Market Overview

PJT Partners Inc. Reports Third Quarter and Nine Months 2020 Results

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Third Quarter Highlights

  • Total Revenues of $298 million, up 71% from a year ago
    • Advisory Revenues of $262 million, up 80%
    • Placement Revenues of $32 million, up 24%
  • GAAP Pretax Income of $70 million and Adjusted Pretax Income of $76 million
  • GAAP Diluted EPS of $1.22 and Adjusted EPS of $1.36

Nine Month Highlights

  • Total Revenues of $730 million, up 56% from a year ago
    • Advisory Revenues of $612 million, up 59%
    • Placement Revenues of $106 million, up 37%
  • GAAP Pretax Income of $153 million and Adjusted Pretax Income of $171 million
  • GAAP Diluted EPS of $2.87 and Adjusted EPS of $3.10

Capital Management and Balance Sheet

  • Repurchased approximately 494 thousand share equivalents during the quarter and approximately 1.7 million share equivalents YTD
    • Intend to repurchase an additional 1.1 million Partnership Units for cash in November 2020
  • $367 million of cash, cash equivalents and short-term investments and no funded debt

Paul J. Taubman, Chairman and Chief Executive Officer, said, "As we mark our five-year anniversary as a public company, we are pleased to report record results for the quarter and the nine months. Our results reflect the unique depth and breadth of our franchise and highlight our differentiated ability to strategically navigate challenging market environments. We remain confident in our future growth prospects."

PJT Partners Inc. (the "Company" or "PJT Partners") (NYSE:PJT) today reported Total Revenues of $297.6 million for third quarter 2020 compared with $174.2 million for the prior year quarter. GAAP Net Income and Adjusted Net Income, If-Converted were $58.1 million and $56.7 million, respectively, for the current quarter compared with $14.8 million and $24.5 million, respectively, for the prior year quarter. GAAP Diluted EPS and Adjusted EPS were $1.22 and $1.36, respectively, for the current quarter compared with $0.28 and $0.60, respectively, for the prior year quarter.

Total Revenues for the nine months ended September 30, 2020 were $730.3 million compared with $469.0 million for the same period in 2019. GAAP Net Income and Adjusted Net Income, If-Converted were $131.0 million and $126.9 million, respectively, for the nine months compared with $25.7 million and $56.9 million, respectively, for the same period in 2019. GAAP Diluted EPS and Adjusted EPS were $2.87 and $3.10, respectively, for the nine months compared with $0.52 and $1.39, respectively, for the same period in 2019.

Revenues

The following table sets forth revenues for the three and nine months ended September 30, 2020 and 2019:

 

 

Three Months Ended

September 30,

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

% Change

 

 

 

2020

 

 

2019

 

 

% Change

 

 

 

(Dollars in Millions)

 

Revenues

 

 

 

Advisory

 

$

262.4

 

 

$

146.1

 

 

80%

 

 

 

$

611.5

 

 

$

383.6

 

 

59%

 

Placement

 

 

31.8

 

 

 

25.6

 

 

24%

 

 

 

 

106.0

 

 

 

77.6

 

 

37%

 

Interest Income & Other

 

 

3.4

 

 

 

2.6

 

 

33%

 

 

 

 

12.7

 

 

 

7.8

 

 

63%

 

Total Revenues

 

$

297.6

 

 

$

174.2

 

 

71%

 

 

 

$

730.3

 

 

$

469.0

 

 

56%

 

Three Months Ended

Total Revenues increased 71% to $297.6 million for third quarter 2020 from $174.2 million for the prior year quarter.

Advisory Revenues increased 80% to $262.4 million for the current quarter from $146.1 million for the prior year quarter. Growth in Advisory Revenues was driven by a substantial increase in completed restructurings as well as increased strategic advisory revenues.

Placement Revenues increased 24% to $31.8 million for the current quarter from $25.6 million for the prior year quarter. The increase in Placement Revenues was principally driven by growth in fund placement activity for private equity clients.

Nine Months Ended

Total Revenues increased 56% to $730.3 million for the nine months ended September 30, 2020 from $469.0 million for the same period a year ago.

Advisory Revenues increased 59% to $611.5 million for the nine months from $383.6 million for the same period a year ago. Advisory Revenues increased due to significant increases in both restructuring revenues and strategic advisory revenues.

