NYSE:PJT PJT Partners Q1 2024 Earnings Report $142.67 -0.84 (-0.58%) Closing price 05/5/2025 03:59 PM EasternExtended Trading$142.64 -0.03 (-0.02%) As of 05/5/2025 05:36 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast PJT Partners EPS ResultsActual EPS$0.98Consensus EPS $0.45Beat/MissBeat by +$0.53One Year Ago EPS$0.54PJT Partners Revenue ResultsActual Revenue$329.39 millionExpected Revenue$229.32 millionBeat/MissBeat by +$100.07 millionYoY Revenue Growth+64.70%PJT Partners Announcement DetailsQuarterQ1 2024Date5/2/2024TimeBefore Market OpensConference Call DateThursday, May 2, 2024Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by PJT Partners Q1 2024 Earnings Call TranscriptProvided by QuartrMay 2, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the PJT Partners First Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead. Speaker 100:00:17Thanks very much. Good morning and welcome to the PJT Partners Q1 2024 Earnings Conference Call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners, and joining me today is Paul Tousman, our Chairman and Chief Executive Officer and Helen Mates, our Chief Financial Officer. Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward looking statements. These forward looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. Speaker 100:00:58We believe that these factors are described in the Risk Factors section contained in PJT Partners' 2023 Form 10 ks, which is available on our website atpjtpartners.com. I want to remind you that the company assumes no duty to update any forward looking statements and that the presentation we make today contains non GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non GAAP metrics and their GAAP reconciliations, you should refer to the financial data contained within the release we issued this morning, also available on our website. And with that, I'll turn the call over to Paul. Speaker 200:01:39Thank you, Sharon. Good morning, everyone, and thank you for joining our earnings call. Earlier today, we reported 1st quarter revenues of 329,000,000 dollars up 65 percent adjusted pretax income of $55,000,000 up 81 percent and adjusted EPS of $0.98 up 81% from year ago levels. We had our 2nd highest revenue quarter ever, reflecting strong performance in all of our businesses as we benefited from continued momentum in restructuring, significantly improved results in PJT Park Hill and strong performance in Strategic Advisory. While we report results quarterly, we measure our progress not in quarters, but in years. Speaker 200:02:33After a highly successful quarter, our focus remains on ending the year a meaningfully stronger firm than when we began the year. A core element of that progress is the continued addition of highly talented professionals with particular emphasis on filling out our strategic advisory footprint. The recruiting environment continues to be conducive to senior hiring and we expect our hiring to remain elevated this year even if it does not match 2023's record recruiting. In the Q1, we had our highest open market repurchases ever as we remain focused on offsetting dilution from these investments. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail. Speaker 200:03:33Helen? Speaker 300:03:33Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the quarter were $329,000,000 a record Q1, up 65% year over year. Revenues were meaningfully higher across all businesses with the highest growth coming from restructuring. Speaker 300:03:50We had a number of transaction completions that met criteria for revenues to be pulled forward in the Q1, totaling $25,000,000 Excluding the impact of pull forwards in both periods, our revenue growth would have been 52%. Turning to expenses. Consistent with prior quarters, we presented the expenses with certain non GAAP adjustments, which are more fully described in our 8 ks. 1st, compensation expense. We accrued compensation expense at 69.5% of revenues for the Q1 compared with 69.8 percent for the full year 2023. Speaker 300:04:25This ratio represents our current best expectations for the full year 2024. Turning to adjusted non compensation expense. Total adjusted non compensation expense was $45,000,000 in the Q1, up from $36,000,000 in the Q1 last year. The higher expense was primarily driven by increases in occupancy costs, travel and related as well as bad debt expense, which is included in other expenses. Despite the high year over year increase in Q1 non comp expense, we continue to expect that our full year 2024 non comp expense will grow at a similar rate to the growth rate we experienced in 2023. Speaker 300:05:05This growth will be primarily driven by an increase in our occupancy costs as well as increased travel and related expense. Turning to adjusted pre tax income. Our adjusted pre tax income was $55,000,000 in the first quarter compared with $30,000,000 for the same period last year and our adjusted pretax margin was 16.8% for the 1st quarter compared with 15.2% for the same period a year ago. The provision for taxes as with prior quarters, we presented our results as if all partnership units had been converted to shares and that all of our income was taxed at a corporate tax rate. Our effective tax rate was 22% for the Q1, below our full year 2023 rate of 25 point 3%. Speaker 300:05:52The tax benefit relating to the delivery of vested shares during the Q1 was greater than last year's benefit. We take a full year view of that benefit and we currently expect our full year effective tax rate to be around 22%. Our adjusted converted earnings were $0.98 per share for the Q1 compared with $0.54 per share in the Q1 last year. On the share count for the quarter, our weighted average share count was 43,700,000 shares, up 5% versus a year ago. This increase primarily reflects the full share count impact of 1,300,000 performance shares, which reached the price hurdles at the end of 2023. Speaker 300:06:37During the Q1, we repurchased the equivalent of approximately 1,500,000 shares, primarily through open market repurchases. In addition, we plan to exchange 116,000 partnership units for cash on May 9, 2024. And on the balance sheet, we ended the quarter with $236,000,000 in cash, cash equivalents and short term investments and $408,000,000 in net working capital and we continue to have no funded debt outstanding. And finally, the Board has approved a dividend of $0.25 per share. The dividend will be paid on June 2024 to Class A common shareholders of record as of June 5. Speaker 300:07:15With that, I'll turn back to Paul. Speaker 200:07:17Thank you, Helen. Beginning with PKT Park Hill. Revenues in our PKT Park Hill business were up significantly quarter on quarter and year over year driven by meaningful growth in private capital solutions. GPs and LPs alike continue to be attracted to Private Capital Solutions as they seek to enhance liquidity, particularly given the current low levels of portfolio monetizations. This combined with a more constructive environment in which to execute secondary transactions helped drive strong Q1 results in PJT Park Hill. Speaker 200:07:59On the primary side, the fundraising environment remains challenged, although somewhat improved from year ago levels as higher equity valuations have served to bring alternatives allocations better into line for many LPs. Turning to restructuring. Our leading restructuring team continues to be extremely active in both liability management assignments as well as in court restructurings. Revenues in our restructuring business were up sharply year over year, but up more modestly quarter on quarter, reflecting continued high levels of activity. We are in a multiyear cycle of elevated activity in liability management and in court restructurings. Speaker 200:08:50In many instances, more favorable financing markets will prove insufficient to state block broader restructuring activity. With each passing day, it is clearer that rates will remain higher for longer, that increasing numbers of companies are being disrupted by technological innovation and changing consumer preferences and that companies