10-Q 1 pjt-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-36869

 

 

img52735828_0.jpg 

PJT Partners Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

36-4797143

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

280 Park Avenue

New York, New York 10017

(Address of principal executive offices)(Zip Code)

(212) 364-7800

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.01 per share

 

PJT

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

 

Smaller Reporting Company

 

 

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of April 29, 2024, there were 23,985,363 shares of Class A common stock, par value $0.01 per share, and 136 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

4

 

 

 

 

 

Unaudited Condensed Consolidated Financial Statements — March 31, 2024 and 2023:

 

 

 

 

 

Condensed Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023

4

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023

5

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023

6

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023

7

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

8

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

22

 

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

29

 

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

30

 

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

31

 

 

 

 

 

ITEM 1A.

RISK FACTORS

31

 

 

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

31

 

 

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

32

 

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

32

 

 

 

 

 

ITEM 5.

OTHER INFORMATION

32

 

 

 

 

 

ITEM 6.

EXHIBITS

33

 

 

 

 

 

SIGNATURES

34

 

 

 

 


 

PJT Partners Inc. was formed in connection with certain merger and spin-off transactions whereby the financial and strategic advisory services, restructuring and reorganization advisory services and Park Hill Group businesses of Blackstone Inc. (“Blackstone” or our “former Parent”) were combined with PJT Capital LP, a financial advisory firm founded by Paul J. Taubman in 2013 (together with its then affiliates, “PJT Capital”), and the combined business was distributed to Blackstone’s unitholders to create PJT Partners Inc., a stand-alone, independent publicly traded company. Throughout this Quarterly Report on Form 10-Q, we refer to this transaction as the “spin-off.” PJT Partners Inc. is a holding company and its only material asset is its controlling equity interest in PJT Partners Holdings LP, a holding partnership that holds the Company’s operating subsidiaries, and certain cash and cash equivalents it may hold from time to time. As the sole general partner of PJT Partners Holdings LP, PJT Partners Inc. operates and controls all of the business and affairs and consolidates the financial results of PJT Partners Holdings LP and its operating subsidiaries.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, the words “PJT Partners Inc.” refers to PJT Partners Inc., and “PJT Partners,” the “Company,” “we,” “us” and “our” refer to PJT Partners Inc., together with its consolidated subsidiaries, including PJT Partners Holdings LP and its operating subsidiaries.

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 (the “Exchange Act”). 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 our current beliefs, expectations and assumptions regarding the future of our 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 our control. Our 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 our 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) cyber attacks, security vulnerabilities and internet disruptions, including breaches of data security and privacy leaks, data loss and business interruptions; (c) failures of our computer systems or communication systems, including as a result of a catastrophic event and the use of remote work environments and virtual platforms; (d) the impact of catastrophic events, including business disruptions, pandemics, reductions in employment and an increase in business failures on (1) the U.S. and the global economy and (2) our employees and our ability to provide services to our clients and respond to their needs; (e) the failure of third-party service providers to perform their functions; and (f) volatility in the political and economic environment, including as a result of inflation, elevated interest rates and geopolitical and military conflicts.

2


 

Any of these factors, as well as such other factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the United States Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, accessible on the SEC’s website at www.sec.gov, could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that are not currently expected to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements.

Website Disclosure

We use our website (www.pjtpartners.com) as a channel of distribution of Company information. The information we post may be deemed material. Accordingly, investors should monitor the website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about PJT Partners when you enroll your e-mail address by visiting the “Investor Relations” page of our website at ir.pjtpartners.com. Although we refer to our website in this report, the contents of our website are not included or incorporated by reference into this report. All references to our website in this report are intended to be inactive textual references only.

3


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PJT Partners Inc.

