PJT - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the PJT Partners' Full-Year and Fourth 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.

Sharon Pearson

Thanks very much, Katie. to conference Partners' call. welcome quarter and and earnings XXXX morning, the full-year PJT fourth Good I'm at PJT Pearson, Partners. Sharon Head of Investor Relations

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

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

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

Paul Taubman

these communities to the but in world, economies caused that our discussing deliver suffering today. of team our In results backdrop record you, loss. so our times, again, Thank around mindful against everyone, we morning results. are reporting extraordinary has and thank and extraordinary fact pandemic, joining Sharon. did Good financial this continues much which the Once for and we pandemic are you roil us results, the in

intent was Hill and I business fortified five XXXX strategic premier, even conflicts, of From to our had independent our businesses advisory review performance, leading conviction We legacy in unwavering just closer build that on from by exceptional wanted be larger in and Park and results. years. restructuring have the business removing businesses. we believe reflect deliver powerful. accomplished become firm. a that beginning, we to scratch, alignment would Before all by And would successful integrated these each an building as And yet more more we turn, by part

We serve to focused work a together on have consistently glove where businesses creating clients. all better our culture, in of hand

differentiated have Our optimistic gain most close reach five capabilities unique culture of teamwork than faster to scale years ago. business from our forecast enabled traction in with us collaboration clients $X our with our faster, even and coupled and revenues billion faster,

XXXX firm-wide million, doubled more Now, also adjusted per revenues $XXX turning share pre-tax share. to earnings results, our to to grew adjusted to than income billion, than more doubled $X.XX full-year per XX% and $X.XX

of pandemic. on in The restructuring, increased result far highest greater disruptions results the market with reaching restructuring leader, in its a Now, down pace business continues revenue drilling our as dramatically be by our to delivered ever. caused activity and of XXXX business detail, global a beginning

us restructuring strong win by well as redirect to collaboration closer enhanced with rates Our practice sponsors. This when financial our was strategic resources advisory and bolstered relationships needed. ever corporates, restructuring enabled seamlessly

third further time pandemic. already second support see the by our will industries severely companies Our only programs quarter we ever, entire Everywhere were restructuring inevitable highest tapering and record revenues turned, companies. fourth stress quarter over weakened we surpassed of performance. by The our government impacted

to For balance be restructured. many, be matter will their it not simply when a need if of sheets

for of XXXX restructuring XXXX anticipate an elevated activity match to elements time, While we we restructuring to these not drive activity do levels. period extended expect

normal managers best-in-class of fundraising in This market a this strength and more coupled we Hill, environment, Park became volatility second-half comfortable superior capabilities to capital and investors hedge was subsided in saw In led gradual environment Turning the snapback pandemic fund world. Hill's increasingly the Park commitments PJT PJT as to virtual a our private the roster by a making revenues distribution of with year. rebounding resulted in equity in verticals. return

As a revenues below modestly result, were XXXX XXXX only levels.

We to the second-half experienced XXXX. over into expect Hill momentum PTJ Park XXXX the of carry positive in

we in benefited Turning revenues to advisory, strategic prior year in growth strategic March. announced the completion of shutting saw M&A significant the to prior to strong transactions of XXXX down pipeline from advisory, we in the the market compared as

volatile on liability management, capital markets increasing global and raises. public have the the we as capital provide and private most an our as and across clients seen from capabilities. advice enabled franchise In of and superior geographies. our with This Our complex highly-experienced advised well of footprint markets a crisis, products, in financial benefited range capital industries, number since turn broader clients team greater depth and breadth and to expanding us execution optimization, of structure

commitment leading Our capital doubled. past business more rewarded year advisory developing was than this revenues markets as a to

to benefited integration we PJT Camberview into of expect the beyond. in In advisory strategic from this more business XXXX our XXXX, continued grow and Looking broadly. and significantly ahead, we firm also

and IR, ESG. We and defense, increasingly capitalizing our capabilities are shareholder on strategic expanding activist in advisory,

caused the the advisory and in sentiment. dialogs market our a experienced Post steady strategic mandates, largely continued of depths Our in track the pandemic the new strategic rebound in partners. in addition client franchise we market with which dislocations by significant the of XXXX have increase seven investment

pipeline, the highest its over has as by at and timeframe, the pre-announced measured of stands now ever. these mandates increased levels new number of mandates this and Our revenue steadily potential

completed an advisory timing convert has, performance. increasing mandates which of cannot transactions, the quality the and been future indicator at of mandates and number into pace strategic our we leading announced in experience While control and important

