First Quarter Overview
- Total Revenues of $200 million, a decrease of 19% from a record
first quarter a year ago
- GAAP Pretax Income of $29 million and Adjusted Pretax Income of
$30 million
- GAAP Diluted EPS of $0.67 and Adjusted EPS of $0.54
Capital Management and Balance Sheet
- 1.2 million share equivalents repurchased
- $99 million of cash, cash equivalents and short-term
investments and no funded debt
Paul J. Taubman, Chairman and Chief Executive Officer, said,
“Our Restructuring and Strategic Advisory businesses navigated this
difficult market environment well as our increasingly integrated
approach resonated with clients. Our firm’s progress continues to
be driven by the success of our recruiting efforts, the maturation
of our team, and the growing recognition of our brand. While these
are difficult and challenging times, our firm is built to weather
difficult and challenging times. We will continue to invest to
strengthen our firm and we remain very confident in our
prospects.”
PJT Partners Inc. (the “Company” or “PJT Partners”) (NYSE: PJT)
today announced its financial results for the first quarter ended
March 31, 2023.
Revenues
The following table sets forth revenues for the three months
ended March 31, 2023 and 2022:
Three Months Ended March 31,
2023
2022
% Change
(Dollars in Millions)
Revenues
Advisory
$
168.1
$
181.7
(7%)
Placement
27.6
60.4
(54%)
Interest Income & Other
4.3
4.3
0%
Total Revenues
$
200.0
$
246.3
(19%)
Total Revenues decreased to $200 million for the current
quarter, down 19% from $246 million for the prior year.
Advisory Revenues decreased to $168 million for the current
quarter, down 7% from $182 million for the prior year, due to
decreases in strategic advisory and private capital solutions
revenues.
Placement Revenues decreased to $28 million for the current
quarter, down 54% from $60 million for the prior year, principally
due to a decrease in fund placement revenues.
Expenses
The following table sets forth information relating to the
Company’s expenses for the three months ended March 31, 2023 and
2022:
Three Months Ended March 31,
2023
2022
GAAP
As Adjusted
GAAP
As Adjusted
(Dollars in Millions)
Expenses
Compensation and Benefits
$
133.0
$
133.0
$
159.2
$
155.2
% of Revenues
66.5
%
66.5
%
64.6
%
63.0
%
Non-Compensation
$
37.8
$
36.5
$
36.9
$
35.0
% of Revenues
18.9
%
18.2
%
15.0
%
14.2
%
Total Expenses
$
170.8
$
169.5
$
196.2
$
190.1
% of Revenues
85.4
%
84.8
%
79.6
%
77.2
%
Pretax Income
$
29.2
$
30.4
$
50.1
$
56.2
% of Revenues
14.6
%
15.2
%
20.4
%
22.8
%
Compensation and Benefits
Expense
GAAP Compensation and Benefits Expense was $133 million for the
current quarter compared with $159 million for the prior year.
Adjusted Compensation and Benefits Expense was $133 million for the
current quarter compared with $155 million for the prior year. The
adjusted compensation accrual rate increased to 66.5% for the
current quarter compared with 63.0% for the prior year. The higher
accrual rate principally reflects increased fixed compensation
expenses combined with lower revenues. Aggregate Compensation and
Benefits Expense decreased in the quarter notwithstanding the
higher accrual rate due to lower revenues compared with the prior
year.
Non-Compensation Expense
GAAP Non-Compensation Expense was $38 million for the current
quarter compared with $37 million for the prior year. Adjusted
Non-Compensation Expense was $36 million for the current quarter
compared with $35 million for the prior year.
The increase in GAAP and Adjusted Non-Compensation Expense for
the current quarter compared with the prior year was due to
increases in Travel and Related and Occupancy and Related, which
were partially offset by a decrease in Other Expenses. Travel and
Related increased due to increased levels of business travel.
Occupancy and Related increased principally due to expansion of our
New York office.