Condensed Consolidated Statements of Financial Condition (Unaudited)

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

 

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

215,525

 

 

$

355,543

 

Investments (at fair value)

 

 

20,071

 

 

 

81,382

 

Accounts Receivable (net of allowance for credit losses of $3,217 and
   $
2,391 at March 31, 2024 and December 31, 2023, respectively)

 

 

324,959

 

 

 

263,529

 

Intangible Assets, Net

 

 

11,730

 

 

 

12,960

 

Goodwill

 

 

172,725

 

 

 

172,725

 

Furniture, Equipment and Leasehold Improvements, Net

 

 

24,006

 

 

 

25,901

 

Operating Lease Right-of-Use Assets

 

 

294,955

 

 

 

299,200

 

Other Assets

 

 

163,171

 

 

 

151,278

 

Deferred Tax Asset, Net

 

 

74,688

 

 

 

72,460

 

Total Assets

 

$

1,301,830

 

 

$

1,434,978

 

Liabilities and Equity

 

 

 

 

 

 

Accrued Compensation and Benefits

 

$

77,930

 

 

$

174,402

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

23,576

 

 

 

22,302

 

Operating Lease Liabilities

 

 

327,450

 

 

 

330,600

 

Amount Due Pursuant to Tax Receivable Agreement

 

 

31,222

 

 

 

29,672

 

Taxes Payable

 

 

5,147

 

 

 

6,573

 

Deferred Revenue

 

 

8,314

 

 

 

10,265

 

Total Liabilities

 

 

473,639

 

 

 

573,814

 

Commitments and Contingencies

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Class A Common Stock, par value $0.01 per share (3,000,000,000
   shares authorized;
33,641,330 and 32,356,489 issued at
   March 31, 2024 and December 31, 2023, respectively;
24,390,702
   and
24,185,439 outstanding at March 31, 2024 and December 31, 2023,
   respectively)

 

 

336

 

 

 

324

 

Class B Common Stock, par value $0.01 per share (1,000,000
   shares authorized;
136 issued and outstanding at March 31, 2024;
   
144 issued and outstanding at December 31, 2023)

 

 

 

 

 

 

Additional Paid-In Capital

 

 

630,335

 

 

 

619,702

 

Retained Earnings

 

 

144,728

 

 

 

118,332

 

Accumulated Other Comprehensive Loss

 

 

(991

)

 

 

(467

)

Treasury Stock at Cost (9,250,628 and 8,171,050 shares at March 31,
    2024 and December 31, 2023, respectively)

 

 

(599,803

)

 

 

(493,222

)

Total PJT Partners Inc. Equity

 

 

174,605

 

 

 

244,669

 

Non-Controlling Interests

 

 

653,586

 

 

 

616,495

 

Total Equity

 

 

828,191

 

 

 

861,164

 

Total Liabilities and Equity

 

$

1,301,830

 

 

$

1,434,978

 

 

See notes to condensed consolidated financial statements.

4


 

PJT Partners Inc.

Condensed Consolidated Statements of Operations (Unaudited)

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

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Revenues

 

 

 

 

 

 

Advisory Fees

 

$

288,681

 

 

$

168,090

 

Placement Fees

 

 

34,489

 

 

 

27,585

 

Interest Income and Other

 

 

6,223

 

 

 

4,313

 

Total Revenues

 

 

329,393

 

 

 

199,988

 

Expenses

 

 

 

 

 

 

Compensation and Benefits

 

 

228,928

 

 

 

133,043

 

Occupancy and Related

 

 

12,161

 

 

 

10,011

 

Travel and Related

 

 

9,101

 

 

 

6,972

 

Professional Fees

 

 

8,349

 

 

 

6,927

 

Communications and Information Services

 

 

4,778

 

 

 

4,077

 

Depreciation and Amortization

 

 

3,498

 

 

 

3,443

 

Other Expenses

 

 

8,675

 

 

 

6,322

 

Total Expenses

 

 

275,490

 

 

 

170,795

 

Income Before Provision for Taxes

 

 

53,903

 

 

 

29,193

 

Provision for Taxes

 

 

531

 

 

 

1,207

 

Net Income

 

 

53,372

 

 

 

27,986

 

Net Income Attributable to
   Non-Controlling Interests

 

 

20,749

 

 

 

10,650

 

Net Income Attributable to PJT Partners Inc.

