PJT - Earnings call 3 2023 | PJT Partners Inc.

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Operator

Good day, and welcome to the PJT Partners Third Quarter 2023 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

Thanks very much, Todd. Good morning, and welcome to the PJT Partners Third Quarter 2023 Earnings Conference Call. of at Head Partners. Pearson, Sharon Investor PJT Relations I'm turn our are Chief our And during to the I call, out today statements. this may to Taubman, I Chief call Chairman want Paul, Officer.Before course Meates, joining me forward-looking that Helen make Paul a and point of over and Executive Financial conference of the we Officer; number to and differ are subject from cause to there uncertainties, are statements and could important forward-looking in These actual indicated risks outcomes materially those these that factors various statements. section described website We XX-K, Partners' in these which factors believe Form pjtpartners.com. at that in are the XXXX our Risk Factors contained is on available PJT the measures, the you company's company are no data Paul. that we I on want evaluating update morning, that, you which GAAP meaningful the to today to in disclosures detailed duty our assumes website.And to the remind reconciliations, contains non-GAAP these I'll release we press refer we presentation make the with and turn financial believe financial metrics call any non-GAAP issued the that available within on over should performance.For to forward-looking the also and this statements contained

Paul Taubman

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

In and to is relief to our Gaza, and humanitarian of efforts funds a against our Before voice We an our organization please month, express the make heartbroken. suffering by and a and civilians our unspeakable against held for aid our in innocent the barbaric, in hostage. We we those few of are civilians do acts, committing Israel. outrage Israel turning world financial our Israel terrorist to part, effort allow we turn perpetrated calling acts comments.This to attention in release results, Gaza.Now me results. to see immediate such has the PJT add we witnessed extraordinary

reached levels to ago. global landscape M&A increased this fraught M&A our contrast, uncertainty provide approach We previously number review in our and combination Helen? team revenues. record a for to full takes businesses U.S. collaborative through delivered levels rates, XX% by equity performance and $XXX business, tighter clients with continue to down conditions, detail After not current higher or our geopolitical a I million tracking than more difficult to and superior Helen grew a all markets dampen so the this outcomes pressures globally. in a as more recruiting of year, These weigh you is decade. on formation activity, issuance our will monetary for backdrop, economic year continue to Against and in unique outperformance bankruptcy financial volumes operate X-month and revenues on year-over-year firm.Our efforts outlook. In our results, a our with update filings environment comparable and of levels decade capital

Helen Meates

Total A revenues in more levels.Turning to compared X-K. restructuring months as certain XX% and Paul. year-over-year. decline Beginning year continued Park with Consistent Park Hill mentioned, revenues revenues non-GAAP you, restructuring than an in X% morning. significant our year-over-year. prior up significant X in third Paul more increase more we've and weakness XX, revenues Advisory in increase than are Good quarter fully for adjustments, a Strategic and Hill ago quarters, third offset expenses. with levels. decline period with same a in were the presented be increase the to in in year.For ago approximately forward revenues pulled quarter last year criteria to compared the the million the that revenues compared modest of Advisory million described Strategic expenses which a first Thank $XXX months September record million, the offset PJT $XXX in in $X approximately $X million, A revenues. PJT ended lower were significant met with total Total were X to

expense. compensation adjusted First,

at for accrue revenues was expectation compensation $XX noncompensation adjusted year ratio up XXXX.Turning Total We to $X million for adjusted continued This quarter, $XX expense our million and months, year-over-year. the the XX.X% to the of $XXX first have for full represents adjusted current of million third up X the noncompensation million expense. year-over-year X year. expense for months the

the of to increases revenues, year X-month growth X-month that same period first year income with As was expense compared costs expense the and occupancy the million increased expect months. pretax expense.We periods. year adjusted as of third the $XX quarter to reported well rate XX% year, and a X full higher percentage line the noncompensation last quarter professional the growth adjusted grew for rate Adjusted both months full XX.X% noncompensation for entertainment the of by $XXX in travel and for with in driven third million be X first as fees, higher we and

XX.X% both to presented compares XX.X% rate. converted the third and shares that for at X-month and been and provision our for with we've as periods the year.The pretax quarters, periods. adjusted prior was results to all taxed corporate as was if X- had Our quarter units tax XX.X% and last a X-month all taxes, our for of income margin This partnership

adjusted per the to XX.X%, months share; our full $X.XX we tax rate was the X tax X and per earnings be months. third $X.XX for and share Our for effective rate for expect this of for first quarter if-converted the our year.Earnings were the XXXX first effective

common X December million it capital, we shareholders A debt in Class cash, ended outstanding.Finally, million share. X cash to the as turn the quarter equivalents dividend on quarter, ago share approved XX.X balance and sheet, The our million paid the of our XX, XXXX higher On cash, will of levels.On record shares. back in count Paul. in exchange $XXX first dividend the million was the of with we a the slightly than of $X.XX count year approximately shares, units and short-term $XXX no Including totaled investments the have for weighted funded Board and working December be to share has net per X.I'll repurchases months average partnership for