Provision for Taxes
As of March 31, 2023, PJT Partners Inc. owned 62.8% of PJT
Partners Holdings LP. PJT Partners Inc. is subject to corporate
U.S. federal and state income tax while PJT Partners Holdings LP is
subject to New York City unincorporated business tax and other
entity-level taxes imposed by certain state and foreign
jurisdictions. Please refer to Note 11. “Stockholders’ Equity” in
the “Notes to Consolidated Financial Statements” in “Part II. Item
8. Financial Statements and Supplementary Data” of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2022 for
further information about the corporate ownership structure. The
effective tax rate for GAAP Net Income for the three months ended
March 31, 2023 and 2022 was 4.1% and 11.3%, respectively.
In calculating Adjusted Net Income, If-Converted, the Company
has assumed that all outstanding Class A partnership units in PJT
Partners Holdings LP (“Partnership Units”) (excluding the unvested
partnership units that have yet to satisfy certain market
conditions) have been exchanged into shares of the Company’s Class
A common stock, subjecting all of the Company’s income to
corporate-level tax.
The effective tax rate for Adjusted Net Income, If-Converted for
the three months ended March 31, 2023 was 26.0% compared with 26.0%
for full year 2022.
Capital Management and Balance Sheet
As of March 31, 2023, the Company held cash, cash equivalents
and short-term investments of $99 million and no funded debt.
During the first quarter 2023, the Company repurchased 855
thousand shares of Class A common stock in the open market, net
share settled 208 thousand shares of Class A common stock to
satisfy employee tax obligations and exchanged 143 thousand
Partnership Units for cash. During the first quarter 2023, the
Company repurchased 1.2 million share equivalents at an average
price of $77.36 per share.
As of March 31, 2023, the Company’s remaining repurchase
authorization was $108 million.
The Company intends to repurchase 139 thousand Partnership Units
for cash on May 9, 2023 at a price to be determined by the
volume-weighted average price per share of the Company’s Class A
common stock on May 4, 2023.
Dividend
The Board of Directors of PJT Partners Inc. has declared a
quarterly dividend of $0.25 per share of Class A common stock. The
dividend will be paid on June 21, 2023 to Class A common
stockholders of record as of June 7, 2023.
Quarterly Investor Call Details
PJT Partners will host a conference call on May 2, 2023 at 8:30
a.m. ET to discuss its first quarter 2023 results. The conference
call can be accessed via the internet at www.pjtpartners.com or by
dialing +1 (888) 224-1005 (U.S. domestic) or +1 (720) 452-9217
(international), passcode 1493252. For those unable to listen to
the live broadcast, a replay will be available following the call
at www.pjtpartners.com.
About PJT Partners
PJT Partners is a premier, global, advisory-focused investment
bank that was built from the ground up to be different. Our highly
experienced, collaborative teams provide independent advice coupled
with old-world, high-touch client service. This ethos has allowed
us to attract some of the very best talent in the markets in which
we operate. We deliver leading advice to many of the world's most
consequential companies, effect some of the most transformative
transactions and restructurings and raise billions of dollars of
capital around the globe to support startups and more established
companies. To learn more about PJT Partners, please visit our
website at www.pjtpartners.com.
