PJT - Earnings call transcript Q1 2020

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Operator

Good day and welcome to the PJT Partners Q1 2020 Earnings Call. Today's conference is being recorded. At this time I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead.

Sharon Pearson

Thanks very much, Sandra and good morning and welcome to the PJT Partners first quarter 2020 earnings conference call. Meates, Head today Relations Chairman is Executive and Pearson, and PJT and Sharon Officer. Officer; me Financial joining Paul Helen am of at Investor Partners Chief I Chief our Taubman, our

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

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

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

Paul J. Taubman

we and different remotely. this glitches. of calling in locations all circumstances morning because conducting all any and today. you you you from are if are us thank well Helen, forgive all Good call the under so all imagine I us who hope in in technical We joining for advance doing are listening Sharon, can please are experience we

continues I since this has and livelihood early report enormity in this and in The February. last of impact extent It yet to crisis to professionals is healthcare the collective the number earnings to part. in extraordinary unfold across to our express And have in nearly fathom heroism small we time. which behalf essential darkness workers On have and do our as like on life loss from severity industries. all real economic are of firm our untold hard health to of our well the is we of tried way serving its The to frontlines. seen would entire to world as the who impossible changed convey our those own gratitude of

work those we continuity plan. be the At to they non-employee closing most had staff sure continued that of NXX the donated the identified these we of paychecks. by local would receive as and had outset procured hospitals, to economically our all to who support of masks our part we business impacted make offices We masks previous

firm. to We are million from donating to focus consistent firm's the related service. more causes interns civic its amount $X And and coming COVID that from ensure million the our our that firm time with community have to we than programs restructured $X internship partners devote meaningful of with summer our

client Since this of fully all firm our working centric our remotely. and with has operational crisis began remained employees almost

never been on From and our have differentiated and support for valued the best Our an employee Managements clients firms by colleagues more have on prepare as to future. being, been advice solving outset variety to approach health, seek to more collaborative insights, we or and how problem initiatives safety. focused of uncertain expertise, highly Boards a well

order level differentiated engagement of have absence communication maintain of already the in even to culture and physical high an We up stepped presence. a in

been element has to commitment our ongoing to these partnership essential an in teamwork navigate firm enabling challenging times. and Our

grew XX%, XXX%, year to into XXX% quarter earnings adjusted XXXX. ago. compared income Turning Revenues a to our our significant financial pretax grew per heading results, these reflect adjusted results and grew share first momentum

rose revenues a dramatic continued of the the bit results while quarter in our onset from sequential increased time. And we to year restructuring each first the versus experienced in do quarter. has restructuring not activity ago Since reflect into a businesses elevated This our and pandemic economic do quarter to expect of first resulting activity. a modestly our the activity second Turning of significant basis. increase more this detail, uplift this reflect however restructuring, financial on level results significantly activity, shutdown our in more restructuring a in over the in we've

collaboration Combining divisional are our crisis. a In this team on to volatile arising turning of Clients for from restructuring liquidity array of the with issues greater. wide level of advice the environment us has management expertise capabilities been and the markets cross capital serve never liability our often difference well have synergistic maker the a for advisory advisors bankers and our spoken industry of three of all I better clients. is the as about expertise benefits and the having to as clients. businesses of working highly together complementary relationships

for firm the Our ever more leading has differentiator always before. critical than now been restructuring practice a

in the to strategic advisory increased in announced quarter increasing compared closed year announced of market entered the consistent investment in a our advisory, strategic dislocations. revenues significant We business. and but not yet with to of XXXX first Turning we backlog significantly the strong on deliberate to quarter reflecting prior the number transactions the prior transactions returns in and a

are activity, and expanded of dialogues in related have there our breadth depth activism. announced sponsor on has opportunistic focused a shareholder liquidity, transactions and engagement, and dearth and post M&A, shareholder capital client increasingly While been both COVID, structure