Paul Taubman

experiencing Beginning a Thank in of overleveraged credit wave a companies Helen. decade higher unfavorable business We're than as with opportunity not balance challenges; many array sheets, increasing more pressured and markets you, an financing seen models, grapple with of restructuring. costs.

higher compared business its We the more this will more continue and to and strong that revenues extended believe rates continuing PJT to The investments commitments. from to X this remains new Hill. due sheet restrictive fundraising are persist the new the up of constrain an repair environment appetite leadership X-month for more substantially credit to impacted momentum and models with for return. as for conditions.Consistent becomes capital anemic on pace further balance continued activity commentary, XXXX year activity world-class restructuring with fundraising of and weighed on time cycle and business broad-based period position extremely our challenging, fundraising months Subdued by levels.Turning with IPO interest record investor to hangover ago periods has the Park companies alternative pressure for M&A

many Advisory. down were percentage backdrop, Against result, new up this low M&A are complete. shaping as down in and taking Notwithstanding Park level activity market longer the revenues X- activity, considerably of to deal-making GDP significantly to Hill is at and a As Strategic a unprecedented our nearly levels. year-on-year.Turning when being recent And capitalization, PJT X-month the scaled XXXX spate global in lowest global decade. is of be to M&A a and of measured fundraises

business the X-month X- Advisory periods. to Strategic revenues and Our down is not slowdown the with immune for both

positioned recovery. return that time, capitalization.Our is end, remain relative M&A will that that any for volumes on basis well However, the a broad remains strategic continues in to historical levels careless declines always relationships global less engaged GDP utmost array a than of market and global clients conditions line with to are that activity.While and with we the to we will, confidence inevitable market topics. with our it global we perform on in ensuring M&A of market, more business call declines To focus meaningfully have bottom improve actively the on in to market revenue overall well

grown has meaningfully today the year mandates of of and the pipeline it than throughout the Our beginning year.Turning steadily talent. was at stronger is to

have unique health consumer, opportunity to XX partners senior the our year position marketplace we would MDs, presents accelerate ever and including be hired through us hiring technology. most We M&A subdued addition a with communicated across strengthening the continue the market consequential our We as that Year-to-date, infrastructure hiring. talent. pace our and high-quality this verticals, of industry expand previously care, many industrials, of to capabilities

expect these important on as focus long-term remain to driver elevated momentum value this We continue steadfast XXXX.We view an creation. in into recruiting shareholder our and value recruiting of levels

headwinds. significant challenging and firm's our in margins we that and weather us history, macro full efforts to expect to to highest long over the businesses look will returns be to this We position build and substantial the we we as pressure continue extraordinarily thrive integrate to investments revenues we conditions recruiting While environment expect improve. remain term, the notwithstanding near these these in volatile ahead, intermediate year our market the markets term.As confident from

differentiated businesses differentiated that, now Our set shareholders to performance.And of balanced take questions. enables will with we with your advice us and reward clients with provide

Operator

from [Operator JMP first Ryan come Instructions] Devin question with Our will Securities.

Devin Ryan

tracking some are growing the start earlier contribution you're much kind I of think I see nice strength. want on year-to-date. And to peers but mandates, seeing hitting results they've so where to a restructuring your business than far. we're uplift Clearly, restructuring your there yet of

that's to for So higher. still it of like potential leading on you business does business you of have just could then coming a the here, like get earlier.And mix. Paul, whether but structurally in sense feel and kind a understand pretty why bullish remain it's just want I this sound you're

could to continues. actually in levels are kind whether growth So think just just that now or PJT about I'm and what a if just good we're higher from baseline that right of for trying mean

Paul Taubman

Well, in restructuring talked about there's period this cycle. for no we've doubt some for time. longer And a of higher we're

is we today. has that None of like extraordinarily that those interest the the businesses that any winning, look overleveraged rafts repair environment cycle, legs.Now flows. benign we're at have conviction it cycle that and available access we're many to balance And to sort are going weakened as were and we that this there rates. mandates dialogues exceedingly are ebbs as sheet of had having think companies have COVID. I result life low was were an a where capital, There of substantially