continue to contend with challenges to their business models that link back to the pandemic. While the near term maturity wall has largely been addressed, another one looms in 2028. In this highly constructive restructuring environment, we expect our 2024 restructuring revenues to remain elevated and to approach last year's record performance. Turning to Strategic Advisory. Speaker 200:09:52In the Q1, our Strategic Advisory business delivered strong revenue growth compared to the prior year. As we highlighted on our last earnings call, we began 2024 with a new record pre announced pipeline, but an atypically low backlog of announced pending close transactions. Our mandate count continues to grow and stands at record levels. Our announced pending close pipeline has also grown appreciably year to date and given the momentum we see in our business, we expect it to continue to build as 2024 progresses. In 2023, announced global M and A volumes declined to levels not seen in a decade. Speaker 200:10:44Over the past several months, the pieces necessary for an M and A recovery have increasingly fallen into place, driven by stronger than expected economic prints, rising global equity valuations, a significant recovery in the debt and equity capital markets and increasing pent up demand for strategic assets following 2 years of sharply reduced transaction activity. Amidst broad based expectations for a sharp uptick in global M and A activity in 2024, annualized year to date activity is tracking only modestly ahead of 2023 levels. We expect to see a gradual increase in M and A activity until certain catalysts are in place, which should further propel activity, namely Central Bank rate clarity and election results in the U. S. And elsewhere. Speaker 200:11:46To capitalize on the multiyear M and A upturn, to capitalize on the multiyear M and A upturn that is ahead of us. The continued addition of senior talent is an important element of that positioning. To close, looking back, we delivered differentiated performance in 20222023 as we continue to invest in our franchise. As we look forward, we are equally committed to further investment to ensure that we are best positioned to capitalize on the future regardless of market conditions. As before, we remain confident in our long term growth prospects. Speaker 200:12:40And with that, we will now take your questions. Operator00:13:05Our first question comes from Devin Ryan with Citizens JMP. Please go ahead. Speaker 400:13:13Hey, good morning. Good morning, Paul. Good morning, Helen. How are you? Speaker 200:13:16Good morning, well. We're well. Thank you. Speaker 400:13:20Good. First question, just want to kind of take a step back and think about just the broader M and A market and PJT's positioning it. And Paul, you gave some comments on the outlook, which I appreciate. But if we look at just the market overall, 2021 was the most recent kind of active year we had. That was probably a year for the backdrop that was above normal. Speaker 400:13:43But when we look at PJT specifically, I think strategic advisory partners have increased by over 40% since that time. And so I just want to kind of think about or how you would frame what a more normalized environment means for PJT's Strategic Advisory business, the type of revenues or production you would expect out of partners or any other parameters that we can think about kind of how much larger this business is and potential is today relative to that time just because we're kind of the business has transitioned so much since there's actually been an active environment. So I think people are having a hard time trying to think about what a normalized revenue potential could be for PJT. Thanks. Speaker 200:14:28Yes. Look, it's really hard to sort of pinpoint what we would look like in a normalized environment, but let's try and have a go at it. If right now we were to experience a 2021 market environment all over again, we would be far better positioned to capitalize on that upswing than we were in actuality in 2021. We're not expecting tomorrow to wake up and be back into 2021 M and A environment. But if we were, we would find ourselves to be able to deliver meaningfully greater performance because our coverage footprint is much greater today, because our coverage footprint better matches where the wallet is distributed, because we have less partially built out industry verticals and more fully built out industry verticals because our brand and years of sustained coverage are greater and we're better known to clients today than we were 3 years ago. Speaker 200:15:45What we are focused on is where we believe the M and A market is going. And it's clear that 20222023 are aberrationally low levels of normalized M and A. Early on, we said this is not a light switch in 2024. Do not look at the light switch that got flipped from 2020 to 2021 and just see this explosive rebound in M and A from 2023 to 2024. We have always viewed it as more of a slow gradual rebuild. Speaker 200:16:29We made the point that 2 years of successive global declines in M and A volume that we didn't believe you'd see a third, that when you do have an inflection point, you typically see 1st year growth of 10% to 15% in volumes. I think year to date, we're tracking year and I continue to believe we'll end up the year up 10% to 15% in global M and A volume. But I do think there's an opportunity for there to be a step function change in that in 2025 beyond And that's what we're playing for. And there's no doubt that in any environment you pick, Devin, our ability to capitalize on that going to be fundamentally different today than it was 3 or 4 years ago. Hopefully, that's helpful. Speaker 400:17:32Yes. Appreciate that, Paul. And then just as a follow-up here on just the comp ratio, just trying to maybe dig in and square a little bit more between the 69.5% relative to the 2nd best ever revenue quarter. Obviously, 69.5% still higher than I think kind of historically where you've been at. And so just want to think about how much of that is maybe a function of seasonal dynamics like retirement eligible expense or the competitive backdrop that you're seeing right now or you obviously heard commentary around the desire to lean in again on recruiting. Speaker 400:18:09So just love to kind of think about that number, what that means and then what the implication is a go forward basis, particularly in an environment where over the next couple of years revenues are potentially recovering? Thanks. So that was so Speaker 200:18:25first of all, 69.5% is our current best estimate of the full year. That is marginally below full year comp ratio for last year. What I said on the last earnings call is in order to see meaningful comp leverage for the ratio to come down meaningfully, we need to see the revenue growth measured in years exceed the headcount growth. And you've made the point. And I think I said on the last earnings call that over the last 3 years, we had added 35% headcount, but we haven't grown our revenues near 35%. Speaker 200:19:06I don't believe that that day is far away. And when those 2 are aligned, that's when you're likely to see meaningful reductions in comp as a percentage of revenue. But we do remain very focused on keeping recruiting elevated. We do believe that the investments we're making are bearing significant fruit, but until all of those revenues are fully realized, the ratios are likely to be out of whack. And we're still uncertain as to what the true market compensation environment will be at the end of the year. Speaker 200:19:42So based on all of that, 69.5% is our current best estimate. Speaker 400:19:51Okay. Very clear. Thanks a lot. Appreciate it. Speaker 200:19:54Thank you. Operator00:19:57Thank you. Our next question comes from James Yaro with Goldman Sachs. Please go ahead. Speaker 500:20:03Good morning and thanks for taking my questions. Maybe just starting with placement, which was excellent in the quarter. I know this can be one of the lower quarters from a seasonal perspective across the year for placement. There's obviously been a