Third Quarter Overview
- Quarterly Revenues of $278 million, an increase of 5% from a
year ago
- GAAP Pretax Income of $43 million and Adjusted Pretax Income of
$44 million
- GAAP Diluted EPS of $0.68 and Adjusted EPS of $0.78
Nine Months Overview
- Record Nine Months Revenues of $825 million, an increase of 11%
from a year ago
- GAAP Pretax Income of $126 million and Adjusted Pretax Income
of $130 million
- GAAP Diluted EPS of $2.20 and Adjusted EPS of $2.30
Capital Management and Balance Sheet
- 2.0 million share and share equivalents repurchased
year-to-date
- $355 million of cash, cash equivalents and short-term
investments and no funded debt
Paul J. Taubman, Chairman and Chief Executive Officer, said, “In
these difficult market conditions, our firm delivered strong
performance. For the first nine months of the year, we generated
record revenues as our unique combination of businesses and
collaborative team approach delivered superior outcomes for clients
and differentiated performance for our firm. We will continue to
invest to enhance our franchise and we remain highly confident in
our future growth prospects.”
PJT Partners Inc. (the “Company” or “PJT Partners”) (NYSE: PJT)
today announced its financial results for the third quarter and
nine months ended September 30, 2023.
Revenues
The following table sets forth revenues for the three and nine
months ended September 30, 2023 and 2022:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change
2023
2022
% Change
(Dollars in Millions)
Revenues
Advisory
$
244.1
$
224.4
9%
$
736.0
$
592.7
24%
Placement
26.7
39.7
(33%)
74.3
149.5
(50%)
Interest Income & Other
7.6
2.0
272%
14.3
3.4
327%
Total Revenues
$
278.4
$
266.1
5%
$
824.6
$
745.6
11%
Three Months Ended
Total Revenues of $278 million in the current quarter, up 5%
from $266 million in the prior year.
Advisory Revenues of $244 million, up 9% from $224 million in
the prior year, due to an increase in restructuring revenues, which
was partially offset by decreases in strategic advisory and private
capital solutions revenues.
Placement Revenues of $27 million, down 33% from $40 million in
the prior year, principally due to a decrease in fund placement
revenues.
Interest Income & Other of $7.6 million, up from $2.0
million in the prior year, principally due to higher interest
income.
Nine Months Ended
Total Revenues of $825 million in the nine months ended
September 30, 2023, up 11% from $746 million in the prior year.
Advisory Revenues of $736 million, up 24% from $593 million in
the prior year, due to an increase in restructuring revenues, which
was partially offset by decreases in strategic advisory and private
capital solutions revenues.
Placement Revenues of $74 million, down 50% from $149 million in
the prior year, principally due to a decrease in fund placement
revenues.
Interest Income & Other of $14.3 million, up from $3.4
million in the prior year, principally due to higher interest
income.
Expenses
The following tables set forth information relating to the
Company’s expenses for the three and nine months ended September
30, 2023 and 2022:
Three Months Ended September
30,
2023
2022
GAAP
As Adjusted
GAAP
As Adjusted
(Dollars in Millions)
Expenses
Compensation and Benefits
$
193.5
$
193.5
$
179.1
$
175.1
% of Revenues
69.5
%
69.5
%
67.3
%
65.8
%
Non-Compensation
$
42.4
$
41.1
$
39.4
$
37.0
% of Revenues
15.2
%
14.8
%
14.8
%
13.9
%
Total Expenses
$
235.8
$
234.6
$
218.5
$
212.1
% of Revenues
84.7
%
84.3
%
82.1
%
79.7
%
Pretax Income
$
42.6
$
43.8
$
47.6
$
54.0
% of Revenues
15.3
%
15.7
%
17.9
%
20.3
%
Nine Months Ended September
30,
2023
2022
GAAP
As Adjusted
GAAP
As Adjusted
(Dollars in Millions)
Expenses
Compensation and Benefits
$
573.1
$
573.1
$
488.9
$
477.2
% of Revenues
69.5
%
69.5
%
65.6
%
64.0
%
Non-Compensation
$
125.6
$
121.8
$
115.2
$
109.1
% of Revenues
15.2
%
14.8
%
15.4
%
14.6
%
Total Expenses
$
698.7
$
694.9
$
604.1
$
586.3
% of Revenues
84.7
%
84.3
%
81.0
%
78.6
%
Pretax Income
$
125.9
$
129.7
$
141.5
$
159.3
% of Revenues
15.3
%
15.7
%
19.0
%
21.4
%
Compensation and Benefits
Expense
Three Months Ended
GAAP Compensation and Benefits Expense was $193 million compared
with $179 million in the prior year. Adjusted Compensation and
Benefits Expense was $193 million compared with $175 million in the
prior year. The increase in Compensation and Benefits Expense was
both the result of higher revenues and a higher accrual rate
compared with prior year quarter.
Nine Months Ended
GAAP Compensation and Benefits Expense was $573 million compared
with $489 million in the prior year. Adjusted Compensation and
Benefits Expense was $573 million compared with $477 million in the
prior year. The adjusted compensation accrual rate of 69.5%
compared with 64.0% in the prior year.
