PJT Partners Inc. Reports Second Quarter 2016 Results
Total Revenues for the six months ended June 30, 2016 were
“Our results reflect continued positive momentum as evidenced by our second quarter revenues, which are up 23% over the same period last year and 32% for the first half of 2016 versus year ago comparisons. We envisioned the strength of our three highly complementary businesses working together to better serve clients and we are seeing the tangible results of this powerful combination,” said
Paul J. Taubman, Chairman and Chief Executive Officer.
“We are building
The Company’s revenues and net income can fluctuate materially depending on the number, size and timing of completed transactions on which it advises as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.
The financial information and results presented below for the periods
prior to October 1, 2015 reflect the historical results of operations of
the strategic advisory services, restructuring and reorganization
advisory services and
Revenues
The following table presents revenues for the three and six months ended June 30, 2016 and 2015 (dollars in thousands; unaudited):
Three Months Ended |
Six Months Ended |
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2016 | 2015 | 2016 | 2015 | ||||||||||||
Advisory | \\$ | 59,078 | \\$ | 46,592 | \\$ | 140,632 | \\$ | 105,266 | |||||||
Placement | 28,652 | 25,189 | 60,603 | 48,323 | |||||||||||
Interest Income and Other | 1,554 | 688 | 3,353 | 1,205 | |||||||||||
Total Revenues | \\$ | 89,284 | \\$ | 72,469 | \\$ | 204,588 | \\$ | 154,794 | |||||||
For the three months ended June 30, 2016, Total Revenues were
For the six months ended June 30, 2016, Total Revenues were
Expenses
The following table sets forth information relating to the Company’s expenses (dollars in thousands; unaudited):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||
GAAP |
As |
GAAP |
As |
GAAP |
As |
GAAP |
As |
|||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Compensation and Benefits |
\\$ | 71,964 | \\$ | 55,989 | \\$ | 60,125 | \\$ | 48,692 | \\$ | 160,135 | \\$ | 128,792 | \\$ | 139,760 | \\$ | 116,423 | ||||||||||||||||
% of Revenues | 81 | % | 63 | % | 83 | % | 67 | % | 78 | % | 63 | % | 90 | % | 75 | % | ||||||||||||||||
Non-Compensation | \\$ | 27,575 | \\$ | 24,792 | \\$ | 18,783 | \\$ | 18,120 | \\$ | 51,975 | \\$ | 46,391 | \\$ | 36,162 | \\$ | 34,836 | ||||||||||||||||
% of Revenues | 31 | % | 28 | % | 26 | % | 25 | % | 25 | % | 23 | % | 23 | % | 23 | % | ||||||||||||||||
Total Expenses | \\$ | 99,539 | \\$ | 80,781 | \\$ | 78,908 | \\$ | 66,812 | \\$ | 212,110 | \\$ | 175,183 | \\$ | 175,922 | \\$ | 151,259 | ||||||||||||||||
% of Revenues | 111 | % | 90 | % | 109 | % | 92 | % | 104 | % | 86 | % | 114 | % | 98 | % | ||||||||||||||||
Pretax Income (Loss) | \\$ | (10,255 | ) | \\$ | 8,503 | \\$ | (6,439 | ) | \\$ | 5,657 | \\$ | (7,522 | ) | \\$ | 29,405 | \\$ | (21,128 | ) | \\$ | 3,535 | ||||||||||||
% of Revenues | N/M | 10 | % | N/M | 8 | % | N/M | 14 | % | N/M | 2 | % |
__________________________
N/M | Not meaningful. | ||
(a) | See Appendix for a reconciliation of GAAP to Non-GAAP Financial Data. |
Compensation and Benefits Expense
GAAP Compensation and Benefits Expense was
GAAP Compensation and Benefits Expense was
Non-Compensation Expense
GAAP Non-Compensation Expense was
The increase in Non-Compensation Expense was primarily due to increases in professional fees, including fees incurred related to the Caspersen matter, as well as communications and information services and other expenses. The primary reason for the increase in other expenses was due to an increase in bad debt expense in the second quarter of 2016 while the second quarter of 2015 included bad debt recovery. The increases in other expenses and communications and information services also reflect increased costs associated with the Company’s operation as a stand-alone public company since October 1, 2015. Non-Compensation Expense was partially offset by a reduction in occupancy and related expense, as the three months ended June 30, 2015 reflected rent expense for both current and previous office locations during the period of transition.