mandates result client a has number active As increased significantly. of their

active experienced our globe firm. senior integrated towards of us advice platform. believed point times difficult decision team from have and clients more to with to of strategic high in quarter gravitating In traction are discussions to group talented be today's our makers the we key differentiation bringing of We join been around that of never and first always prior as as three with our these ability partners greater. total increasingly such with we number for updates the a continued the the bankers more to consistent In in environment serve added broad and deliver a bankers would advisory an partners extraordinarily XX has quality highly

expand While quality remote highest recruit will our are undiminished, strategic an successfully be environment. onboard as to entirely our to franchise incrementally in with it individuals advisory we the individuals and as more remains challenging work desire long

expect the We slow closer pace of things until to return not to to stop recruiting but normal.

Park levels. PJT to PJT ago Hill. Turning In versus Park year in the modestly revenues quarter Hill increased

asset the as Looking a levels. to of these expect in many dislocations. of Hill's stability Until cycle raisings in forward is of be these In we increased fund recalibrated completing be significantly down to we we the many do significant including greater fund raising delays more delayed expect not to there result clarity values return to PJT fund as Park expect market normalized to market XXXX. raisings light revenues

our Reviewing priorities capital our on outlook. XXXX

of Before I review turn to it over all that. to I Helen wanted

a leading all have benefit attractive We that balanced of cash very of highly generative. group businesses the are

We have and capitalized the first free with inception. conservatively largest cash been always since and balance period our we quarter ended debt

active economic We we the we repurchase In end program the throughout our strongest and light the expected expect to for and share are grow the of balances ever. to cash these year. first in uncertain repurchases of balance very year with XXXX quarter, position our we the to backdrop financial be significant unlikely in expect the

to XXXX in have Four built to not operating our we we into Notwithstanding we revenues unprecedented any market said most most extraordinary continued any environment are outlook, that XXXX we Turning in always and times. environment. market months in expect reported, to backdrop rather abrupt last are to grow conditions are and XXXX. operating in increase we this our changes the since we in

of turn Helen longer the results. review sense it facing. over I to beyond appropriate to any our However we is financial now that all specificity no are historic will that with And given uncertainties

Helen T. Meates

in of Thank up activity you Beginning revenues. revenues, an morning. XX% XX placement were up restructuring increase corporate some Paul, revenues were year-over-year. million total year-over-year placement both increases and revenues. million million advisory the XXX XX% The with XX% revenues, private reflecting in advisory year-over-year revenues of significant revenues XXX up Placement and good with for strategic strong quarter breakdown

consistent to XX% at We accrued expenses, the first of quarter XX% for compensation the expense prior non-GAAP expenses with these certain XXXX. fully first quarter adjustments quarters more the we in presented suggested adjustments and with compared adjusted compensation revenues described expense. X-K our to Turning have with in of

we accrual modestly Given our this macro rate of backdrop economic end raised second we will refresh the accrual quarter. the highly uncertain and at the

XX from the Turning to in quarter XXXX adjusted first and from XXXX the first non-compensation non-compensation total slightly fourth the down quarter down expense adjusted quarter X% XXXX. expense, was million

direct a concentrated our costs in quarter. of in experienced last of was percentage revenues quarter travelling the down in a first a first from the in weeks was decline As the down highly XX.X% related in Net COVID-XX. traveling the expense of year-over-year few related quarter XX% XXXX. as We XX.X% large reduction non-compensation impact

fees help professional higher as Off lower costs as spend quarter. had U.S. and also occupancy in on were in the declines the last to took to IT. employees many them space related in well transition additional COVID-XX We year we our to higher taking the their London In working these and to we communications infrastructure to additional we in remote and our response to of enhance remotely investments made computing provided support

adjusted all XX first our a quarters million annualized been pretax same pretax of at during we and and relating up the that to income, million was converted shares delivery results the was as quarter compared with for adjusted first period to XX for with the benefit the income units vested of of compared reported to year for pretax first tax taxes, rate. with adjusted partnership quarter, all Turning quarter. the presented for our income our year. We've XX.X% shares we prior also margin had significantly Provision tax last last have the corporate as if XX.X%

rate in first tax rate year XX% full the for we is expected be applied effective resulting quarter. which Our to is the the

