PJT - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the PJT Partners Third Quarter 2021 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. to Partners welcome earnings quarter and call. conference morning, the third PJT XXXX Good Head Relations of Pearson, Sharon I'm Investor at Partners. PJT Officer; me joining and Chief today Paul Officer. and Executive Financial Taubman, our Helen And Meates, our is Chief Chairman

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

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

Paul Taubman

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

support credit XXXX PJT and to bullish that meaningfully outlook, continue CamberView our significantly, has backdrop, deliver while provide Against and on markets dampened our In restructuring policy monetary the benign return XXXX revenues long-term This to the about record levels. of we growing our review current the businesses. environment. unprecedented Hill, be and restructuring physical some and wanted extraordinarily quarterly the PJT Advisory, quite will high-level Strategic performance. we results, commentary all will restructuring, to Before I are year, each Park

particularly we As quarter third with difficult comparisons. year's present us last previously, discussed record restructuring results

results restructuring review revenues relative total nearly nine-month second-half our this greater restructuring quarter. million of in the and weighing skewed quarter's record-setting towards step will on will reflect heavily $XXX businesses I each quarter's Advisory be This Strategic After a our presents detail. that revenues to fact year's Also performing. results our the financial last down Helen fourth results, is in three

Helen Meates

Thank XX% revenues revenues XX% you, million, Paul. morning. quarter down Advisory for were revenues, year-over-year. total year-over-year. down million, Good $XXX Beginning $XXX with the were

continued year's XX% up was revenues decline Advisory As revenues levels. growth mentioned, the year-over-year, strong while restructuring from in nearly by driven that Strategic fund record experienced year-over-year placements. revenues, in activity growth were $XX Placement million we Paul masked last by in $XXX million,

higher fund X% total September by advisory third results, $XXX $XXX ended Strategic revenues XX% were revenues year-over-year, placement driven offset the XX, decline growth than For million, Placement revenues million, to our down restructuring were $XXX million, nine-months, year-over-year; Advisory quarter down by revenues. was up in were more revenues XX%. a fees. in Similar

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

the for every continues be full-year. our accrued quarter, XX.X%. compensation review expense to adjusted comp compensation our XX.X% the First, ratio estimate best at expense; current We adjusted compensation represents estimate ratio and for

the increased Turning third nine-month to the in expense first and quarter, the $XX the and million to in non-compensation for relating and non-comp recruiting advisor $XX quarter costs, as third expense well for non-compensation was contributed as investments expense, periods. Increased million senior adjusted expense IT adjusted to nine-months. total higher both

increase in well below activity travel business-related still is third an saw the pre-COVID travel expense but levels. also We tracking in quarter,

for taxes, the of and the XX.X% quarter, million we income, XX.X% pre-tax nine-months, $XXX an of pre-tax for the million reported third pre-tax third adjusted and the with margin to quarter, Turning for adjusted for $XX nine-months. taxed all adjusted income had our first tax shares, with quarters, converted for at results and as provision all been was if of The prior to a income our as that we've corporate rate. partnership units presented

shares We the annualized the delivery of tax relating to also benefit of the this first quarter vested during year.

just effective our above full-year XX%, for XX.X%. We the our be expect rate estimate slightly of tax to previous which is

share were nine-months. [if-converted] first $X.XX the [Ph] and quarter, per per earnings share adjusted Our for for third $X.XX the

quarter, shares. the count share average weighted our was million For XX

cash, for market of quarter, During of of first exchange well these units X.X third And including the shares totaled for open units partnership units nine-months receipt past, as repurchases repurchased done for as partnership through for exchange units. currently as the exchange cash. we we exchange an the approximately we our approximately X.X of additional have million in partnership million And We're repurchases. equivalent through will in XXX,XXX the notices the the shares, approximately XXX,XXX for cash.

we sheet, the working quarter And previously balance and the [Ph] short-term announced dividend share. special have we've equivalents, in in $XXX $X.XX we [funded] On no outstanding. the cash, paid debt per with million of million net quarter-end, cash investments, and capital. ended $XXX Since

shareholders is common Class Board turn to X. December For this quarter, of record payable dividend approved A back of on $X.XX the to per a December of which Paul. now as has I'll share, XX

Paul Taubman

you, Thank Helen.

