PJT - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the PJT Partners Third Quarter 2019 Earnings Call. [Operator Instructions] And now I’d like hand over to your host Sharon Pearson, Head of Investor Relations.

Sharon Pearson

Thank you very much, Sunny, and good morning, and welcome to the PJT Partners Third Quarter 2019 Earnings Conference Call. I’m Sharon Pearson, Head of Investor Relations and joining me today is Paul Taubman, our Chairman and Chief Executive Officer; and Helen Meates, our Chief Financial Officer.

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

contained our these that XX-K, in Factors XXXX are We pjtpartners.com. in available believe Partners on factors PJT is at the described Risk section website which Form

financial believe that company update any to meaningful want I the today the no presentation assumes company's to we remind you duty measures, contains evaluating in non-GAAP statements are that and which the performance. forward-looking

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

Paul Taubman

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

the million, $XXX rose quarter a year our XX% For firm-wide ago. revenues a versus to third increase

our versus $XXX nine were million, months the XX% period, up For ago. revenues year a

revenues three growth in in both year-over-year Advisory business. growth the Strategic substantial nine months months were by our for Our periods driven and

financial continue and of our realize investment of are the business. strongest Strategic benefits are we As These reflective our sustained ever this in ongoing Advisory results to investment. our

nine with of period. in our the Now revenues turning to each to more Restructuring, detail, last meaningfully the month businesses almost third for held even beginning in compared decreased levels, year's quarter, but

our a versus backlog year telecommunications, the pharma, to with expect combined a should be our heading into increase the retail, result bit industries, up expertise now and in such Given consumer positive in revenues full-year activity we restructurings distress stronger media, slightly level within for bankers This to and energy, ago. has of more connectivity the Advisory ability leverage as Strategic a outlook XXXX restructuring full-year become certain increasing year-over-year.

Park the ago year and to month levels. revenues for were slightly quarter overall down period Turning PJT Hill, nine versus

XXXX PJT we Park timing to previously quarter. be we heavily weighted of fourth Hill given the said anticipated to the have results expect closings, As

another For the advisory driven full-year as PJT by strong Park hedge Hill and deliver equity growth continued as strength secondary private remains revenue real estate, funds. well track record year, to both in and on in

our a business, with best-in-class in secondary NASDAQ leading advisory As PJT private partnership Hill's venture the part capabilities platform. secondary offer business new private announced of execution clients market's Park capabilities recently market we investment with NASDAQ continued to combines of transactions. This secondary advisory the for technology enhanced

to NASDAQ, a diligently we'll We be this are with is collaborative success. and partnering work delighted ensure that to

momentum in our The the four growth of Strategic across have Advisory, quarter, The for positive the being investments the these as significant period. Strategic reflected driver month with as of revenues the Turning a Advisory, third firm-wide in our in reflects our are of business nine the made number seeing in was to Advisory past results. geographies. verticals, increasingly larger we Strategic products our Strategic in number clients industry increase revenues and growing years engagement reported Advisory well we are a

in our inclusive larger by increased count increased We XX% on revenue talented acquisition. focused remain complexity, a roster nearly size are in These versus partner has expanding our In and bankers. turn engagements year our Advisory, senior ago, CamberView creating Strategic of potential. of

Four business. strategic three made seeing not have we Our advisory with the partners be joining at years could be this pleased additional will and the momentum more robust recruiting we be continues shortly. our journey pipeline we into to and us are progress

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

Helen Meates

advisory. and revenues year-over-year. – declines growth with $XXX XX% revenues, strategic secondary were The million, in year-over-year of Thank up significant you for Paul, the good breakdown up and $XXX were morning. Beginning revenues revenues advisory total advisory XX% million, in with restructuring quarter

$XX revenues and from with private up same fund equity higher private corporate Placement placements. XX% placements last the revenues period were and year million,

were XX% total advisory months $XXX nine placement – XX, million, million, private million, X% significant $XXX the and in year-over-year revenues revenues secondary up were September driven and corporate revenues with year-over-year growth up and of ended $XX by XX% declines advisory strategic For activity. advisory restructuring. in year-over-year, were revenues in nine the month up Placement breakdown growth