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

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

we employee repurchases, open which exchanges, repurchased obligations. from repurchased tax XXX,XXX million the approximately XXX,XXX the settlements combination of equivalent open and quarter shares a first the [indiscernible]. through approximately in X included We shares of During year market of next shares market

for of exchange XXX,XXX approximately currently units for units notices in cash. we in have past done the will as these the are state we exchange partnership We and

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

us debt strongest and to line earlier have our end to of our the referenced outstanding is credit position with cash full no ever. available and as year Paul We expect we

be June record of shareholders questions. we XX, with as Finally dividend of per will a paid the Xrd. Board share. A that XXXX of $X.XX common now The June Class approved And has on take dividend will to your

Operator

much. very you Thank

from question Please go first our take David Ryan, now JP will We Securities. ahead.

Devin Ryan

good with Great, I you Ryan How am JMP. are Devin guys? morning.

Paul J. Taubman

We to fine are Nice Devin. voice. hear your

Devin Ryan

so Yeah, not first has balance well. and clearly if I restructuring in on think provide that and the guess business leading the question clearly some environment. practice you I will this as restructuring, PJT leading

longer some how of see to the away accelerating or come and advisory be then anything in between appreciate M&A double on handoff it try tailed can towards around the context context there if business in a to business you wasn't seeing to in just cycle thinking us piece we revenues but the how M&A any can the in about the restructuring on we you could how but be just dynamics should how more did So then perspective scaled, prior to business that? two not so was more in you the the and it give I some what maybe just cycle, of or company restructuring there helpful? give about just around evidence are terms last public would revenues how restructuring any kind activity could And restructuring extent think and Paul is question the quickly, going but decline be maybe advisory, And the expected closing, that being the is context of some performed, different more revenues? relative performed here

Paul J. Taubman

in that and question me make all answer of feel to it that free Okay, getting the we And we're pay follow your in time abilities. can a really to tremendous economic well so different business looked The that last to please activity entirely at was I sure is predecessor there's at try up restructuring in a don't my of there what questions. the then let downturn but today. best mind the we're me lot uptick firms so much let reality because like

and team and working alongside input front expertise their are providing relationship very managers glove with our capital partners legs who really markets restructuring the We have the and nearly and are industry XX strategic and hand advisory senior restructuring real in the end arms brethren.

partners about so it in engaging with it world and happened are think that not us entire was ago. is I as management have the today previously or XX decade or restructuring So liability more which who and a something is to a we certainly clients way that open clearly

to So that every to from until financially a the sure client of the conversation what the of and then to that positioned of normal you now think to recovery have out knows going curve is believe very occur. and start we business. since shape you how and built edge strategic business, only I'm really like markets strong, because that be it very going make what smaller leading a is not a a liquidity, out I capitalization, have and pace the a to no the most things, to about liquidity. uniquely advisory crawling we It's and adequate strategic the of heretofore capital have that core the occur And appropriate to and long to we the needs structure built secure strategic seeing capital whole are restructuring business, one, couple companies leading to largest imperative have a causes one what's series back did we not we advisory robust be

these the first And sudden you're So up first with seizing wave I liquidity is businesses effectively come companies how what of issues are with is is and on to literally will but see level they're otherwise snapback capitalization that looking see wave many fore. markets ground then water where going dealing rising out actions depending this how is, think themselves to those all to at because suspect to here high with management to shut to and upon address down, the are to needing the and companies environment as have issues going stand issues, economic firm third first they other and who the immediate have they have extended is, to spend companies you're foremost, certain effect run they they're cash. quick if Then with an you on of spend, who need consumer their to. unsure very a higher an the be need lower in And liability forward. reduced we lower that's And own of I period today And business runway. the time. themselves asking certain give whether for you're going standing wave the these case, footing more will may you address

we're we're and So to advice a and can serve make client I that activity provide clients think going cycle our forward to base. be long just to here that to there and we sure to everything of very able there's conversations those our and do having leaning being