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

Helen Meates

were revenues $XXX Good by in billion, million, revenues Thank advisory morning. up up revenues driven total increases for activities both and equity XX% an up were XX% of driven you, as million, revenues, strategic breakdown hedge year-over-year, year-over-year, by activity, XXXX fund $XXX The XX% with revenues, and Paul. year-year-year. Beginning clients. in private significant advisory. $X.XX increased were increase private for corporate restructuring fund placement as well Placement placement

fourth the year-over-year. of million, quarter, XX% $XXX up of total For in driven were in by up breakdown roughly quarter, The million, revenues the continued growth million, strategic year-over-year Placement year-over-year, XX% advisory. $XX advisory were restructuring year-over-year. revenues revenues and $XXX revenues significant growth flat in

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

and XX.X% first ratio compensation expense, adjusted of compensation year. revenues First, below of we months XX% expense was the $XXX through million, the the full-year nine adjusted accrued

the as The XX.X%. quarter our our reduce our of first results. communicate in percentage fourth revenues. quarter, We'll adjusted compensation compensation enabled when for compensation For quarter expense we report and revenues full-year was ratio accrual to for of our a the the XXXX us strength fourth the expense

adjusted non-compensation adjusted expense was to $XXX million, total expense, year-over-year. Turning non-compensation XXXX XX% down for

down X% the For was a in global declines fourth expense quarter, Related adjusted and Travel significant non-compensation a The year-over-year. both and consequence of XX% Travel expense and with year-over-year. periods pandemic, reduction million, non-compensation in Related grew excluding $XX year-over-year expense as

early X.X% non-compensation expense for as XXXX, we Travel to expense, was increased XX.X% As full-year have expect a our for and of of impact and travel, given in the and percentage by and forecast outside In too Travel in the much Related of the XXXX, will non-comp resume capabilities, head our grow, count revenues, fourth quarter. the expense we invest XXXX. on pandemic it's continue disruptive when, to how to technology

up the million adjust reported million pretax for pretax full-year XXXX, year-over-year. $XXX XX% income of adjusted income, fourth Turning year-over-year quarter and $XXX the we to up XXX% to for

Our and XXXX. taxes XX.X% was the quarter, represented of units taxed The tax and for provision for the margin XX.X% as results if in all that corporate at prior adjusted up our the quarters to quarter full-year, rate. up XX.X% fourth was of had from in a been our as fourth pretax converted all XX.X% from partnership income shares XXXX, in

lower And changes at The rate state the year than deliveries compared year benefit with quarter, and of tax X% our previous were In effective rate per in $X.XX Earnings tax the our the we $X.XX share, the which reflects deliveries, to if-converted fiscal $X.X XX%. tax was in benefit compared for excluding ending in of share effective taxes. X.X%. XXXX, earnings shared slightly full-year, the adjusted be $XX.X year. the absent tax XX.X%, weighted expect fourth with for $X.XX the primarily our this full-year for Our The than rate our the XXXX estimate. legislative by lower any would XXXX, is million count impacted XXXX. local average and prior count anticipated around share and a share XXXX, was

was at X% The of the reflects the $X.X period weighted by of that our For inclusion $X.X increase shares equivalents increased price quarter million met to partial share of million million share average passionately This share share units performance-based quarter. the count offset $XX.X shares in quarter. during quarter and million XXXX. by aggregate fourth X.X the count the fourth thresholds versus repurchase the

our A This from approximately will is partnership to we million share full-year Consistent million $XXX repurchases exchanges mindful these safe for settlements. to dilutive on of has in exchange make we Class market exchange to receipt prior but units float. we and currently XXX,XXX units repurchase equivalent have an focus in at million cash, also cash the the units, impact use XXXX, open these authorized for additional while of For continue stock. to partnership price of also with will $XX shares notices investments for we the We're of a of authorization. our priorities, an past, share business, as common $XX.XX our the done cash. reduce for capital an in of of repurchases, company's repurchased the board share shares addition The program X.X remaining investing the the approximately average per excess being through

million $X.XX approved the a in turn balances dividend quarter XX, a have no short-term On Paul. The share. cash on sheet, investments, to working and finally, as capital highest ever back million of the we XXXX per it the March founded net cash board $XXX of we $XXX XXXX. record cash to A with I with balance will data paid Class has and March that shareholders be will And dividend common XX, and of and equivalents And with in outstanding. ended

Paul Taubman

Thank you, Helen.

our and standout annual of terms outlook our a rate any Over a the of two the five than of tripled. our has In compound is success five have levels. our much undersized by have the Notwithstanding XXXX period, more last income a just resounding XX%. in XXXX pre-tax more years performance. will our be early Even have we Undoubtedly our more income last than because days firm, have company the nearly XX% first than the years, very a measure, as comparisons in six a pretax increased years franchise. times in out enjoyed at of have more headcount doubled still than relative or five revenues market-leading are public And grown relatively that first have our the now absolute year-over-year years, revenues building we been still of success. our more tremendous In challenging we footprint. we by though

