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 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.

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 the first nine months of 2024 were up 16% compared with the first nine months of 2023. On an annualized basis, volume was up 7% 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 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.

Current wording

Global restructuring and special situations activity continued to remain strong throughout the third quarter of 2024 due to continued elevated levels of liability management and more traditional balance sheet restructurings. A number of factors continue to drive activity, including companies proactively managing debt maturities and structural issues facing many industries. Activity in the third quarter was 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 activity.

Previous wording

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

Current wording

1 Source: LSEG Global Mergers & Acquisitions Review for First Nine Months of 2024 as of September 30, 2024.

Previous wording

Substantially all of our revenues are derived from contracts with clients to provide advisory and placement services. This revenue is primarily a function of the number of active engagements we have, the size of each of those engagements and the fees we charge for our services.

Current wording

Substantially all of our revenues are derived from contracts with clients to provide advisory and placement services. This revenue is primarily a function of the number of active engagements we have, the size and the complexity of each of those engagements and the fees we charge for our services.

Previous wording

Compensation and Benefits – Compensation and Benefits expense includes salaries, restricted and unrestricted cash awards, benefits, employer taxes and equity-based compensation associated with the grants of equity-based awards to partners and employees. Changes in this expense are driven by fluctuations in the number of employees, the composition of our workforce, business performance, compensation adjustments in relation to market movements, changes in rates for employer taxes and other cost increases affecting benefit plans. The expense associated with our restricted and unrestricted cash award and equity plans can also have a significant impact on this expense category and may vary from year to year. Certain awards are expensed over the requisite service period for partners and employees who are or will become retirement eligible prior to the stated vesting date. Over time, a greater number of partners and employees may become retirement eligible and the related requisite service period over which the expense is recognized will be shorter than the stated vesting period.

Current wording

Compensation and Benefits – Compensation and Benefits expense includes salaries, restricted and unrestricted cash awards, benefits, employer taxes and equity-based compensation associated with the grants of equity-based awards to partners and employees. Changes in this expense are driven by fluctuations in the number of employees, the composition of our workforce, business performance, compensation adjustments in relation to market movements, changes in rates for employer taxes and other cost increases affecting benefit plans. The expense associated with our restricted and unrestricted cash award and equity plans can also have a significant impact and may vary from year to year. Certain awards are expensed over the requisite service period for partners and employees who are or will become retirement eligible prior to the stated vesting date. Over time, a greater number of partners and employees may become retirement eligible and the related requisite service period over which the expense is recognized will be shorter than the stated vesting period.

Previous wording

PJT Partners Inc. is subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from the holding partnership (PJT Partners Holdings LP).

Current wording

PJT Partners Inc. is subject to U.S. federal, state and local corporate income tax on its allocable share of results of operations from the holding partnership (PJT Partners Holdings LP).

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current wording

Total Revenues were $326.3 million for the three months ended September 30, 2024, an increase of $48.0 million compared with $278.4 million for the three months ended September 30, 2023. Advisory Fees were $283.8 million for the three months ended September 30, 2024, an increase of $39.7 million compared with $244.1 million for the three months ended September 30, 2023. The increase in Advisory Fees was principally due to an increase in private capital solutions revenues. Placement Fees were $32.5 million for the three months ended September 30, 2024, an increase of $5.8 million compared with $26.7 million for the three months ended September 30, 2023. The increase in Placement Fees was due to an increase in fund placement revenues. Interest Income and Other was $10.1 million for the three months ended September 30, 2024, an increase of $2.5 million compared with $7.6 million for the three months ended September 30, 2023. The increase in Interest Income and Other was principally due to higher interest income.

Previous wording

Total Revenues were $689.6 million for the six months ended June 30, 2024, an increase of $143.3 million compared with $546.3 million for the six months ended June 30, 2023. Advisory Fees were $595.8 million for the six months ended June 30, 2024, an increase of $103.9 million compared with $491.9 million for the six months ended June 30, 2023. The increase in Advisory Fees was due to increases in restructuring, strategic advisory and private capital solutions revenues. Placement Fees were $81.4 million for the six months ended June 30, 2024, an increase of $33.7 million compared with $47.6 million for the six 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 $12.4 million for the six months ended June 30, 2024, an increase of $5.7 million compared with $6.8 million for the six months ended June 30, 2023. The increase in Interest Income and Other was principally due to higher interest income.

Current wording

Total Revenues were $1,015.9 million for the nine months ended September 30, 2024, an increase of $191.3 million compared with $824.6 million for the nine months ended September 30, 2023. Advisory Fees were $879.6 million for the nine months ended September 30, 2024, an increase of $143.5 million compared with $736.0 million for the nine months ended September 30, 2023. The increase in Advisory Fees was due to increases in strategic advisory, restructuring and private capital solutions revenues. Placement Fees were $113.8 million for the nine months ended September 30, 2024, an increase of $39.6 million compared with $74.3 million for the nine months ended September 30, 2023. The increase in Placement Fees was due to a significant increase in fund placement revenues. Interest Income and Other was $22.5 million for the nine months ended September 30, 2024, an increase of $8.2 million compared with $14.3 million for the nine months ended September 30, 2023. The increase in Interest Income and Other was principally due to higher interest income.