 

$

32,623

 

 

$

17,336

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

Basic

 

$

1.27

 

 

$

0.69

 

Diluted

 

$

1.22

 

 

$

0.67

 

Weighted-Average Shares of Class A Common
   Stock Outstanding

 

 

 

 

 

 

Basic

 

 

25,690,530

 

 

 

25,231,815

 

Diluted

 

 

28,168,504

 

 

 

26,918,511

 

See notes to condensed consolidated financial statements.

5


 

PJT Partners Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in Thousands)

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net Income

 

$

53,372

 

 

$

27,986

 

Other Comprehensive Income (Loss), Net of Tax
   
Currency Translation Adjustment

 

 

(966

)

 

 

1,388

 

Comprehensive Income

 

 

52,406

 

 

 

29,374

 

Less:

 

 

 

 

 

 

Comprehensive Income Attributable to Non-
   Controlling Interests

 

 

20,307

 

 

 

11,262

 

Comprehensive Income Attributable to PJT Partners Inc.

 

$

32,099

 

 

$

18,112

 

See notes to condensed consolidated financial statements.

6


 

PJT Partners Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(Dollars in Thousands, Except Share Data)

 

 

Three Months Ended March 31, 2024

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

Non-

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Controlling

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

(Loss)

 

 

Stock

 

 

Interests

 

 

Total

 

Balance at December 31, 2023

 

 

32,356,489

 

 

 

144

 

 

 

(8,171,050

)

 

$

324

 

 

$

 

 

$

619,702

 

 

$

118,332

 

 

$

(467

)

 

$

(493,222

)

 

$

616,495

 

 

$

861,164

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,623

 

 

 

 

 

 

 

 

 

20,749

 

 

 

53,372

 

Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(524

)

 

 

 

 

 

(442

)

 

 

(966

)

Dividends Declared ($0.25 Per Share of
   Class A Common Stock)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,227

)

 

 

 

 

 

 

 

 

 

 

 

(6,227

)

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,313

 

 

 

 

 

 

 

 

 

 

 

 

6,505

 

 

 

72,818

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,953

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,953

)

Deliveries of Vested Shares of
   Class A Common Stock

 

 

1,284,841

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Ownership Interest

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

(28,715

)

 

 

 

 

 

 

 

 

 

 

 

10,279

 

 

 

(18,436

)

Treasury Stock Purchases

 

 

 

 

 

 

 

 

(1,079,578

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(106,581

)

 

 

 

 

 

(106,581

)

Balance at March 31, 2024

 

 

33,641,330

 

 

 

136

 

 

 

(9,250,628

)

 

$

336

 

 

$

 

 

$

630,335

 

 

$

144,728

 

 

$

(991

)

 

$

(599,803

)

 

$

653,586

 

 

$

828,191

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

Non-

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Controlling

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

(Loss)

 

 

Stock

 

 

Interests

 

 

Total

 

Balance at December 31, 2022

 

 

31,062,575

 

 

 

158

 

 

 

(6,583,289

)

 

$

310

 

 

$

 

 

$

502,585

 

 

$

60,969

 

 

$

(2,274

)

 

$

(376,484

)

 

$

574,452

 

 

$

759,558

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,336

 

 

 

 

 

 

 

10,650

 

 

 

27,986

 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

776

 

 

 

 

 

612

 

 

 

1,388

 

Dividends Declared ($0.25 Per Share of
   Class A Common Stock)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,229

)

 

 

 

 

 

 

 

 

(6,229

)

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

44,076

 

 

 

 

 

 

 

 

 

4,720

 

 

 

48,796

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

(16,339

)

 

 

 

 

 

 

 

 

 

 

(16,339

)

Deliveries of Vested Shares of
   Class A Common Stock

 

 

1,176,026

 

 

 

 

 

 

 

12

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

Change in Ownership Interest

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

724

 

 

 

 

 

 

 

 

 

(11,555

)

 

 

(10,831

)

Treasury Stock Purchases

 

 

 

 

 

 

(855,118

)

 

 

 

 

 

 

 

 

 

 

 

 

(66,180

)

 

 

 

 

(66,180

)

Balance at March 31, 2023

 

 

32,238,601

 

 

 

159

 

 

 

(7,438,407

)

 

$

322

 

 

$

 

 

$

531,034

 

 

$

72,076

 

 

$

(1,498

)

 

$

(442,664

)

 

$

578,879

 

 

$

738,149

 

See notes to condensed consolidated financial statements.