Forward-Looking Statements
Certain material presented herein contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). Forward-looking
statements include certain information concerning future results of
operations, business strategies, acquisitions, financing plans,
competitive position, potential growth opportunities, potential
operating performance improvements, the effects of competition and
the effects of future legislation or regulations. Forward-looking
statements include all statements that are not historical facts and
can be identified by the use of forward-looking terminology such as
the words “believe,” “expect,” “opportunity,” “plan,” “intend,”
“anticipate,” “estimate,” “predict,” “potential,” “continue,”
“may,” “might,” “should,” “could” or the negative of these terms or
similar expressions.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations, and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and trends, the economy, and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks, and
changes in circumstances that are difficult to predict, many of
which are outside our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not place undue
reliance upon any of these forward-looking statements. Important
factors that could cause our actual results and financial condition
to differ materially from those indicated in the forward-looking
statements include, among others, the following: (a) changes in
governmental regulations and policies; (b) cyberattacks, security
vulnerabilities, and internet disruptions, including breaches of
data security and privacy leaks, data loss, and business
interruptions; (c) failures of our computer systems or
communication systems, including as a result of a catastrophic
event and the use of remote work environments and virtual
platforms; (d) the impact of catastrophic events, including
business disruptions, pandemics, reductions in employment and an
increase in business failures on (1) the U.S. and the global
economy, (2) our employees and our ability to provide services to
our clients and respond to their needs; (e) the failure of
third-party service providers to perform their functions; and (f)
volatility in the political and economic environment, including as
a result of inflation, rising interest rates, international
conflict, and instability in the banking system as a result of
several recent bank failures.
Any of these factors, as well as such other factors discussed in
the “Risk Factors” section of the Company’s Annual Report on Form
10-K for the year ended December 31, 2022, filed with the United
States Securities and Exchange Commission (“SEC”), as such factors
may be updated from time to time in the Company’s periodic filings
with the SEC, accessible on the SEC’s website at www.sec.gov, could
cause the Company’s results to differ materially from those
expressed in forward-looking statements. There may be other risks
and uncertainties that the Company is unable to predict at this
time or that are not currently expected to have a material adverse
effect on its business. Any such risks could cause the Company’s
results to differ materially from those expressed in
forward-looking statements.
Non-GAAP Financial Measures
The following represent key performance measures that management
uses in making resource allocation and/or compensation decisions.
These measures should not be considered substitutes for, or
superior to, financial measures prepared in accordance with
GAAP.
Management believes the following non-GAAP measures, when
presented together with comparable GAAP measures, are useful to
investors in understanding the Company’s operating results:
Adjusted Pretax Income; Adjusted Net Income; Adjusted Net Income,
If-Converted, in total and on a per-share basis (referred to as
“Adjusted EPS”); Adjusted Compensation and Benefits Expense and
Adjusted Non-Compensation Expense. These non-GAAP measures,
presented and discussed in this earnings release, remove the
significant accounting impact of: (a) transaction-related
compensation expense, including expense related to Partnership
Units with both time-based vesting and market conditions as well as
equity-based and cash awards granted in connection with the
acquisition of CamberView Partners Holdings, LLC (“CamberView”);
(b) intangible asset amortization associated with Blackstone Inc.’s
(“Blackstone”) initial public offering (“IPO”), the acquisition of
PJT Capital LP, and the acquisition of CamberView; and (c) the net
change to the amount the Company has agreed to pay Blackstone
related to the net realized cash benefit from certain
compensation-related tax deductions. Reconciliations of the
non-GAAP measures to their most directly comparable GAAP measures
and further detail regarding the adjustments are provided in the
Appendix.
To help investors understand the effect of the Company’s
ownership structure on its Adjusted Net Income, the Company has
presented Adjusted Net Income, If-Converted. This measure
illustrates the impact of taxes on Adjusted Pretax Income, assuming
all Partnership Units (excluding the unvested Partnership Units
that have yet to satisfy certain market conditions) were exchanged
for shares of the Company’s Class A common stock, resulting in all
of the Company’s income becoming subject to corporate-level tax,
considering both current and deferred income tax effects. This tax
rate excludes a number of adjustments, including the tax benefits
of the adjustments for transaction-related compensation expense and
amortization expense.
Appendix
GAAP Condensed Consolidated Statements of Operations
(unaudited)
Reconciliations of GAAP to Non-GAAP Financial Data
(unaudited)
Summary of Shares Outstanding (unaudited)
Footnotes
PJT Partners Inc.