Looking fully to global capitalize capabilities. expand our best-in-class more ahead, on significant see we our franchise, of opportunities reach the advisory and

so the capabilities expands of and of our our our too reach distinctive will As brand. awareness power

we we prospects. With confident growth future that, your extremely remain before, in questions. will our now take As

Operator

Ryan take We'll Instructions] Devin JMP [Operator Securities. you. first our question from Thank with

Devin Ryan

Great, morning good everyone.

Paul Taubman

Good morning, morning. Devin. Good

Helen Meates

Morning.

Devin Ryan

Thanks.

after So, terrific want just first productivity touch a question on to here, XXXX.

all newer appreciate you pretty we the look the the an productivity. number end-of-year there's employees, this per output, performing But and well that is million revenue $X.X and fact the are do that think contribution call are, you not scaling this versus beginning it, input of the on on push that of and pull and the their on between had $X.X the year, way people on productivity your still one to your were a fact that businesses at platform employee about headcount, the I headcount. it, model. how So, an million

trying terrific a [indiscernible]. was think Just -- it -- this obviously to about is and year

really just high levels that So about performing these achieved all just well? to could again businesses trying or given were be think that if is a whether bar the are this

Paul Taubman

answer. a a Well, with complex simple it's I mean question

formidable with the there that clients. the break conditions could year lock the who because we more, revenues, you platform a down If of platform XXXX senior are on they for stronger, the more firm. elements would been goes more we different repeat to deliver the we have by one more therefore I are every and And team, traction every If having be all it. year with goes that our bit would on the to market are people expect productivity doors and by us higher, of same that year

moves So all the else equal, up right. that vector into

Second platform is, conditions we more then that issue in add is as down then the the up market professionals we because pushes days, to then with, same. we that the productivity. early add no third individuals real are as is year the that not additional the every And end

if So that were platform as time to and by. who this individuals believe all able you I just on of isolate do that off goes are business the dimension, more to this stronger one platform are get of

Devin Ryan

perspective continued and one as ratio, for lot the in of of growth, good to a reasonable Paul. revenue a way next a relationship on has Okay, to about moving years within continue that to think if but a parts XXX over to good on reasonable tight there. connection, to ended the compensation maybe perspective. about of has see business where it's trajectory, been like just good about the appreciate seems pretty just of so modeling been to scaling. the just that, and there's I there's output The and based leverage try from And assuming revenue there's that is of growth or Helen four kind there, kind relative years It -- it's backdrop. a understand it couple some way bottoms-up. pretty basis a points Is grown kind really strong last a think are you've comp it to revenues comp the think a that's

Paul Taubman

be it we not sure fact top our I are mean from commitment making up. on always shortchanging look We're investment. bottom at way the down, in but itself we may in how the reveals that that to any focused compensation do

deliver also on comps, although to are well make improvement over discipline mindful the We increased stakeholders, that growth margin that margin expect discipline consistently in point time to do both from non-comps, our we comes we as revenue. on as

into into never come it's any in go line always always direction. always go So costs bottom. a up the don't into right, always down don't the revenues Margins straight right, up the don't

revenues profitability that, periods exceed that representative investment clients you'll to it's enhanced of growth, little made bit So a make side and on we traction of prescriptive, conditions of of but our time, and but in meet where a margin full and normalized high expenses being the see be group, difficult of is is but over overly should heavy we'd with a being reflected, believe yet peer couple the in and points, pressure. platform elevated or overall which power haven't that the is of

we And we year-to-year. doesn't ratio as the down we sat tends we've to and five accrual and that's down, something all or over was was quarter-to-quarter beginning So that you more this all neatly for at comfortable normalize, what else, became time as even But in been quarter. should years. more it and saying much was out here, comp anything And year. saw thought perfectly of the happen see the what the information come as the taken full-year appropriate increasingly we fourth that with

performance. about think what the up So ended the meaningful than of because being far context we fourth our is number full-year quarter in accruals do the ultimately less comp full-year

Devin Ryan

that's squeeze okay, Paul, get love helpful on if thoughts no, I SPAC Sure, market. more, your can the to one here, just in color. Maybe

SPACs peers have around launched opportunities. have strategies business and your coordinated own of somewhat Some the their

it curious in and the around opportunities at that I'm guys activity looking past you types thinking with the market you're market obviously, broadly? of are year the surge how more the in over SPAC about So