strong step up in the business versus last year. So does that suggest that there could be substantial growth from here and we can see the normal seasonal improvement over the course of the year in that business for 2024? Speaker 200:20:34And I always hesitate to try and reduce our business to 13 week earnings cycles as to what's going to fall into any cycle. So it's easier James for us to talk about it on a year basis. I think we've been pretty consistent that 2023 was an aberrationally difficult year in terms of total revenue results for PJT Park Hill that the environment, while still far from perfect, is improved. And then if you just look at placement, which really is closer to primary capital raise, but it also encompasses things like corporate private placements and the like. I think there's no doubt that we're in a more favorable environment and we all expect that to be an up year. Speaker 200:21:21But where it falls quarter to quarter, I'd rather refrain from speculating. Speaker 500:21:27Okay. That makes a lot of sense. Maybe just a longer term question on the strong growth in secondary continuation funds that we're seeing across the industry and I think you're benefiting from that as well. Maybe just your longer term outlook on the businesses, the ability for the strong growth to be sustained and then how they interplay with the lack of M and A and whether that's supporting some of the activity and growth that we've seen more recently? Well, it does Speaker 200:21:55have some inner it does have some interrelationship where it is related to some extent to the dearth of M and A monetization because it's been difficult for private equity to be comfortable monetizing investments in this rate environment and that, that is an opportunity to create liquidity for investors. But I think this trend is far beyond that. I think there is increasing recognition that it is an important tool in the toolkit. It can be very helpful when there are high quality assets that sponsors would like to continue to own and manage. And they recognize that selling, there's probably more friction cost, more disruption than just creating a vehicle for certain LPs to exit and others to enter. Speaker 200:22:55I think one of the challenges has been that there's probably far greater demand on the part of sponsors to deploy continuation fund vehicles than there is dedicated capital to the asset class. I think one could make a very strong compelling case that investors are significantly under allocated to this asset class And what you've started to see in recent time is very significant pools of capital raised by leading sponsors to increase the available capital. And as that capital builds, which I expect it will, and as more capital is redirected into secondaries and continuation funds, I think this is a long term trend and it's a trend that we intend to capitalize on. Speaker 500:23:47Very clear. Thank you so much. Speaker 200:23:49Thank you. Operator00:23:53Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Please go ahead. Speaker 600:23:59Hey, good morning. Speaker 200:24:01Good morning, Jim. Maybe just Speaker 600:24:03a follow-up on restructuring, Paul. We did have record debt issuance in the Q1. So to your point, we had a lot of refinancing that might have solved a lot of issues for this year at least. So I guess what gives you the confidence that that doesn't continue and start to maybe create a little bit of a headwind the restructuring. It feels like we've been through this cycle before when refinancing really picks up, we do get some eventually some slowdown in restructuring. Speaker 600:24:35So just wanted to get maybe a little more detail what your confidence level is in that continuing the restructuring levels that we're seeing. Speaker 200:24:43Well, there's 2 different things. One is, are we going to set records every year? Or are we going to fall back to early the way we did from 2020 to 2021? And what I've said repeatedly is 2020 to 2021 is not in any way indicative of the environment that we're in today. So I can't sit here and say that every year is going to be a record year, but I think we're going to enjoy elevated levels of liability management for an extended period of time for all of the factors I've talked about. Speaker 200:25:23Some is simply that rates are not coming down nearly as quickly as people had hoped or expected. And that weighs. There is real disruption and lots of winners and there's all the new economy and there's all of these incredible success stories, but there's creative destruction and you can't just have a world where there are winners and there are no losers. So there are companies who we didn't even talk about 5 or 10 years ago, who are incredibly disruptive all highly disruptive. And that means that you can have a robust economy and you can have companies that fundamentally have business models that no longer work. Speaker 200:26:18That is not going to diminish. That is going to increase. And also, I think we were right for the long term and wrong in the short term, which is we talked about COVID doing permanent damage to a very significant number of companies. And the reality is the extraordinary fiscal and monetary stimulus that all appeared at the end of 2020 and into 2021 covered up a lot of sense. And what that did is it enabled companies to continue, but they're really walking wounded. Speaker 200:26:55And at some point, they need to address their issues. So we see this as a multiyear cycle, but a multiyear cycle can operate at elevated levels, but not necessarily be at elevated at record levels every year, just as we expect there to be a very robust multiyear M and A wave, but that doesn't mean we're predicting that every year is going to stair step be better than the year before. And I think if you step back and widen the lens and look at sort of where historical default rates were, that's the aberration. That's what's not sustainable. And we're in a different environment and it's a multiyear cycle. Speaker 600:27:42That's helpful. Maybe just switching to buybacks and or capital return, if we assume sort of activity and therefore profitability and cash flow are improving in the coming years. I'm not putting words in your mouth, but I guess that's the expectation for most people. How do you think about the priorities of that extra cash flow putting it to work? Is it first in net buybacks? Speaker 600:28:05Can we start to see net buybacks versus offsetting dilution? Or is it a higher dividend? How do you think about a scenario where cash flow is growing pretty nicely? Speaker 200:28:14Well, the first thing is just investing in the business and whether it's organic, inorganic, we're investing in our business. That has to be priority 1, 2 and 3. It's all of the above. We've got to focus on that. What we if you look at all of the incentive awards in the 1st 6 years and Helen can augment this commentary, we ultimately got it all back. Speaker 200:28:38And I think we've talked about these performance awards, which were triggered, they've worked beautifully. We want to get them all back. We're going to work to do it. I think what we've done in a quarter is we've neutralized and then pretty much we pretty much neutralized all of last year's regular way issuance, to get at that. I think that's a higher priority than increasing the dividend, but that doesn't mean we can't do a little bit of both. Speaker 200:29:14It doesn't mean we do all of 1 and none of another. But if you ask just sort of directionally priorities, invest in the business. And I think lessons should be well understood by everyone that you need to focus on growing and investing in your core business. And then the second is to make sure that we're not diluting our precious equity. And then I'm confident we could do both of those and in the appropriate time and at the appropriate in the appropriate cadence to grow the dividend, but it's 1, 2, 3. Speaker 300:29:50So just to confirm that, to date most of their repurchases have been to neutralize the issuances. So as Paul said, maybe in the future, we take that further, but