 

7


 

PJT Partners Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in Thousands)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating Activities

 

 

 

 

 

 

Net Income

 

$

53,372

 

 

$

27,986

 

Adjustments to Reconcile Net Income to Net Cash Used in
   Operating Activities

 

 

 

 

 

 

Equity-Based Compensation Expense

 

 

72,818

 

 

 

48,796

 

Depreciation and Amortization Expense

 

 

3,498

 

 

 

3,443

 

Amortization of Operating Lease Right-of-Use Assets

 

 

3,941

 

 

 

5,667

 

Provision for Credit Losses

 

 

1,981

 

 

 

453

 

Other

 

 

857

 

 

 

231

 

Cash Flows Due to Changes in Operating Assets and Liabilities

 

 

 

 

 

 

Accounts Receivable

 

 

(64,034

)

 

 

(1,610

)

Other Assets

 

 

(10,565

)

 

 

(35,540

)

Accrued Compensation and Benefits

 

 

(95,842

)

 

 

(66,609

)

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

(1,509

)

 

 

(5,956

)

Taxes Payable

 

 

(1,359

)

 

 

255

 

Deferred Revenue

 

 

(1,937

)

 

 

(105

)

Net Cash Used in Operating Activities

 

 

(38,779

)

 

 

(22,989

)

Investing Activities

 

 

 

 

 

 

Purchases of Investments

 

 

(20,000

)

 

 

(4,996

)

Proceeds from Sales and Maturities of Investments

 

 

80,221

 

 

 

49,801

 

Purchases of Furniture, Equipment and Leasehold Improvements

 

 

(439

)

 

 

(2,146

)

Net Cash Provided by Investing Activities

 

 

59,782

 

 

 

42,659

 

Financing Activities

 

 

 

 

 

 

Dividends

 

 

(6,227

)

 

 

(6,229

)

Proceeds from Revolving Credit Facility

 

 

 

 

 

15,000

 

Payments on Revolving Credit Facility

 

 

 

 

 

(15,000

)

Employee Taxes Paid for Shares Withheld

 

 

(26,953

)

 

 

(16,339

)

Cash-Settled Exchanges of Partnership Units

 

 

(18,743

)

 

 

(10,737

)

Treasury Stock Purchases

 

 

(106,429

)

 

 

(66,180

)

Net Cash Used in Financing Activities

 

 

(158,352

)

 

 

(99,485

)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

 

(2,669

)

 

 

121

 

Net Decrease in Cash and Cash Equivalents

 

 

(140,018

)

 

 

(79,694

)

Cash and Cash Equivalents, Beginning of Period

 

 

355,543

 

 

 

173,235

 

Cash and Cash Equivalents, End of Period

 

$

215,525

 

 

$

93,541

 

Supplemental Disclosure of Cash Flows Information

 

 

 

 

 

 

Payments for Income Taxes, Net of Refunds Received

 

$

2,217

 

 

$

675

 

See notes to condensed consolidated financial statements.

 

8


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

1.
ORGANIZATION

PJT Partners Inc. and its consolidated subsidiaries (the “Company” or “PJT Partners”) offer a unique portfolio of advisory and placement services designed to help clients achieve their strategic objectives.

On October 1, 2015, Blackstone Inc. (“Blackstone” or the “former Parent”) distributed on a pro rata basis to its common unitholders all of the issued and outstanding shares of Class A common stock of PJT Partners Inc. held by it. This pro rata distribution is referred to as the “Distribution.” The separation of the PJT Partners business from Blackstone and related transactions, including the Distribution, the internal reorganization that preceded the Distribution and the acquisition by PJT Partners of PJT Capital LP (together with its general partner and their respective subsidiaries, “PJT Capital”) that occurred substantially concurrently with the Distribution, is referred to as the “spin-off.”