GAAP Condensed Consolidated Statements
of Operations (unaudited)
(Dollars in Thousands, Except Share and
Per Share Data)
Three Months Ended March 31,
2023
2022
Revenues
Advisory
$
168,090
$
181,658
Placement
27,585
60,351
Interest Income and Other
4,313
4,310
Total Revenues
199,988
246,319
Expenses
Compensation and Benefits
133,043
159,232
Occupancy and Related
10,011
8,942
Travel and Related
6,972
4,458
Professional Fees
6,927
7,051
Communications and Information
Services
4,077
4,423
Depreciation and Amortization
3,443
4,307
Other Expenses
6,322
7,758
Total Expenses
170,795
196,171
Income Before Provision for Taxes
29,193
50,148
Provision for Taxes
1,207
5,680
Net Income
27,986
44,468
Net Income Attributable to Non-Controlling
Interests
10,650
18,764
Net Income Attributable to PJT Partners
Inc.
$
17,336
$
25,704
Net Income Per Share of Class A Common
Stock
Basic
$
0.69
$
1.03
Diluted
$
0.67
$
1.00
Weighted-Average Shares of Class A Common
Stock Outstanding
Basic
25,231,815
24,989,152
Diluted
26,918,511
26,551,835
PJT Partners Inc.
Reconciliations of GAAP to Non-GAAP
Financial Data (unaudited)
(Dollars in Thousands, Except Share and
Per Share Data)
Three Months Ended March 31,
2023
2022
GAAP Net Income
$
27,986
$
44,468
Less: GAAP Provision for Taxes
1,207
5,680
GAAP Pretax Income
29,193
50,148
Adjustments to GAAP Pretax
Income
Transaction-Related Compensation
Expense(1)
—
4,051
Amortization of Intangible Assets(2)
1,230
1,928
Spin-Off-Related Payable Due to
Blackstone(3)
25
51
Adjusted Pretax Income
30,448
56,178
Adjusted Taxes(4)
1,431
6,623
Adjusted Net Income
29,017
49,555
If-Converted Adjustments
Less: Adjusted Taxes(4)
(1,431
)
(6,623
)
Add: If-Converted Taxes(5)
7,909
14,488
Adjusted Net Income, If-Converted
$
22,539
$
41,690
GAAP Net Income Per Share of Class A
Common Stock
Basic
$
0.69
$
1.03
Diluted
$
0.67
$
1.00
GAAP Weighted-Average Shares of Class A
Common Stock Outstanding
Basic
25,231,815
24,989,152
Diluted
26,918,511
26,551,835
Adjusted Net Income, If-Converted Per
Share
$
0.54
$
1.00
Weighted-Average Shares Outstanding,
If-Converted
41,684,276
41,751,081
PJT Partners Inc.
Reconciliations of GAAP to Non-GAAP
Financial Data – continued (unaudited)
(Dollars in Thousands)
Three Months Ended March 31,
2023
2022
GAAP Compensation and Benefits Expense
$
133,043
$
159,232
Transaction-Related Compensation
Expense(1)
—
(4,051
)
Adjusted Compensation and Benefits
Expense
$
133,043
$
155,181
Non-Compensation Expenses
Occupancy and Related
$
10,011
$
8,942
Travel and Related
6,972
4,458
Professional Fees
6,927
7,051
Communications and Information
Services
4,077
4,423
Depreciation and Amortization
3,443
4,307
Other Expenses
6,322
7,758
GAAP Non-Compensation Expense
37,752
36,939
Amortization of Intangible Assets(2)
(1,230
)
(1,928
)
Spin-Off-Related Payable Due to
Blackstone(3)
(25
)
(51
)
Adjusted Non-Compensation Expense
$
36,497
$
34,960
PJT Partners Inc.
