our as our drivers would

to Now our businesses turning each greater in detail. of

for significantly Turning in compared the quarter ahead the to period. are to and grew levels Revenues prior the second Restructuring. of last year six-month year’s

maintained ranking the US One its Restructuring restructurings Our position, for XXXX. first half Number of leadership in business global completed and

record restructuring to flat full working us essentially are the XXXX. outlook year remains for mandates, increased low well credit conditions, Despite only low Restructuring entering benign we muted for which should down. modestly Our notwithstanding macro revenues historically we backdrop, unchanged, this default year an to number full the expect and near of interest on rates rates, extremely be serve

Turning hedge to quarter in Park Hill. business. our performance fund better Overall modestly revenues due the in to grew

on record to While year-on-year. revenues Park are Hill slightly year-to-date, track down deliver Park another year. remains Hill

Park XXXX Hill to to fourth timing the results quarter. anticipated expect of heavily the we be Given closings, weighted

our Advisory. and of complexity closed in revenues associated Strategic mandates, average continues quarter size an mandates, of transactions. number period the active an The have the the an our announced Strategic in year. in but and seen increased revenue Revenues these to Turning potential build to in Advisory compared increase for and last of the to six-month momentum since we increase earnings both not increase the business call, size, our yet and last

in will this momentum into financial get in Strategic quarter, we be reflected last said XXXX As the our more Advisory we results. further the

enhance of activism. to all business Our PJT and advice relationships our The shareholder new capabilities of PJT with differentiated of aspects provide clients increasingly us additional across the to and addition continues CamberView. existing governance and enabling from benefit Advisory CamberView Strategic are

side, hire in year to comes while On hiring the we on talent endeavored a round our bursts. basis, often

Advisory the who recruiting, will grow third Given by count our a partner cross partner in including five Strategic quarter, will focus initiatives. divisional recent senior on

below excluding robust have than Additionally, campus we year Strategic hired hiring and program, the more partner level XX date. professionals’ Advisory our to

review to now call will over the results. I turn to Helen our financial

Helen Meates

morning. with in Placement were Thank $XX the XX% year. $XXX growth good were were Total slightly you, Paul with revenues for [ph] quarter quarter Advisory revenues from year. revenues. Strategic both $XXX Advisory The last in same up $XXX from the million Restructuring. and period up XX% breakdown the revenues. Yes. year-over-year, up revenues second last Beginning of million million, million

total the Advisory. six primarily The Advisory months XX% XX% down million $XXX Strategic of -- six-month were $XXX June slightly revenues $XX million revenues were breakdown Placement XX, year-over-year. up driven revenues by in year-over-year. up ended million, For growth were year-over-year, revenues

these we and adjustments are fully presented with in expenses quarters, X-K. have expenses, certain to with described Turning the prior adjustments our more consistent non-GAAP

First, expense. expense ratio Adjusted to for our best ratio XX%. at current represents full accrued the This continues year. adjusted estimate compensation compensation compensation be for the

as increases higher Adjusted adjusted for the and was addition our compared increased are expenses in $XX.X mostly million activity expense. associated to When business other year-to-date. non-comp as the prior headcount last to $XX.X million well with period’s expense year businesses. of due Turning quarter CamberView non-comp and the to

our at or second to largely quarter increased XXXX. was Looking associated space on the non-compensation our quarter increase expense in was with quarter a occupancy first non-comp the X% up costs reflecting compared due full This million expense of $X London. additional basis, the expense with sequential

the for as for second partnership the prior results taxes the six in provision we’ve income. had to reported as all adjusted quarter $XX.X first quarter of our converted XXXX. for first our second shares. adjusted adjusted $XX.X was million margin the And for to months. six XX.X% months income pre-tax quarters, of million We and pre-tax been and The if presented of units Turning pre-tax XX.X%

tax of tax in amortized all This at that We’ve a full So the was also in XXXX benefit taxed their during in XX%. benefit takes lower a corporate tax years. value higher an rate year shares The account resulting delivery the of prior into the for relating cost. at to assumes the our benefit was rate. of income than quarter rate annualized this a tax effective vested than

Earnings per share.