for now, that's where we are. Speaker 600:30:02Okay, great. Thank Speaker 400:30:05you. Thank Operator00:30:06you. Our next question will come from Steven Chubak with Wolfe Research. Please go ahead. Speaker 700:30:12Good morning. This is Brendan O'Brien filling in for Steven. I guess, sorry, I just want to talk a bit about the new outlook commentary you provided. I mean, if we put the pieces together with restructuring down modestly, strategic advisory likely to be up slightly depending on how the back half plays up and plays out and Park Hill expected to be up more meaningfully. It sounds like you're pointing to a similar level of revenue growth as you guys saw last year. Speaker 700:30:40Is that a fair interpretation of your comments? Speaker 200:30:44We can interpret my comments many different ways, but let me be really precise. What we said was our we currently expect our restructuring business to approach last year's record levels. We expect the Park Hill business to enjoy a very significant recovery from last year's levels. And I've talked about all of the puts and takes in strategic advisory, which is there's tremendous momentum. The mandate count continues to grow. Speaker 200:31:16It sits at record levels. We talked a quarter ago about record or near record preannounced pipeline. That pipeline continues to grow. We see the environment getting more constructive by the day. We talked about the one Achilles heel at the beginning of the year. Speaker 200:31:35It was atypicallylowannounced pending close. That number has grown appreciably. We expect it will continue to grow. How that all works out with closings and the like, TBD. Speaker 700:31:52Got you. Thanks for the color. And I guess for my follow-up, I just wanted to touch on the election, which you called out as a potential catalyst. Last quarter, it sounded like the election had not yet been top of mind for clients. However, given we're just a few months away, I just want to get a sense as to what type of impact this is having on that maybe conversion from the pending and that are pre announced to that pending close backlog? Speaker 200:32:21Yes. Look, again, I don't think it's a light switch that all of a sudden everyone is obsessing about the election. What we said early on is we think that that's a risk activity that's not well understood and not appreciated, but over time, it will be. I think you're starting to see more and more commentary that people are very much focused on the election. If you look at sort of forward bets on volatility, they've increased appreciably as you get closer to the election. Speaker 200:32:55I think it's 2 things. I think companies that are thinking about transformative M and A that involves an interpretation of policy, enforcement at the FTC and the DOJ. I think this weighs on them and that for a number of clients, they're going to wait and see the results of the election and then decide what their course of action is. And it could be that they were thinking of a larger target and they now believe it's unlikely and they're going to pivot to a different target or a different way to scratch the edge or it could mean that the second term of the current administration might have a different focus on enforcement once you get past the reelection campaign or it could mean that with a change in administration, you have a fundamentally different approach. So that is freezing some activity. Speaker 200:33:51I can't say it's freezing tremendous amounts, but there is there are pockets where that affects it, number 1. Number 2, I believe that as we get a lot closer to the election, we're going to see a lot more volatility, a lot more uncertainty, a lot of dueling prescriptions, which are going to create different sets of winners and losers, different proposed tax policies, regulatory policies, different approaches to China. And as a result, as we get closer, I think you're going to see activity dip as a result of that because of that volatility and people are going to want to get through it. So it's going to manifest itself over time. It's going to manifest itself in different ways depending upon what type of M and A you're looking at. Speaker 200:34:41But in the aggregate, I think when you get behind it and we're past the elections, I believe all else equal, we're going to end up with more activity, not less post election than 2018. Speaker 700:34:54Great. Thank you for taking my questions. Speaker 200:34:56Absolutely. Thank you. Operator00:35:00Thank you. Our next question comes from Brennan Hawken with UBS. Please go ahead. Speaker 800:35:07Good morning. This is Ben Rubin filling in for Brennan. Thanks for taking my questions. My first question is on restructuring after a record year last year. It looks you guys had another strong quarter this 1Q and it seems like the commentary was quite bullish with that respect. Speaker 800:35:23I was wondering if you could just give me a sense of where your restructuring pipeline sits today. And you also spoke to record mandate counts within the strategic advisory practice. So I was just curious, how does that compare for the restructuring group? And then just lastly, any type of color you can provide around the overall contribution in terms of revenue that the Restructuring practice had on this quarter's results would be helpful. Thanks. Speaker 300:35:49I'll answer the last question first. We don't break out the contribution from each of the businesses. I think we've been pretty consistent on that. And then in terms of the pipeline, I think Paul's commentary about where we see the year ending up versus last year, as you can imagine, the pipeline would look consistent with that. Speaker 800:36:11Okay, great. Thanks. And then for my follow-up, just on recruiting, obviously, last year was a record year and it sounds like it will stay elevated in terms of the pace of this year. And according to the slide deck, which I thought was interesting, there actually are several hires outside of strategic advisory. Could you speak to your latest expectations for the overall pace of strategic advisory? Speaker 800:36:37Thanks. Speaker 300:36:38Yes. So I'll talk about the increase in the partner count, which we disclosed in our report this morning. That does include promotions. So historically, the growth in partners in the businesses outside of Strategic Advisory has usually been from internal promotes. And within Advisory, it's a combination of internal promotes and new hiring. Speaker 300:37:00So when you see increases, you shouldn't assume that all of that comes from outside. Speaker 800:37:07Great. Thanks for taking my questions. Operator00:37:13Thank you. That does conclude today's Q and A session. I will now turn the call back to Mr. Taubman for closing remarks. Speaker 200:37:22Well, thank you all for joining us this morning. We very much appreciate your interest and your support and we look forward to reconvening after second quarter earnings are released. Thank you very much.