PJT - Earnings call transcript Q3 2020

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Operator

And ladies and gentlemen, please standby. Good day, and welcome to the PJT Partners Third Quarter 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, ma’am.

Sharon Pearson

Drake. much, very you Thank Good morning, XXXX Partners quarter the welcome conference call. to earnings PJT third and I’m Head Sharon Partners. PJT Pearson, of Investor at Relations And Meates, Paul Executive joining is Chairman me Chief and Taubman, Officer; Chief our our Helen Financial Officer. and today

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

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

Paul Taubman

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

Each Strategic million, ago in delivered for compared in quarter firm-wide $XXX strong Advisory while Hill increased PJT nine In revenues quarter, than XXX% months. record Park Restructuring, to We to revenues ago. pretax of income are the pleased with year a year from higher the performance the year business a to the each ago. grew and adjusted quarter for results and report XX%, third levels

differentiated and by year income revenues. the revenues million, Adjusted exceeding nine full $XXX increased grew results XXX% highlight franchise we When the optimistic levels were reflect ability environments. grown market million. of to the Since full firm-wide to about then, appropriately ever reported our $XXX first from challenging results, the unique our and our more our XXXX These to we cautious year. about For breadth have depth remainder quarter months, year-ago navigate pretax of we year. XX% the

into enabled strong to heading has the a Increasingly, times. and record are gain turbulent gravitating year, Advisory our leading these superior to clients with Engagement business in Our model balanced in Strategic delivering Restructuring, us Capital market in momentum combined demonstrated pillars with track Markets Advisory Shareholder share advice. of

talented serve Our clients has our results. with superior manner culture produce to distinctively us extraordinarily enabled and collaborative exceptional a in team, combined

clients. turning in collective of were global comparable year periods each sharply Restructuring and between the delivering our to business ever-increasing results rest in firm the quarter for our collaboration of to greater expertise, for Revenues Restructuring us Restructuring. a Now ago. our and with detail. our enables months consistently Beginning businesses the nine leverage up exceptional our compared for to The

a characterized backdrop has market team our contraction, disruptions, economic excelled. During by and dislocations

the of compromised active new of environment and an are future. to meaningfully, by in near-term, by likely been remain businesses to for historical dislocations relative to have restructuring pace cases, to the foreseeable While expect Accordingly, see caused significant pandemic. expect levels. we activity slow it the in we a the elevated number some restructuring whose and permanently is There industries companies

Hill. Park Turning to PJT

to fund volatility to in-demand Hill, investors has significantly market rather what at Hill, managers was significantly quarter year diligence. environment. third normalize our the With physical onset PJT year’s best it flight-to-quality versus a subsided revenues described than bring virtual rebounded of competitive pandemic, business impacted PJT as and to levels, relative last acclimated become essentially respect due environment been In expected. a to the has has Park market can increasingly levels. ago fundraising The global this Park as more in have than advantage continues While nine-month are to revenues unchanged increased be to ability and quickly

last We revenues quarter, growth results in sequential fourth fall we in anticipate short Park year to Hill’s expect the PJT although full results. of year’s

year Despite and versus Advisory, ended Strategic transaction count the economic and Year-to-date Strategic shutdown, Advisory corresponding the XX% another levels. our six Strategic XX growth by firm’s global months have the Advisory. increased enjoyed September Restructuring to been In quarter. pandemic ago strong Turning announced we drivers. in

ago value uptick significantly to significant in mandates. was of the third strategic new the in aggregate of these levels. down quarter, transactions number and see dialogues a year However, Beginning started compared to we

Our our have and we energy. started we we Year-to-date, to preannounced committed and individuals the an activist now talented is year-ago remain in levels. partners all We of estate for our And five case team backlog above been hired be Strategic continues technology, defense, levels. build in Advisory investing to our to Strategic has firm, choice employer Advisory franchise. at to continue real since new

review to detail. results in greater to over our financial Now Helen

Helen Meates

increase by well increase up million, by revenues equity $XX Thank million, were funds. you, breakdown Placement revenues in revenues. morning. significant in a as for private an increase Paul. quarter year-over-year, were Good revenues. were activity in an $XXX $XXX placement revenues. The Advisory up Total fund revenues Revenues year-over-year, Strategic of driven million, as Beginning XX% XX% XX% up the for with Restructuring year-over-year. driven Advisory

by year-over-year. and Strategic $XXX million, $XXX million, were up For in placement The as activity. as ended revenues XX% months year-over-year, fund were million, year-over-year, both in Restructuring both by XX% private the breakdown significant placement well Advisory. Placement nine-month driven nine of revenues $XXX growth driven September revenues XX% total corporate up activity increases XX, were Advisory revenues, up