GAAP Non-Compensation Expense was
The increase in Non-Compensation Expense was primarily due to the
previously disclosed
GAAP Non-Compensation Expense for the three and six months ended
June 30, 2016 also reflects additional amortization expense related to
intangible assets identified in connection with the acquisition of
Provision for Taxes
Prior to October 1, 2015, the Company’s operations were included in Blackstone subsidiaries’ U.S. federal, state and foreign tax returns. As a stand-alone entity, the Company’s deferred taxes and effective tax rate may differ from those in historical periods.
As of June 30, 2016,
The GAAP Benefit for Taxes was
The GAAP Benefit for Taxes was
Additionally, the magnitude of equity-based compensation expense not deductible for income tax purposes relative to the projected pretax income gives rise to a higher GAAP effective tax rate.
In calculating Adjusted Net Income, If-Converted, the Company has
assumed that all outstanding Class A partnership units of
The effective tax rates for Adjusted Net Income, If-Converted for the three and six months ended June 30, 2016 were 38.6% and 38.7%, respectively, and include the tax impacts of the adjustments for transaction-related equity-based compensation and amortization expense.
Capital Management and Balance Sheet
As of June 30, 2016, the Company held cash and cash equivalents of
The Board of Directors of
Quarterly Investor Call Details
About
Forward-Looking Statements
Certain material presented herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include the information concerning our results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in such forward-looking statements. You should not put undue reliance on any forward-looking statements contained herein. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
The risk factors discussed in the “Risk Factors” section of our Annual
Report on Form 10-K for the year ended
Non-GAAP Financial Measures
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; Adjusted Net Income, If-Converted, in total and on
a per-share basis; Adjusted Compensation and Benefits Expense and
Adjusted Non-Compensation Expense. These non-GAAP measures, presented
and discussed in this earnings release, remove the significant
accounting impact of (a) transaction-related equity-based compensation
expense, including expense related to Partnership Units with both
time-based vesting and market conditions as well as equity-based
retention awards granted in connection with the spin-off, (b) severance
incurred in connection with the spin-off (for periods through the third
quarter of 2015), and (c) intangible asset amortization associated with
Blackstone’s initial public offering (“IPO”) and the acquisition of
In the interest of limiting the adjustments to GAAP results reflected in Adjusted Net Income to only the most significant items, the Company amended its definition of Adjusted Net Income in the third quarter of 2015 to no longer exclude certain transaction-related non-compensation expenses associated with the spin-off. Adjusted Net Income amounts presented for prior periods have been conformed to this presentation.
Additionally, in the second quarter of 2016, the Company amended its definition of tax expense used to compute Adjusted Net Income to reflect the manner in which taxes are computed under GAAP. Adjusted Taxes previously represented the total GAAP tax provision adjusted to include only current income taxes. Adjusted Taxes presented for prior periods in this earnings release have been conformed to this presentation.