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallPJT Partners Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) PJT Partners Earnings HeadlinesPJT's Taubman Is Bullish on Europe for DealmakingMay 5 at 3:37 PM | msn.comPJT Partners opens new Riyadh office, expands senior Middle East teamMay 5 at 10:36 AM | reuters.comTrump’s Bitcoin Reserve is No Accident…Crypto policy is changing fast… Smart investors are positioning themselves to benefit. And it's all happening outside of the traditional system. At the center of it all is one crypto project we believe could be the #1 coin to own right now.May 6, 2025 | Crypto 101 Media (Ad)Seaport Res Ptn Raises Earnings Estimates for PJT PartnersMay 4 at 2:11 AM | americanbankingnews.comQ2 EPS Estimates for PJT Partners Cut by Seaport Res PtnMay 3 at 2:03 AM | americanbankingnews.comPJT Partners Q1 2025 presentation slides: Revenue reaches $1.5B as advisory firm expandsApril 30, 2025 | investing.comSee More PJT Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like PJT Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on PJT Partners and other key companies, straight to your email. Email Address About PJT PartnersPJT Partners (NYSE:PJT), an investment bank, provides various strategic and capital markets advisory, restructuring and special situations, and shareholder advisory services to corporations, financial sponsors, institutional investors, and governments worldwide. It offers advisory services to clients on various transactions, including mergers and acquisitions (M&A), spin-offs, activism defense, contested M&A, joint ventures, minority investments, and divestitures. The company also advises private and public company boards and management teams on strategies for building productive investor relationships with a focus on shareholder engagement; and strategic investor relations; environmental, social, and governance matters; and other investor-related matters. In addition, it provides advisory services related to debt and acquisition financings; structured product offerings; public equity raises, including initial public offering and SPAC offerings; and private capital raises for early and later stage companies, as well as other capital structure related matters. Further, the company offers advisory services in financial restructurings and reorganizations; liability management; distressed mergers and acquisitions; and to management teams, corporate boards, sponsors and creditors. Additionally, it provides private fund advisory and fundraising services for a range of investment strategies; and advisory services to general and partners on liquidity and other structured solutions. The company was formerly known as Blackstone Advisory Inc. and changed its name to PJT Partners Inc. in March 2015. PJT Partners Inc. was incorporated in 2014 and is headquartered in New York, New York.View PJT Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 9 speakers on the call. Operator00:00:00Good day, and welcome to the PJT Partners First Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead. Speaker 100:00:17Thanks very much. Good morning and welcome to the PJT Partners Q1 2024 Earnings Conference Call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners, and joining me today is Paul Tousman, our Chairman and Chief Executive Officer and Helen Mates, our Chief Financial Officer. Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward looking statements. These forward looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. Speaker 100:00:58We believe that these factors are described in the Risk Factors section contained in PJT Partners' 2023 Form 10 ks, which is available on our website atpjtpartners.com. I want to remind you that the company assumes no duty to update any forward looking statements and that the presentation we make today contains non GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non GAAP metrics and their GAAP reconciliations, you should refer to the financial data contained within the release we issued this morning, also available on our website. And with that, I'll turn the call over to Paul. Speaker 200:01:39Thank you, Sharon. Good morning, everyone, and thank you for joining our earnings call. Earlier today, we reported 1st quarter revenues of 329,000,000 dollars up 65 percent adjusted pretax income of $55,000,000 up 81 percent and adjusted EPS of $0.98 up 81% from year ago levels. We had our 2nd highest revenue quarter ever, reflecting strong performance in all of our businesses as we benefited from continued momentum in restructuring, significantly improved results in PJT Park Hill and strong performance in Strategic Advisory. While we report results quarterly, we measure our progress not in quarters, but in years. Speaker 200:02:33After a highly successful quarter, our focus remains on ending the year a meaningfully stronger firm than when we began the year. A core element of that progress is the continued addition of highly talented professionals with particular emphasis on filling out our strategic advisory footprint. The recruiting environment continues to be conducive to senior hiring and we expect our hiring to remain elevated this year even if it does not match 2023's record recruiting. In the Q1, we had our highest open market repurchases ever as we remain focused on offsetting dilution from these investments. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail. Speaker 200:03:33Helen? Speaker 300:03:33Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the quarter were $329,000,000 a record Q1, up 65% year over year. Revenues were meaningfully higher across all businesses with the highest growth coming from restructuring. Speaker 300:03:50We had a number of transaction completions that met criteria for revenues to be pulled forward in the Q1, totaling $25,000,000 Excluding the impact of pull forwards in both periods, our revenue growth would have been 52%. Turning to expenses. Consistent with prior quarters, we presented the expenses with certain non GAAP adjustments, which are more fully described in our 8 ks. 1st, compensation expense. We accrued compensation expense at 69.5% of revenues for the Q1 compared with 69.8 percent for the full year 2023. Speaker 300:04:25This ratio represents our current best expectations for the full year 2024. Turning to adjusted non compensation expense. Total adjusted non compensation expense was $45,000,000 in the Q1, up from $36,000,000 in the Q1 last year. The higher expense was primarily driven by increases in occupancy costs, travel and related as well as bad debt expense, which is included in other expenses. Despite the high year over year increase in Q1 non comp expense, we continue to expect that our full year 2024 non comp expense will grow at a similar rate to the growth rate we experienced in 2023. Speaker 300:05:05This growth will be primarily driven by an increase in our occupancy costs as well as increased travel and related expense. Turning to adjusted pre tax income. Our adjusted pre tax income was $55,000,000 in the first quarter compared with $30,000,000 for the same period last year and our adjusted pretax margin was 16.8% for the 1st quarter compared with 15.2% for the same period a year ago. The provision for taxes as with prior quarters, we presented our results as if all partnership units had been converted to shares and that all of our income was taxed at a corporate tax rate. Our effective tax rate was 22% for the Q1, below our full year 2023 rate of 25 point 3%. Speaker 300:05:52The tax benefit relating to the delivery of vested shares during the Q1 was greater than last year's benefit. We take a full year view of that benefit and we currently expect our full year effective tax rate to be around 22%. Our adjusted converted earnings were $0.98 per share for the Q1 compared with $0.54 per share in the Q1 last year. On the share count for the quarter, our weighted average share count was 43,700,000 shares, up 5% versus a year ago. This increase primarily reflects the full share count impact of 1,300,000 performance shares, which reached the price hurdles at the end of 2023. Speaker 300:06:37During the Q1, we repurchased the equivalent of approximately 1,500,000 shares, primarily through open market repurchases. In addition, we plan to exchange 116,000 partnership units for cash on May 9, 2024. And on the balance sheet, we ended the quarter with $236,000,000 in cash, cash equivalents and short term investments and $408,000,000 in net working capital and we continue to have no funded debt outstanding. And finally, the Board has approved a dividend of $0.25 per share. The dividend will be paid on June 2024 to Class A common shareholders of record as of June 5. Speaker 300:07:15With that, I'll turn back to Paul. Speaker 200:07:17Thank you, Helen. Beginning with PKT Park Hill. Revenues in our PKT Park Hill business were up significantly quarter on quarter and year over year driven by meaningful growth in private capital solutions. GPs and LPs alike continue to be attracted to Private Capital Solutions as they seek to enhance liquidity, particularly given the current low levels of portfolio monetizations. This combined with a more constructive environment in which