the detail me it operate. let pre-COVID default given this to not which our we global while a currently have expect rates backdrop, and environment do outlook. restructuring, our with bit more provide benign persist in very And to levels. extraordinarily returned on market dynamic Now, credit we long, businesses the is Beginning for

and from inflicted behavior, continue to medium accelerated stress as The with clients These already period challenges, We're early the damage to changes elevated to with commodity expect COVID-XX sheer we our activity. has expectations inflationary of build. many services. will, of an we over technological chain restructuring in disruptions, see as by business system, combined significantly engaging extended beginning of in pandemic supply demand rising fallout costs, starting to debt restructuring innovation. signs with well consumer increased outstanding, are long-term, that the the around dislocated and rising are labor to in trigger quantum the Over companies time, result on prices, for models building

market-leading will, franchise to for and we well-positioned Our environment business. as the turns, in continue remains it the invest when

a macro Turning asset business to follow-on is alternative PJT Park advantage. performance, a funds Hill, year, best-in-class on competitive managers this environment, market. unprecedented PJT is strong fund raising at capital rates, larger our In is with record from differentiated in and significant strategies On taking size. focus Park delivering many deploying this consequence place growth our as are benefiting trends in Hill quickly the and are and a more basis, investment managers secular

Advisory our managers. with take As our Hill market-leading other franchise positioned becomes to business, financial even more increasingly of are we PJT Park and expanded asset opportunities advantage aligned Strategic sponsors with

momentum to ahead, additional opportunities see looking share. business strong. And we Our gain is

following ahead been measured Turning nine-months. XXXX, levels. ahead of a benchmarks, up Advisory, Strategic mandates, in where market record in seen a strong to pace announced then, nearly announced by in closing. XXXX year's well transactions Strategic the number dollar through of rates tracking transactions our we a of count, mandate with increase is And were have value and number Advisory, very we last Since XX% of the steady entered but well that had were fewer our growth with awaiting

XXXX strong significantly strategic and in a our revenues next fourth the record translate with We set Strategic well to momentum CamberView expect shareholder enter for IR, ESG, year. us in greater advisory positioning deliver and activism. in will PJT its CamberView into tracking is XXXX, performance from and also strategic Advisory Overall, PJT to up quarter, benefiting backlog. in is record

to powerful remain than future began extremely XXXX a growth confident in and With we questions. we now with XXXX, Looking stronger take ahead, we and are poised more prospects. that, we enter your will firm demonstrably our

Operator

Ryan comes of Our Instructions] Securities. JMP first question [Operator today Devin from

Devin Ryan

Great. Good everyone. morning,

Paul Taubman

morning. Good morning, Good Devin.

Devin Ryan

want a two platform still on for give the looking on the we younger been] than on [Ph] years, that Strategic how heading any little helpful. of partners been ramp question still [so had] into relative kind the if to bit that just here, there's be production presentation, to platform production at XXXX Strategic of the more cohort, on we're for tends platform. I that PJT's [not so cohort have maybe the start there's Advisory [Ph] on of I other seen you XX% can quarter with And years? a think gains maturing Advisory. some you with for but the context us productivity And some other would the Can the two a about talk to outlook

Paul Taubman

a high partners That or and just two I it's of mean, whether perspective. I on a think true on because more productivity, of for than outsized not a And years partners places opportunity chase clear more and not that I right inevitably, in a differentiated to that's and it's relationship, that than make and to are the long-term necessarily steering down do are relationships, firm. the be were your economic our two less with taking to you who think but two who point. partners generate but you've our showing ramps aim if partners than years, to long-term long-term, there's in building increased build years, would what's first business to our not the they're been view, than you're to in wheel, you, opportunities here front that, for means that less of are long-term for investing where all for And two road, look sure the trusted years. only

third in do experience, as compete The And efficient partner productivity productive, every clear an prior second franchise, comes needed to also these And added partner to partner it's together. verticals, scale is, we most sector with it's enter that not everywhere that better like. board third sometimes is a some executives, was known, the in that there's where what's more to to more there's to begun disproportionate and verticals, a brings experience the the then because it's we're overall the you thing all get more the members, we connectivity, this. have gain is, of it these incremental

fortunate announcements a to mean tremendous revenue time productivity don't lag fully we for just to gains mandates doesn't closings, partner two turn to any, the two and that a one we if So, month. that the just everyone. ramp remind the incredibly of just the a We we're getting to you why, I and inning the given the to very always is, full of about get productivity much think in mandate and reason unless where that lead first across magically have see pre all expect much, the years to I talked when revenue, they're mature years, years partners. are there's two our early lead times post announcements and And And from in field.

how that's think So, Devin. it, we about

Devin Ryan

thank Okay, you, very Paul, helpful.

