PJT Partners Inc

Previous wording

Mergers and acquisitions (“M&A”) is a cyclical business that is impacted by macroeconomic conditions. There are several factors influencing global M&A activity in the intermediate term, including monetary policy, greater economic and geopolitical uncertainty and global growth. Worldwide M&A announced volumes during first quarter of 2024 were up 38% compared with first quarter of 2023. On an annualized basis, volume was up 10% compared with 20231. How these macroeconomic factors will impact the strength of strategic activity in the intermediate term is still uncertain. While we expect the markets to recover to historical relationships between M&A activity and broader market benchmarks, the pace of such recovery remains unclear.

Current wording

Mergers and acquisitions (“M&A”) is a cyclical business that is impacted by macroeconomic conditions. There are several factors influencing global M&A activity in the intermediate term, including monetary policy, greater economic and geopolitical uncertainty and global growth. Worldwide M&A announced volumes during first half of 2024 were up 18% compared with first half of 2023. On an annualized basis, volume was up 6% compared with 2023.1 How these macroeconomic factors will impact the strength of strategic activity in the intermediate term is still uncertain. While we expect the markets to recover to historical relationships between M&A activity and broader market benchmarks, the pace of such recovery remains unclear.

Previous wording

Global restructuring activity remained strong throughout the first quarter of 2024 due to continued elevated levels of balance sheet restructurings and liability management transactions. A number of factors continue to drive restructuring activity, including higher interest rates, companies proactively managing debt maturities and structural issues facing many industries. Strong levels of restructuring activity continue to be driven by a mix of liability management as well as in-court restructuring assignments as companies, creditors and financial sponsors focus on comprehensive capital structure solutions. Activity in the first quarter of 2024 remained dispersed across a broad cross section of industries and geographies, further demonstrating a multi-year cycle of elevated restructuring activity.

Current wording

Global restructuring activity remained strong throughout the second quarter of 2024 due to continued elevated levels of liability management and more traditional balance sheet restructurings. A number of factors continue to drive restructuring activity, including elevated interest rates, companies proactively managing debt maturities and structural issues facing many industries. Activity in the second quarter of 2024 continued to remain dispersed across companies, creditors and financial sponsors as well as a broad cross section of industries and geographies, demonstrating a continued multi-year trend of elevated restructuring activity.

Previous wording

Fund placement activity remained challenged given the global macroeconomic environment and supply of alternative investment opportunities in the market seeking capital. Additionally, limited partners have become more discerning in their deployment of capital for both existing and new fund manager relationships. Investors continue to focus on existing relationships and, as a result, the bar for fund managers to attract new investors remains high as a flight to quality persists. As it relates to private capital solutions, market volatility has increased resulting from sustained inflation, higher interest rates and geopolitical events. As a result, market sentiment has shifted away from highly concentrated portfolio structures in favor of diversification.

Current wording

Fund placement activity, although increased from a year ago levels, remained challenged given the global macroeconomic environment and supply of alternative investment opportunities in the market seeking capital. Additionally, limited partners have become more discerning in their deployment of capital for both existing and new fund manager relationships. Investors continue to focus on existing relationships and, as a result, the bar for fund managers to attract new investors remains high as a flight to quality persists. As it relates to private capital solutions, investors need for liquidity continues to be a driver for increased market volumes, and, absent any unexpected macroeconomic headwinds, these favorable conditions should persist.

Previous wording

1 Source: LSEG Global Mergers & Acquisitions Review for First Quarter of 2024 as of March 31, 2024.

Current wording

1 Source: LSEG Global Mergers & Acquisitions Review for First Half of 2024 as of June 30, 2024.

Previous wording

The following table sets forth our condensed consolidated results of operations for the three months ended March 31, 2024 and 2023:

Current wording

The following table sets forth our condensed consolidated results of operations for the three and six months ended June 30, 2024 and 2023:

Previous wording

The following table provides revenue statistics for the three months ended March 31, 2024 and 2023:

Current wording

The following table provides revenue statistics for the three and six months ended June 30, 2024 and 2023:

Previous wording

Total Revenues were $329.4 million for the three months ended March 31, 2024, an increase of $129.4 million compared with $200.0 million for the three months ended March 31, 2023. Advisory Fees were $288.7 million for the three months ended March 31, 2024, an increase of $120.6 million compared with $168.1 million for the three months ended March 31, 2023. The increase in Advisory Fees was due to significant increases in restructuring, strategic advisory and private capital solutions revenues. Placement Fees were $34.5 million for the three months ended March 31, 2024, an increase of $6.9 million compared with $27.6 million for the three months ended March 31, 2023. The increase in Placement Fees was due to an increase in fund placement revenues. Interest Income and Other revenues were $6.2 million for the three months ended March 31, 2024, an increase of $1.9 million compared with $4.3 million for the three months ended March 31, 2023. The increase in Interest Income and Other was principally due to higher interest income.