Non-Compensation Expense
Three Months Ended
GAAP Non-Compensation Expense was $42 million compared with $39
million in the prior year. Adjusted Non-Compensation Expense was
$41 million compared with $37 million in the prior year.
The increase in GAAP and Adjusted Non-Compensation Expense
compared with the prior year was principally due to increases in
Professional Fees and Occupancy and Related expenses. Professional
Fees increased principally due to higher consulting and legal
expenses relating to the firm's business activities. Occupancy and
Related increased principally due to the further expansion of our
New York headquarters, which commenced in the fourth quarter of
2022.
Nine Months Ended
GAAP Non-Compensation Expense was $126 million compared with
$115 million in the prior year. Adjusted Non-Compensation Expense
was $122 million compared with $109 million in the prior year.
The increase in GAAP and Adjusted Non-Compensation Expense
compared with the prior year was principally due to increases in
Professional Fees, Occupancy and Related, and Travel and Related
expenses. Professional Fees increased principally due to higher
consulting and legal expenses relating to the firm's business
activities. Occupancy and Related increased principally due to the
further expansion of our New York headquarters, which commenced in
the fourth quarter of 2022. Travel and Related increased due to
increased levels of business travel.
Provision for Taxes
As of September 30, 2023, PJT Partners Inc. owned 62.2% 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
September 30, 2023 and 2022 was 26.8% and 18.1%, respectively. The
effective tax rate for GAAP Net Income for the nine months ended
September 30, 2023 and 2022 was 20.4% and 16.1%, 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 nine months ended September 30, 2023 was 26.7% compared with
26.0% for full year 2022.
Capital Management and Balance Sheet
As of September 30, 2023, the Company held cash, cash
equivalents and short-term investments of $355 million and no
funded debt.
In total during the third quarter 2023, the Company repurchased
47 thousand share equivalents at an average price of $74.06 per
share. During the nine months ended September 30, 2023, the Company
repurchased 2.0 million share equivalents at an average price of
$72.09 per share.
As of September 30, 2023, the Company’s remaining repurchase
authorization was $68 million.
The Company intends to repurchase 33 thousand Partnership Units
for cash on November 7, 2023 at a price to be determined by the
volume-weighted average price per share of the Company’s Class A
common stock on November 2, 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 December 20, 2023 to Class A common
stockholders of record as of December 6, 2023.
Quarterly Investor Call Details
PJT Partners will host a conference call on October 31, 2023 at
8:30 a.m. ET to discuss its third quarter 2023 results. The
conference call can be accessed via the internet at
www.pjtpartners.com or by dialing +1 (800) 579- 2543 (U.S.
domestic) or +1 (785) 424-1789 (international), passcode PJTP3Q23.
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, and (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, and geopolitical
conflict.
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) have been
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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues
Advisory
$
244,129
$
224,405
$
736,013
$
592,712
Placement
26,660
39,652
74,273
149,485
Interest Income and Other
7,574
2,035
14,342
3,355
Total Revenues
278,363
266,092
824,628
745,552
Expenses
Compensation and Benefits
193,457
179,080
573,114
488,899
Occupancy and Related
9,768
8,231
29,699
25,831
Travel and Related(1)
7,177
7,893
22,463
20,923
Professional Fees
10,344
7,375
28,725
21,652
Communications and Information
Services
4,479
4,155
12,317
12,819
Depreciation and Amortization
3,547
3,755
10,587
12,156
Other Expenses(1)
7,037
7,961
21,807
21,794
Total Expenses
235,809
218,450
698,712
604,074
Income Before Provision for Taxes
42,554
47,642
125,916
141,478
Provision for Taxes
11,401
8,601
25,725
22,776
Net Income
31,153
39,041
100,191
118,702
Net Income Attributable to Non-Controlling
Interests
13,743
17,953
43,304
52,742
Net Income Attributable to PJT Partners
Inc.
$
17,410
$
21,088
$
56,887
$
65,960
Net Income Per Share of Class A Common
Stock
Basic
$
0.69
$
0.84
$
2.26
$
2.63
Diluted
$
0.68
$
0.82
$
2.20
$
2.56
Weighted-Average Shares of Class A Common
Stock Outstanding
Basic
25,193,359
24,966,527
25,220,031
25,032,151
Diluted
26,644,324
26,519,173
26,630,957
26,497,177
PJT Partners Inc.