PJT Partners Inc. is the sole general partner of PJT Partners Holdings LP. PJT Partners Inc. owns less than 100% of the economic interest in PJT Partners Holdings LP, but has 100% of the voting power and controls the management of PJT Partners Holdings LP. As of March 31, 2024, the non-controlling interest of PJT Partners Holdings LP was 38.7%. As the sole general partner of PJT Partners Holdings LP, PJT Partners Inc. operates and controls all of the business and affairs and consolidates the financial results of PJT Partners Holdings LP and its operating subsidiaries. The Company operates through the following subsidiaries: PJT Partners LP, PJT Partners (UK) Limited, PJT Partners (HK) Limited, PJT Partners Park Hill (Spain) A.V., S.A.U., PJT Partners (Germany) GmbH, PJT Partners (France) SAS and PJT Partners Japan K.K.

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing its condensed consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Intercompany transactions have been eliminated for all periods presented.

For a comprehensive disclosure of the Company’s significant accounting policies, see Note 2. “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Cash, Cash Equivalents and Investments

Cash and Cash Equivalents include short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. Cash and Cash Equivalents are maintained in U.S. and non-U.S. bank accounts and are held at six financial institutions. Also included in Cash and Cash Equivalents are amounts held in bank accounts that are subject to advance notification to withdraw, which totaled $9.1 million and $9.2 million as of March 31, 2024 and December 31, 2023, respectively.

Treasury securities with original maturities greater than three months when purchased are classified as Investments in the Condensed Consolidated Statements of Financial Condition.

9


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

Income Taxes

The Organization for Economic Co-operation and Development ("OECD") Pillar Two Model Rules ("Pillar Two") set forth for a global 15% minimum tax on the income arising in each jurisdiction in which the Company operates. Many such jurisdictions have implemented or are in the process of implementing Pillar Two and it is expected to be applicable for annual periods beginning on or after December 31, 2023. The Company is continuing to assess the impact of Pillar Two and does not expect it to have a material impact on the Company’s 2024 condensed consolidated financial statements.

Recent Accounting Developments

In November 2023, the Financial Accounting Standards Board ("FASB") issued guidance on improvements to reportable segment disclosures. The guidance primarily requires enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact that adoption will have on its condensed consolidated financial statements.

In December 2023, the FASB issued guidance to improve its income tax disclosure requirements. The guidance enhances existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact that adoption will have on its condensed consolidated financial statements.

In March 2024, the FASB issued guidance which clarifies appropriate accounting for profits interest and similar awards. The guidance is effective for annual and interim periods beginning after December 15, 2024, with early adoption permitted. The Company is currently assessing the impact that adoption will have on its condensed consolidated financial statements.

3.
REVENUES FROM CONTRACTS WITH CUSTOMERS

The following table provides a disaggregation of revenues recognized from contracts with customers for the three months ended March 31, 2024 and 2023:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Advisory Fees

 

$

288,681

 

 

$

168,090

 

Placement Fees

 

 

34,489

 

 

 

27,585

 

Interest Income from Placement Fees and Other

 

 

3,915

 

 

 

4,270

 

Revenues from Contracts with Customers

 

$

327,085

 

 

$

199,945

 

Remaining Performance Obligations and Revenue Recognized from Past Performance

As of March 31, 2024, the aggregate amount of the transaction price allocated to performance obligations yet to be satisfied was $46.4 million and the Company generally expects to recognize this revenue within the next twelve months. Such amounts relate to the Company’s performance obligations of providing advisory and placement services.

The Company recognized revenue of $6.9 million and $3.6 million for the three months ended March 31, 2024 and 2023, respectively, related to performance obligations that were fully satisfied in prior periods, primarily due to constraints on variable consideration in prior periods being resolved. Such amounts related primarily to the provision of corporate and fund placement services. The majority of revenues recognized by the Company during the three months ended March 31, 2024 and 2023 were predominantly related to performance obligations that were partially satisfied in prior periods.

10


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

Contract Balances

There were no significant impairments related to contract balances during the three months ended March 31, 2024 and 2023.