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

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

Turning to the adjusted $XX compared to the modestly expense. for third prior non-compensation Total quarter adjusted to year. expense million $XX non-compensation for decreased million

experience We global have reduction relates equity. due increase entertainment This the advancement partly relief expenses a charitable COVID-related pandemic. a of of a by factors, to continued as in expense was other and variety reduction significant largest contribution which to an travel in offset consequence and the both to supporting of racial the of

million total months, compared X% expense nine to the $XX the For year. to $XX prior non-compensation for million adjusted decreased

And adjusted months, pretax we last significantly million last double $XX.X million income $XX $XXX compared pretax million, the reported reported Turning quarter, to up more pretax the for adjusted for of third nine income adjusted $XX with same income. period year. for We million year. of than the

and presented taxed XX.X% delivery relating of period a our income quarter. compared if first The all quarter, and for Our adjusted XX.X% taxes, was rate. at the corporate last last results quarters. also XX.X% vested was this partnership margin provision We’ve as annualized nine tax months the as for We’ve year for the that period the during same units the for to with all shares converted year. benefit XX.X% the prior pretax same been of compared our year for had the third with with

same lower is were slightly share, be rate the our with quarter, last Earnings Our was This anticipated the for share count with and expected if-converted year in quarter, average year. full earnings XX.X%. share $X.XX compared per significantly effective per months, for share, our $X.XX quarter up weighted taxes. the period is than share up tax third year. state for adjusted million compared last the $X.XX lower in $X.XX to the previous to And count, first per per the rate Share local reflect third shares. for XX.X estimate nine significantly our

equivalent cash. market repurchased share the we shares as of quarter, units repurchases XXX,XXX as open partnership the the for exchange approximately During well of to

totaled of XXX,XXX Our approximately first partnership million, cash. units in $X.X total the the including repurchases exchange approximately months for nine

We’re currently approximately of for exchange in receipt units. million X.X partnership notices

exchange had we in the we cash. units As for will these done past,

cash ended short-term $XXX investments and working our sheet, $XXX no equivalents balance in quarter and million the cash million and we On as with outstanding. debt ever, the with cash, we funded highest have balance capital,

dividend of of XX, X, common share. that, December as approved December I’ll has Finally, The on paid the record be a turn to of with shareholders And A Board dividend XXXX. Class will XXXX, $X.XX back per Paul. to

Paul Taubman

Thank you, Helen.

and anniversary off We reflected build results. our in excellence, and we would in make journey, had confidence these consistent best-in-class investments a Throughout culture ultimately ahead, we’ve Xth not clarity clear extraordinarily occurring celebrated and growing financial we both shaping a to appreciated. big company. Looking up on apparent would publicly progress this investments one, we the the integrity. investment, and have outside, as our collaboration of that after for always is our terms. greater vision on years said results, the now longer was progress the Clearly, saw of of far absolute are of lens, and the an but to business. the in always XXXX track relative decision-makers independent forged that for an day better would be worldwide, value-added this simple a we We’ve for our and firm PJT. A vision record earlier the our by advice strategy to of clearly understood From traded date month, a view firm had be strong our to firm inside the deliver year five pay and

is with few over it extremely next questions. the will confident prospects present our the in and measured premature remain beyond. XXXX that, years we to growth we While your take outlook, when future And

Operator

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

Devin Ryan

Great. Good everyone. morning,

Paul Taubman

Good Devin. morning. morning, Good

Devin Ryan

dig is drivers as of the a frame there little the And strong this more guys and activity at right it of are think I’m right what’s whether to just very the least something business you whether this accelerating of Or are or the a Maybe that something some trying else right now Just seeing to be of how bit virus. around you’re would kind now pandemic is of you of dealt curious decision-making now. now. here what occurring, about usual of is driving resumption resumption as we’re to else? companies immediate M&A strategic the start key activity with seeing. supporting because this more tone in impacts

