PJT - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the PJT Partners Full Year and Fourth Quarter 2019 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s call is being recorded. And now I would like to hand the call over to your host, Sharon Pearson, Head of Investor Relations at PJT Partners. Please go ahead.

Sharon Pearson

and Year and Earnings and Jake, PJT to Conference much, Full Partners Fourth very good welcome morning, the Call. Thanks Quarter XXXX

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

there factors statements. these differ Risk in to described that number call available PJT outcomes out the from These materially is our important subject to the statements which in on of are could cause We this forward-looking actual turn of website Partners those indicated want XX-K, we pjtpartners.com. call, XXXX to Factors in during I and factors are over statements. these section contained I to that Paul, Form various uncertainties, believe Before may are course at conference the point that make and risks a forward-looking

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

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

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

Paul Taubman

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

deliver measure line leverage. we to our progress clearer. in our year results. considerable confident And XXXX becomes and and to growth bottom not full pleased full our line lens, began prospects in quarters. made our the We years continue progress in highly that are with We report And top operating today, ability XXXX to we have year much this

the share XX% earnings confidence this adjusted number grew of XX%, full worldwide where additional strides goes accomplished transactions. make global towards transactions in deal results pretax firm. premier years. four per income of These results building dollar and declined day grew did Our every XX%. that completed the environment achieved were revenues M&A an these goal of year by, a as the And as adjusted grew We've great advisory value we affirm just in our

This purposeful XX investment of Since now all recruiting at than XXXX, and completed all we progress continued We our including our is commitment partners. employees, adding to year-to-date, aspects doubled successful have October our most by levels. unwavering buttressed and talent have an in X, business. XXX more headcount

our collaboration maintained growing of an for high while and have firm, we incredibly standard talent our enhancing inclusion. In culture

growing our of is broaden our partnership enabling product secondary to offer to services NASDAQ continue capabilities the partnership NASDAQ's a and leading advisory clients execution. example clients with with Hills of best-in-class market. around to the One world. technology business advisory deepen This and industry roster PJT capabilities, transaction Park platform private broader a superior combines us We of suite to deliver recent

our increased businesses also PJT globe matters. have ESG enhanced resources advise This industry-leading all rates to to have the shareholder business. governance, committed around We investments Boards market These has of further CamberView, across in and our other win management additional teams our and corporate shares. and advisory activism corporate advisory, higher governance and resulted on ability

turning Now in our restructuring. more each detail. Beginning to with of businesses

completed growth leadership dollar ranking for globally revenues. in announced exceeded No. restructuring of XXXX, initial value business position, expectations its franchise world-class powered X U.S. revenue and meaningfully substantial restructuring Our maintained in The our restructurings. by

to restructuring business well distress year and industries the continues to in ongoing closer of bankers as restructuring. given mandated The between outlook positive, as for certain result increase the a relative our our advisory was be in and This strategic collaboration ago. backlog

across to the year delivered verticals of the record second as experienced growth. continues Park our straight and third leading Hill, business, expected from a Park PJT PJT business of firm year-over-year year greater each is results. Hill Hill. Park PJT to results deliver to straight collaboration a record Turning fundraising of benefit

XXXX in increasingly visible benefits to business. announced significant roster M&A to the investment Advisory, which became as saw we our revenues XXXX as a firm-wide as to in realize Strategic compared financial of the increased of of our in reflected year In the progress our contribution Strategic Advisory was Strategic sustained we prior well Advisory. the transactions Turning completed growth in continue year and to results. as

join have our turn our and our with the becomes results. Strategic seen of ended remains I review success XXXX will Helen wanting bankers over to pipeline this an now call clearer, increased recruiting financial to XX we Advisory platform. As number partners, talented We to robust.