Just will, the about that $X.XX chapter, here guess, is capital the outlook beyond we on return the more Obviously, kind a there. special, and, for next paying out substantially if and of you the I follow-up the capital paid think now Clearly generating dividend. excess PJT. the firm you've as

thinking areas moment? priorities you And about should return be or capital at more feel special are guys or thinking priorities? how about how the be attractive? more there that are maybe buybacks, So, should thinking we about any And dividends greater we

Paul Taubman

we're our franchise, value in Well, big the believers in still proposition. and

So, of share be continue equivalents. repurchasers you to should share us aggressive expect to and

the of the that of reasons earn-outs same over repurchase have And reduced a on is translated to been the going-forward extent. you last hasn't triggered. years, six share all basis, because, into why have of the that won't count lot share One a aggressive

going actually maintaining reduced with up share just not most end we're So, share count. likely to count,

would suggest bit we'll make to one companion, we've to engaging be own informed have basis a we need periodic that specials. out, as not the think repurchasing think feel from at own focus. return And I that want But begun shares. I to capital to But decision. the I shareowners. most our a point, dividend our whether as principle conversations do, some to And figure probably our increase in going road, an it's we'll a head have place ordinary we at the is by probably to of be fork I to the going point other. with or investment we that's probably think confident, which in that on we'll some deviate want the or our But some early is

Devin Ryan

it terrific, much. Thank hold Great, very you there.

Paul Taubman

Thank you, Devin.

Operator

Sachs. Goldman question comes Ramsden next Our from of Richard

Richard Ramsden

Hey, good morning, guys.

at also So, off lot, the the expectations which short a last moved perhaps I Paul, with rates you since start end a both up the market's expectations is, long I can know, have up spoke, just interest of a question, and picked lot, inflation curve. for bigger-picture the

and just could of impacts it higher think about rates, positives of we you businesses each head you As constituent negatives think as talk your how into the you through XXXX? both

Paul Taubman

no rising more Well, doubt I right. rates interest there's that for environment think a should restructuring, create hospitable

capital even restructuring. yield. with are inevitable because And incredibly risk-on kick models had in that's Because more into the there a the impacted do have low driven companies to plentiful is of has turn, long-term. chasing and who the of so to whose the probably over road transpired markets. reckoning on years, you're and extraordinarily believe than benign further conditions, has been so out You've severely that, yield capital go business down two credit prepared markets, out anticipated risk had of receptive what And in has able in by Everyone day a continuum. that have I not with can we lot chasing that sustainable the equity pushed been you're rates last the trade

to suspect I won't think So, to refinance needs attractive companies, be I will there over over but find time, and able be not refinance, who would be issue. that, to lot is able tipping of that there terms a time on you'll a point,

dealing and you prices plan, most issue move everything in I if and are way think of fall It's in against pivot. and terms inflationary happens because significant able And your then from unexpected or or an position plans. to -- trigger because way either either in they rates of interest rise. also just position the with move expectation manage you, a the way there one is you're one with away to really restructuring rates is exposure according your exchange that's exchange rates or foreign companies typically the their

create I conditions you the to to those that real system some are and suspect need beginning So build. activity to restructuring of shocks