Previous wording

Expenses were $295.8 million for the three months ended June 30, 2024, an increase of $3.7 million compared with $292.1 million for the three months ended June 30, 2023. The increase in expenses was due to increases in Compensation and Benefits, Occupancy and Related, and Communication and Information Services of $3.7 million, $2.2 million and $1.5 million, respectively, which were offset by decreases in Professional Fees and Other Expenses of $2.7 million and $1.3 million, respectively. Compensation and Benefits increased reflecting higher revenues and a lower compensation accrual rate. Occupancy and Related increased principally due to the expansion and lease term extension of our New York headquarters in the fourth quarter of 2023. 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. Other Expenses decreased principally due to insurance reimbursements, which were partially offset by increases in market data and higher bad debt expense.

Current wording

Expenses were $276.9 million for the three months ended September 30, 2024, an increase of $41.1 million compared with $235.8 million for the three months ended September 30, 2023. The increase in expenses was principally due to increases in Compensation and Benefits, Occupancy and Related, Other Expenses and Travel and Related of $33.3 million, $3.2 million, $3.1 million and $1.1 million, respectively. The increase in Compensation and Benefits was driven by higher revenues compared with prior year. Occupancy and Related increased principally due to the expansion and lease term extension for our New York headquarters in the fourth quarter of 2023 and further expansion of our London office in the third quarter of 2024. Other Expenses increased principally due to legal reserves, market data expense and the acceleration of contributions to our partner charitable giving program. Travel and Related increased due to increased levels of business travel.

Previous 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.

Current wording

Expenses were $848.2 million for the nine months ended September 30, 2024, an increase of $149.5 million compared with $698.7 million for the nine months ended September 30, 2023. The increase in expenses was due to increases in Compensation and Benefits, Occupancy and Related, Other Expenses, Travel and Related and Communications and Information Services of $132.9 million, $7.5 million, $4.1 million, $4.0 million and $2.6 million, respectively. The increase in Compensation and Benefits was driven by higher revenues compared with the prior year. Occupancy and Related increased principally due to the expansion and lease term extension for our New York headquarters in the fourth quarter of 2023 and further expansion of our London office in the third quarter of 2024. Other Expenses increased principally due to increases in bad debt expense and market data expense. Travel and Related increased due to increased levels of business travel. Communications and Information Services increased principally due to investments in technology infrastructure.

Previous 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.

Current wording

The Company’s Provision for Taxes for the three months ended September 30, 2024 was $8.3 million, which represents an effective tax rate of 16.8% on pretax income of $49.4 million. The Company’s Provision for Taxes for the three months ended September 30, 2023 was $11.4 million, which represents an effective tax rate of 26.8% on pretax income of $42.6 million.

Previous wording

The Company’s Provision for Taxes for the six months ended June 30, 2024 was $11.9 million, which represents an effective tax rate of 10.1% on pretax income of $118.3 million. The Company’s Provision for Taxes for the six months ended June 30, 2023 was $14.3 million, which represents an effective tax rate of 17.2% on pretax income of $83.4 million.

Current wording

The Company’s Provision for Taxes for the nine months ended September 30, 2024 was $20.2 million, which represents an effective tax rate of 12.1% on pretax income of $167.7 million. The Company’s Provision for Taxes for the nine months ended September 30, 2023 was $25.7 million, which represents an effective tax rate of 20.4% on pretax income of $125.9 million.

Previous wording

On February 1, 2021, PJT Partners Holdings LP, as borrower (the “Borrower”), entered into a Renewal and Modification Agreement (the “Renewal Agreement”) and related documents with First Republic Bank (now part of JPMorgan Chase), as lender (the “Lender”), amending the terms of the Borrower’s revolving credit facility with the Lender under the Amended and Restated Loan Agreement dated October 1, 2018 (the “Amended and Restated Loan Agreement”). On February 7, 2023, the Renewal Agreement was further amended to extend the maturity date to October 1, 2024. Further information regarding the Renewal Agreement and Amended and Restated Loan Agreement can be found in Note 13. “Commitments and Contingencies—Commitments, Line of Credit” in the “Notes to Condensed Consolidated Financial Statements” in “—Item 1. Financial Statements” of this filing. As of June 30, 2024 and December 31, 2023, we were in compliance with the debt covenants under the Renewal Agreement and Amended and Restated Loan Agreement, respectively. Additionally, as of June 30, 2024 and December 31, 2023, there were no borrowings outstanding under the revolving credit facility.

Current wording

On February 1, 2021, PJT Partners Holdings LP, as borrower (the “Borrower”), entered into a Renewal and Modification Agreement (the “Renewal Agreement”) and related documents with First Republic Bank (now part of JPMorgan Chase), as lender (the “Lender”), amending the terms of the Borrower’s revolving credit facility with the Lender under the Amended and Restated Loan Agreement dated October 1, 2018 (the “Amended and Restated Loan Agreement”).