To help investors understand the effect of the Company’s ownership
structure on its Adjusted Net Income, the Company is presenting Adjusted
Net Income, If-Converted, for periods beginning after the spin-off on
October 1, 2015. This measure illustrates the impact on adjusted
earnings if all Class A partnership units of
Appendix
GAAP Condensed Consolidated and Combined Statements of Operations (unaudited)
Reconciliations of GAAP to Non-GAAP Financial Data (unaudited)
Summary of Shares Outstanding (unaudited)
PJT Partners Inc. |
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Three Months Ended |
Six Months Ended |
||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenues | |||||||||||||||||
Advisory | \\$ | 59,078 | \\$ | 46,592 | \\$ | 140,632 | \\$ | 105,266 | |||||||||
Placement | 28,652 | 25,189 | 60,603 | 48,323 | |||||||||||||
Interest Income and Other | 1,554 | 688 | 3,353 | 1,205 | |||||||||||||
Total Revenues | 89,284 | 72,469 | 204,588 | 154,794 | |||||||||||||
Expenses | |||||||||||||||||
Compensation and Benefits | 71,964 | 60,125 | 160,135 | 139,760 | |||||||||||||
Occupancy and Related | 6,622 | 8,762 | 13,040 | 14,044 | |||||||||||||
Travel and Related | 2,802 | 3,055 | 5,547 | 6,359 | |||||||||||||
Professional Fees | 6,691 | 3,007 | 10,187 | 5,536 | |||||||||||||
Communications and Information Services | 2,647 | 1,761 | 4,700 | 3,167 | |||||||||||||
Depreciation and Amortization | 4,025 | 1,508 | 7,926 | 3,035 | |||||||||||||
Other Expenses | 4,788 | 690 | 10,575 | 4,021 | |||||||||||||
Total Expenses | 99,539 | 78,908 | 212,110 | 175,922 | |||||||||||||
Loss Before Provision (Benefit) for Taxes | (10,255 | ) | (6,439 | ) | (7,522 | ) | (21,128 | ) | |||||||||
Provision (Benefit) for Taxes | (5,539 | ) | 584 | (4,237 | ) | 2,002 | |||||||||||
Net Loss | (4,716 | ) | \\$ | (7,023 | ) | (3,285 | ) | \\$ | (23,130 | ) | |||||||
Net Loss Attributable to Redeemable Non-Controlling Interests |
(4,393 | ) | (3,217 | ) | |||||||||||||
Net Loss Attributable to PJT Partners Inc. | \\$ | (323 | ) | \\$ | (68 | ) | |||||||||||
Net Loss Per Share of Class A Common Stock — Basic and Diluted |
\\$ | (0.02 | ) | \\$ | (0.00 |
) |
|||||||||||
Weighted-Average Shares of Class A Common Stock Outstanding — Basic and Diluted |
18,264,742 | 18,263,365 | |||||||||||||||
PJT Partners Inc. |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
GAAP Net Loss | \\$ | (4,716 | ) | \\$ | (7,023 | ) | \\$ | (3,285 | ) | \\$ | (23,130 | ) | ||||
Less: GAAP Provision (Benefit) for Taxes | (5,539 | ) | 584 | (4,237 | ) | 2,002 | ||||||||||
GAAP Pretax Loss | (10,255 | ) | (6,439 | ) | (7,522 | ) | (21,128 | ) | ||||||||
Adjustments to GAAP Pretax Loss | ||||||||||||||||
Transaction-Related Compensation Expense (a) | 15,975 | 11,433 | 31,343 | 23,337 | ||||||||||||
Amortization of Intangible Assets (b) | 2,783 | 663 | 5,584 | 1,326 | ||||||||||||
Adjusted Pretax Income | 8,503 | 5,657 | 29,405 | 3,535 | ||||||||||||
Adjusted Taxes (c) | 1,909 | 634 | 6,476 | 1,469 | ||||||||||||
Adjusted Net Income | 6,594 | \\$ | 5,023 | 22,929 | \\$ | 2,066 | ||||||||||
If-Converted Adjustments | ||||||||||||||||
Less: Adjusted Taxes (c) | (1,909 | ) | (6,476 | ) | ||||||||||||
Add: If-Converted Taxes (d) | 3,284 | 11,374 | ||||||||||||||
Adjusted Net Income, If-Converted (e) | \\$ | 5,219 | \\$ | 18,031 | ||||||||||||
GAAP Net Loss Per Share of Class A Common Stock — Basic and Diluted |
\\$ | (0.02 | ) | \\$ | (0.00 | ) | ||||||||||
GAAP Weighted-Average Shares of Class A Common Stock Outstanding — Basic and Diluted |
18,264,742 | 18,263,365 | ||||||||||||||
Adjusted Net Income, If-Converted Per Share (f) | \\$ | 0.14 | \\$ | 0.49 | ||||||||||||
Weighted-Average Shares Outstanding, If-Converted | 36,834,337 | 36,773,563 | ||||||||||||||
GAAP Compensation and Benefits Expense | \\$ | 71,964 | \\$ | 60,125 | \\$ | 160,135 | \\$ | 139,760 | ||||||||
Transaction-Related Compensation Expense (a) | (15,975 | ) | (11,433 | ) | (31,343 | ) | (23,337 | ) | ||||||||
Adjusted Compensation and Benefits Expense | \\$ | 55,989 | \\$ | 48,692 | \\$ | 128,792 | \\$ | 116,423 | ||||||||