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

compensation adjusted updated for XX%, at expense, ratio compensation accrued adjusted be the this estimate represents to the ratio full-year. expense our First compensation continues for

the occupancy Adjusted expense, non-compensation quarter, for expense up in costs London. on reflecting space additional non-compensation $XX.X largely The to due million taking year-over-year. was associated the Turning X% expense. increase was adjusted increased to with

For month million, higher XX% non-compensation to expense business increased our expense London, increased year-over-year, as CamberView. up headcount was the reflecting the nine addition the well adjusted costs including of with and period, occupancy relating $XX.X associated activity, as

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

in at account And benefit all in all rate. converted our shares the during value our delivery prior benefit the was annualized taxes, of cost. of the into if was amortized quarters for to a vested assumes provision prior benefit than their quarter, first takes years. incorporated XXXX corporate lower income this been rate. higher rate to at shares, a with presented This has results tax so that relating in than units as partnership our also The a tax taxed as tax been The had we

ongoing U.S. is an engagement with than rate effective in estimated the that tax XXXX, six local current XX% Our we rate in have due the months tax of we primarily effective the in full-year this first to rate XX.X%, additional for the incurred is slightly higher of taxes applied connection territory.

third with $X.XX $X.XX the $X.XX in the was for $X.XX adjusted for quarter with in the compared share, share, same the months, if-converted quarter, year. nine per last Earnings period year. third first per last compared And our per share earnings

for the quarter, count months net million the nine million count units the X.X through settlements partnership first was combination and of share we XX.X equivalent share of the of a during share market and repurchases, shares repurchased our average year, weighted for cash. of The exchanges share open shares

the with provide flexibility notices continued the our authorization, and these remaining XXX,XXX in share time. currently dilution over We will receipt as under quarter units of $XX exchange partnership manage approximately We're in units we million done for exchange ended to repurchase we've cash. approximately and past, with us this will for

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

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

back now I'll to turn Paul for comments. final some

Paul Taubman

you, Thank Helen.

our our we progress We confident are of the and contribution remain businesses firm's XXXX with the each whole. to as of our and in by very pleased and outlook beyond. strength a for Overall, of to-date our stability growth franchise and

we that, take now your And will with questions.

Operator

Thank you.

in call. of line Devin live comes Ryan you're from Please first question from Your the JMP proceed, Securities. the

Devin Ryan

everyone. morning, Great. Good

Helen Meates

Good morning.

Paul Taubman

Good morning.

Devin Ryan

the question comments and this can strategic from backlog just appreciate growing on morning. the first advisory clearly business, the The the see outside we

the given But been little have if growth backdrop, talk last kind firm broadly your about year, might year environment to able the market business? especially a then markets M&A clearly and heading so is business. a Gap] executing choppy. like and election little gaining Paul, mean you bit in the be so it since share. seems it's of, could for that's been know, quarter, what, of, spoke you bit And that evolving just [Audio more How in into view kind next And for that we

Paul Taubman

think continue have the at we respects, a the we with function will is results the is, end of success as clients we more our and because business, there the regardless long differentiated clients our the our we day, grow long as those and going our to And engage we micro as continue growth as those macro. Devin, and idiosyncratic as for coverage we're are as of be story, business our clients. appreciates client of with, grow, micro a many been as have in of capabilities, grows, long the to Well, well do additional it's as traction to base we and capabilities long I deliver get the which the macro, an footprint very

give some comfortable very just the really there our M&A activity, the mean because for certainly much heading us a find will feel in with activity sense, asked not global does, And of position. my of you but be what we since XXXX, about of very I almost see an XXXX I'll But is me terms to clearly, if you've of regardless short is I which of into crisis, that, immune, we level in activity halt macro don't complete levels. I a and abatement good two of macro,

macro has transformed strategic a reshaped be more to pockets that changing I becoming the industries be catalyst a analog the backdrop, even there whole see give is benign still activity. of there need And would to world that would advisory, if and has it's is I changing in you a and adjust. The uncertain companies in argue and need are rapidly would restructuring, world bit distress been restructuring be for a that to proven as and just