Devin Ryan

it is where Paul, mean, I'm just backdrop they appreciate create these do capabilities point, become having moments, the important. And advice important to around I more maybe in terms also of I your situations they that curious, Okay, many color. are

of kind started to since firms the firms conversations given is I'm so in quite just how And request you advice you with more more sounds that speak to in of you and curious active before, advising interest companies or there from interacted having provide? it holistic the with terms clients maybe the that worked maybe haven't are before, or type you're you like haven't just to that you're with are of today, you just you interacting still pandemic seeing talk

Paul J. Taubman

too. in there's that Yeah, and again lot question a

XXX% the other we're operational our that -- world issues to allocation, clients. or this in not businesses to virtually own be not balance capital us focused laser on shock giving fact system been we focused company. recognize issues that a with time every now with we've And got more singularly then sudden, has who is as to distracted we're entire we're where outward And commodity seen of they've had about to by are on make that And advice operating world, getting trying they've sheet deal enabled to and the that there not clients differentiating advice a to confront. heretofore that more traction I lending And the a as think sense think, facing surprisingly factor. are the clients a not clients. more of are been all more a I has and less we're

number our and mandates of considerably. number up are our So, dialogues of

can about not thought with fine we've may is to much in that, to And very actual do and show dialogues we're because but reality long-term. the the more or building always that there we are that confident our Now, we way be monetize the business of to for transactions we going more the can with the we're have, that clients engage well. that

to I as have not clients conferences, think I we wasted distractions. don't because good we're of exchanging of a as on more us just think find video and which time make clients traveling, without with every in all to getting we're would say hour engaging for and spending every trying we're other with messages a of inevitably every probably all So time view coordinating phone is, we engaging working not we're to that any to calls, spend lead then point remotely, with day good these hour we're working time thing meetings, We're this we're think exclusively a lot And that clients. minute all every able And will adjust the world will that more of all I harder I I spending last and that things. time.

to us enabled more far efficient. be and also far it's think I intense So more

Devin Ryan

for to and it's appreciate be the environment. the the in there, just especially just commentary then given last outlook one overly that And the me, difficult great. specific, update just and Okay, I uncertainty appreciate

just of there guess, I or take you another quickly to revenues change level to and maybe revenues to up of year-over-year? that the what at I actually be So so could it -- year-over-year that, guess, is we're pretty trying so view expect backdrop evolving in grow get change would here still what what and way, kind that

Paul J. Taubman

saying I today. the it start environment see as by think I we would is

and a done is our months go. months then the sit to to a year restructuring it. this lot have in has We eight dusted, of of four where bed So we CamberView with and obviously heavy retainer business

have visibility. we a of So lot

and yet guaranteed transactions world nothing closed difficult strong this while have And backlog announced certainly six what of weeks. would not We on heightened experienced where we that. an a we've incredibly has been is in visibility have

that way lightly. the the feel I upward back, moving step our make of the this But that year business such day, is dealing comment When times. with restructuring So I don't end right. in at uncertain we're to I

right. Our is upward strategic XXXX advisory and in business the to moving

a have normal to And business, business is what transactions of of CamberView look want year. however, that, directly gave and to specific that we just the on as strong consolidated put the world when at year, was for I I more this beginning for try more is impacted grow it and get a in the totality We don't where the at that Hill too but year expect we revenues And pushed will fine the Park in be out. guidance times. point a

year see I've let's I just it underpin develops. how and think to the tried

Devin Ryan

the get appreciate very in for back taking Paul. questions. queue. And I'll Yep, much, the it thanks

Paul J. Taubman

you, Devin. Thank

Operator

Thank much. very you

Associates will Piper now last take [ph] Research. Sandler from Sumeet We Mody our question from Existed

Sumeet Mody

appetite side activity acquired more talk much. little Alright, that? you're the you and M&A between or for very either Can having the conversations sponsor great, bit you on levels thank about strategic a targeted

Paul J. Taubman

of, conversations advisory -- I'm the strategic sorry, on had? strategic sort the are side being was On

Sumeet Mody

Yeah.