to execute secondary transactions helped drive strong Q1 results in PJT Park Hill. Speaker 200:07:59On the primary side, the fundraising environment remains challenged, although somewhat improved from year ago levels as higher equity valuations have served to bring alternatives allocations better into line for many LPs. Turning to restructuring. Our leading restructuring team continues to be extremely active in both liability management assignments as well as in court restructurings. Revenues in our restructuring business were up sharply year over year, but up more modestly quarter on quarter, reflecting continued high levels of activity. We are in a multiyear cycle of elevated activity in liability management and in court restructurings. Speaker 200:08:50In many instances, more favorable financing markets will prove insufficient to state block broader restructuring activity. With each passing day, it is clearer that rates will remain higher for longer, that increasing numbers of companies are being disrupted by technological innovation and changing consumer preferences and that companies continue to contend with challenges to their business models that link back to the pandemic. While the near term maturity wall has largely been addressed, another one looms in 2028. In this highly constructive restructuring environment, we expect our 2024 restructuring revenues to remain elevated and to approach last year's record performance. Turning to Strategic Advisory. Speaker 200:09:52In the Q1, our Strategic Advisory business delivered strong revenue growth compared to the prior year. As we highlighted on our last earnings call, we began 2024 with a new record pre announced pipeline, but an atypically low backlog of announced pending close transactions. Our mandate count continues to grow and stands at record levels. Our announced pending close pipeline has also grown appreciably year to date and given the momentum we see in our business, we expect it to continue to build as 2024 progresses. In 2023, announced global M and A volumes declined to levels not seen in a decade. Speaker 200:10:44Over the past several months, the pieces necessary for an M and A recovery have increasingly fallen into place, driven by stronger than expected economic prints, rising global equity valuations, a significant recovery in the debt and equity capital markets and increasing pent up demand for strategic assets following 2 years of sharply reduced transaction activity. Amidst broad based expectations for a sharp uptick in global M and A activity in 2024, annualized year to date activity is tracking only modestly ahead of 2023 levels. We expect to see a gradual increase in M and A activity until certain catalysts are in place, which should further propel activity, namely Central Bank rate clarity and election results in the U. S. And elsewhere. Speaker 200:11:46To capitalize on the multiyear M and A upturn, to capitalize on the multiyear M and A upturn that is ahead of us. The continued addition of senior talent is an important element of that positioning. To close, looking back, we delivered differentiated performance in 20222023 as we continue to invest in our franchise. As we look forward, we are equally committed to further investment to ensure that we are best positioned to capitalize on the future regardless of market conditions. As before, we remain confident in our long term growth prospects. Speaker 200:12:40And with that, we will now take your questions. Operator00:13:05Our first question comes from Devin Ryan with Citizens JMP. Please go ahead. Speaker 400:13:13Hey, good morning. Good morning, Paul. Good morning, Helen. How are you? Speaker 200:13:16Good morning, well. We're well. Thank you. Speaker 400:13:20Good. First question, just want to kind of take a step back and think about just the broader M and A market and PJT's positioning it. And Paul, you gave some comments on the outlook, which I appreciate. But if we look at just the market overall, 2021 was the most recent kind of active year we had. That was probably a year for the backdrop that was above normal. Speaker 400:13:43But when we look at PJT specifically, I think strategic advisory partners have increased by over 40% since that time. And so I just want to kind of think about or how you would frame what a more normalized environment means for PJT's Strategic Advisory business, the type of revenues or production you would expect out of partners or any other parameters that we can think about kind of how much larger this business is and potential is today relative to that time just because we're kind of the business has transitioned so much since there's actually been an active environment. So I think people are having a hard time trying to think about what a normalized revenue potential could be for PJT. Thanks. Speaker 200:14:28Yes. Look, it's really hard to sort of pinpoint what we would look like in a normalized environment, but let's try and have a go at it. If right now we were to experience a 2021 market environment all over again, we would be far better positioned to capitalize on that upswing than we were in actuality in 2021. We're not expecting tomorrow to wake up and be back into 2021 M and A environment. But if we were, we would find ourselves to be able to deliver meaningfully greater performance because our coverage footprint is much greater today, because our coverage footprint better matches where the wallet is distributed, because we have less partially built out industry verticals and more fully built out industry verticals because our brand and years of sustained coverage are greater and we're better known to clients today than we were 3 years ago. Speaker 200:15:45What we are focused on is where we believe the M and A market is going. And it's clear that 20222023 are aberrationally low levels of normalized M and A. Early on, we said this is not a light switch in 2024. Do not look at the light switch that got flipped from 2020 to 2021 and just see this explosive rebound in M and A from 2023 to 2024. We have always viewed it as more of a slow gradual rebuild. Speaker 200:16:29We made the point that 2 years of successive global declines in M and A volume that we didn't believe you'd see a third, that when you do have an inflection point, you typically see 1st year growth of 10% to 15% in volumes. I think year to date, we're tracking year and I continue to believe we'll end up the year up 10% to 15% in global M and A volume. But I do think there's an opportunity for there to be a step function change in that in 2025 beyond And that's what we're playing for. And there's no doubt that in any environment you pick, Devin, our ability to capitalize on that going to be fundamentally different today than it was 3 or 4 years ago. Hopefully, that's helpful. Speaker 400:17:32Yes. Appreciate that, Paul. And then just as a follow-up here on just the comp ratio, just trying to maybe dig in and square a little bit more between the 69.5% relative to the 2nd best ever revenue quarter. Obviously, 69.5% still higher than I think kind of historically where you've been at. And so just want to think about how much of that is maybe a function of seasonal dynamics like retirement eligible expense or the competitive backdrop that you're seeing right now or you obviously heard commentary around the desire to lean in again on recruiting. Speaker 400:18:09So just love to kind of think about that number, what that means and then what the implication is a go forward basis, particularly in an environment where over the next couple of years revenues are potentially recovering? Thanks. So that was so Speaker 200:18:25first of all, 69.5% is our current best estimate of the full year. That is marginally below full year comp ratio for last year. What I said on the last earnings call is in order to see meaningful comp leverage for the ratio to come down meaningfully, we need to see the revenue growth measured in years exceed the headcount growth. And you've made the point. And I think I said on the last earnings call that over the last 3 years, we had added 35% headcount, but we