Paul Taubman

while. more is think a variety way clearly to through on capitalizing a maybe in with as but SPACs, active here serve them process. to a We've that We flush We've is it that we stay market been and vehicle arbitrage this public we're sold represented continue than ability runner the to companies And it's for and book forever, a the seeing this certainly de-SPACing the into SPAC -- not served here been is have IPO. we'll market of of on for in and in a here offerings, capital. some traditional create SPAC ways. And part a

part is base We have amounts raising monetizing potentially or business and through the or raise public there as or either on will the not significant of them to their continue the business to considering to way so-called we're as into with a our of entity, whether tight or provide client a of financing SPAC capital And selling SPAC. conversations SPAC a listed creating in merit SPACs. to a

mindful an way, create directly trend. needs have in who continue. of powerful. do is late-stage being investor, is to to to model investing But from scratched, desperately So needers a are and listing as the pace and of to high-growth thatwith think public I be itch being that capital, really some we're who of capital particularly questions are a the companies, I public vehicle a a can investors, to this growth very SPAC to able able bring different provide voracious activity marry whether as which scratching that is sophisticated

Devin Ryan

it answers. Yes, Appreciate I there. terrific. will leave okay, the

Paul Taubman

you, Thank Devin.

Operator

you. Thank

Ramsden with We will Goldman take our next question Sachs. from Richard

Richard Ramsden

Hi, guys. Good morning.

and So for with start outlook questions? ask the that your a can couple business. I business restructuring of let's with First,

strength in XXXX? on weaker that? of just second-half that because next that of a into in So you be is year and seeing expand little that will I XXXX. weak the a or you're heard that expectations the bit heading to the reflection your backlogs Is comments around Could your of business just drivers

Paul Taubman

stepping description, bit less from more is a strong accurate back about record we're talking I a Well, levels. fair because to think be

going perspective, year context. by be our very a from it's So I strong to think

and in economic I activity to to think XXXX than our healthy or but today market And they expect restructuring that March of likely were by that -- enhanced then. more exceed are we We all in year the this performance crisis depths in May. and meet was meaningfully be levels. observation was of And to initiated XXXX, what relative and was not the reasonable restructuring there saw April part conditions

companies that a think to has industries I that, Richard, now many interest we debt with and and companies consistent sort unsustainable to nothing and been believe of than And extraordinary. equity is is that of able those swath having rates economic of damaged economies economic a low do So have restructured. limp along, quantum many by said the markets, models to exceedingly we this it's and continue additional and will of to these have with that done been on companies been on and that inevitably companies damage of have they more the been them, taken whole but be these buoyant many of need has

strong fever to be well and it's XXXX So of for in not pitch we but may in see a spring but very coming summer repeated repeated, the likely the many opportunity month. restructuring years, be of the

Richard Ramsden

then record for in for rate XXXX? should fourth that for Okay. I'm any run about I we in right when the That was sense. the quarter that a business makes you. Is And this that about think the there think think placement quarter business, we on saying seasonality

Paul Taubman

transactions stage have closed are going the involved the year. fundraisings and companies involved built business tends an see And into of Park revenues as increasingly as increasingly of markets pipe placement year-end we're to private are more placement and there SPACs, lot to the fundraisings, pop we out. later you're but as Well, line. capital Hill for raises of just the private business by carry Park in substantial of get not capital into a part seasonality in have not also calendar have for we our increasingly and advisory, that placement like that them next performance, impetus corporate reflective to Hill But think where I is

a we that parts think the grows business is going I fact contributed undertaking reflective of seasonality, companies, our of So partially our and line capital variety also as raise be are that but to as assignments firm. to increasingly for is multiple by that of

Richard Ramsden

-- that just increasing capital authorization look the talk you your me, you this then and the something Okay, the for year, in one in see dividend one what dividends consider given great. a of breadth should business around relative terms I and term the aspirations milestones for just you buyback? So return? is buyback scale the the last of to are little increasing we longer which the can obviously is the bit would the about And the that for increase