Previous wording

On July 29, 2024, PJT Partners Holdings LP, as borrower, entered into a new syndicated revolving credit agreement (the “Credit Agreement”) and related documents with Bank of America, N.A., as the administrative agent (the “Administrative Agent”), and certain other financial institutions party thereto as lenders. The Credit Agreement, which replaces the Borrower's existing Amended and Restated Loan Agreement in its entirety, provides for a revolving credit facility with aggregate principal amount of up to $100 million. Outstanding borrowings under the revolving credit facility bear interest of Secured Overnight Financing Rate plus 1.85% per annum. In connection with the closing of the Credit Agreement, the Borrower paid certain closing costs and fees. In addition, the Borrower will also pay a commitment fee on the unused portion of the revolving credit facility of 0.25% per annum, payable quarterly in arrears. The revolving credit facility will mature and the commitments thereunder will terminate on July 29, 2026, subject to extension by agreement of the Borrower and Administrative Agent.

Current wording

On July 29, 2024, PJT Partners Holdings LP, as borrower, entered into a new syndicated revolving credit agreement (the “Credit Agreement”) and related documents with Bank of America, N.A., as the administrative agent (the “Administrative Agent”), and certain other financial institutions party thereto as lenders. The Credit Agreement, which replaces the Borrower's existing Amended and Restated Loan Agreement in its entirety, provides for a revolving credit facility with aggregate principal amount of up to $100 million. Outstanding borrowings under the revolving credit facility bear interest of Secured Overnight Financing Rate plus 1.85% per annum. In connection with the closing of the Credit Agreement, the Borrower paid certain closing costs and fees. In addition, the Borrower will also pay a commitment fee on the unused portion of the revolving credit facility of 0.25% per annum, payable quarterly in arrears. The revolving credit facility will mature and the commitments thereunder will terminate on July 29, 2026, subject to extension by agreement of the Borrower and Administrative Agent. Further information regarding the Credit Agreement can be found in Note 13. “Commitments and Contingencies—Commitments, Line of Credit” in the “Notes to Condensed Consolidated Financial Statements” in “—Item 1. Financial Statements” of this filing.

Previous 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.

Current wording

We evaluate our cash needs on a regular basis. As of September 30, 2024 and December 31, 2023, we had cash, cash equivalents and short-term investments of $477.0 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 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.

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 September 30, 2024 and December 31, 2023, total accounts receivable, net of allowance for credit losses, was $343.6 million and $263.5 million, respectively. As of September 30, 2024 and December 31, 2023, the allowance for credit losses was $4.0 million and $2.4 million, respectively. Included in Accounts Receivable, Net are long-term receivables of $88.5 million and $84.4 million as of September 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

We actively monitor our regulatory capital base. We are subject to regulatory requirements in the U.S. and certain international jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, recordkeeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 14. “Regulated Entities” in the “Notes to Condensed Consolidated Financial Statements” in “—Item 1. Financial Statements” of this filing for further information. The licenses under which we operate are meant to be appropriate to conduct our business. We believe that we provide each of these entities with sufficient capital and liquidity, consistent with their business and regulatory requirements.

Current wording

We are subject to regulatory requirements in the U.S. and certain international jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, recordkeeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 14. “Regulated Entities” in the “Notes to Condensed Consolidated Financial Statements” in “—Item 1. Financial Statements” of this filing for further information. The licenses under which we operate are meant to be appropriate to conduct our business. We actively monitor our regulatory capital and we believe that we provide each of these entities with sufficient capital and liquidity, consistent with their business and regulatory requirements.

Previous 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.

Current wording

Certain holders of Partnership Units exchanged 0.4 million and 0.3 million Partnership Units, respectively, for cash in the amounts of $43.4 million and $19.6 million, respectively, for the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

During the nine months ended September 30, 2024, the Company repurchased 1.9 million shares of the Company’s Class A common stock at an average price per share of $100.08, or $185.5 million in aggregate, pursuant to the share repurchase program. As of September 30, 2024, the Company’s remaining repurchase authorization was $327.2 million.

Previous wording

With respect to our litigation matters, including any litigation discussed under the caption “Legal Proceedings” elsewhere in this report, we are not currently able to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support such an assessment, including quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by courts on motions or appeals, analysis by experts or the status of any settlement negotiations. While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, we believe, based on current knowledge and after consultation with counsel, that we are not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company.

Current wording

With respect to our litigation matters, including any litigation discussed under the caption “Legal Proceedings” elsewhere in this report, we are not currently able to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support such an assessment, including , but not limited to, quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by courts on motions or appeals, analysis by experts or the status of any settlement negotiations. While the ultimate outcome and the costs associated with litigation are inherently uncertain and difficult to predict, we believe, based on current knowledge and after consultation with counsel, that we are not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company.

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 $2.2 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.

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 $2.0 million and $2.3 million as of September 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 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.

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 September 30, 2024 and December 31, 2023, the Company had amounts due of $30.7 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.