Current wording

Total Revenues were $360.2 million for the three months ended June 30, 2024, an increase of $13.9 million compared with $346.3 million for the three months ended June 30, 2023. Advisory Fees were $307.1 million for the three months ended June 30, 2024, a decrease of $16.7 million compared with $323.8 million for the three months ended June 30, 2023. The decrease in Advisory Fees was due to a decrease in restructuring revenues partially offset by an increase in strategic advisory revenues. Placement Fees were $46.9 million for the three months ended June 30, 2024, an increase of $26.8 million compared with $20.0 million for the three months ended June 30, 2023. The increase in Placement Fees was due to a significant increase in fund placement revenues. Interest Income and Other was $6.2 million for the three months ended June 30, 2024, an increase of $3.8 million compared with $2.5 million for the three months ended June 30, 2023. The increase in Interest Income and Other was principally due to higher interest income.

Previous wording

Expenses were $275.5 million for the three months ended March 31, 2024, an increase of $104.7 million compared with $170.8 million for the three months ended March 31, 2023. The increase in expenses was principally attributable to increases in Compensation and Benefits, Other Expenses, Occupancy and Related and Travel and Related of $95.9 million, $2.4 million, $2.2 million and $2.1 million, respectively. The increase in Compensation and Benefits was driven by the combination of higher revenues and a higher accrual rate compared with the prior year. Other Expenses increased principally due to higher bad debt expense. Occupancy and Related increased principally due to the further expansion and lease term extension of our New York headquarters. Travel and Related increased due to increased levels of business travel.

Current wording

Expenses were $571.3 million for the six months ended June 30, 2024, an increase of $108.4 million compared with $462.9 million for the six months ended June 30, 2023. The increase in expenses was principally due to increases in Compensation and Benefits, Occupancy and Related, Travel and Related, and Communications and Information Services of $99.6 million, $4.3 million, $2.9 million and $2.2 million, respectively, partially offset by a decrease in Professional Fees of $1.3 million. Compensation and Benefits increased reflecting higher revenues compared with the prior year. Occupancy and Related increased principally due to the expansion and lease term extension of our New York headquarters in the fourth quarter of 2023. Travel and Related increased due to increased levels of business travel. Communications and Information Services increased principally due to investments in technology infrastructure. Professional Fees decreased due to lower consulting expenses relating to the firm's business activities.

Previous wording

The Company’s Provision for Taxes for the three months ended March 31, 2024 was $0.5 million, which represents an effective tax rate of 1.0% on pretax income of $53.9 million. The Company’s Provision for Taxes for the three months ended March 31, 2023 was $1.2 million, which represents an effective tax rate of 4.1% on pretax income of $29.2 million.

Current wording

The Company’s Provision for Taxes for the three months ended June 30, 2024 was $11.4 million, which represents an effective tax rate of 17.7% on pretax income of $64.4 million. The Company’s Provision for Taxes for the three months ended June 30, 2023 was $13.1 million, which represents an effective tax rate of 24.2% on pretax income of $54.2 million.

Previous wording

We evaluate our cash needs on a regular basis. As of March 31, 2024 and December 31, 2023, we had cash, cash equivalents and short-term investments of $235.6 million and $436.9 million, respectively. The vast majority of these balances are either held in institutions labeled by the Financial Stability Board as global systemically important banks or Treasury securities. Although we maintain multiple banking relationships with both global and regional banks and actively monitor the financial stability of such institutions, a failure at any institution where we maintain a banking relationship could impact our liquidity.

Current wording

We evaluate our cash needs on a regular basis. As of June 30, 2024 and December 31, 2023, we had cash, cash equivalents and short-term investments of $350.8 million and $436.9 million, respectively. The vast majority of these balances are either held in institutions labeled by the Financial Stability Board as global systemically important banks or Treasury securities. Although we maintain multiple banking relationships with both global and regional banks and actively monitor the financial stability of such institutions, a failure at any institution where we maintain a banking relationship could impact our liquidity.