Placement Revenues increased 37% to $106.0 million for the nine months from $77.6 million for the same period a year ago. Placement Revenues increased principally due to increased corporate private placement activity.

Interest Income & Other was $12.7 million for the nine months compared with $7.8 million for the same period a year ago. The increase in Interest Income & Other was primarily driven by more favorable foreign currency translation rates during the nine months.

Expenses

The following tables set forth information relating to the Company's expenses for the three and nine months ended September 30, 2020 and 2019:

 

 

Three Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

 

GAAP

 

 

As Adjusted

 

 

GAAP

 

 

As Adjusted

 

 

 

(Dollars in Millions)

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

$

196.9

 

 

$

193.4

 

 

$

123.0

 

 

$

111.5

 

% of Revenues

 

 

66.2

%

 

 

65.0

%

 

 

70.6

%

 

 

64.0

%

Non-Compensation

 

$

30.6

 

 

$

28.2

 

 

$

31.4

 

 

$

29.2

 

% of Revenues

 

 

10.3

%

 

 

9.5

%

 

 

18.0

%

 

 

16.8

%

Total Expenses

 

$

227.5

 

 

$

221.6

 

 

$

154.4

 

 

$

140.7

 

% of Revenues

 

 

76.4

%

 

 

74.5

%

 

 

88.6

%

 

 

80.8

%

Pretax Income

 

$

70.1

 

 

$

76.0

 

 

$

19.8

 

 

$

33.5

 

% of Revenues

 

 

23.6

%

 

 

25.5

%

 

 

11.4

%

 

 

19.2

%

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

 

GAAP

 

 

As Adjusted

 

 

GAAP

 

 

As Adjusted

 

 

 

(Dollars in Millions)

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

$

485.7

 

 

$

474.7

 

 

$

337.4

 

 

$

300.2

 

% of Revenues

 

 

66.5

%

 

 

65.0

%

 

 

71.9

%

 

 

64.0

%

Non-Compensation

 

$

91.3

 

 

$

85.0

 

 

$

98.3

 

 

$

92.1

 

% of Revenues

 

 

12.5

%

 

 

11.6

%

 

 

21.0

%

 

 

19.6

%

Total Expenses

 

$

577.0

 

 

$

559.7

 

 

$

435.7

 

 

$

392.3

 

% of Revenues

 

 

79.0

%

 

 

76.6

%

 

 

92.9

%

 

 

83.6

%

Pretax Income

 

$

153.3

 

 

$

170.6

 

 

$

33.3

 

 

$

76.7

 

% of Revenues

 

 

21.0

%

 

 

23.4

%

 

 

7.1

%

 

 

16.4

%

Compensation and Benefits Expense

Three Months Ended

GAAP Compensation and Benefits Expense was $196.9 million for third quarter 2020 compared with $123.0 million for the prior year quarter. Adjusted Compensation and Benefits Expense was $193.4 million for the current quarter compared with $111.5 million for the prior year quarter. The increase in Compensation and Benefits Expense was principally the result of significantly improved operating performance during the current quarter.

Nine Months Ended

GAAP Compensation and Benefits Expense was $485.7 million for the nine months ended September 30, 2020 compared with $337.4 million for the same period a year ago. Adjusted Compensation and Benefits Expense was $474.7 million for the nine months compared with $300.2 million for the same period a year ago. The increase in Compensation and Benefits Expense was principally the result of significantly improved operating performance during the current nine month period.

Non-Compensation Expense

Three Months Ended

GAAP Non-Compensation Expense was $30.6 million for third quarter 2020 compared with $31.4 million for the prior year quarter. Adjusted Non-Compensation Expense was $28.2 million for the current quarter compared with $29.2 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 Other Expenses. Travel and Related decreased due to reduced travel and entertainment activity stemming from the global health crisis. Other Expenses increased $3.3 million due to a variety of factors, the largest of which relates to charitable contributions made to causes supporting COVID-19 relief and the advancement of racial equity.

Nine Months Ended

GAAP Non-Compensation Expense was $91.3 million for the nine months ended September 30, 2020 compared with $98.3 million for the same period a year ago. Adjusted Non-Compensation Expense was $85.0 million for the nine months compared with $92.1 million for the same period a year ago.