For the three months ended March 31, 2024 and 2023, $5.7 million and $7.4 million, respectively, of revenue was recognized that was included in the beginning balance of Deferred Revenue, primarily related to the Company’s performance obligation of standing ready to perform. In certain contracts, the Company receives customer expense advances, which are also considered to be contract liabilities. The Company recorded $2.1 million and $2.0 million as of March 31, 2024 and December 31, 2023, respectively, in Accounts Payable, Accrued Expenses and Other Liabilities in the Condensed Consolidated Statements of Financial Condition primarily related to expense advances.

4.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Changes in the allowance for credit losses consist of the following:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Beginning Balance

 

$

2,391

 

 

$

1,945

 

Provision for Credit Losses

 

 

1,981

 

 

 

453

 

Write-offs

 

 

(1,155

)

 

 

(145

)

Ending Balance

 

$

3,217

 

 

$

2,253

 

Included in Accounts Receivable, Net is accrued interest of $3.9 million and $3.4 million as of March 31, 2024 and December 31, 2023, respectively, related to placement fees.

Included in Accounts Receivable, Net are long-term receivables of $84.0 million and $84.4 million as of March 31, 2024 and December 31, 2023, respectively, related to placement fees that are generally paid in installments over a period of three to four years.

The Company does not have any long-term receivables on non-accrual status. Of receivables that originated as long-term, there were $4.5 million and $1.3 million as of March 31, 2024 and December 31, 2023, respectively, that were outstanding more than 90 days. The Company’s allowance for credit losses with respect to long-term receivables was $1.0 million and $0.6 million as of March 31, 2024 and December 31, 2023, respectively.

5.
INTANGIBLE ASSETS

Intangible Assets, Net consists of the following:

 

 

March 31,
2024

 

 

December 31,
2023

 

Finite-Lived Intangible Assets

 

 

 

 

 

 

Customer Relationships

 

$

61,276

 

 

$

61,276

 

Trade Name

 

 

9,800

 

 

 

9,800

 

Total Intangible Assets

 

 

71,076

 

 

 

71,076

 

Accumulated Amortization

 

 

 

 

 

 

Customer Relationships

 

 

(50,401

)

 

 

(49,314

)

Trade Name

 

 

(8,945

)

 

 

(8,802

)

Total Accumulated Amortization

 

 

(59,346

)

 

 

(58,116

)

Intangible Assets, Net

 

$

11,730

 

 

$

12,960

 

Amortization expense was $1.2 million for each of the three months ended March 31, 2024 and 2023.

11


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

Amortization of Intangible Assets held at March 31, 2024 is expected to be $3.7 million for the remainder of the year ending December 31, 2024; $4.8 million the year ending December 31, 2025; and $3.3 million for the year ending December 31, 2026.

6.
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Furniture, Equipment and Leasehold Improvements, Net consists of the following:

 

 

March 31,
2024

 

 

December 31,
2023

 

Leasehold Improvements

 

$

56,517

 

 

$

56,456

 

Furniture and Fixtures

 

 

17,224

 

 

 

17,027

 

Office Equipment

 

 

6,510

 

 

 

6,467

 

Total Furniture, Equipment and Leasehold Improvements

 

 

80,251

 

 

 

79,950

 

Accumulated Depreciation

 

 

(56,245

)

 

 

(54,049

)

Furniture, Equipment and Leasehold Improvements, Net

 

$

24,006

 

 

$

25,901

 

Depreciation expense was $2.3 million and $2.2 million for the three months ended March 31, 2024 and 2023, respectively.

7.
FAIR VALUE MEASUREMENTS

The following tables summarize the valuation of the Company’s investments by the fair value hierarchy:

 

 

March 31, 2024

 

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Treasury Securities

 

$

 

 

$

20,071

 

 

$

 

 

$

20,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Treasury Securities

 

$

 

 

$

183,514

 

 

$

 

 

$

183,514

 

Investments in Treasury securities were included in Investments at March 31, 2024 and in both Cash and Cash Equivalents and Investments at December 31, 2023 in the Condensed Consolidated Statements of Financial Condition.