Summary of Shares Outstanding
(unaudited)
The following table provides a summary of
weighted-average shares outstanding for the three months ended
March 31, 2023 and 2022 for both basic and diluted shares. The
table also provides a reconciliation to If-Converted Shares
Outstanding assuming that all Partnership Units and unvested PJT
Partners Inc. restricted stock units (“RSUs”) were converted to
shares of the Company’s Class A common stock:
Three Months Ended March 31,
2023
2022
Weighted-Average Shares Outstanding -
GAAP
Basic Shares Outstanding, GAAP
25,231,815
24,989,152
Dilutive Impact of Unvested RSUs(6)
1,686,696
1,562,683
Diluted Shares Outstanding, GAAP
26,918,511
26,551,835
Weighted-Average Shares Outstanding -
If-Converted
Basic Shares Outstanding, GAAP
25,231,815
24,989,152
Unvested RSUs(8)
1,686,696
1,565,276
Partnership Units(7)
14,765,765
15,196,653
If-Converted Shares Outstanding
41,684,276
41,751,081
As of March 31,
2023
2022
Fully-Diluted Shares Outstanding(9)
44,367,647
44,447,086
As of March 31, 2023, 1.1 million Partnership Units and 1.5
million RSUs that have yet to satisfy certain market conditions
were excluded from any share count calculations.
Of the total 2.6 million share equivalents subject to market
conditions, 1.3 million require the Company to achieve a dividend
adjusted volume-weighted average share price over any consecutive
20-day trading period (“20-day VWAP”) of $100 prior to February 26,
2027. The remaining 1.3 million vest ratably upon the Company
achieving a 20-day VWAP between $100 and $130 prior to February 26,
2027. The awards are also subject to a five year service based
vesting requirement, with 20% vesting per annum.
Footnotes
(1)
This adjustment adds back to GAAP Pretax
Income transaction-related compensation expense for Partnership
Units with both time-based vesting and market conditions as well as
equity-based and cash awards granted in connection with the
acquisition of CamberView.
(2)
This adjustment adds back to GAAP Pretax
Income amounts for the amortization of intangible assets that are
associated with Blackstone’s IPO, the acquisition of PJT Capital LP
on October 1, 2015 and the acquisition of CamberView on October 1,
2018.
(3)
This adjustment adds back to GAAP Pretax
Income the net change to the amount the Company has agreed to pay
Blackstone related to the net realized cash benefit from certain
compensation-related tax deductions. Such amounts are reflected in
Other Expenses in the Condensed Consolidated Statements of
Operations.
(4)
Represents taxes on Adjusted Pretax
Income, considering both current and deferred income tax effects
for the current ownership structure.
(5)
Represents taxes on Adjusted Pretax
Income, assuming all Partnership Units (excluding the unvested
Partnership Units that have yet to satisfy market conditions) were
exchanged for shares of the Company’s Class A common stock,
resulting in all of the Company’s income becoming subject to
corporate-level tax, considering both current and deferred income
tax effects. This tax rate excludes a number of adjustments,
including the tax benefits of the adjustments for
transaction-related compensation expense and amortization
expense.
(6)
Represents the dilutive impact under the
treasury method of unvested RSUs that have a remaining service
requirement.
(7)
Represents the number of shares assuming
the conversion of all Partnership Units, excluding Partnership
Units that have yet to satisfy certain market conditions.
(8)
Represents the dilutive impact of unvested
RSUs that have a remaining service requirement.
(9)
Assumes all Partnership Units and unvested
RSUs have been converted to shares of the Company’s Class A common
stock. As of March 31, 2023, 1.1 million Partnership Units and 1.5
million RSUs that have yet to satisfy certain market conditions
were excluded from any share count calculations.
Note:
Amounts presented in tables above may not
add or recalculate due to rounding
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version on businesswire.com: https://www.businesswire.com/news/home/20230501005653/en/
Media Relations: Jon Keehner Joele Frank, Wilkinson
Brimmer Katcher Tel: +1 212.355.4449 PJT-JF@joelefrank.com
Investor Relations: Sharon Pearson PJT Partners Inc. Tel:
+1 212.364.7120 pearson@pjtpartners.com
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