APPENDIX B
U.S. GAAP Reconciliations
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; and Adjusted Net Income, If-Converted, in total and on a per-share basis (referred to as “Adjusted EPS”). These non-GAAP measures, presented and discussed herein, 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”); |
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| (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 |
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| (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. |
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Reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and further detail regarding the adjustments are provided below.
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.
The following table provides a reconciliation of non-GAAP measures to their most directly comparable GAAP measures.
(Dollars in Thousands, Except Share and Per Share Data)
| · · Year Ended December 31, |
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| | | 2023 | | | 2022 |
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| GAAP Net Income | | | $145,682 | | | $164,772 |
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| Less: GAAP Provision for Taxes | | | 31,927 | | | 36,699 |
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| GAAP Pretax Income | | | 177,609 | | | 201,471 |
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| Adjustments to GAAP Pretax Income | | | | | | |
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| Transaction-Related Compensation Expense(1) | | | — | | | 11,765 |
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| Amortization of Intangible Assets(2) | | | 4,920 | | | 6,506 |
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| Spin-Off-Related Payable Due to Blackstone(3) | | | 136 | | | 804 |
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| Adjusted Pretax Income | | | 182,665 | | | 220,546 |
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| Adjusted Taxes(4) | | | 32,768 | | | 40,020 |
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| Adjusted Net Income | | | 149,897 | | | 180,526 |
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| If-Converted Adjustments | | | | | | |
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| Less: Adjusted Taxes(4) | | | (32,768) | | | (40,020) |
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| Add: If-Converted Taxes(5) | | | 46,297 | | | 57,264 |
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| Adjusted Net Income, If-Converted | | | $136,368 | | | $163,282 |
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| GAAP Net Income Per Share of Class A Common Stock | | | | | | |
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| Basic | | | $3.24 | | | $3.61 |
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| Diluted | | | $3.12 | | | $3.51 |
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| GAAP Weighted-Average Shares of Class A Common Stock Outstanding Basic | | | 25,255,327 | | | 25,077,835 |
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| Diluted | | | 41,882,034 | | | 26,616,640 |
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| Adjusted Net Income, If-Converted Per Share | | | $3.27 | | | $3.92 |
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| Weighted-Average Shares Outstanding, If-Converted | | | 41,749,633 | | | 41,663,773 |
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| (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. |
| (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) 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. |
The following table provides a summary of weighted-average shares outstanding for the year ended December 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. RSUs were converted to shares of the company’s Class A common stock:
| · · Year Ended December 31, |
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| | | 2023 | | | 2022 |
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| Weighted-Average Shares Outstanding - GAAP · · · · |
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| Basic Shares Outstanding, GAAP | | | 25,255,327 | | | 25,077,835 |
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| Dilutive Impact of Unvested RSUs(1) | | | 1,711,829 | | | 1,538,805 |
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| Dilutive Impact of Partnership Unit(2) | | | 14,914,878 | | | — |
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| Diluted Shares Outstanding, GAAP | | | 41,882,034 | | | 26,616,640 |
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| Weighted-Average Shares Outstanding - If-Converted | | | | | | |
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| Basic Shares Outstanding, GAAP | | | 25,255,327 | | | 25,077,835 |
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| Unvested RSUs(3) | | | 1,711,829 | | | 1,540,744 |
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| Partnership Units(4) | | | 14,782,477 | | | 15,045,194 |
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| If-Converted Shares Outstanding | | | 41,749,633 | | | 41,663,773 |
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As of December 31, 2023, in relation to awards granted containing both service and market conditions, the Company achieved a dividend adjusted 20-day volume-weighted average share price in excess of $100. As a result, 1.3 million share equivalents were included in the Company's fully-diluted share count, of which 0.3 million had satisfied both service and market conditions, with the remaining 1.0 million vesting pursuant to ongoing service conditions. In addition, 1.4 million share equivalents had not yet satisfied certain market conditions and were therefore excluded from any share count calculations.
| (1) | Represents the dilutive impact under the treasury method of unvested, non-participating RSUs that have a remaining service requirement. |
| (2) | Represents the number of shares assuming the conversion of vested Partnership Units, the dilutive impact of unvested Partnership Units with a remaining service requirement, and the dilutive impact of Partnership Units that achieved certain market conditions as if those conditions were achieved as of the beginning of the reporting period. |
| (3) | Represents the dilutive impact of unvested RSUs that have a remaining service requirement. |
| (4) | Represents the number of shares assuming the conversion of all Partnership Units, including Partnership Units that achieved certain market conditions as of the date those conditions were achieved, and excludes Partnership Units that have yet to satisfy certain market conditions. |