So economic be every continue and business slowdown of pickup period that elevated with continues to models should a step what business do deal access for not need as difficult, near-term maturities but and affect we we to in performance. day believe will becomes companies these believe more an taking is time a back as simply as levels activity, to some just capital

where of kind that's So world. the we see

Devin Ryan

ratio. just Okay. Great then I guess, a on expense And here, color. follow-up just

up is know it's don't XX% but expense know comp year-to-date, I on down XX% up about year-to-date. it's were this scientific, break revenues possible So if comps not quite I to just specifically.

just much competitive going is to recruiting just how Just most of the a inflation year Just how hiring growth think this be and that year just all about of that is amortization versus prior consequential versus from function that's relationship. year in of much the trying to dynamics?

Helen Meates

Look, mentioned. that I you as senior-level number we're to sort significant talked think of are that with hiring components Devin, begin there's a about. the the of we've one -- our is for there revenues, of a But outlook is and we number what doing comp factor ratio

impact that obviously So will it.

that amortization think from competitive backdrop. as well. through then around as be the population, prior also will discipline about is comps mentioned, the you comp And year's existing there We flowing

determine guesstimate factors is. for our all taken the So we account what are ratio when into those best

Paul Taubman

Devin, presented demonstrably a we have firm X years, think, if today stronger what the ago. I X you over back look last we years just than

the grown ago. are environments X of meaningfully headcount, for that extraordinarily operating subdued to market have X We in businesses X relative we're but our years

the of ratio So X of significant that it's available has significant you the franchise very our the higher. the strengthening wallet you step back and when at not in moved comp X businesses, look reduction the in and surprise investment, a

Operator

come James will Goldman with from question next Sachs. Yaro Our

James Yaro

your impacting could Paul, higher backdrop just is rates alluded more to, how macro a maybe have with the obviously We you and geopolitical obviously U.S. business. election. as uncertainty coming we start this and

levels perhaps So M&A. -- the you and just return to time inflection normalized about or what which could talk that we line for see for maybe means over cadence which or of the M&A

Paul Taubman

down sober Look, we most M&A came this the the and assessment market. perhaps that with another this marketplace, assume be the of into we James, in year, would year

many manage forward undeterred. desires their indigestion little bit head And essentially I quantum that's damper, factors core difficult get It's committed antitrust portfolio, to it, it whether different in the and that was all of It's get of terms was we think because when done. the had recession. themselves then costs.On and controlling difficult price. put It's you with as this notwithstanding levels, it of that, available. the makes out in is transactions going affect is financing drumbeat all has lower of XXXX, their a we're to has And agreeing the uncertainty. negative where chilling move constrained enforcement add in deconstruct it's that, benefit agendas meaningfully you It's been what more from a a transactions scale difficult to the effect which and to sellers into It's more the on marketplace. active the of that, been in sponsors it see. every It's it competencies, which companies' policy was difficult to more fundraising environment a between desire not gain less remained it capital was has expected direction. done, the a and and to moving bearish to and probably of difficulty sort that remains continued financing, financing agree. side on deals on if or in and to difficulty volatility alternatives been from strategic even prevail for whether cost betwixt they to harder to it to of and or buyers economies a like cycle are administration, willing not companies very have strong to that to from not subject number of has dimension, companies' transactions unchallenged.And this But as to

on companies all I backlog, building, companies But And getting the large equity ecosystem putting has be private is so the to liquidity ultimately relative an And awfully think the how you think how I events in number there in if firms are And unclear term. of those get perhaps out. effect we're near there's in in for that tunnel. also it's many have that portfolio companies will adjust. sales an IPO-ed would that been aggressive a businesses, of I adjustment and like capital a of the I a bid And on equity of private said, I process.So tunnel, of initiate reluctant think inevitably, a phase think itself. feeds lot confidence to closer more many less markets as this are to it's dark we're the these out factors. on but long, is

James Yaro

can and say, Okay. That's helpful success today Paul. obviously let's speak of you've are expectations you tremendous Maybe had just And XXXX? that you the far just this perspective, as your see with what whether hiring opportunities you a follow-up, -- into same for this versus, hiring, a so just for the to year. beginning year the hiring really on what