Helen Meates

Total Good Paul. or million, you, XXXX up year full XX% XX% Thank year-over-year. revenues year-over-year. $XXX a for was our revenues morning. Adjusting million CamberView, revenues. XXXX Beginning results for of increased with $XXX

year-over-year activity fundraising The placement Advisory revenues. Strategic million, higher Secondary clients up as Hill Advisory across $XXX million, breakdown increase were driven Park and well revenues year-over-year with reflecting fees. in increase of XX% for an the as revenues PJT by businesses. significantly private higher Placement revenues $XXX XX% were corporate up the Advisory

of the highest Placement the A by breakdown history. in year-over-year. in million, Advisory, year, Park million, total revenues Hill. PJT fundraising quarter. in company's Advisory the same the the of revenues XX% driven $XXX Advisory. million, quarter $XX increases fourth XX% $XXX significant higher and reflecting with up revenue in of revenues For quarter, up were year-over-year Strategic revenues revenues up Restructuring compared the This last period XX% is Secondary

our fully with Consistent expenses. related expenses adjustments described Turning quarters, the These certain the to adjustments, prior we non-GAAP in not CamberView acquisition. adjustments including presented X-K. with to are more

XX.X% expense. through million, the accrued three first compensation year. revenues we Full the ratio was with quarters $XXX and expense consistent of adjusted of year First, compensation

in for resulting non-compensation a U.S., occupancy headcount, space XXXX was increased in invested for $XX business year-over-year non-compensation activity and The $XXX growth to expense fourth adjusted also XX% in XX%. and and expense. up year-over-year up Turning million, million, XX% an Total London we quarter, increase year-over-year the reflected both costs. the additional

we in additional expect With acquiring increase headcount this additional able to before meaningfully in be estate, to space locations. current our investment real

percentage XX.X% from in a for of XXXX. non-comp XXXX, expense year down was full As revenues, our XX.X% the

non-compensation While in non-comps. investment realize increased expense outpaces well in increase to business operating revenue expect in we increased due activity the to as leverage XXXX growth continued infrastructure additional as levels, as we expect our

Turning fourth to adjusted adjusted of income. We and reported the pretax pretax for million XXXX income the year full million in $XXX.X $XX.X quarter.

in from quarter, quarter adjusted Our year, from fourth XXXX. the was XX.X% XX.X% the fourth pretax and in margin XX.X% full in for XX.X% the up up XXXX

The provision for taxes.

at With rate. had also The years, assumes was that shares, to tax adjustments, account corporate presented into prior our as been benefit rate we the our all of tax a a if tax converted rate delivery partnership our the year so income units XX.X%. taxed effective during takes all our relating As full those year tax at than results the to shares of of higher was amortized cost. value vested

effective tax we XXXX, our the of expect would in to rate range XX%. share. to In XX% be per Earnings

Our $X.XX was year, $X.XX XX%. adjusted and quarter, if-converted the XX% share in up fourth for earnings per the up full

The share count.

of to dilutive capital million year business, the the to X% in For while year on full continue ending share of up with XX average this also the Consistent weighted our flows. XXXX. versus count impact focus investing use investment, cash we reduce our will priorities, shares XXXX, but also being excess over mindful just our was

of market combination we For approximately X.X XXXX, cash the repurchased open for of through exchanges units share of equivalent million the full and shares settlements. a repurchases, net year partnership

which for During notices to cash, we've quarters, the exchange fourth received as units elected partnership we quarter, units these week. approximately next XXX,XXX will exchange to in prior settle

and cash capital. On the million the million investments year net $XXX balance we sheet, approximately in in short-term ended $XXX and with working

also we a extended which ahead funded which we remains our ended schedule, and with million $XX.X We debt, line year of the subsequently of undrawn. have repaid year in credit,

Board A on on share. turn of approved dividend The X. paid I’ll to common record now of be to will $X.XX March March dividend has shareholders Class back Paul. XX a The per