Previous wording

Our liquidity is highly dependent upon cash receipts from clients, which are generally dependent upon the successful completion of transactions as well as the timing of receivable collections. As of March 31, 2024 and December 31, 2023, total accounts receivable, net of allowance for credit losses, were $325.0 million and $263.5 million, respectively. As of March 31, 2024 and December 31, 2023, the allowance for credit losses was $3.2 million and $2.4 million, respectively. Included in Accounts Receivable, Net are long-term receivables of $84.0 million and $84.4 million as of March 31, 2024 and December 31, 2023, respectively, related to placement fees that are generally paid in installments over a period of three to four years.

Current wording

Our liquidity is highly dependent upon cash receipts from clients, which are generally dependent upon the successful completion of transactions as well as the timing of receivable collections. As of June 30, 2024 and December 31, 2023, total accounts receivable, net of allowance for credit losses, were $343.7 million and $263.5 million, respectively. As of June 30, 2024 and December 31, 2023, the allowance for credit losses was $3.6 million and $2.4 million, respectively. Included in Accounts Receivable, Net are long-term receivables of $89.6 million and $84.4 million as of June 30, 2024 and December 31, 2023, respectively, related to placement fees that are generally paid in installments over a period of three to four years.

Previous wording

Certain holders of Partnership Units exchanged 0.2 million and 0.1 million Partnership Units, respectively, for cash in the amounts of $18.7 million and $10.7 million, respectively, for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Certain holders of Partnership Units exchanged 0.3 million Partnership Units for cash in the amount of $30.3 million for the six months ended June 30, 2024 and 0.3 million Partnership Units for cash in the amount of $19.4 million for the six months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2024, the Company repurchased 1.1 million shares of the Company’s Class A common stock at an average price per share of $98.55, or $106.4 million in aggregate, pursuant to the share repurchase program. As of March 31, 2024, the Company’s remaining repurchase authorization was $406.3 million.

Current wording

During the six months ended June 30, 2024, the Company repurchased 1.7 million shares of the Company’s Class A common stock at an average price per share of $97.60, or $162.5 million in aggregate, pursuant to the share repurchase program. As of June 30, 2024, the Company’s remaining repurchase authorization was $350.2 million.

Previous wording

The Company provides a guarantee to a lending institution for certain loans held by employees for investment in funds of its former Parent, which are secured by the underlying investments in those funds. The amount guaranteed was $2.3 million as of each of March 31, 2024 and December 31, 2023. In connection with this guarantee, we currently expect any associated risk of loss to be insignificant.

Current wording

The Company provides a guarantee to a lending institution for certain loans held by employees for investment in funds of its former Parent, which are secured by the underlying investments in those funds. The amount guaranteed was $2.2 million and $2.3 million as of June 30, 2024 and December 31, 2023, respectively. In connection with this guarantee, we currently expect any associated risk of loss to be insignificant.

Previous wording

We have entered and may continue to enter into contracts that contain a variety of indemnification obligations. Our maximum exposure under these arrangements is not known; however, we currently expect any associated risk of loss to be insignificant.

Current wording

We have entered and may continue to enter into contracts that contain a variety of indemnification obligations. Our maximum exposure under these arrangements is not known; however, we currently expect any associated risk of loss to be insignificant. In connection with these matters, we have incurred and may continue to incur legal expenses, which are expensed as incurred.

Previous wording

We have entered into a tax receivable agreement with the holders of Partnership Units (other than PJT Partners Inc.) that provides for the payment by PJT Partners Inc. to exchanging holders of Partnership Units of 85% of the benefits, if any, that PJT Partners Inc. is deemed to realize as a result of the increases in tax basis related to such exchanges of Partnership Units and of certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. As of March 31, 2024 and December 31, 2023, the Company had amounts due of $31.2 million and $29.7 million, respectively, pursuant to the tax receivable agreement, which represent management’s best estimate of the amounts currently expected to be owed in connection with the tax receivable agreement. Actual payments may differ significantly from estimated amounts due.

Current wording

We have entered into a tax receivable agreement with the holders of Partnership Units (other than PJT Partners Inc.) that provides for the payment by PJT Partners Inc. to exchanging holders of Partnership Units of 85% of the benefits, if any, that PJT Partners Inc. is deemed to realize as a result of the increases in tax basis related to such exchanges of Partnership Units and of certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. As of June 30, 2024 and December 31, 2023, the Company had amounts due of $30.9 million and $29.7 million, respectively, pursuant to the tax receivable agreement, which represent management’s best estimate of the amounts currently expected to be owed in connection with the tax receivable agreement. Actual payments may differ significantly from estimated amounts due.