Non-Compensation Expenses | ||||||||||||||||
Occupancy and Related | \\$ | 6,622 | \\$ | 8,762 | \\$ | 13,040 | \\$ | 14,044 | ||||||||
Travel and Related | 2,802 | 3,055 | 5,547 | 6,359 | ||||||||||||
Professional Fees | 6,691 | 3,007 | 10,187 | 5,536 | ||||||||||||
Communications and Information Services | 2,647 | 1,761 | 4,700 | 3,167 | ||||||||||||
Depreciation and Amortization | 4,025 | 1,508 | 7,926 | 3,035 | ||||||||||||
Other Expenses | 4,788 | 690 | 10,575 | 4,021 | ||||||||||||
GAAP Non-Compensation Expense | 27,575 | 18,783 | 51,975 | 36,162 | ||||||||||||
Amortization of Intangible Assets (b) | (2,783 | ) | (663 | ) | (5,584 | ) | (1,326 | ) | ||||||||
Adjusted Non-Compensation Expense |
\\$ | 24,792 | \\$ | 18,120 | \\$ | 46,391 | \\$ | 34,836 |
__________________________
(a) | An adjustment has been made for equity-based compensation charges associated with the vesting during the periods presented of awards granted in connection with the Blackstone IPO in 2007 and severance incurred in connection with the spin-off (for periods through the third quarter of 2015). Additionally, for periods after October 1, 2015, the transaction-related equity-based compensation adjustment includes expense for Partnership Units with both time-based vesting and market conditions as well as equity-based retention awards granted in connection with the spin-off. | ||
(b) | This adjustment adds back to GAAP Pretax Loss amounts for the amortization of intangible assets which are associated with Blackstone’s IPO and amortization related to intangible assets identified in connection with the acquisition of PJT Capital LP on October 1, 2015. | ||
(c) |
Represents taxes on Adjusted Pretax Income, considering both current and deferred income tax effects for the current ownership structure. |
||
(d) |
Represents taxes on adjusted earnings if all Class A partnership units of PJT Partners Holdings LP (excluding the unvested partnership units that have yet to satisfy market conditions) were exchanged for shares of 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. |
||
(e) | Not applicable for periods prior to October 1, 2015. | ||
(f) |
Adjusted Net Income, If-Converted Per Share was \\$0.35 for the three months ended March 31, 2016. |
||
PJT Partners Inc. |
Summary of Shares Outstanding (unaudited) |
The following table provides a summary of weighted-average shares
outstanding for the three and six months ended June 30, 2016 for both
basic and diluted shares. The table also provides a reconciliation to
If-Converted Shares Outstanding assuming that all Partnership Units in
Three Months Ended |
Six Months Ended |
||||||
Weighted-Average Shares Outstanding - GAAP | |||||||
Shares of Class A Common Stock Outstanding | 17,966,456 | 17,966,456 | |||||
Vested, Undelivered RSUs | 298,286 | 296,909 | |||||
Basic and Diluted Shares Outstanding, GAAP | 18,264,742 | 18,263,365 | |||||
Weighted-Average Shares Outstanding - If-Converted | |||||||
Shares of Class A Common Stock Outstanding | 17,966,456 | 17,966,456 | |||||
Vested, Undelivered RSUs | 298,286 | 296,909 | |||||
Conversion of Unvested Common RSUs (a) | 1,754,382 | 1,646,233 | |||||
Conversion of Participating RSUs | 754,174 | 772,005 | |||||
Conversion of Partnership Units (b) | 16,061,039 | 16,091,960 | |||||
If-Converted Shares Outstanding (c) | 36,834,337 | 36,773,563 |
__________________________
(a) | Represents amount of dilutive shares calculated under the treasury method of the 4.7 million unvested, non-participating restricted stock units that have a remaining service requirement. | ||
(b) | Excluded from If-Converted Shares Outstanding are 6.5 million unvested Partnership Units in PJT Partners Holdings LP that have yet to satisfy market conditions. | ||
(c) | Assuming all Partnership Units and unvested participating restricted stock units were converted to shares of Class A common stock, there would be 39.8 million shares outstanding as of June 30, 2016. | ||
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