share in Our for second last shares. quarter quarter with adjusted per second average count $X.XX if-converted the year. and $X.XX XX.X for share six months, earnings were On same million was compared for share per $X.XX compared period our the the the $X.XX the share quarter, weighted in count last with year

of million shares market for respectively settlements and we X.X repurchased of through equivalent units share partnership XXX,XXX shares repurchases, net During the open second quarter and share six months, exchanges cash. the and

as partnership XXX,XXX we We’re currently exchange of the will receipt units for these past, we for in done notices have in cash. exchange approximately units,

This with We repurchase continued dilution manage flexibility provide have approximately us our XXX to over million authorization. will share remaining under time.

the investments, balance million debt. $XXX $XX in sheet; we in million $XX million the capital On in quarter net equivalents and funded and ended with short-term working cash, cash

record will And finally, XX, per Class approved to $X.XX XXXX. the paid shareholders dividend Board common X, have A XXXX a of be September as of of share. September on dividend The

it now Paul. turn I’ll back to

Paul Taubman

Thank Helen. you,

for outlook overall to Turning year. the our

quarter. stronger this We expect half heavy second of half a be the to in the rate the year weighting with than first growth fourth the of towards

half for based broad that XXXX to be success the confident second and place are pillars in continue of the all in We beyond.

that, will with questions. And your we now take

Helen Meates

Operator?

Operator

[Operator Devin Securities. live go you’re the JMP Instructions] Please is first question call. The from ahead, Ryan, in

Devin Ryan

Great. Good morning, everyone.

Paul Taubman

Devin. morning, Good

Devin Ryan

just the We over have past couple it’s with So start and the seen touch the to months a maybe on consistent momentum so of that had outlook. been about. just maybe update bit clearly what here, you what’s on kind appreciate speaking publicly the of because visible

just far? bankers of to thus they’re building of recent of maturing of maybe examples situations just together? relationships the wins I’m of and larger tangible on some win of collaboration everyone collaboration of business function able that firm where specific kind seeing are kind and of the over so around the really assignments? kind tangible -- there the to months, PJT that whether win senior they kind the kind carrying so or the you’re the maybe that benefits Some is of curious on seeing Or you’ve what of you without kind of provide what some high-profile just And is any are anecdote the of and that’s the we’ve to of So announcements these examples there’s all if you’re deals working you’re can in seen of been how -- collaboration being already? platform

Paul Taubman

thank Well, question. that there’s think question. I And a lot the in you for

that and they’re whether to transaction that position advancing the our long lead clients, the to have our a have strategic of new period time making other -- whether professionals some indicator becomes that from constant clients, So into a is are we’re progress client But that with turn and engaged some their ultimately some it we that of resonates early platform of our they’re with who are existing simple we’re that. of seen time strategic period of to or that, strategy client in at is on that know confidence But coming of evolution apparent that day just relationships. is the a over natural maturation a base. they look basis, so traction all out. considerable the go outside we a the to whether the on progress day on lagging discussions, track, for whether world mandate, so trust, is then the that, have in with to then and successful have getting right this that And partners the we a is to and of individuals discussion until

about know teams, that assembling we that talked that’s with an way of with the the to the disproportionate with cross advantages Europe which amount talked example, that’s increasingly of we we’re small is together and have clients. And said skills our of best structure, is of that, a And individuals a team. serve Europe, and teams clients to that in extraordinarily function that, because our doing have resonate meaning, firm work recruiting, our as as compelling way an delivering in clients. also we competencies that strategic as capabilities I’ve feel, a one because resonating global we’re the choose we’re And of Having firm who compensation about that knit firm broad who always big array in border.

Restructuring business, Advisory into what near it’s we of and jointly Strategic and all at set that assignments integrating you what doing our which if you number staffed look we’re between with one. Restructuring the that out it’s If of are from day the embedding to part and is considerable, And quite look at a CamberView capabilities half. be

Devin Ryan

a in in Europe may group franchise. starting Europe And in drill it’s Continental there it around bit Europe, hearing Got different the outlook little to have more little you. thank a occurring just bit very some, a And a then like that the guys We’ve feels nice from just you more I of constructive particularly, helpful, commentary what’s been UK, know to think, on and maybe story. improve. where the be I

So of broadly, kind European I’m backdrop just kind overall which on then Europe, curious franchise? views the more been in recent for your the pretty And years? challenged macro has of just