Devin Ryan

the to of, as well update. obviously, I the about comments mentioned, then that than, you full-year on heard better Terrific. kind just maybe being the view, and And know, restructuring, you touch as last

why a activity that, a they're the so it's those as firm you're benign? kind being it you And changed your still development relatively is of like bit in seeing PJT of what's in is more mentioned feel kind backdrop stress much a versus here how I'm and more actually where you as function of, pockets, curious there

Paul Taubman

for is for some in a when grow we why, a restructuring uptick and if and – more be the our an might resolution. constructive that to of said that they And is seeing most foreshadowed we that our engagement intend there – that's an in uptick long year XXXX. to extent The see to on but continued reality slight a this to until XXXX. we positive assignment started we've for we're the where mean, from progressively restructuring get up just really view, what you spike Devin, prognosis is said restructuring in cycle we activity, that a I for then

enter mentioned the few how It's that a much as to hard both. And if things, you micro? a think of know, And halt with macro? to XXXX stronger of we're we say, I expect, that do is from but how is the benefiting backlog. much moments And ago, it I

in stress in integrated both certain stress, firm regards. demonstrably it's system and additional is in more more the benefiting, formidable, think a I So certainly are there there I and is, think we we're areas clearly where concentrated more

Devin Ryan

great. Okay,

Just you partnership. can us one what able helpful. would that weren't quick the you will more NASDAQ that, are What from your if you one to with expectations last do on that And color be partnership? previously give any be

Paul Taubman

an platform. Well, enhanced look, execution it's

coax So that, with do can it should Because in and more do increased our strategic means to we and these that, able because speed clients then provide efficiency. successful the that investors. able can up streamlined be from actually from individual additional a be some transactions, we're then we enhanced to able we institutional GP If robust participations we benefit take And confidence we transaction. if led to and in greater turn of may there's process. out

been can be terms types sort So we partnerships, to participations, for is its means, results circle recapitalizations more and best-in-class ago their there or virtuous of taking be on do us to that means decade an the time, that participation who it moved to a didn't of breadth, limited able it sophistication trying industry less advantage GPs, among of keenly restructurings real transactions a quite tangible have that it the this is execution partners and is a and increase forward. NASDAQ. do the that experience, of differentiated caliber to just greater of it long in – are or dramatically will should exist, deliver and our we've there'll really to area of just some GPs that these moves and more of experience, knowing it's focused partners, This the

Devin Ryan

Thanks taking questions. Great. all for my

Paul Taubman

Thank Absolutely. Devin. you,

Operator

Thank you.

Ramsden Richard in comes you're question Please line next Sachs. the Your from of call. proceed, the from Goldman live

Sal Saroni

good This Sal filling Hi, in is Richard morning. Saroni for today.

is saw based of rate about that from million a run first on to the that rest the quarter for had bit non-comp XXXX. this materialize one half just little quick earlier a us. Just indicator this remainder year? year think of of $XX non-comp if On you. the It right in or Thank the this wanted and We previously came previously you a $XX I talked in quarter the that's activity what you really discussed? lower. touch million was for the

Helen Meates

questions. of Thanks your for all

Firstly, I purely quarterly that but variability would which managing in business continue be related. be to expenses, non-comps, there some will is say we disciplined in our our

Sal, you question? the that would operating fourth And as be we so which would we that's and leverage, the fact the prior control. more slightly as did the quarter in in well. increased quarter, at be business by activity, seen going an think expect have given we up there'll than look think But any additional you've non-comps do driven fourth about we go years growth to think as we cost that

Sal Saroni

you for Thank that it very No, much. was us.

Helen Meates

Thank much. you very

Operator

you. Thank

question Please live from the final of call. the Buckingham you're is from proceed, Our Mitchell Jim line in Research.