They're the Hill, Now reasonably the but market they're environment immune of some to Park movements. will bring question I product, over think other of strategies which mix from the as macro business. managers, we it Hill greatest don't probably our change I in businesses which time we the have and managers to in which the is to really in changes, the which Park clearly affects But we momentum that asset to probably there's continue the investor or that think strategies market. bring pivot will it and where strength as means demand you

at far think be complex to more stories to need as forefront and clearly investors more with with I engage world difficult becomes able to are the with convey the ESG becoming to shareowners. the increasingly

within where world I degrees don't I headwinds. Advisory but CamberView changing benefits there up then higher less some I And point tipping think business. think the M&A thrust with predictable basic as the that our the Strategic everything, it probably becomes a like some freedom, see side, real you on of meaningfully end of clearly a comes bit activity,

here there's a that, but effect anywhere if know marketplace, dampening we're the be have meaningfully at bigger the is going But to growth enough Strategic make near that some overall pretty I to in suspect reasonably uncorrelated we're idiosyncratic Advisory. one I will Strategic don't as and is a disruption Advisory franchise point So on the much until market. point our if to

all why why the that's and at at grow really year when why years tied we've micro been basis macro others been as in and to to we're is levels grown that's not from able significantly grow XXXX, extraordinary we've growth and every Our and to to able that's able why haven't a we've environment. like been grow that's

from are where concern because the environment disconnected the of probably macro is lesser market. broader one a business, really we the that's So

point, very to Strategic Advisory from at at continue business we XXXX on centrally our rates, double grow as Now, some M&A hefty will these the side XXXX. to

some more doubling story. we're that a to of are keep then broader some that trends, will we'll market, you concerned If point now we become very point a and about get macro but we much representative right business, the the micro of at

Richard Ramsden

where this XXXX are and you at for can rate? your in And Okay, is the half going know below we are the you QX that's that run if look closer that stay second expectations to is a I up business at of the then very that perhaps that least restructuring But your you materially to I that your And expectation to the year, going helpful. on XXXX it perhaps run follow said and is Thanks. there ask at it's level. just near-term? in anticipation

Paul Taubman

that I'm confident much of from loads the have the XXXX go but I having pretty view And end on we'll us to think -- any I there say confident reasonably year levels. we're business. de-risked highly it we're that can't top lower, essentially

doesn't fraction our but go Now headwinds to would that were mean bit in any of XXXX. that in we in have get winds if face business, lower, little that it it couldn't blowing been a a be the

So of whether bottom, that's a quantum in a any of is what little down but a experienced whether year. it laid the of much go less concern, lower, fraction further bit we've could it's absolute the restructuring this potential

Richard Ramsden

Okay. very a Thanks lot That's helpful. Paul.

Operator

from of today Our next question Instructions] Chubak [Operator Wolfe comes Research. Steven

Steven Chubak

morning. good Hi,

Paul Taubman

Steve. morning, doing? you're Good How

Steven Chubak

Thanks. I'm Yes, okay. doing

-- So

Paul Taubman

Great.

Steven Chubak

the lap to hoping XXXX is should little materially we wanted of for largely de-risked. I of conveyed you restructuring fact versus guys, comps. XXXX confidence expectation more a XXXX. M&A recognizing tougher their be strength as the of around unpack transition better that these the at increase some XXXX like business the what you a year some that mandates revenue start bit year Their the particular that Paul, could growth representing frame in maybe a was in XX% restructuring of side, I commentary on has just you just the coupled to was with been growth

Paul Taubman

of you to three it businesses, if of at average our this out the none four of it's you to healthy I four our weighted with think the if Strategic very literally the whatever but together, it of at and is best you businesses. were the And in headwinds. PJT consolidated see don't them of in numbers Park mix, I get our business, our And in of you It's you're rate momentum the weighted them business. Camberview, X in growth some is significant unpack businesses it to relative four significant way our momentum think put that. and that's what to Camberview momentum one business going PJT -- look the average call year, is it Advisory when of representative with consolidated the Hill rates, growing all say PJT

the is that just up So, significant growing $XXX that had fact one And therefore, healthy stepped talked number third quarter declines. about already a three the really the rates alone. just businesses, of we've that in and four are down it consolidated roll at million nearly was very

If businesses to to next I exactly XXXX, year, and for just in now. you move restructuring of we're don't And to momentum three from there. happens continuing conditions talk going let's severe of neutral while much likely what beyond. go very see set forward XXXX about XXXX know those a pretty in headwind we a into But the presumably most

like acquiring to the XXXX. a in powerful And this was it different but average turn. we're the we're and build a success earlier dealing even Advisory And we than helping is be large look more macro, every with restructuring is down so is just fact extraordinary writing to mandates the that we I successful So that to going these of another very we it were just and that leading and because had we pool market able hand the does, when have means all turns. that going out practice, that sight footprint have help that economic then very market they when the folks capture, to run than others going the because inevitably to day Strategic of in weighted lose but table restructuring for it don't want whatever to looks at

to to or restructuring be environment, next likely over the neutral there's though we're the and years, that XXXX view XXXX environment quite extraordinarily the I we're even a what So, that going inevitable that. of about well restructuring as pickup to going XXXX don't restructuring capture number be positioned see to I'm because environment it's