GAAP and Adjusted Non-Compensation Expense decreased during the nine months compared with the same period a year ago, primarily driven by decreases in Travel and Related as well as Professional Fees, and partially offset by increases in Other Expenses and Occupancy and Related. Travel and Related decreased due to reduced travel and entertainment activity stemming from the global health crisis. Other Expenses increased $3.3 million due to a variety of factors, the largest of which relates to charitable contributions made to causes supporting COVID-19 relief and the advancement of racial equity. Occupancy and Related increased due to increased occupancy expense in certain locations.

Provision for Taxes

As of September 30, 2020, PJT Partners Inc. owned 61.1% 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 (Deficit)" 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, 2019 for further information about the corporate ownership structure.

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 nine months ended September 30, 2020 was 25.6% compared with 25.5% for full year 2019. 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 September 30, 2020, the Company held cash, cash equivalents and short-term investments of $367 million, and had no funded debt.

On April 24, 2019, the Company's Board of Directors authorized the repurchase of shares of the Company's Class A common stock in an amount up to $100 million. As of September 30, 2020, the Company's remaining repurchase authorization was $43.5 million.

During the third quarter 2020, the Company repurchased 289,255 shares of Class A common stock pursuant to the share repurchase program, repurchased 202,384 Partnership Units for cash pursuant to the quarterly exchange program and net share settled 2,554 shares to satisfy employee tax obligations. In aggregate during the third quarter 2020, the Company repurchased an equivalent of 494,193 shares at an average price of $55.31 per share.

The Company intends to repurchase 1.1 million Partnership Units for cash on November 3, 2020 at a price to be determined by the volume-weighted average price per share of the Company's Class A common stock on October 29, 2020.

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 December 16, 2020 to Class A common stockholders of record on December 2, 2020.

COVID-19 Impact on Operations

The vast majority of the Company's employees have been working remotely 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 a limited number of employees to return to office locations on a voluntary basis, following safety protocols from health advisors and the respective governmental agencies. The Company is prepared to continue operating in a remote work environment for the foreseeable future, if necessary.

Quarterly Investor Call Details

PJT Partners will host a conference call on October 27, 2020 at 8:30 a.m. ET to discuss its third quarter 2020 results. The conference call can be accessed via the internet on www.pjtpartners.com or by dialing +1 (866) 548-4713 (U.S. domestic) or +1 (720) 543-0206 (international), passcode 7234131. For those unable to listen to the live broadcast, a replay will be available following the call at www.pjtpartners.com or by dialing +1 (888) 203-1112 (U.S. domestic) or +1 (719) 457-0820 (international), passcode 7234131.

About PJT Partners

PJT Partners is a premier global advisory-focused investment bank. Our team of senior professionals delivers a wide array of strategic advisory, strategic capital markets, restructuring and special situations, shareholder advisory, and private fund advisory and fundraising services to corporations, financial sponsors, institutional investors and governments around the world. We offer a unique portfolio of advisory services designed to help our clients achieve their strategic objectives. 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.

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 certain information concerning future results of operations, business strategies, acquisitions, 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," "opportunity," "plan," "intend," "anticipate," "estimate," "predict," "potential," "continue," "may," "might," "should," "could" or the negative of these terms or similar expressions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations, and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, many of which are outside the Company's control. The Company's actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance upon any of these forward-looking statements. Important factors that could cause the Company's actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (a) changes in governmental regulations and policies; (b) the possibility of cyberattacks, security vulnerabilities, and internet disruptions, including breaches of data security and privacy leaks, data loss, and business interruptions; (c) the possibility of failure of the Company's computer systems or communication systems during a catastrophic event, including as a result of the increased use of remote work environments and virtual platforms during the outbreak of COVID-19 (coronavirus); (d) the impact of catastrophic events, such as COVID-19, on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business failures; (e) the impact of catastrophic events, such as COVID-19, on the Company's employees and the Company's ability to provide services to its clients and respond to their needs; (f) the failure of third-party service providers to perform their functions; and (g) volatility in the political and economic environment.

Any of these factors, as well as such other factors discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the three months ended June 30, 2020, in each case filed with the United States Securities and Exchange Commission ("SEC"), as such factors may be updated from time to time in the Company's periodic filings with the SEC, accessible on the SEC's website at www.sec.gov, could cause the Company's results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that the Company is unable to predict at this time or that are not currently expected to have a material adverse effect on its business. Any such risks could cause the Company's results to differ materially from those expressed in forward-looking statements.