Jim Mitchell

morning. you that Just on really economics? an really fees, downward in on the transparency make works if business this we a just think about us good think the about a up efficiency is me issue do put does Hey, you, NASDAQ help price, think volumes more volume helped? – to just just Maybe way but the the play, and just bringing – maybe pressure – that it's volume? not economics how follow-up by partnership, it's in Or really about help the how on it

Paul Taubman

experience doing differentiated because Well, have better LPs obviously to a partnership to a with because parties differentiated we increase, can with broader to we're provide time hope ability that expand We customer able this the business. more and our the for who provide and it NASDAQ, you a unique do, and experience. business a we the is business and the are just customer would win arena potentially GPs into should over

I think that. as it's as simple

Jim Mitchell

any don't you feel you how the centralization don't the – you of pressure more business? and for fee And is your there structure given clients, or advise transparency of like

Paul Taubman

and cumbersome. to the have who then these would where right think clients, be the is we is now less transactions because up more take performance. in is execution issue there take see I ups, There the want process streamline

consider having that been a result if have increase we only everyone. mandated success invites be of So to And us. win we for And differentiated for for perceived that these can that capabilities the a additional specific win actually not a transactions of should transactions that's be already as win as us. a that's as others we are should an

view caliber our else our as capabilities differentiated which So at to do. been a of and everything to just expand execution extension and firm, we insights doing natural we've of is to everything bring we this

partner and So this with manifestation chose the to we association. NASDAQ is just us, that another pleased of we're are delighted with and that

Jim Mitchell

thoughts you as I the some I get makes could macro on sense. growth agree your well, idiosyncratic completely if stories. maybe, Yes, absolutely And from

– before still Brexit been is skin Or on has out any lot – macro in maybe been of game no we sense of consternation we to the been you the U.S. see overhang. Europe, outside the about is way a get just – start a have but say weak What there? to there to to it need pickup? how Brexit sign doesn't of speak, your activity over has just think do I – the can particularly So there's

Paul Taubman

mean, it's interesting. quite I again,

than dislocation looking there's opportunities, as a to said way that a equity doubt are in UK take to companies and there. business we creates invites papers, with And the of previously private add resources ways it companies finding marketplace. a in of pick-up there we lot and difficult, Europe, the We I've and a move renewed ever resources is transactions UK firms still we the in no but in you active sterling continue is look home UK, are more continue in the significant you just interest in there now if interest to see been, market, to do makes refreshed we've lot add that to of outside it more

to to then still like And of also have companies, their global attractive at more been grow of anything, were we'd of the the have companies, just Many of therefore, of domiciled you to in underpinnings UK companies, imperatives to in if business And be these with domiciled when or headquartered who continue as who UK from who strategic or UK. the outside their the really market. have have business comes look they're global without UK, uncertainties the you Brexit. and,

will you're in through is meaning in the fundamentally much is But everything uncertainty. that with accesses of can it because look else uncertainty, transaction ultimately these dealing that those uncertainty in So many parties like either be resolution. on the bumpy there'll side a else be And transaction where as situations so uncertain overblown of is it the certain.

to a I resolution think lot we're we'd been. closer now than a ever

the be And it's things a it's the to in commodity along one only adjust, just we'll comfortable this quite of that are currency against with there not we're always get it of getting difficult a baseline the some will perception because when and market, markets an in it. is fighting we turmoil, and of things and in can more of the when that to so very you moving differentiate are sometimes things think it's a commoditized, advises easy bullion yourself, as and think actually world I from adjust the goes benefited, of impact uncertain will advise activity, up value back but will markets we've

but, in to volume, not look levels; robust way much. and of And step of when number down, quite marketplace in it's back it's terms down down terribly B, of transaction just at transactions, levels from it's you A, the activity the macro

but my not is, is it. is there So anx probably sense there than anx more we're if deserved, feeling is

Jim Mitchell

all for Thanks appreciate your it. I insights. Thanks. Paul. Thanks

Paul Taubman

Thanks, Absolutely. Jim.

Paul Taubman

think forward we I We to our results. Okay, earnings that call. all. Thank again quarter fourth look concludes after report visiting with this you you,

PJT Partners (PJT) 29 Oct 192019 Q3 Earnings call transcript