Reconciliations of GAAP to Non-GAAP Financial Data
(unaudited) (Dollars in Thousands, Except Share and Per
Share Data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP Net Income
$
31,153
$
39,041
$
100,191
$
118,702
Less: GAAP Provision for Taxes
11,401
8,601
25,725
22,776
GAAP Pretax Income
42,554
47,642
125,916
141,478
Adjustments to GAAP Pretax
Income
Transaction-Related Compensation
Expense(2)
—
3,987
—
11,746
Amortization of Intangible Assets(3)
1,230
1,486
3,690
5,276
Spin-Off-Related Payable Due to
Blackstone(4)
21
836
100
771
Adjusted Pretax Income
43,805
53,951
129,706
159,271
Adjusted Taxes(5)
11,162
10,142
26,068
26,206
Adjusted Net Income
32,643
43,809
103,638
133,065
If-Converted Adjustments
Less: Adjusted Taxes(5)
(11,162
)
(10,142
)
(26,068
)
(26,206
)
Add: If-Converted Taxes(6)
11,691
13,970
34,631
41,143
Adjusted Net Income, If-Converted
$
32,114
$
39,981
$
95,075
$
118,128
GAAP Net Income Per Share of Class A
Common Stock
Basic
$
0.69
$
0.84
$
2.26
$
2.63
Diluted
$
0.68
$
0.82
$
2.20
$
2.56
GAAP Weighted-Average Shares of Class A
Common Stock Outstanding
Basic
25,193,359
24,966,527
25,220,031
25,032,151
Diluted
26,644,324
26,519,173
26,630,957
26,497,177
Adjusted Net Income, If-Converted Per
Share
$
0.78
$
0.96
$
2.30
$
2.84
Weighted-Average Shares Outstanding,
If-Converted
41,409,625
41,540,815
41,351,599
41,614,791
PJT Partners Inc.
Reconciliations of GAAP to Non-GAAP Financial Data – continued
(unaudited) (Dollars in Thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
GAAP Compensation and Benefits Expense
$
193,457
$
179,080
$
573,114
$
488,899
Transaction-Related Compensation
Expense(2)
—
(3,987
)
—
(11,746
)
Adjusted Compensation and Benefits
Expense
$
193,457
$
175,093
$
573,114
$
477,153
Non-Compensation Expenses
Occupancy and Related
$
9,768
$
8,231
$
29,699
$
25,831
Travel and Related(1)
7,177
7,893
22,463
20,923
Professional Fees
10,344
7,375
28,725
21,652
Communications and Information
Services
4,479
4,155
12,317
12,819
Depreciation and Amortization
3,547
3,755
10,587
12,156
Other Expenses(1)
7,037
7,961
21,807
21,794
GAAP Non-Compensation Expense
42,352
39,370
125,598
115,175
Amortization of Intangible Assets(3)
(1,230
)
(1,486
)
(3,690
)
(5,276
)
Spin-Off-Related Payable Due to
Blackstone(4)
(21
)
(836
)
(100
)
(771
)
Adjusted Non-Compensation Expense
$
41,101
$
37,048
$
121,808
$
109,128
PJT Partners Inc. Summary of Shares Outstanding
(unaudited)
The following table provides a summary of weighted-average
shares outstanding for the three and nine months ended September
30, 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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Weighted-Average Shares Outstanding -
GAAP
Basic Shares Outstanding, GAAP
25,193,359
24,966,527
25,220,031
25,032,151
Dilutive Impact of Unvested RSUs(7)
1,450,965
1,552,646
1,410,926
1,465,026
Diluted Shares Outstanding, GAAP
26,644,324
26,519,173
26,630,957
26,497,177
Weighted-Average Shares Outstanding -
If-Converted
Basic Shares Outstanding, GAAP
25,193,359
24,966,527
25,220,031
25,032,151
Unvested RSUs(8)
1,450,965
1,555,239
1,410,926
1,467,619
Partnership Units(9)
14,765,301
15,019,049
14,720,642
15,115,021
If-Converted Shares Outstanding
41,409,625
41,540,815
41,351,599
41,614,791
As of September 30,
2023
2022
Fully-Diluted Shares Outstanding(10)
44,457,247
43,761,678
As of September 30, 2023, 1.1 million Partnership Units and 1.6
million RSUs that have yet to satisfy certain market conditions
were excluded from any share count calculations.
Footnotes
(1)
Certain balances in the prior
period have been reclassified to conform to their current
presentation. For the three and nine months ended September 30,
2022, this resulted in a reclassification of $1.6 million and $3.5
million, respectively, from Other Expenses to Travel and Related.
There was no impact on either U.S. GAAP EPS or Adjusted EPS as a
result of the reclassification.
(2)
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.
(3)
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.
(4)
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.
(5)
Represents taxes on Adjusted
Pretax Income, considering both current and deferred income tax
effects for the current ownership structure.
(6)
Represents taxes on Adjusted
Pretax Income, assuming all Partnership Units (excluding the
unvested Partnership Units that have yet to satisfy market
conditions) have been 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.
(7)
Represents the dilutive impact
under the treasury method of unvested RSUs that have a remaining
service requirement.
(8)
Represents the dilutive impact of
unvested RSUs that have a remaining service requirement.
(9)
Represents the number of shares
assuming the conversion of all Partnership Units, excluding
Partnership Units that have yet to satisfy certain market
conditions.
(10)
Assumes all Partnership Units and
unvested RSUs have been converted to shares of the Company’s Class
A common stock. As of September 30, 2023, 1.1 million Partnership
Units and 1.6 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030189122/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
PJT Partners (NYSE:PJT)
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PJT Partners (NYSE:PJT)
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