Paul Taubman

Helen. you, Thank

While two firm. indelible we've who the had left on to individuals are by mark deeply much an of we passing our celebrate, saddened

be Commissioner, by and Park Hill and as Hill stewardship soft-spoken will adviser, pioneering Dan's co-Founder an Our colleague. partner, leadership. beloved NBA Dan Dan of Prendergast and former inspirational Stern. a a of was our marked David entrepreneur integrity senior leader, remembered Prendergast, Park

from will big excellence Stern his clients. a just legacy adviser, we joined senior as have Park He benefit a smallest were dreams honored even of to David and detail. PJT we focus as forever him to and maintaining out, commitment dream to mentor. as us PJT on Hill the starting were challenged while

period of into The to enabled connection he in extraordinary a everything sense will come His spirit warmth of of did. much David missed. be and us and way has short colleagues very these joyful humor, time. infused long contribution a human respect

in investments to our our have businesses. debut, other business Since our well Advisory our substantial outlook. as as leading Now Strategic made we turning

our all As are we today, they were businesses than significantly in sit larger XXXX. here

largest of firm-wide this and business, While XX% year, combined for businesses Strategic of Advisory fastest-growing is now all than our still revenues. will more account other our

businesses businesses that these continue to our realize of for in opportunities has and Each invest growth, we to meaningful will growth.

built margin environment said our most uncertain confident pretax in to by while driven environment. income grow we our further macro have for the view in always growth are than year continued more We are by XXXX, that to XX% And market and we M&A revenue we grow an any of have this ability improvement.

questions. will we your And with that, now take

Operator

will We Devin Ryan Instructions] with with JMP Securities. [Operator begin

Devin Ryan

Paul, morning Sharon and you? Helen how Good are Hi, great.

Paul Taubman

Very well, good morning.

Devin Ryan

Good morning.

the of years. the for overall of call years, the of helpful. still those Strategic firm all, the or the base. in plus the on only that's the for two I XX% guess just, have kind from appreciate at of, shows been slide but firm commentary how presentation it's like outlook. it, been at you thirds the up end the That in that XXXX, number first First made of partners are partners trending and the question been and I That's XXXX firm Advisory that two that the is on over at just two partner always have

So there's runway there. big still

to think are the a firm experience And I'm of two full been I'm kind there's And to essentially, trying very here expectations getting the has I helpful experienced years context right some for that would just is a – guess have it of of also, still then not frame? increased so XXXX? has trying contribution. firm the partners been? of three that get more Is market ramp. for narrative time helpful. trying with and that's percentage get kind the not just think of be two over your still for some or what years, it's to that two perspective the of I years And to ramping there's years, what the large third Because about end piece such context partners the from kind I'm end XXXX of so little that course in of your contribution? you've and a So actually slide ramping, just because at percentage been

Paul Taubman

of Sure. things, couple Devin. Well, a

First sit partners than two But if to have the going percentage XX you partners, where the Strategic we one the at continue for we our been platform on less at end year, of to of the look as year it's all, a third grow third to is which other Advisory years. firm. that of during onboard

of going are So individuals extended those for continuously up who mix of period of it. this to to new been term time, on we're have the who end evolving platform – with an and

is it's expect a always or day year that no years individuals doubt of potential on. that always have first four three at can three opportunity than science, than because three art and magically this and as in, contribution not for any We revenue as individuals if we've delineation this There's had a in in meaningful months. of XX partner here it's the a that years think to continuum. the productive our made is two. point more in view experience, who been the We who fully are are they immersed deliver platform, made some the on ultimately or all unrealistic the years more somehow I

The our impact. individuals instantaneous join have almost who firm

client at long connectivity, almost immediately dialogues we the a itself with matures. this announcement opportunities, business introduction a a more need their But because So between this at minus. and the brand get years see business that C-suite a see to of if in we number sort us the because just looks but of that three the mandate, want a as get awarded momentum, works, potential because overly impact, We and way three minimum, maintained up many predictive boardrooms because to clients to to, instances, bifurcate we the plus of long years and we I get running we've see for model and see always cycle time in coming the our situation. invested you we completion there's it's more years, the for sales business. are And don't of mandate period firm

of sale brand tremendous not it's recognition up, an of matures, And we for track cost firm up. all opportunity our what contribution goes So our firm's of this go think record. goes individual, it's our us. of also down, just rates win as the there's ahead the and And and the runway stands

Devin Ryan

I on appreciate that, Paul. the Maybe a follow-up business. restructuring

seeing that of kind a You sounds acceleration a year. nice to contributed year saw improvement XXXX, it the business of like from you're in ago. heard strong the activity there kind commentary that throughout overall so in you But

the that year, of year holding off accelerating? given pace Just it trend it looks, to that there throughout the And of towards that, did in middle you're maybe if any context later trajectory of started so terms curious how the year? is improve kind of the the that it more of business or that develop in I'm if seems

Paul Taubman

Yes.