8.
INCOME TAXES

The following table summarizes the Company’s tax position:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Income Before Provision for Taxes

 

$

53,903

 

 

$

29,193

 

Provision for Taxes

 

$

531

 

 

$

1,207

 

Effective Income Tax Rate

 

 

1.0

%

 

 

4.1

%

The Company’s effective tax rate differed from the U.S. federal statutory tax rate for the three months ended March 31, 2024 primarily due to partnership income not being subject to U.S. corporate income taxes and permanent differences related to compensation.

The Company had no unrecognized tax benefits as of March 31, 2024.

During the quarter ended March 31, 2023, the Company's holding partnership, PJT Partners Holdings LP, received a notice from the Internal Revenue Service that its Form 1065, U.S. Return of Partnership Income, was

12


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

selected for examination for the tax year ended December 31, 2020. The Company currently does not expect the results of the audit to have any material impact on its condensed consolidated financial statements.

9.
NET INCOME PER SHARE OF CLASS A COMMON STOCK

Basic and diluted net income per share of Class A common stock for the three months ended March 31, 2024 and 2023 is presented below:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net Income Attributable to Shares of Class A
   Common Stock — Basic

 

$

32,623

 

 

$

17,336

 

Incremental Net Income from Dilutive Securities

 

 

1,765

 

 

 

574

 

Net Income Attributable to Shares of Class A
   Common Stock — Diluted

 

$

34,388

 

 

$

17,910

 

Denominator:

 

 

 

 

 

 

Weighted-Average Shares of Class A Common
   Stock Outstanding — Basic

 

 

25,690,530

 

 

 

25,231,815

 

Weighted-Average Number of Incremental Shares from
   Unvested RSUs

 

 

2,477,974

 

 

 

1,686,696

 

Weighted-Average Shares of Class A Common
   Stock Outstanding — Diluted

 

 

28,168,504

 

 

 

26,918,511

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

Basic

 

$

1.27

 

 

$

0.69

 

Diluted

 

$

1.22

 

 

$

0.67

 

The ownership interests of holders (other than PJT Partners Inc.) of the common units of partnership interest in PJT Partners Holdings LP (“Partnership Units”) may be exchanged for PJT Partners Inc. Class A common stock on a one-for-one basis, subject to applicable vesting and transfer restrictions. If all Partnership Units were exchanged for Class A common stock, weighted-average Class A common stock outstanding would be 41,259,144 for the three months ended March 31, 2024, excluding unvested restricted stock units (“RSUs”). In computing the dilutive effect, if any, which the aforementioned exchange would have on net income per share, net income attributable to holders of Class A common stock would be adjusted due to the elimination of the non-controlling interests associated with the Partnership Units (including any tax impact). For the three months ended March 31, 2024 and 2023, there were 15,568,614 and 14,765,765 weighted-average Partnership Units, respectively, that were anti-dilutive.

Share Repurchase Program

On February 6, 2024, the Company announced that the Board authorized a $500 million Class A common stock repurchase program, which replaced the then-existing $200 million repurchase program authorized on April 25, 2022. Under the new repurchase program, which has no expiration date, shares of the Company’s Class A common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date.

During the three months ended March 31, 2024, the Company repurchased 1.1 million shares of the Company’s Class A common stock at an average price per share of $98.55, or $106.4 million in aggregate, pursuant to the share repurchase program. As of March 31, 2024, the Company’s remaining repurchase authorization was $406.3 million.

13


PJT Partners Inc.

Notes to Condensed Consolidated Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

10.
EQUITY-BASED AND OTHER DEFERRED COMPENSATION

Overview

Further information regarding the Company’s equity-based compensation awards is described in Note 10. “Equity-Based and Other Deferred Compensation” in the “Notes to Consolidated Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The following table represents equity-based compensation expense and the related income tax benefit for the three months ended March 31, 2024 and 2023, respectively:

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Equity-Based Compensation Expense

 

$

72,818

 

 

$

48,796

 

Income Tax Benefit

 

$

9,877

 

 

$

6,703

 

Restricted Stock Units

The following table summarizes activity related to unvested RSUs for the three months ended March 31, 2024:

 

 

Restricted Stock Units

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

Average