Paul Taubman

all environment, continues the environment a probably those a fundamental on being past the in have previous to years. the attracting our to a that time impediments practitioners and us take attractiveness firm those a to personal leave time was talked to And that in long able just headwind not of leave, periods high. to talent of linked we've and activity, were of that, unique that was hiring, in is had the few and what for we're time create anomalies costs connections. together long One on significantly of was the gardening build. period is X COVID, That remote think recruit.And to seen I those chilling our therefore, we firms about being second consistently M&A constrained the extraordinary well thankfully.And the of cost X XXXX, best senior in ability we've extraordinarily effect now friction because melt-up and friction in

those of by appreciate and they've back have which way better we're the to we in been the the M&A banks without thrived levels forever can bottom the joining we of come because attractiveness impediments, think at Every our to considering a some connections firm get more as able to the the those And for those environment XXXX. level back all through. low I because It's at friction to of cadence. are low costs by serve have to the the quarter into a addition macro point, firm individual who top arguably our and have activity.So of But is individual. firm that expect momentum all many That's to firm. as We're normal the of culture certainly in from create current office. personal talent don't I It's who not the big our to And up. clients. understood the come in together People quotas. unique dissatisfaction the the as is destination And continue fourth in down. continues all are shining remain. we'll from better

Operator

Our with comes Chubak Research. Wolfe Steven question from next

Brendan O'Brien

Steven. Brendan I last the side on based a than results the guess And prepared it in O'Brien have bit is This stronger for to like the start, of remarks, seems been filling on your commentary restructuring suggested. that quarter largely might business. maybe were

it see a that get sense that meaning this expected to there's a timing to weren't that some more deals of that you expecting? should to I XQ, have? meaningful typically uplift to be was simply you seasonal function in related, just in you whether we that XQ And So bit as pickup underlying in close if timing, expecting earlier activity was you whether closed or wanted a

Paul Taubman

quarter a ago. we upbeat I year it is full commentary think I -- our Well, was than think more modestly

just mandates but the additional would to into believe translate revenues. that improved, how seeing been ago.I exclusively business, quarter hard relative suggests to the our a outlook firm. function and but for always that exactly these A opportunities of as per the I restructuring. for that this and all to but is So year presented don't predict the is environment simply say of But macro strength marginally timing it's it's all opportunities improved business the field, in these restructuring, lot of is step and It's competing not a in marginally we've and think some se, it's doing just I that it ourselves, improved. not

Brendan O'Brien

you're for a my And few months, transactions but which, along touched front, have strategic antitrust the it. of the guess strategic a such and some all of of you likely large that I And number same positive the serve gap Got rates That's seen announced you dialogues to public know strategics the do over activity? the time, color. the at helpful Activision-Microsoft having subdued that guess, suggest suggests with is follow-up, I environment for on we to is the long-end bit, the activity I more on higher ], the commentary you But as like near the this transactions. news sponsor as as that favorable maybe intermediate for [ the with in at sponsors approval large moment? further accelerant sponsors feel could or in term.Could relatively remain past from at the large compare

Paul Taubman

I didn't I'm last sorry, just repeat sentence. hear... that

Brendan O'Brien

and impact on The the gap long-end higher sponsor activity. in potential rates

Paul Taubman

be a come could also Look, and and optimistic. that green fruition. I I shoots look, about talk I reasons a clearly and here paint think sit bag. it I about picture the not talk all to -- -- why the reasons to mixed may could can is it's

transactions done. with is a to environment think get reality challenging we're the I very dealing

take Let's just antitrust.

result, longer remains the to in think I backdrop, that this time periods between sort committed makes get closing.And and extended that macroeconomic putting a at as it yet to the and still well-publicized a risk And been there, in of risk administration they're have for active some because the enforcement. puts targets and comfortable. of businesses victories, just out of it adds is there companies while not time fact period they're a volatile they're signing that and not and when companies for crosshairs difficult more of sitting integrated acquired,

of is with were different there there and uncertainty, mere jurisdictions the longer and is So the transactions day. of the the globe mean doesn't opportunities It are test just geopolitical market mere that to fact signing for would broader around margin, fact periods the on transactions.That many of agendas deals, wills, to as transactions. a interveners time there between otherwise some fact get that precludes in be agreed caught more never that closing, that that regulatory up the means just that the weighs see that presented it all light

create there's companies. no firms private monetization bit. open that events a with IPO to portfolio think more The looking equity doubt markets are hopefully I up

like interest very just for why like the with to growth and vehicles ways the seeing more lenders and financing but of capital the to be continues create the private companies.Committed the companies that you to execution would you're for number sheer challenges look That's IPO and large as One direct transactions, of and more be for will in access creative liquidity fund of pools deal-making. greater continuation market. challenging then you're seeing

control, aligned team sure have possible. priorities clients, have making field, to of to backlog strategic movement and we're secure able a fact we out to some is acted most and what and get as an we the we that deals clouds yet is it what high-quality But that gives confidence simple And companies start ever-growing the the adjusting this to way the right the as not and see I activity sure move matter how think upon, fact of we trying a the you is the making right try many been done, to right present of culture making our soon desires initiatives these as And to as lift, have an to to me forward. accelerant. figure mandates deals we're we be have is which on that team to with strong sure upside.So conditions these the no could get some So to have very controlling difficult environment.