haven't grown our revenues near 35%. Speaker 200:19:06I don't believe that that day is far away. And when those 2 are aligned, that's when you're likely to see meaningful reductions in comp as a percentage of revenue. But we do remain very focused on keeping recruiting elevated. We do believe that the investments we're making are bearing significant fruit, but until all of those revenues are fully realized, the ratios are likely to be out of whack. And we're still uncertain as to what the true market compensation environment will be at the end of the year. Speaker 200:19:42So based on all of that, 69.5% is our current best estimate. Speaker 400:19:51Okay. Very clear. Thanks a lot. Appreciate it. Speaker 200:19:54Thank you. Operator00:19:57Thank you. Our next question comes from James Yaro with Goldman Sachs. Please go ahead. Speaker 500:20:03Good morning and thanks for taking my questions. Maybe just starting with placement, which was excellent in the quarter. I know this can be one of the lower quarters from a seasonal perspective across the year for placement. There's obviously been a strong step up in the business versus last year. So does that suggest that there could be substantial growth from here and we can see the normal seasonal improvement over the course of the year in that business for 2024? Speaker 200:20:34And I always hesitate to try and reduce our business to 13 week earnings cycles as to what's going to fall into any cycle. So it's easier James for us to talk about it on a year basis. I think we've been pretty consistent that 2023 was an aberrationally difficult year in terms of total revenue results for PJT Park Hill that the environment, while still far from perfect, is improved. And then if you just look at placement, which really is closer to primary capital raise, but it also encompasses things like corporate private placements and the like. I think there's no doubt that we're in a more favorable environment and we all expect that to be an up year. Speaker 200:21:21But where it falls quarter to quarter, I'd rather refrain from speculating. Speaker 500:21:27Okay. That makes a lot of sense. Maybe just a longer term question on the strong growth in secondary continuation funds that we're seeing across the industry and I think you're benefiting from that as well. Maybe just your longer term outlook on the businesses, the ability for the strong growth to be sustained and then how they interplay with the lack of M and A and whether that's supporting some of the activity and growth that we've seen more recently? Well, it does Speaker 200:21:55have some inner it does have some interrelationship where it is related to some extent to the dearth of M and A monetization because it's been difficult for private equity to be comfortable monetizing investments in this rate environment and that, that is an opportunity to create liquidity for investors. But I think this trend is far beyond that. I think there is increasing recognition that it is an important tool in the toolkit. It can be very helpful when there are high quality assets that sponsors would like to continue to own and manage. And they recognize that selling, there's probably more friction cost, more disruption than just creating a vehicle for certain LPs to exit and others to enter. Speaker 200:22:55I think one of the challenges has been that there's probably far greater demand on the part of sponsors to deploy continuation fund vehicles than there is dedicated capital to the asset class. I think one could make a very strong compelling case that investors are significantly under allocated to this asset class And what you've started to see in recent time is very significant pools of capital raised by leading sponsors to increase the available capital. And as that capital builds, which I expect it will, and as more capital is redirected into secondaries and continuation funds, I think this is a long term trend and it's a trend that we intend to capitalize on. Speaker 500:23:47Very clear. Thank you so much. Speaker 200:23:49Thank you. Operator00:23:53Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Please go ahead. Speaker 600:23:59Hey, good morning. Speaker 200:24:01Good morning, Jim. Maybe just Speaker 600:24:03a follow-up on restructuring, Paul. We did have record debt issuance in the Q1. So to your point, we had a lot of refinancing that might have solved a lot of issues for this year at least. So I guess what gives you the confidence that that doesn't continue and start to maybe create a little bit of a headwind the restructuring. It feels like we've been through this cycle before when refinancing really picks up, we do get some eventually some slowdown in restructuring. Speaker 600:24:35So just wanted to get maybe a little more detail what your confidence level is in that continuing the restructuring levels that we're seeing. Speaker 200:24:43Well, there's 2 different things. One is, are we going to set records every year? Or are we going to fall back to early the way we did from 2020 to 2021? And what I've said repeatedly is 2020 to 2021 is not in any way indicative of the environment that we're in today. So I can't sit here and say that every year is going to be a record year, but I think we're going to enjoy elevated levels of liability management for an extended period of time for all of the factors I've talked about. Speaker 200:25:23Some is simply that rates are not coming down nearly as quickly as people had hoped or expected. And that weighs. There is real disruption and lots of winners and there's all the new economy and there's all of these incredible success stories, but there's creative destruction and you can't just have a world where there are winners and there are no losers. So there are companies who we didn't even talk about 5 or 10 years ago, who are incredibly disruptive all highly disruptive. And that means that you can have a robust economy and you can have companies that fundamentally have business models that no longer work. Speaker 200:26:18That is not going to diminish. That is going to increase. And also, I think we were right for the long term and wrong in the short term, which is we talked about COVID doing permanent damage to a very significant number of companies. And the reality is the extraordinary fiscal and monetary stimulus that all appeared at the end of 2020 and into 2021 covered up a lot of sense. And what that did is it enabled companies to continue, but they're really walking wounded. Speaker 200:26:55And at some point, they need to address their issues. So we see this as a multiyear cycle, but a multiyear cycle can operate at elevated levels, but not necessarily be at elevated at record levels every year, just as we expect there to be a very robust multiyear M and A wave, but that doesn't mean we're predicting that every year is going to stair step be better than the year before. And I think if you step back and widen the lens and look at sort of where historical default rates were, that's the aberration. That's what's not sustainable. And we're in a different environment and it's a multiyear cycle. Speaker 600:27:42That's helpful. Maybe just switching to buybacks and or capital return, if we assume sort of activity and therefore profitability and cash flow are improving in the coming years. I'm not putting words in your mouth, but I guess that's the expectation for most people. How do you think about the priorities of that extra cash flow putting it to work? Is it first in net buybacks? Speaker 600:28:05Can we start to see net buybacks versus offsetting dilution? Or is it a higher dividend? How do you think about a scenario where cash flow is growing pretty nicely? Speaker 200:28:14Well, the first thing is just investing in the business and whether it's organic, inorganic, we're investing in our business. That has to be priority 1, 2 and 3. It's all of the above. We've got to focus on that. What we if you look at all of the incentive awards in the 1st 6 years and Helen can augment this commentary, we ultimately got it all back. Speaker 200:28:38And I think we've talked about these