I we And early you flash talked time, the we acceleration increasingly it year said persisted, that more saw wasn't think we our as was for fact believe narrative just was sort commentary a XXXX. we an began if what we into but for coming end And of XXXX, Devin, mandates. increase what and we on that steady a see of XXXX and XXXX would and in we late as gave the I the quarter-by-quarter the about increasingly more grow at a persisted to of in prospects that optimistic. mandates XXXX if in of that constructive our it in became I increase some period think tape, rewind ago

mentioned very a today year of few we mandated backlog growth feel higher we our I as as And remarks is activity think ended a about prospects of the a restructuring totality ago, higher level meaningfully in at we XXXX. our XXXX, good forecast ago, I a business, it look And my with moments our was we prior. had continued than than for year in in and

Devin Ryan

Okay, terrific.

Clearly, you nice Just last had to expansion. the leverage one. is improvement in margin I operating around heard are Helen's growing. platform trying And operating from remarks about maturing. think a expecting the just you here, XXXX. Revenues

expectations of And here so curious trajectory what moment the kind of incremental that you're expecting or on margins of the as at seeing just and kind from the platform matures?

Paul Taubman

steady improvement that it'll over the in some consistently you'll to made we've to be amount we've more saw financial business. think tremendous beginning state. results, have We operating evidenced our the from XXXX. fruit, out this past phase bit Look, years more that I as ever-increasing said the four-plus then that investment moderate see we investments phase, the margin that of start in fair we importantly, bear a heavy that a into in a get investment and of And leverage get of we as until

of And again, to in that I margin look I, XXXX. on referenced that that. forward expansion continued in further see we revenue expect more delivering growth, and XXXX, think We we

Devin Ryan

All right. on and forward Terrific. year nice congratulations to I a Well, look XXXX.

Paul Taubman

you. Thank

Helen Meates

Thank you.

Operator

we'll a take Goldman Sachs. from Now Ramsden question Richard with

Richard Ramsden

Hey, Paul doing? are How you and Helen.

Paul Taubman

Good Fine. morning.

Helen Meates

Fine.

Richard Ramsden

question perhaps little So leverage the ask a on bit differently. I operating can

improvement XXXX. of and in that assume say, to If think organic more linear to going should for exponential margin let's of margin you maybe to Or start an about I assume in XX%, XXXX? you expansion growth XXXX do to are So improvement will from think similar the of benefits around, here? scale be revenue that we lead we you basis margin of the think, XXX do points saw, just XX%

Helen Meates

guidance a we're be try quarter of the one not we'll our point, first to make. first that's I'll have which this on factors yet At to we level do we when the question. that provided to going on results. is our the many impact of investment accrual, comp going margin going But report

in determine. non-comps we portion our we of look as we're at when we that something believe the to look and revenues to to expect grow was non-comp our we to the components and cost do range outpace with our our likely variable grow going our fixed that, the cost the said, fixed closer growth. that's cost, We revenue single-digit of non-comps as think to the growth. So going at And is we've

we that believe significant So will leverage. operating provide

Paul Taubman

at mean I Richard, just come from point. different slightly vantage a to it

growth. all in and base, curve drives leverage, We've lead of continued it's what We that come how right quickly of further the in day, at of been we feel slope revenue our our those going is this still very comfortable for prospects will But revenue And all revenues to the that confident we're on the but very really the what to comfortable years. the are for revenue they growth We asking But days end hit, going made margin is that's ultimately, the improvement. path to seeing the when path. we're that of about creates operating that expense create feel hit, margin. what's four-plus XXXX. on investments the to really ultimately we've the the which of is right you're fruition. outpace That early growth