Paul Taubman

everywhere repurchase continue bias suspending whether repurchase, I this our to over share were share they or think favor like. year And economic dividends when we crisis dividend. could got the or equivalent and has to dividends been an or earlier questioning companies

able and is, the belief an on keep do that And Our return is to do capital to the way is be to dividend soundest the low. to to way discretionary basis. entirely

grow. So that it the for that higher dividends. of isn't in have also bias, have mean far that reason would trading continue focused also to effect as point to our the lean that met, additional we're those on shares. believe dilutive to has room that and value I heavily very levels that is been doesn't for ticked there is out bias and price extraordinary buybacks we shares at there's means on offsetting that likely our been our that these market just to It fact a conditions share more than we as

dividend. repurchase bias. a future, float of, the stock, been in may time units other there's that the I bias because dividend. our return the to going in shares to to been at of make more repurchases time, be liquidity, lean units, dilution, I into shifts to twofer, less. as well are foreseeable they is affect than that But capital, where over is to share try the want more we're that's we also which ourselves the return and one shares in point float. But additional come So that We and it continue and mindful that less the sure look for through than do of there they thing repurchases think of as very we continues not can coming so And the that grow. have are the focused, really And and long Helen, avail they have which and market don't we offset constantly to

long going As of likely that's the this. reward we're our create to about course. any to available always not long-term to focused on And that's as to be to we're us, preferred be of But dogmatic what's and package value, actions the shareholder shareholders. best

Richard Ramsden

That's very thank Okay, you. helpful.

Paul Taubman

Richard. Thank you,

Operator

Thank you. with We'll to Jim go Mitchell Securities. next Global Seaport

Jim Mitchell

good strategic Helen. the now? question the you we you about changed? area, that now, expect do mean, significant growth, doubled think think come obviously three how the Hey, Does how on have how a that's hesitate recruiting morning, or environment do Paul, environment last the been I in you revenues of I years, do Maybe headcount environment advisory think, just are payday a make has sort Or coming? dramatically to seeing right recruits over they big because recruiting how

Paul Taubman

making as it go more evident close see at to to be challenge, on we not successful more get the a you're world, recruit. graduate, Like everywhere attract to that The and recruits firm. others highest continue more that that and we'll But difficult. And of direct who it of have we'll said to it's conversations we the firm, firm, certainly, but Jim to add to the virtual is and where It's in our a to exceedingly and to it it ability interest we I be a quality may And as in is will world our quality join have we our we've more a and undergraduate have grow. headcount, and And campuses only some impossible, just the have more connection. while more as longer recruiting easier for to continue they partners while, firm would who over more the doing high mindshare, difficult. said have before, joined of senior we environment, time. attractive in as we've not the overwhelming platform. It that does add to as as number that you conversations firm, for demand with our just in we've world hires, get pandemic continues don't make slower, we're grow familiar our the that virtual our number the out, long expect outsiders that seen that personal the is you the the is,

Jim Mitchell

little Does thanks. of that maybe pace we a think read in or buybacks flow was or was market, 'XX open cash high? pace you can a that Okay, just announced one you shouldn't pumped buyback, sort better increase into mean in this $XXX floats up one, last on that you follow-up finish XX%. the of you the the the you of of this think can for I do more, And you very -- just is In another million, trying that have of obviously the that? capacity April to didn't more it. that signal Is

Paul Taubman

I'll then on points in it is One these presented to to I'll are also spending settlement we cash units turn two which a us, lot numbers. are that Helen. and make are not of

So, these presented to that us are and over Board what to exchanges to above respond basis. on quarterly authorizes us the are

this quarter, to example are which for repurchase is perfect XXX,XXX cash, being we So, units going share effectively a repurchase. a nearly

the reduce that through to to we going supply to lot preferred open And extent to of then float. our are are to us are us We time, long more of over going be mindful But exchanges means. is presented be as there as those available is the to market. the units that

how today. fact are then, share partially So, the And XXX of I levels the is at we trading this. higher that XXX think thinking reflective that's our versus really is about

need we And capital are company did two than with a you three or also, larger -- to cash the years today ago. share balances. more it's So, stronger retire we obviously a

very of $XXX guess, authorization. with comfortable what total is now, are I million we So,

Jim Mitchell

Right.

on using timing flexibility think that I it's hearing so necessarily am it? not of more up acceleration Okay, [indiscernible] I about an

Paul Taubman

Maybe another be aggressively shares much part to how be going function way continue what's of a and available market to through a And is that in to equivalents. large opportunity see going an is to not function share is bargain repurchase repurchase we're repurchases at of also to see a there looking exchanges. of to shares plug whether it to us becomes we And prices. through more or of as open

So, little everything. it's of a bit

Jim Mitchell

very that's clear. Thank Right, you much.

Operator

would for like session. Thank question-and-answer At you. to Mr. remarks. over conclude our any to Taubman That this additional time, or turn I back call closing will the

Paul Taubman

to I just able for wish these challenging to we that we're safe, We to thank and and that and quarter conversation. of everyone this of us on that stay at know this health connect joining our us good all behalf wanted And continue times. you you are morning.

So, all much. thank very you

Operator

your That concludes participation. appreciate our We call.

PJT Partners (PJT) 2 Feb 212020 Q4 Earnings call transcript