NEW YORK–(BUSINESS WIRE)–PJT Partners Inc. (NYSE: PJT) today reported Total Revenues of $206.7 million for first quarter 2021 compared with $200.2 million for the prior year quarter. GAAP Net Income and Adjusted Net Income, If-Converted were $43.8 million and $38.5 million, respectively, for the current quarter compared with $32.0 million and $29.1 million, respectively, for the prior year quarter. GAAP Diluted EPS and Adjusted EPS were $1.03 and $0.89, respectively, for the current quarter compared with $0.72 and $0.71, respectively, for the prior year quarter.
Paul J. Taubman, Chairman and Chief Executive Officer, said, “Our balanced business model generated strong revenues and delivered meaningful growth in pretax income and earnings per share against the backdrop of a muted restructuring environment. Given the strength of our complementary businesses, we remain confident in our future growth prospects regardless of market environment.”
Revenues
The following table sets forth revenues for the three months ended March 31, 2021 and 2020:
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
||||||
|
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
||||
|
|
|
(Dollars in Millions) |
|
|
|
|
|
||||||
|
Revenues |
|
|
|
||||||||||
|
Advisory |
|
$ |
152.6 |
|
|
$ |
156.6 |
|
|
(3 |
%) |
|
|
|
Placement |
|
|
50.4 |
|
|
|
39.0 |
|
|
29 |
% |
|
|
|
Interest Income & Other |
|
|
3.7 |
|
|
|
4.6 |
|
|
(19 |
%) |
|
|
|
Total Revenues |
|
$ |
206.7 |
|
|
$ |
200.2 |
|
|
3 |
% |
|
|
Total Revenues increased 3% to $207 million for first quarter 2021 from $200 million for the prior year quarter.
Advisory Revenues decreased 3% to $153 million for the current quarter from $157 million for the prior year quarter. The decrease was driven by a significant reduction in restructuring revenues, which was largely offset by an increase in strategic advisory revenues.
Placement Revenues increased 29% to $50 million for the current quarter from $39 million for the prior year quarter. The increase in Placement Revenues reflected a strong increase in fund placement activity.
Interest Income & Other decreased slightly to $4 million for the current quarter compared with $5 million for the prior year quarter.
Expenses
The following table sets forth information relating to the Company’s expenses for the three months ended March 31, 2021 and 2020:
|
|
|
Three Months Ended March 31, |
||||||||||||||
|
|
|
2021 |
|
2020 |
||||||||||||
|
|
|
GAAP |
|
As Adjusted |
|
GAAP |
|
As Adjusted |
||||||||
|
|
|
(Dollars in Millions) |
|
|||||||||||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits |
|
$ |
132.8 |
|
|
$ |
129.2 |
|
|
$ |
134.0 |
|
|
$ |
130.1 |
|
|
% of Revenues |
|
|
64.2 |
% |
|
|
62.5 |
% |
|
|
67.0 |
% |
|
|
65.0 |
% |
|
Non-Compensation |
|
$ |
30.0 |
|
|
$ |
28.0 |
|
|
$ |
32.6 |
|
|
$ |
30.6 |
|
|
% of Revenues |
|
|
14.5 |
% |
|
|
13.5 |
% |
|
|
16.3 |
% |
|
|
15.3 |
% |
|
Total Expenses |
|
$ |
162.8 |
|
|
$ |
157.2 |
|
|
$ |
166.6 |
|
|
$ |
160.8 |
|
|
% of Revenues |
|
|
78.8 |
% |
|
|
76.0 |
% |
|
|
83.2 |
% |
|
|
80.3 |
% |
|
Pretax Income |
|
$ |
43.9 |
|
|
$ |
49.5 |
|
|
$ |
33.6 |
|
|
$ |
39.4 |
|
|
% of Revenues |
|
|
21.2 |
% |
|
|
24.0 |
% |
|
|
16.8 |
% |
|
|
19.7 |
% |
Compensation and Benefits Expense
GAAP Compensation and Benefits Expense was $133 million for first quarter 2021 compared with $134 million for the prior year quarter. Adjusted Compensation and Benefits Expense decreased slightly to $129 million for the current quarter compared with $130 million for the prior year quarter. The Company expects to accrue compensation at a somewhat lower rate based on its current estimate of full year operating performance.