diligently revenues, lower growth an we if output, the such we not we're had. be creates margins for organization, that settle leverage. to what for The because of that's and from a we've cost think beginning, said dynamic Margin we input. very because But range. operating growing now, it's get our together have leverage investments. heavy growing operating a expenses, at made firm is and overall structure state operating plenty But our ever inputs provides in significant growing to but Helen in to a as put a rate an will the has leverage we are, And we there's have steady meaningfully

in is variable that end when in, is it's our just further day, the is about as I three likely looks feel or mind two less But drive and I like clearly to lot look, continue grow growth. our of than right And hit get, to do two revenue the in I we confident years on own three quarters. rates a incremental the what very visibility we're value. revenues know, more Our to I shareholder than good in or expense, the far which more my at the of track, fixed, have it the out on our at you ability firm

Richard Ramsden

very That's helpful. Okay.

But I ask perhaps question Okay. another just the can on environment.

as we So And heard whether a much today, shift you view? XXXX? obviously do be a on talk to little there seen peers, strategic can seem more of bit and not you've about at or number share your constructive look view backlogs into heading in you sponsor from a that activity does the Europe between financial you any

Paul Taubman

see business. said we've in we that the overhang, activity dimunition notwithstanding Brexit in Well, consistently did our the not

see continue thing. to the same We

not will we're Europe which the view, more economy. just to continue in is changing a that we've mind-numbingly view. large important our of maybe part our consistent Maybe it's part because been So be an such global

there as companies are a they time, that companies. the that have look business, believe much always to secular lot if you companies by focus said – U.S. of at that to there more that are the where we you business. we've globe, as And Europe, domiciled a shift sometimes And companies do that much U.S. much over do as opposed are are of where business so too And on and we M&A. they is European do around companies multinationals definition

of nothing we And prospects gain XXXX we said variety also does mind element own but beyond confidence few reasons, continue to a of uncertain market cyclical a I to view moments gain it. really for the an environment is to our is continue a dampen ago, because have that we've and said our macro as XXXX What there to that in share. for we share,

how not it's are. much dry you just also valuations with money as it's sponsors, where powder, have And

powder remain elevated, an interesting much is if I how way, valuations know deployed. going of in be that don't to dry So

think if I down activity think Do there's it's a if commit prepared in and I to sponsors significant down than fill just sponsor I funds. safety will different be lag that raised XXXX big a do come do. valuations void? are that Now, capital? somehow necessarily But net, upturn meaningfully, because they that's going believing they've in others to not

Richard Ramsden

Okay. Thanks. That’s very helpful.

Paul Taubman

Thank you, Richard.

Operator

now take with from Buckingham a We'll Jim Mitchell question Research.

Jim Mitchell

is flow you this is high-quality as down you problem, going double a ago, grow pretax you over Hey, so cash pretty pretty cash paid if sound healthily, – – a good grow morning. levels, a Paul, debt at year pretty of to you're but that look maybe income confident double well. healthily the down, bit will

right think level – to where think turn, So you is thinking when you think about with or start and capital how a – what's do it dividends being more about how about maybe about the whether Or aggressive special little you buybacks? that? do more

Paul Taubman

Well, I appreciate the question.

view it very as look equity you we confident of position, history. a spent I in more cash believe, of pursuing And valued. up our CamberView now our acquisition kept possible have If very our we it. comfortable XXXX, the ever position a short wanted own as to had we result, we and give we cash we're our than because in XXXX currency at because as in our little tight replenishing And incredibly prospects, the end as at we've highly

then to at at said you and payable reflects that that, to account line, to paid need you the look the which take need and then also Having compensation into year, comp cash the have debt number Helen was has referenced. which the after off, paid that you look

is, that whatever number that should very the is only I comfortable, number that year. throughout think consistently there's grow but not no doubt

has dilution. minimize always and priority Our try been to

and thereof be the we'll the been look you but float. to average we've diluted shares, that, I shareholders' think capital, or fully shares weighted do growth at mindful continue and also lack or good stewards of if our of

a the end of to beginning better question of than that's XXXX the XXXX. at at us maybe ask So