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 (referred to as "Adjusted EPS"); 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 compensation expense, including expense related to Partnership Units with both time-based vesting and market conditions as well as equity-based and cash awards granted in connection with the spin-off from Blackstone and acquisition of CamberView Partners Holdings, LLC ("CamberView"); (b) intangible asset amortization associated with Blackstone's initial public offering ("IPO"), the acquisition of PJT Capital LP, and the acquisition of CamberView; and (c) the amount the Company has agreed to pay Blackstone related to the net realized cash benefit from certain compensation-related tax deductions. Reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and further detail regarding the adjustments are provided in the Appendix.

To help investors understand the effect of the Company's ownership structure on its Adjusted Net Income, the Company has presented Adjusted Net Income, If-Converted. This measure illustrates the impact of taxes on Adjusted Pretax Income, assuming all Partnership Units (excluding the unvested partnership units that have yet to satisfy certain market conditions) were exchanged for shares of the Company's Class A common stock, resulting in all of the Company's income becoming subject to corporate-level tax, considering both current and deferred income tax effects. This tax rate excludes the tax benefits of the adjustments for transaction-related compensation expense, amortization expense, tax benefit recorded pursuant to the CARES Act as well as certain payments to Blackstone resulting from the October 1, 2015 spin-off.

Appendix

GAAP Condensed Consolidated Statements of Operations (unaudited)

Reconciliations of GAAP to Non-GAAP Financial Data (unaudited)

Summary of Shares Outstanding (unaudited)

Footnotes

 

PJT Partners Inc.

GAAP Condensed Consolidated Statements of Operations (unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory

 

$

262,400

 

 

$

146,075

 

 

$

611,530

 

 

$

383,577

 

Placement

 

 

31,774

 

 

 

25,596

 

 

 

106,026

 

 

 

77,603

 

Interest Income and Other

 

 

3,389

 

 

 

2,556

 

 

 

12,741

 

 

 

7,807

 

Total Revenues

 

 

297,563

 

 

 

174,227

 

 

 

730,297

 

 

 

468,987

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

 

196,896

 

 

 

123,040

 

 

 

485,650

 

 

 

337,356

 

Occupancy and Related

 

 

8,564

 

 

 

7,883

 

 

 

25,877

 

 

 

22,821

 

Travel and Related

 

 

546

 

 

 

5,567

 

 

 

6,379

 

 

 

19,247

 

Professional Fees

 

 

6,014

 

 

 

6,120

 

 

 

16,077

 

 

 

17,589

 

Communications and Information Services

 

 

3,435

 

 

 

3,365

 

 

 

10,575

 

 

 

10,071

 

Depreciation and Amortization

 

 

3,700

 

 

 

3,454

 

 

 

11,229

 

 

 

10,709

 

Other Expenses

 

 

8,312

 

 

 

5,015

 

 

 

21,178

 

 

 

17,906

 

Total Expenses

 

 

227,467

 

 

 

154,444

 

 

 

576,965

 

 

 

435,699

 

Income Before Provision for Taxes

 

 

70,096

 

 

 

19,783

 

 

 

153,332

 

 

 

33,288

 

Provision for Taxes

 

 

11,989

 

 

 

5,002

 

 

 

22,299

 

 

 

7,544

 

Net Income

 

 

58,107

 

 

 

14,781

 

 

 

131,033

 

 

 

25,744

 

Net Income Attributable to Non-Controlling Interests

 

 

27,200

 

 

 

7,956

 

 

 

59,596

 

 

 

12,992

 

Net Income Attributable to PJT Partners Inc.

 

$

30,907

 

 

$

6,825

 

 

$

71,437

 

 

$

12,752

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.25

 

 

$

0.28

 

 

$

2.92

 

 

$

0.53

 

Diluted

 

$

1.22

 

 

$

0.28

 

 

$

2.87

 

 

$

0.52

 

Weighted-Average Shares of Class A Common Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,645,853

 

 

 

24,013,033

 

 

 

24,431,436

 

 

 

24,107,179

 

Diluted

 

 

26,242,631

 

 

 

24,973,570

 

 

 

25,452,816

 

 

 

25,024,084

 

 

PJT Partners Inc.