performance awards, which were triggered, they've worked beautifully. We want to get them all back. We're going to work to do it. I think what we've done in a quarter is we've neutralized and then pretty much we pretty much neutralized all of last year's regular way issuance, to get at that. I think that's a higher priority than increasing the dividend, but that doesn't mean we can't do a little bit of both. Speaker 200:29:14It doesn't mean we do all of 1 and none of another. But if you ask just sort of directionally priorities, invest in the business. And I think lessons should be well understood by everyone that you need to focus on growing and investing in your core business. And then the second is to make sure that we're not diluting our precious equity. And then I'm confident we could do both of those and in the appropriate time and at the appropriate in the appropriate cadence to grow the dividend, but it's 1, 2, 3. Speaker 300:29:50So just to confirm that, to date most of their repurchases have been to neutralize the issuances. So as Paul said, maybe in the future, we take that further, but for now, that's where we are. Speaker 600:30:02Okay, great. Thank Speaker 400:30:05you. Thank Operator00:30:06you. Our next question will come from Steven Chubak with Wolfe Research. Please go ahead. Speaker 700:30:12Good morning. This is Brendan O'Brien filling in for Steven. I guess, sorry, I just want to talk a bit about the new outlook commentary you provided. I mean, if we put the pieces together with restructuring down modestly, strategic advisory likely to be up slightly depending on how the back half plays up and plays out and Park Hill expected to be up more meaningfully. It sounds like you're pointing to a similar level of revenue growth as you guys saw last year. Speaker 700:30:40Is that a fair interpretation of your comments? Speaker 200:30:44We can interpret my comments many different ways, but let me be really precise. What we said was our we currently expect our restructuring business to approach last year's record levels. We expect the Park Hill business to enjoy a very significant recovery from last year's levels. And I've talked about all of the puts and takes in strategic advisory, which is there's tremendous momentum. The mandate count continues to grow. Speaker 200:31:16It sits at record levels. We talked a quarter ago about record or near record preannounced pipeline. That pipeline continues to grow. We see the environment getting more constructive by the day. We talked about the one Achilles heel at the beginning of the year. Speaker 200:31:35It was atypicallylowannounced pending close. That number has grown appreciably. We expect it will continue to grow. How that all works out with closings and the like, TBD. Speaker 700:31:52Got you. Thanks for the color. And I guess for my follow-up, I just wanted to touch on the election, which you called out as a potential catalyst. Last quarter, it sounded like the election had not yet been top of mind for clients. However, given we're just a few months away, I just want to get a sense as to what type of impact this is having on that maybe conversion from the pending and that are pre announced to that pending close backlog? Speaker 200:32:21Yes. Look, again, I don't think it's a light switch that all of a sudden everyone is obsessing about the election. What we said early on is we think that that's a risk activity that's not well understood and not appreciated, but over time, it will be. I think you're starting to see more and more commentary that people are very much focused on the election. If you look at sort of forward bets on volatility, they've increased appreciably as you get closer to the election. Speaker 200:32:55I think it's 2 things. I think companies that are thinking about transformative M and A that involves an interpretation of policy, enforcement at the FTC and the DOJ. I think this weighs on them and that for a number of clients, they're going to wait and see the results of the election and then decide what their course of action is. And it could be that they were thinking of a larger target and they now believe it's unlikely and they're going to pivot to a different target or a different way to scratch the edge or it could mean that the second term of the current administration might have a different focus on enforcement once you get past the reelection campaign or it could mean that with a change in administration, you have a fundamentally different approach. So that is freezing some activity. Speaker 200:33:51I can't say it's freezing tremendous amounts, but there is there are pockets where that affects it, number 1. Number 2, I believe that as we get a lot closer to the election, we're going to see a lot more volatility, a lot more uncertainty, a lot of dueling prescriptions, which are going to create different sets of winners and losers, different proposed tax policies, regulatory policies, different approaches to China. And as a result, as we get closer, I think you're going to see activity dip as a result of that because of that volatility and people are going to want to get through it. So it's going to manifest itself over time. It's going to manifest itself in different ways depending upon what type of M and A you're looking at. Speaker 200:34:41But in the aggregate, I think when you get behind it and we're past the elections, I believe all else equal, we're going to end up with more activity, not less post election than 2018. Speaker 700:34:54Great. Thank you for taking my questions. Speaker 200:34:56Absolutely. Thank you. Operator00:35:00Thank you. Our next question comes from Brennan Hawken with UBS. Please go ahead. Speaker 800:35:07Good morning. This is Ben Rubin filling in for Brennan. Thanks for taking my questions. My first question is on restructuring after a record year last year. It looks you guys had another strong quarter this 1Q and it seems like the commentary was quite bullish with that respect. Speaker 800:35:23I was wondering if you could just give me a sense of where your restructuring pipeline sits today. And you also spoke to record mandate counts within the strategic advisory practice. So I was just curious, how does that compare for the restructuring group? And then just lastly, any type of color you can provide around the overall contribution in terms of revenue that the Restructuring practice had on this quarter's results would be helpful. Thanks. Speaker 300:35:49I'll answer the last question first. We don't break out the contribution from each of the businesses. I think we've been pretty consistent on that. And then in terms of the pipeline, I think Paul's commentary about where we see the year ending up versus last year, as you can imagine, the pipeline would look consistent with that. Speaker 800:36:11Okay, great. Thanks. And then for my follow-up, just on recruiting, obviously, last year was a record year and it sounds like it will stay elevated in terms of the pace of this year. And according to the slide deck, which I thought was interesting, there actually are several hires outside of strategic advisory. Could you speak to your latest expectations for the overall pace of strategic advisory? Speaker 800:36:37Thanks. Speaker 300:36:38Yes. So I'll talk about the increase in the partner count, which we disclosed in our report this morning. That does include promotions. So historically, the growth in partners in the businesses outside of Strategic Advisory has usually been from internal promotes. And within Advisory, it's a combination of internal promotes and new hiring. Speaker 300:37:00So when you see increases, you shouldn't assume that all of that comes from outside. Speaker 800:37:07Great. Thanks for taking my questions. Operator00:37:13Thank you. That does conclude today's Q and A session. I will now turn the call back to Mr. Taubman for closing remarks. Speaker 200:37:22Well, thank you all for joining us this morning. We very much appreciate your interest and your support and we look forward to reconvening after second quarter earnings are released. Thank you very much.Read morePowered by