Paul Taubman

feel positive franchise. very Well, about European we our

size to and grow is position platform resources access if and smallest, expertise. expand have had the good committed backdrop. that effective to smallest. a number basis, And wins to leveraged continue have and platform the industry among grow relative we it. of a and We the we’re our to many global also European how the number which, significant the relative we But not deep have in very a on we’ll been business like those we of regardless think of of continue the And reach and our a of we’ve macro

headquartered all just of even And So strategic significant I a a firm. quite UK we the on be and look you’re calls, in of which interest of specific not of who Brexit the that whether that, investor an something is outside in at said to I’ve exchange really is the Having seeing the of sponsors point companies global companies reach also very or midst UK-listed, that deterred in even are have try any that take UK, our Brexit, companies. previous that, who have way made that uncertainties, dislocations their also and the financial strategic it’s terms in believe you said those capital to think amount of has we’ve accumulated sentiment. to advantage that rate interest in if

there ambitions that to be a themselves of those we UK. And have to would the about some global surprised increase to the companies UK number are also and have of the talked fact exposure we see not reach in markets that global companies their outside and look

see our continue quite comfortable of environment just both most given environment. that’s to way that in any also how a And in our So And reasonable are suggesting and given grow we any in early significant that almost can small it. we expanding in results footprint, we Europe. we’re we��re our evolution activity comfortable

Devin Ryan

Terrific.

here on one last Just expenses.

growing should will grow Obviously how If grow you or them from the non-compensation to at can expect little which the the here? And touch this would maybe starting system be point? revenues, think to You’re to here, operating to about of expenses a relative think fixed trying expect from in on you kind costs faster how I really bit see all today? just just maybe on leverage?

Helen Meates

said First be our which the activity operating disciplined in are mentioned, that, will And the to our skewed quarter. variability be is continue expenses. that reasonably not. managing business our fourth as but our having of are evenly in all, revenues revenues And year And there spread I Paul some year, to this our expenses we will would be quarterly related. say non-comps throughout

So leverage directionally, get until full side do leverage. operating grow, to difficult to on expect see non-comp it’s see But fully operating be the results. we over year revenues any as time, we going to

Devin Ryan

non-compensation more I spend the guess, think guess leverage I costs, to with would off the start because you should And get there’s thinking that less thinking I’m Right. -- because piece see needed? -- component. fixed I be -- of that I’m some more infrastructure I nice or variable just of

Helen Meates

a look costs fixed fixed variable now the at at cost XX%. the than cost. We lower definitely Yes. grown has And rate look probably around historically, you our if

forward. going So we that would expect

Devin Ryan

very Great. much. Thank you

Operator

the Ramsden, is next Goldman call. question The from in Please ahead, go Sachs. Richard you’re live

Richard Ramsden

year? know us lot. a you on you’ve of perhaps I where out update Paul, growing on this building recruiting got Is in the you sectors. earlier bit environment seen you some And significant terms financials can to and any in about in that largely Thanks a were changes talking industrials, year verticals? complete? little other of the so have pharmaceuticals, process various this far

Paul Taubman

cohort you the And which relatively is, and in so so for small to that we us, they resource about global those relative sense currently compete almost quite moat franchise investors individuals take of a around in I Richard, to the a that as don’t are we’re vertical we think study. terms can in a can even verticals add to of so try ever And are about where platform are if this complete large going think going we’re I it commitment that advanced more talent. who be the create either or to our to relative constantly strong we’re areas a to firms these what still can educate and to in. need against into not very competitors get us evaluate

to make look at did some early investments? You where we need initial on

even start see the time other tangible And though all that if this see three you results. out two nearly then of to where years, you look period then we’ve may verticals progress, made some investments or are to And for those it there see some as And take will instantly. year. as you recently can we

earliest And some did short minimum we of perspective. we thought that to real minimum places necessary important out our in we relatively results. we, one Europe. I in got that’s that that So to was early practice order, -- scale. saw point And where an make committed building were on the the

we that verticals results resonates. that making We, in or five always And be be short I extremely of inform requisite that to proposition, add are talented recruiting which we’re verticals, enter think augment we had that’s think our on. And saw quarter that our in. to other TMT, which our talent we fact variety minimum and partners whole investments brand, as scale those we on order, early committing a in the alone going environment, verticals who to in these we’re significant opposed the fact will by will speaks story the driven senior need in to available, which we But we the one verticals. are