Reconciliations of GAAP to Non-GAAP Financial Data (unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP Net Income

 

$

58,107

 

 

$

14,781

 

 

$

131,033

 

 

$

25,744

 

Less: GAAP Provision for Taxes

 

 

11,989

 

 

 

5,002

 

 

 

22,299

 

 

 

7,544

 

GAAP Pretax Income

 

 

70,096

 

 

 

19,783

 

 

 

153,332

 

 

 

33,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to GAAP Pretax Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-Related Compensation Expense(1)

 

 

3,480

 

 

 

11,535

 

 

 

10,957

 

 

 

37,205

 

Amortization of Intangible Assets(2)

 

 

1,928

 

 

 

1,758

 

 

 

5,783

 

 

 

5,726

 

Spin-Off-Related Payable Due to Blackstone(3)

 

 

464

 

 

 

430

 

 

 

517

 

 

 

515

 

Adjusted Pretax Income

 

 

75,968

 

 

 

33,506

 

 

 

170,589

 

 

 

76,734

 

Adjusted Taxes(4)

 

 

12,870

 

 

 

6,192

 

 

 

23,652

 

 

 

12,457

 

Adjusted Net Income

 

 

63,098

 

 

 

27,314

 

 

 

146,937

 

 

 

64,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If-Converted Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Adjusted Taxes(4)

 

 

(12,870

)

 

 

(6,192

)

 

 

(23,652

)

 

 

(12,457

)

Add: If-Converted Taxes(5)

 

 

19,296

 

 

 

8,959

 

 

 

43,717

 

 

 

19,786

 

Adjusted Net Income, If-Converted

 

$

56,672

 

 

$

24,547

 

 

$

126,872

 

 

$

56,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.25

 

 

$

0.28

 

 

$

2.92

 

 

$

0.53

 

Diluted

 

$

1.22

 

 

$

0.28

 

 

$

2.87

 

 

$

0.52

 

GAAP Weighted-Average Shares of Class A Common Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,645,853

 

 

 

24,013,033

 

 

 

24,431,436

 

 

 

24,107,179

 

Diluted

 

 

26,242,631

 

 

 

24,973,570

 

 

 

25,452,816

 

 

 

25,024,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income, If-Converted Per Share

 

$

1.36

 

 

$

0.60

 

 

$

3.10

 

 

$

1.39

 

Weighted-Average Shares Outstanding, If-Converted

 

 

41,542,673

 

 

 

40,917,949

 

 

 

40,954,770

 

 

 

41,022,464

 

PJT Partners Inc.

Reconciliations of GAAP to Non-GAAP Financial Data – continued (unaudited)

(Dollars in Thousands)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP Compensation and Benefits Expense

 

$

196,896

 

 

$

123,040

 

 

$

485,650

 

 

$

337,356

 

Transaction-Related Compensation Expense(1)

 

 

(3,480

)

 

 

(11,535

)

 

 

(10,957

)

 

 

(37,205

)

Adjusted Compensation and Benefits Expense

 

$

193,416

 

 

$

111,505

 

 

$

474,693

 

 

$

300,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Compensation Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and Related

 

$

8,564

 

 

$

7,883

 

 

$

25,877

 

 

$

22,821

 

Travel and Related

 

 

546

 

 

 

5,567

 

 

 

6,379

 

 

 

19,247

 

Professional Fees

 

 

6,014

 

 

 

6,120

 

 

 

16,077

 

 

 

17,589

 

Communications and Information Services

 

 

3,435

 

 

 

3,365

 

 

 

10,575

 

 

 

10,071

 

Depreciation and Amortization

 

 

3,700

 

 

 

3,454

 

 

 

11,229

 

 

 

10,709

 

Other Expenses

 

 

8,312

 

 

 

5,015

 

 

 

21,178

 

 

 

17,906

 

GAAP Non-Compensation Expense

 

 

30,571

 

 

 

31,404

 

 

 

91,315

 

 

 

98,343

 

Amortization of Intangible Assets(2)

 

 

(1,928

)

 

 

(1,758

)

 

 

(5,783

)

 

 

(5,726

)

Spin-Off-Related Payable Due to Blackstone(3)

 

 

(464

)

 

 

(430

)

 

 

(517

)

 

 

(515

)

Adjusted Non-Compensation Expense

 

$

28,179

 

 

$

29,216

 

 

$

85,015

 

 

$

92,102

 

PJT Partners Inc.