Paul Taubman

capabilities now actively is more rising way the is, fortify which no economic enormous they we are, innovation, and years point. short-term business, it’s be trends ripples. did, to good pandemic stabilized, disruption and said extent. what longer I stopped technological businesses M&A up, going they of now skills a more certain what see is to is their it’s have the number and at to beginning. any to markets and because strategic need think at to it about pandemic all in ground, very, of very a crisis deeply we a before the terrible evidence a equal, shift think else they them, What that and reason get back more to I M&A to And leave in to no manage activity. health rising magnified all almost the in while and said we able what world a are insect we as acquire did that think always many have froze that there the is cyclical is evidence the is, competitive kept who secular a with to were for for many stand now But business secular believe but health we’ve and for to go environment crisis, And the can the models, and more companies speeds rising the And to any as waters, it still more advantage. a trends look portfolio M&A either it longer consistently the in there’s higher that were that rising, that their companies

that are pandemic take we’ve with if that And by that their And And that of that’s that had they what but the strategically see. how liquidity, for dislocations, damaged if they’d to they we’re figure seeing. once able new accelerated. insure had were dealt the out rightsized going to And were significantly pre going figure trends, they had we trends always were back. that, had why economic out they strategically the And that’s same best the were have business needs, position. they reality, they immediate to adequate conviction to by what With that’s step to what do advantaged fortunate their it. to they’re advantage the companies about

Devin Ryan

been firm’s do. the tailwinds Comp, Okay. level, plus comp there. in helped ratio helped Appreciate Thanks, color on quarter, Maybe as Obviously, that the steady hit XX% margin you question Paul. and you the the typically non-comp at. a the best you’ve the there. revenues pretax potential strong

well, from the to been contemplating here comp ratio kind you Just margin there, potential of of indication really that what guys see months. of you’re how type just the that think already year-to-date, that about into here industry years of given of where through and trying has given the haven’t, kind now of better as nine flexibility some given you you first any kind zone, grew kind in

trying Just can margin remain potential, were about view a that to we to the extent, to revenues here. solid think from extrapolate

Paul Taubman

about optimistic business. out the to build look years, over we revenue as because I’m we the outlook Well, the continue

have The much increasingly to potential continue so us. ahead brand attract talent. We think I And we of is well-known.

So how that is certainly world. the see we

is always that the the we get to to not a that not only you one, leverage is day from equivalent as operating We’ve more said was But the structure cost of said, and over revenues. out others. we’ve that were grow, and through time built side, cost out the line. see needed the relative that it that advantaged On you the have business revenues that expenses

start consistently you’ve normal. – midst to that is increasingly seen non-comps, an And have about a no in I’m or sorry, percentage the come where of as is a you the expect a think normalization, increasingly, is I would everyone reluctant to have we revenues we’re where to to had increasing but that, am not anything extrapolate that. of pre-pandemic talk to down. world as year where environment one traveling, I steadily to a that but to track were necessarily not look as where we if is certainly And in the us But we to go. of record year. continue pre-pandemic, margin remoting place do year that level, from I to

Devin Ryan

and on ever continued Okay, a of quick the strongest share build one think just equivalents. here, to has cash terrific. I obviously, cash Last $X position, had, you’ve about it’s

and how Just about that would it around build as, perspective position that also thinking you’re understanding love obviously, just guys are you some models. to cash capital-light continues

to that you Just guys trying building today. about contemplating how are position think

Paul Taubman

obligations Well, compensation builds because we have first the year-end all, to year throughout our traditionally the of pay cash people.

have, balance look you to it it’s time need than year equivalent million matter delusion. There’s a managed that are in prior already excess which and look years. that that more committed of we’ve fact our – But to take the numbers And it’s we’ve we’re to relative going a capital on than And spend fourth those quarter. year. no any At basis. of than already amount about partnership So repurchase X.X think really you But units. grown I at always sizeable at the other been then in it’s this number Helen higher higher gross even a signaled the on prudently and to talked cash net cash a has sheet. there’s it’s it, this commitments how quickly been time we year, at the to

collective do you that as to the times, that’s relate consistent and a to and where sense we a are the believe our we’re uncertain going fact we’ve business. operated the investment. we and prudently everything heads in like manage such be that have gives But always we can how think, stewards, issuances, stability, at strength to with in we conservative doing and the we’re always which deeply to but currency financial also I

think remains that unchanged. I So philosophy

Devin Ryan

it Paul. Thanks, Great. leave I’ll there.