Paul J. Taubman

sorry, I think ahead. it's -- go

Sumeet Mody

just and the contrasting? Oh, kind I say going environment just on any kind to no, if I and this there's January maybe side, was of differences the today strategic and in just no, posted February, that's sponsor of

Paul J. Taubman

heard all to others, to we've be different a being often think talk empirically, is espoused. did sponsors a about which much you this an I And consistently had And M&A Yeah, very healthy activity. think levels with is you've activity there's of were and some therefore, bull starting of and start that to sponsors very valuations. maybe take even that dismissive the And the powder powder which is us it's dry view with respect sponsors, always we accelerant a helpful levels. of sponsors step that is in we to always all will pressured, world to than of view to sudden high higher I that market that are have be believed reason system, for of attuned we're a dry capital. somewhat I look absorber void starting been back if tend out in prove the to going valuations see into of all to that some see that. What valuations that think is as deploy that And to and is shock

But to in need activity, have sponsor term, things. in the order a you near few very

companies much economic to to survive of that of paradigm, some the and as there's universe you of You that in triangulate motivated the try very that and need importantly confidence all When that back that need these is next will if because righted evaluation the you sufficiently sober making a a either not things capital today assessment money, so level, new won't well. you're is large there's of better those for I new uncertainty need full need or what the investment to suspect is buyers, the an companies get it structure go to that these there attractive you world. and equilibrium. sellers, known to more with the valuations be that a damage company's need extent

of see activity. increasing You'll sponsor levels

having in see but a respect that I many you very over with Unclear And momentum how couple increasing get the conversations. in just many thoughts. of regard. term those affected you'll M&A, give time them suspect we're to of of that reaching, these So I'll long of certain very and compromised. going severely be effects. be there there far lots crisis, are to lasting are are industries global scars this going economic to This shutdown And going out to to come that going have are of health near this

other be to higher level be that who you're a dollars fund, going you And going the more that you will There's they will over probably others. increase the And I do and meaningful there of of of ground. try suspect enough will then that be will you right board, come the going talked be what to to for across a them M&A M&A cushion. that selling to And going get no catalyst way the be do raise be think I have of take I they activity is rainy of scale. the assets. that the to by the out day is of to a years set conclude companies this these by a realistic to that structure, will that money companies enough then and there'll who consolidated consolidating willing equity do some navigating see And are capital suspect suspect out point or probably of I delever that And variety industries number time. companies system. latter they have a to just to I is to been strengthened average And be world are suspect we've to have will conclusion for they that consistently. a back be ask on lot reasons and activity. you'll they going are buffer safer or is the both I here a spend the having others about themselves, do either of And will of And most that that the and longer create leverage recognize necessary and see lot think

more to dimension. I some increasingly, is going want to expansive domiciled. are what the what of dimension are the cross-border important the or countries suspect suspect other geopolitical that rethink security view their their may on a I that And And companies I going are industries suppliers perspective activities. that and U.S. supply national chain globe here to from around reduce where a companies are and take think

going changing of there's a think to I activity. and be nature face

do company, Some what starting but their they're these most companies, the does new the the that does structure, occur capital I structure is are what appropriate of is conversations trying it think their capital reality for mean to just like, they embrace about economy? And inevitable think what of move reopening talked time, they how the of do need the to paradigm operationally, how to about I've employees, they to understand conversations look do just their fore. to the for probably more will do that the start over

line. I today, has I the move over front more of but in it helpful. as dialogues time shift hope think ceases to ground they as will the they're to the that's stabilize, and background those you'll starts dramatically the of as I suspect see to more