Summary of Shares Outstanding (unaudited)

The following table provides a summary of weighted-average shares outstanding for the three and nine months ended September 30, 2020 and 2019 for both basic and diluted shares. The table also provides a reconciliation to If-Converted Shares Outstanding assuming that all Partnership Units and unvested PJT Partners Inc. restricted stock units ("RSUs") were converted to shares of the Company's Class A common stock:

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Weighted-Average Shares Outstanding - GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of Class A Common Stock Outstanding

 

 

24,009,979

 

 

 

22,968,953

 

 

 

23,825,622

 

 

 

23,127,276

 

Vested, Undelivered RSUs

 

 

635,874

 

 

 

1,044,080

 

 

 

605,814

 

 

 

979,903

 

Basic Shares Outstanding, GAAP

 

 

24,645,853

 

 

 

24,013,033

 

 

 

24,431,436

 

 

 

24,107,179

 

Dilutive Impact of Unvested Common RSUs(6)

 

 

1,596,778

 

 

 

960,537

 

 

 

1,021,380

 

 

 

916,905

 

Diluted Shares Outstanding, GAAP

 

 

26,242,631

 

 

 

24,973,570

 

 

 

25,452,816

 

 

 

25,024,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Shares Outstanding - If-Converted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of Class A Common Stock Outstanding

 

 

24,009,979

 

 

 

22,968,953

 

 

 

23,825,622

 

 

 

23,127,276

 

Vested, Undelivered RSUs

 

 

635,874

 

 

 

1,044,080

 

 

 

605,814

 

 

 

979,903

 

Conversion of Unvested Common RSUs(6)

 

 

1,596,778

 

 

 

960,537

 

 

 

1,021,380

 

 

 

916,905

 

Conversion of Participating RSUs

 

 

7,777

 

 

 

28,514

 

 

 

20,266

 

 

 

45,039

 

Conversion of Partnership Units

 

 

15,292,265

 

 

 

15,915,865

 

 

 

15,481,688

 

 

 

15,953,341

 

If-Converted Shares Outstanding

 

 

41,542,673

 

 

 

40,917,949

 

 

 

40,954,770

 

 

 

41,022,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30,

 

 

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

Fully-Diluted Shares Outstanding(7)(8)

 

 

44,019,898

 

 

 

43,274,179

 

 

 

 

 

 

 

 

 

As of September 30, 2020, there were 3.6 million Partnership Units and 0.4 million RSUs subject to market conditions that are not included in fully-diluted shares outstanding.

Of the 4.0 million Partnership Units and RSUs subject to market conditions, 1.25 million require the Company to achieve a volume-weighted average share price over any consecutive 30-day trading period ("30-day VWAP") of $63, 1.25 million require a 30-day VWAP of $71 and 1.50 million require a 30-day VWAP of $79.

As of October 26, 2020, the 30-day VWAP was approximately $61.82.

   
Footnotes
 

(1)

This adjustment adds back to GAAP Pretax Income transaction-related compensation expense for Partnership Units with both time-based vesting and market conditions as well as equity-based and cash awards granted in connection with the spin-off from Blackstone and the acquisition of CamberView.

(2)

This adjustment adds back to GAAP Pretax Income amounts for the amortization of intangible assets that are associated with Blackstone's IPO, the acquisition of PJT Capital LP on October 1, 2015 and the acquisition of CamberView on October 1, 2018.

(3)

This adjustment adds back to GAAP Pretax Income the amount the Company has agreed to pay Blackstone related to the net realized cash benefit from certain compensation-related tax deductions. Such expense is reflected in Other Expenses in the Condensed Consolidated Statements of Operations.

(4)

Represents taxes on Adjusted Pretax Income, considering both current and deferred income tax effects for the current ownership structure.

(5)

Represents taxes on Adjusted Pretax Income, assuming all Partnership Units (excluding the unvested partnership units that have yet to satisfy market conditions) were exchanged for shares of the Company's Class A common stock, resulting in all of the Company's income becoming subject to corporate-level tax, considering both current and deferred income tax effects. This tax rate excludes the tax benefits of the adjustments for transaction-related compensation expense, amortization expense, tax benefit recorded pursuant to the CARES Act as well as certain payments to Blackstone resulting from the October 1, 2015 spin-off.

(6)

Represents the dilutive impact under the treasury method of unvested, non-participating RSUs that have a remaining service requirement.

(7)

Excludes 3.6 million unvested Partnership Units and 0.4 million RSUs as of September 30, 2020 that have yet to satisfy certain market conditions.

(8)

Assumes all Partnership Units and unvested participating RSUs have been converted to shares of the Company's Class A common stock.

Note: 

Amounts presented in tables above may not add or recalculate due to rounding.

 

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