Non-Compensation Expense
GAAP Non-Compensation Expense was $30 million for first quarter 2021 compared with $33 million for the prior year quarter. Adjusted Non-Compensation Expense was $28 million for the current quarter compared with $31 million for the prior year quarter.
GAAP and Adjusted Non-Compensation Expense decreased during the current quarter compared with the prior year quarter, primarily driven by a decrease in Travel and Related and partially offset by an increase in Professional Fees. Travel and Related decreased due to reduced travel and entertainment activity. Professional Fees increased primarily due to higher consulting payments relating to the firm’s business activities and increased recruiting costs.
Provision for Taxes
As of March 31, 2021, PJT Partners Inc. owned 61.0% of PJT Partners Holdings LP. PJT Partners Inc. is subject to corporate U.S. federal and state income tax while PJT Partners Holdings LP is subject to New York City unincorporated business tax and other entity-level taxes imposed by certain state and foreign jurisdictions. Please refer to Note 12. “Stockholders’ Equity” in the “Notes to Consolidated Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for further information about the corporate ownership structure. The effective tax rate for GAAP Net Income for the quarter ended March 31, 2021 was 0.2%.
In calculating Adjusted Net Income, If-Converted, the Company has assumed that all outstanding Class A partnership units in PJT Partners Holdings LP (“Partnership Units”) (excluding the unvested partnership units that have yet to satisfy certain market conditions) have been exchanged into shares of the Company’s Class A common stock, subjecting all of the Company’s income to corporate-level tax.
The effective tax rate for Adjusted Net Income, If-Converted for the three months ended March 31, 2021 was 22.2% compared with 24.8% for full year 2020. This tax rate excludes the tax benefits of the adjustments for transaction-related compensation expense, amortization expense, tax benefit recorded pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) as well as certain payments to The Blackstone Group Inc. (“Blackstone”) resulting from the October 1, 2015 spin-off.
Capital Management and Balance Sheet
As of March 31, 2021, the Company held cash, cash equivalents and short-term investments of $172.3 million, and had no funded debt.
On February 1, 2021, the Company’s Board of Directors authorized the repurchase of shares of the Company’s Class A common stock in an amount up to $150 million. As of March 31, 2021, the Company’s remaining repurchase authorization was $140.6 million.
During the first quarter 2021, the Company repurchased 680,368 Partnership Units for cash pursuant to the quarterly exchange program, 657,907 shares of Class A common stock pursuant to the share repurchase program and net share settled 291,408 shares to satisfy employee tax obligations. During the first quarter 2021, the total share equivalent repurchases were 1.6 million shares at an average price of $70.43 per share.
The Company intends to repurchase 221,164 Partnership Units for cash on May 4, 2021 at a price to be determined by the volume-weighted average price per share of the Company’s Class A common stock on April 29, 2021.
Dividend
The Board of Directors of PJT Partners Inc. has declared a quarterly dividend of $0.05 per share of Class A common stock. The dividend will be paid on June 16, 2021 to Class A common stockholders of record on June 2, 2021.
COVID-19 Impact on Operations
The vast majority of the Company’s employees continue to work remotely, as they have since mid-March 2020. There have been no material changes to the Company’s internal controls as a result of this working environment. The Company has undertaken steps to allow employees to return to certain office locations on a voluntary basis, following safety protocols from health advisors and the respective governmental agencies. The Company is working toward a return to office later in the year but will continue operating in a remote work environment for the foreseeable future, if necessary.
About PJT Partners
PJT Partners is a premier global advisory-focused investment bank. We offer a unique portfolio of advisory services designed to help our clients achieve their strategic objectives. Our team of senior professionals delivers a range of strategic advisory, capital markets advisory, restructuring and special situations and shareholder advisory services to corporations, financial sponsors, institutional investors and governments around the world. We also provide, through PJT Park Hill, private fund advisory and fundraising services for alternative investment managers, including private equity funds, real estate funds and hedge funds. To learn more about PJT Partners, please visit our website at www.pjtpartners.com.