on have turn be positioning much investors stronger quarterly the as what even and to like will for that we're in to we as present don't basis, our inevitable hopefully, we'd does, So reflected results. a ourselves at if least it

Operator

Our next Brennan with come question Hawken UBS. will from

Brennan Hawken

wanted continue recently? margins. say you what to I the expectation your incremental that, you've pressure with that When implication understand been recently to have is to will Paul, recruiting more Or that more Just for versus generating you saying start, pressure trying is continue? the seen pressure that there. to the that

Paul Taubman

get wouldn't think you I you would already like aware of be as than weren't telling historically. to lower anything as to saying are and get back margins Well, to by dealing those I we were our what back be we're that where will historically. subdued ability the the And But margins to current long been they've a recruiting, with pressured. elevated margins environment

Brennan Hawken

Okay.

just or I little incremental. not to you're that. was would little understood trying to a on a incremental. I be whether it I guess, talking get Okay. about left texture I'm assume

So...

Paul Taubman

year. my need we higher to to see through this just they would get have the objective. we land begin the and we margins from be But clear, there, over time and year would been to historically. where That's full those get where be sorry, hope get for to I'm them back that

So there's no confusion.

Brennan Hawken

starting clear growth remark kind restructuring, heard It's interesting in to on firms' level really of see. sort of then Okay. out. because good strength And we've really to other

we firm's the how that that. expecting the fact sounds is And in one, you're it you're the revenue driven? does like highest Curious, not sponsor-owned, that number history, debtor given So seeing what still side compare revenue kind there of as order And of revenue great. to additional far be you record year-to-date see XXXX? as go? would Any color magnitude could restructuring the think do

Paul Taubman

sure. Well,

you we come at and the fourth precise much to the get to year, think our additional thing. have saying thinking just very a will restructuring. if lot think I'm XXXX. quarter the of I am prior we really years. a I our that reflects made, predict difficult or of estimates of it's comfortable tie give and -- year in our We're year more full peak lot It's sort have point is this a revenue a that.And want still don't take this quarter. to mean, color about slight I that, the are highest I it think And in all And back not what be that point, had comfortable earlier in it's modest on because comments I this to at But exclusively saying I ever last prognosis. overly I restructuring. quarter comfortable any that Just beyond to fourth improvement a was don't to on

courts their of have it's It's business. of It's are mix I a to to filings. make a I early but liability to creditors. characterize their think business our mix business increasingly of some which that working corporates, more stacks, overleveraged affects restructuring managing business, and environment proactive and that it use and I think difficult between of more was of and no may now a to the is management probably this resolve them debt on, of debtors the continues proactively to to wave manage as debt credit would unrelated of stacks geographically. some bankruptcy choice mix and situation.So those business carry We're starting see, pressure companies

to outside Asia. our to Europe continue presence United the We work increase and States, in in

pleased sheet in industry different that. wave business cycle their able court, expertise that continue does dealt than go anytime very to this work not to I'm and their predict that business.Now relationships that money more after our And continue burst to it push access, activity their this and where up, and ask the don't where I'm Strategic that, feels we we with. repair quarter-to-quarter? if this out back and court, of wave coming team that easy can is is still this where Advisory is XXXX, soon. We the our we of and a need forward think to link the I with balance me, this had with hope see and we But then be to can and it's quite depth that just breadth all you it going to at resemble of dried

Brennan Hawken

texture. helpful Yes. clear very and That's

know to you record. it's strength don't the prior of believe exceeding XXXX, possible which if to magnitude was that? I And -- degree? I your to Just Are restructuring compare order what

Paul Taubman

thank let we I peak. have look Well, and year-on-year year can Thank XXXX when full getting of produce and your actually compare right. what's results your the forward we better, just full year.All back can to us our see I you But communicating give was XXXX. year We us what's through than much. very -- to appreciate joining going the our dusted, appreciate prior today, perhaps and and results support, us and then look we XXXX different for benefit we we in -- interest. early done everyone

Helen Meates

you. Thank

Operator

conclude does today's this call. And

may disconnect. You now

PJT Partners (PJT) 31 Oct 232023 Q3 Earnings call transcript