Paul Taubman

Thank Devin. you,

Operator

move we Richard now Ramsden Sachs. And to Goldman with will

Richard Ramsden

Good morning, guys.

Helen Meates

morning. Good

Richard Ramsden

more into a dig wanted restructuring to I business. little the So bit

couple the questions. of guess I So

And that advisory you pool. a revenue was you third this today, restructuring, in we at if a of of expand as said the just restructuring Is obviously, that going of go business you the helpful. that your that of think think know, the here. But the be availability, First look the a you quarter. I little said restructuring from in If it the you has lot I then. a sharply probably I think, bit from to you financing? it’s up I little the if few Paul, is, of you bit years, secondly, you third contribution since why talked know expect on is you is changed happened? slow mix to the significantly I that different pace Could then a a actually expectations terms slowdown, said case? about of Thanks. because already back it think Is just I have XXXX. about, could think just lot is mandates that’s expand

Paul Taubman

an amplify Yes. of it I sort because comments. to question, appreciate my me gives the opportunity

March, and environment. likely circumstances, activity consumer That’s as That of And on businesses models in a in and amount behavior indefinitely. not through shut that year, activity what operating a of concentric of we’ve might will extreme and said to industries mandates, through leave then the that as that tremendous back way go be number near system. point of as with system, said first that offended in, the deeply in dealing an not are the extraordinary the economic a business is turned saw we’ve with us The term, to is essentially this there down the on screen earlier revenue a That crisis What relates And where done damage severely day those its the by was May. to through by waves customers, at businesses was model perspective companion in are listen also the environment. changes which dependent going overnight. of business literally revenues, if the we’ve you in April – but in There no restructuring. into were at If that said cash is industries keep changes immediately to are months most long-lasting. levels, And from works there is affected. work markets alternatives that off coming normal this extreme need debt no be not more day with businesses, its certain circumstances. companies to No that point, we an some way. And circles companies they much industry elevated companies way be one. and the highly to business to there even compromised. a a is from on this were pandemic. in of But robust number came one, the capital upon there’s to radar And all the of challenged limit we’ve the near-term, can how potentially and collective also other And is permanently there’s a are the that restructured. another even be put you going are said to however,

So what I’m that’s really about. talking

of companies take dealing as pandemic. of large the and whether in-court, this, by activity We’re levels itself. to many who extraordinarily And businesses, activities. geared their at activity with may highly high with may balance of are companies to management in. there have time number of inevitably affected onset are restructurings to deal then continuing had have are present that to of But it’s liability deeply That the those restructuring going have restructure but sheets, a continues out-of-court major who balance been their now coming sheets

Richard Ramsden

from Has year financial forward the wins code, next say obviously it’s who tax then right. helpful. that specifically Or of Okay. year? terms And in tax would election. a the around changes That’s so potentially to any you. this had impact into increase been sponsors secondly, in mandates pulling an capital inconsequential? very from you All of on been lot thank there’s discussions gains depending Well,

Paul Taubman

been it’s modest. quite think I

tax people talks really coming have it. determination few that and and prepared you the everyone a are little think make bit, see sell back to it I much but They potential to year, in you act go earlier. be time order businesses then in in if about this very also

it just I’m and now You my process, sell year. to typically this done in get run wake up don’t say, and just in a business September going compressed go

policy, portfolio, think, views might when back is which planning And You whether you liquid. much It’s if this, of I well. will a seven there And people difficult more do for to with were from the days be or different quite where they probably do week about stock quite terms conventional election. it in eight your be wisdom to change may might as strategically. knows as now be in who before go they’ll tax a be than the

that in not the that been to We think to the I extent there earlier of think no year. next families year, at a much something year whether tax there’s that and see not. I increase, first it. a something was the it didn’t And So thinking have knows would or happens about of that the retroactive this or point, is one companies

and So seen whether you’re just there’s tax all but that much process to I this uncertainty of a pull going started significant I if companies they have will forward. so earlier, not should suspect maybe then back have increase about who a look there question is a

Richard Ramsden

very All you my taking Thank right. for Okay. questions. much

Paul Taubman

Richard. Absolutely. you, Thank

Operator

We go question Steven Chubak. will ahead. from now to move a Please

Steven Chubak

good morning. Hey,

Paul Taubman

Good morning.