Jim Mitchell

just All you a sort Is number combination, Or kind but the driving And about, that talking maybe to Maybe everything We'll there, a picked accelerated to to is cyclical? as business. to pickup? years, much the wait. you have growth of meld before right. placement have about of up really Fair After seems of lot of enough. it a there and wasn't leverage things more together. cross-sell talk that it Can that it you're give what's more business? a grow bit there how little on little kind of and platform? color is doing

Paul Taubman

Well, the we've inside other Park can business, business is insights, provide can a clients. a more that value touch clients, of the more we it always ways incredibly Hill provide has that jewel and more tailored we to business. said businesses fits the more It's the our ways holistically, a we solutions, jewel ways well can and

So we and to compensated add ourselves ourselves we for more, being find value winning able find be that. would

the low see growth have in quite opportunity just the we we can the shares market what on of pay still the that don't sheer growth I continued business. of off, and prospects rival Advisory investments think very about pleased been made, that investment we're side good in the begun but and in our that continued And we business. prospects see growth that Advisory because Strategic feel Strategic we for have quantum to have

Jim Mitchell

thanks Well, answering questions. my right. All for

Paul Taubman

you. Thank

Operator

question come of Sumeet line And our Mody final Sandler. with from the will Piper

Sumeet Mody

of count should the It or about the Advisory. reach in that partner in past Thanks. that guys. talked next approach we've maybe in Strategic kind around like XX hiring Good or seems you elevated you morning, until XX guys two. know year about I

are you're way reassessing before that at growth look expansion you fair from a how thinking So to about here? maybe levels it rate? the growth Is still

Paul Taubman

culture. that of to be And have that going as said to hiring. we dictate function will incredibly attract always our we've think in the to terms the I hires of number or enhancement earlier, of that I high we individuals platform. the standards have And mentioned maintenance think and is a our talent the we the of the opportunity

we existing high And that all very high-quality So returns we new set entering to either or individuals we do earn the And are a we're hiring can to that. an who extent bars. vertical, of there growing significant continue believe criteria. by our meet going to vertical

going And date, And as it want marketplace ultimately, clients as long we're to found business of do well. us our going not we continue And numbers we're what terms provides resonates to continues we're incredibly to as and in take our story the to we're grow. then to opportunities. that managing to resonate to firm, with as quality. increasingly But the to there, managing long

So criteria, which a then we qualitatively a have very result. quantitative defined creates

the talk platform? needs we we're very drive each I we add we individuals look understood going standards, But likely many just upon those, vision there's of without to like. compromising that you know if firm have better continue do grow each becomes quarter, our any the I platform, if the to depending in person the the to what how marketplace, because asked attract a me, of this And year result. So to want And the think that talent. of don't, have if anything, we high stop become to opportunity higher-end an we're to attracting destination for to more us, growth. to who to to our the opportunity quality individuals the talent

Sumeet Mody

Got then, to elsewhere of Just some do wanted you in the the your on geographically world, Europe. Asia, opportunity in perhaps, opportunity is some Where over there. seeing Paul. in business? opportunity new product next presence more diversification the of between I get small sector a you maybe are few of a know mean see for got thoughts an maybe follow-up that. that years? viewed But most U.S.? then the that or product it. further And kind I you guess, Thanks, I

Paul Taubman

Well, a global first of it's business. all,

the really We your business We firm globe. anywhere you in in the who clients' a by with capabilities that countries and do is think business world domicile. And globe. business nearly with their defined the do global in regardless do we to around – country willingness currently are a of being of regard, to around nearly firm. are I their do companies headquarters, business And global XX

again, we help in time, we If right globe the in the to areas. individuals. global a be attractive investment make are. the how individuals question make to found more goes At effort market is, back to by defined the individuals a that are is, further – want those And of it going found right regions right further less and we the investment, to create if But us, for we would we beachhead who how in market is can firm. that attractive that a by the lead now

Sumeet Mody

Great. Thank you.

Paul Taubman

very Thank much. you

I to appreciate this now. concludes for from think us much. you speaking that quarter one morning, we call. very forward you We to look today's and Thank joining everyone

PJT Partners (PJT) 6 Feb 202019 Q4 Earnings call transcript