there’s the for we we the to we’ve have, we more And out becomes apparent that prefer that year-to-date going don’t But that’s reservoir believe right it we think still an side is that all have of believe you we’re enormous lumpy. side, if more talent even additions. the to focus a been there just has increasingly be and we’re to some can from would on our to who the so advisory home to not bit them. platform a we others that And success why where compromise that lurching going individuals so inform be right made we smaller

just And of but in get leave, bad little who things a be being bit with swing us because to their their reason of the one firm, sort we’d firm, a no leave they’re urgency them, individuals compelling very successful of sure if longer patient. then are them we’re And incumbent destination. And leave. these individual right that they a wait the time we focused incumbent whether they’ll they’ve would dealing we’re the and rather were And of that on leave because many pitch. just a very is of for long there’s have take for periods lot conversations at informed not to to to

Richard Ramsden

how And sponsors up cadence just I’m activity perhaps Okay. financial think a you And a in in that the about follow of holding we second mean is Great. back? talk I activity? seen going on. sponsor to financial data. Can as at bit you what’s the haven’t track kind a And little much least certainly public half? of pick the wondering in of

Paul Taubman

talk many have mean because adjacent about is that sponsor really powder have they dry become Well, of gatherers they financial verticals. powder dry all the in to for to moved all I as sorts And where into that successful you companies, people of these drill down of land. have so as asset

some of into some aggressively moved estate into real ventures, aggressively and infrastructure, some into So them elsewhere. moved have have moved aggressively have

of traditional ask of has overall to I So look powder, is dry as that And you really buyouts. way has. regular at when at growth don’t much you believe as directed the all dry sort how yourself powder need much grown that dry number powder

do disruption in I starting in to you’re think a Europe. is activity and or sponsor certainly that Europe, sponsor a some in We’ve there been that’s activity a see, there’s been And because equity out prices. be bit rumored fair suggested of in there’d And involved more dislocation there.

probably think maybe market. you’ll are there arguably And driven that where sponsor of in more I see US, increasing So you’ll dislocations I the greater more here amount US than of opportunities an see value suspect growth outside activity. the and

Richard Ramsden

thanks lot. Ok, a

Paul Taubman

you. Thank

Operator

Mitchell, Research. you Your in the call. live final Please, Jim question is head go from Buckingham

Jim Mitchell

you Maybe, talk internal Well, good development. Paul, a could morning, little bit talent about

You little and progression time? more more think feel the How about the you partners the you coming over is you Can of under partner talk noted Advisory how bit getting more internal a there where about Strategic that And below about they’re in hires level? talent XX partner about level. from?

Paul Taubman

their new having promoted. certainly internally and age sustainable firm the starting Well, it we’re the are in is partner on. three-plus been to you’re at three-plus The absolutely evidence is what when over a in not XX to partners the But see people years. reality much we for where years, preponderance that our all the firm of entire up that are at focused to has making firm way going existence committed career time of

that So folks nearly or our offers at fact we we’re firm. those at want applications the positions. start plus of who minus that entry we to And for positions X,XXX level. The get X% summer sending

I think positive. we’re something it’s evidence onto quite that

competitive our if focused and something. And we firm. then talent we get keep into on most development levels, can training tapping have the have talent, those best a We individuals advantage culture. through junior to always developing at the We’re

a a advantages our We to have business like better, a where ours from firm We’ve lot competitive we believe of can individuals learn within promoted up specifically number of elsewhere. and than firm partner. individuals at this

over we’re levels. significant Some our all or of with those as have And were best-in-class period incredibly that been for getting at became others and talent time And a partner. predecessor hired on focused externally firm firm we’re of non-partners time. ensuring

So take talking of I a activity. really it count partner a time and village. But spend know about we does lot partner

clients senior need have is And team talent levels. to people. to is successful all the easier junior You it it no stronger is there’s that be with to best-in-class the recruit at doubt easier the the more and

And it reverse. works in

we’re feedback, it. So talk don’t we about I’d it, we focused rather development. it. very people just But then do training, talk And do on giving it

I’d that’s So what say on that score.

Okay.

think our call, I next our speak you you all and Thank results. to earnings on very concludes that much. we’ll

PJT Partners (PJT) 30 Jul 192019 Q2 Earnings call transcript