Steven Chubak

just Now, maybe follow that's And tough, from fair color, Paul. this question. call really just a helpful let's but my up,

those expectation the hearing there that indexed XXXX, you more bit M&A, of be we've are activity the the that would hoping where some might areas one whether heading in you lukewarm. folks misguided it's been sponsor been could competitors any or you M&A bit and And to how competitively relative think to whether are that beyond? be supposed that a from little little to posted and you XXXX. I from just results cap are is And a point more tailwinds XXXX, or stronger, positioned of your other remain that I was speak European you're we is guys tepid that to the it just restructuring tepid. firm peers in concerns concerns we've believe And more where best is into activity, those of next of view? some of track year it's seen large

Paul Taubman

The you basis, the we we on as think early a terms generated presence, way macro on we revenues, about growth ourselves innings. view of in as market I now, not very in much if basis. think Right a much headcount Well, have our firm, -- it micro still as about

our first you grown Strategic perspective, quietly, XX% a year. nine one's in give the looking, headcount months So of to when has a Advisory the no just in

Okay.

we're we're fully two at we're of which could our we'll or But not We the every clip. came up double XXXX not the not not put our out. separately, dimensionalize you vertical, that pair is of anyone every as we're XXXX a the against Strategic built not geography, anywhere anywhere. to a We are near market, way to revenues just industry at pandemic Strategic report lockdown yet it, the significant revenues, grow do years and I Advisory in but look Advisory close if doing pretty M&A we're in continuing to trade

growth our don't idiosyncratic. they're on what's be to say, sit time oriented by And the going clients down about don't this time, and the if beginning a It's year to to the a winning platform, the share to So the client, really going spend focused a lot we're client a year, market of we're people build do and result, thinking our continue going being client We one at be. and We going sit at is the that as of banker the function relationship of relationships. and revenue and I market. generate what literally bankers. down then we banker, not is by we focus on to of

of focus count trusted because the sure clients the and why you spend others So are on how because ultimately air, focus mandate lot if one of many the many planes so really us and inevitably put than we a to much a mandate. we that's mandates at their then have the securing we those I'm going have enough looking we how selected good time becoming on on advisor that as what not on reasons that's need that things of doing. that, have we more do to a trusted advisor And in And up happen. of clients are

really on don't a getting is do of time lot that. What started. know I I we're So spend just

when I other have has how return anything track the headwind being is but of very And progress blowing, you hit more significant is bottom made being building by history, we the We year line masked that what businesses will And has some to think have power stops continuous very a as headwind. earnings been this the of our in that franchise, continuous. growth that evident. six these out year restructuring significant

who that's So we are.

Steven Chubak

terms tepid. Now, me, insights. manifest? region, global quite picking is sharing that starting helpful. final how that's just should you're and restructuring opportunities one to footprint, participate those appreciate you I from maybe And at are in those one least The understand one where meaningfully the I some just activity is positioned or Paul. environment acknowledged I say, China. area of really you your to wanted of to revenue up remains

Paul Taubman

mandates have, talk focused on very do client about region. We that we the we Right. not but are

there. have We footprint

senior We have very connectivity.

Asia a done that in the restructuring that a mindful quite have of has the And we're region. should We lot team assume you opportunities.

Steven Chubak

much for taking so Thanks questions. my Right.

Paul Taubman

Steve. Absolutely,

Operator

hand closing like As Paul for the Taubman remarks. further over there are no call to questions, to I'd

Paul Taubman

think all concludes this of full year We to earnings our we in look quarter report XXXX. I interest. speaking you And when appreciate you. review. we third your early to Thank forward results

Operator

This you for participation. concludes Thank today's call. your

disconnect. may You now

PJT Partners (PJT) 26 Oct 212021 Q3 Earnings call transcript