Sumeet Mody

I Thanks helpful. since for if for hasn't restructuring to I much count really all moment to Paul. changed could. pivot just color, that's Notice the Yes, over partner that And wanted a XXXX.

ask that? to demand environment, the a this just about with keeping a have up think in of of being sector. scope dislocations spike you cater how with issues should little today's was had with to last team the you deal You and kind all know, it's the we kind capacity in wanted I the wider the any there kind we of energy able bit how time to clients, of saw

Paul J. Taubman

happening as and the dialogues companies because Well, having capital of those at us biggest partners down day, And balance do are view mean the XX from I to restructuring liquidity, before, said structure, those end smallest. the as are this, I sheet, the I strategic issues.

in all And and most these our many in capital to structure the are in involved restructuring. that and increase as advisory partners restructuring. increased has strategic about we created of advisory have sets number capability between this our So restructuring. capital of we've intimately But of transactions. and raising and are quite increased strategic ultimately headcount capital markets most experienced issues, come advisory relates as We've really the partners issues, management now it liability

our So issue numbers, XXX%. with its than capacity staffed, we right is the the spending find had confident assignments of but lot heading much. a clearly nearly the that were I it's companies time nearly that and that situations can just of yourself making might relationship cross towards focused half exact on economics, sure half don't I'm have far and the more quite that right you to have on don't you're with And because whereas restructuring right amount today the

any other it's no business. So than different really

sure You time always that a restructuring quite that much longer the a on be of have deal we resources much wisely. and larger period that turns to confident your to you're spending be environment that time. and the very with But very for to making focused we're out have disciplined, persist capabilities

Sumeet Mody

just early to moving high thanks. the for Alright, for the through me, And expectations competitors still but a kind opportunity it's bulge last around. know and at boutique some days, I that just on the bracket had of for I we of that unique talent and ship crisis one follow last pace quarantine this performing color bit kind hiring but and a maybe the thanks for one up wanted to slow little of

the expect to guys they'll looking quarantine be maybe that's Just out see starts be opportunities lifted, cycle, this if after what you to for? those wondering same

Paul J. Taubman

ago. long prepared firm ours a is model maintained X firm grown bulge we come to business caliber far globe and the has was it leave for or who over in more of of have for bracket like years is accepted Look, corporations to the is the around reason a that this today than time time. the embedded that a individual to thinking And XX

always a grow dramatically to because greater than we firms, in the So that want the to is therefore, crisis a moves firm regard. years proof is I in prepared there that's advice And And of of over in focused that like this on reside big that ours clients was average that And maintained smaller not change talent flow that to to that today the did of continuing I've that. is exists caliber talent XX steady increasingly will event advisory ago. firms way their a that talented ago. individual intend where XX it doesn't years be available main the to time leaving and that suspect concept today bankers continue where come

remote it's is feel for I more doing quite individuals which still is individuals and get firm. us are was the in few it is social than hire individuals than calls really going spending rather all entirely it to that we're Zoom hours it and the point, joining. world And in environment our we is more making people like difficult expressed strong to But have are know in a and ability a of a to is because who interest well together a boarding far remotely. and have a And greater. there on known meeting the

has firm work else I it's to individuals. be all continue environment. confident completely know remote everyone difficult having vetted equal in to degree the our individuals of that and a to But add let at difficulty partners going and we're completely individuals like So be they what getting need fully to understand to realistic those more by in that the

So long near about no as should the term, indicator are. I objectives way an our term be slows what suspect it viewed or that in in aspirations

Sumeet Mody

my great, it, taking Got for thanks Paul. questions

Paul J. Taubman

Thank Great, the report. your and thank And look you world. our you all we for for our of today. that together next country the process time you that to speaking well you. wish we next in we in listening the And stay get support we to forward are time and all thank healing and and safe earnings you in experiencing

Operator

call. your This disconnect. participation, Thank you for concludes today's may now you

PJT Partners (PJT) 28 Apr 202020 Q1 Earnings call transcript