Steven Chubak

[Technical the you the in Difficulty] have you Paul, I dialogue. backlog parsing basis. backlog the the of for to seeing the outlook if representative trends obviously that Your At you’re time, the improvement, whereas appears in strategic advisory strategic been comments your public ask much same just peers of some peers. to are of some have about dialogues? mine, public given of some the I’m think to the guys seeing the some mix outsized regards year-over-year curious constructive revenue seen to be remarks lower albeit on or at what you’re that those made – you wanted is relative

Paul Taubman

a son… phone quite connection I’m your garbled here this, may because take Steven, to you appreciate my going as is not shot Okay. but

Steven Chubak

about that. Sorry

Paul Taubman

go. Okay. There we

Steven Chubak

sure landline I’m so my not apologies. there,

Okay.

Paul Taubman

trying of summary and that pretty to Is of asking database you’re most I what parse good all caught could Strategic of about Advisory I backlogs that. and think you our a about think if asked? just public it, I I comments summarize,

Steven Chubak

great a summary. That’s

Paul Taubman

to bankers, have in right three companies, I we week you this know summary, you I right don’t next bankers that’s and that they it you have which "Gee, the what in, and I have the or front come advice, dialogues Okay. want I to don’t with how I we think thing bottoms ever see a the have the don’t on do I the Well, and look database come I the need we we the we ultimately, deals never put comment know this on the at team literally to quarter." the think is first, backlog. public right asked I’ve no will ship I this we’re so on about up, right even you’re more have confess, if – about database because as stretched. say. to incredibly from public just But just not right clients to calls serving summary or the enough business the and boardroom of calling get manage think if focused our inevitably, our business And and

then to So upon we’re incredibly to and things company down up. where we they idiosyncratic our business may active relationships depending decide something be on active that pencils are, in how live the talking go they an are, where pick then and

comments, my good benchmark say kind is a normal. as So the of pretty quarter third of and reiterate what the new second to will unfortunate I

important ago, quarters. and when things. third XX year we they and bit tie as I What quarter, more the period in companies to were six-month higher me that’s the to began more world as and very the in a What recede quarter. publicly date come with shut but end and up unfortunate XX% is a to were they really smaller a at year as second Number to said what’s did known into ago. normal, can one, And announced new got of they to that shore is rounded began available. the uptick their the to dialogues was is than good than able ground down, meaningfully strategic second the the third March really a pretty began of significant no waters so see transactions three but little we liquidity So transactions we rounding one grips this a

July, these issues, uptick we tend from companies began significant potential in we shifted shifted And that to. management focus have liability somewhere issues, all on need to a restructurings and see liquidity the world activity. So we really in overnight to fire, to back is the

no the We have maybe they strategic and significant that either now were very who companies deciding are demand situations, play about companies to as from will good mandates many to I talk August, and well October know we looking balance dialogues they to having itself how the these if forward. right the and than if in and this year and longer right sit a the have that backlog we’re place But the happen. all built did I presents a the sheet itself is model and as are ultimately week-to-week, publicly, idea. in continue quarter-to-quarter, assignments, November what has now will high-quality reveals know business ago. But and month things succeed July, going steadily lens, offense who transactions, consistently better into many that And have persists of presumably we don’t these beyond. trend And I of September,

Steven Chubak

for appreciate me. all And the I more just No, color, one Paul. Great.

backdrop recruitment the on recognize… Just

Paul Taubman

you’re more Can you time? still breaking. Steven, try one

Steven Chubak

looking If much okay. for taking so I’m questions. follow-up later you this on on my Thank start that, Okay.

Paul Taubman

for apologies Well, that. Okay.

remain a it line. times do in evidence can technological and healthy had manner the everyone dislocations, clear these we’ve the from world, to about sincerely everyone talked safe I phone Steven’s disruptions, But sound wish navigate that difficult and that I So of we and and on they you able shareowners, do all interaction the to in to that with much. normal call. you. Thank interim, sooner next our we’ll remain will virtually we can accessible speak more to our you all rather resume the than earnings part of later, But very are a

Operator

gentlemen, today. participation. you Thank your conference for and your conclude will Ladies this for

now You disconnect. may

PJT Partners (PJT) 27 Oct 202020 Q3 Earnings call transcript