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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 SEPTEMBER 30, 2022

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

 

 

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 October 24, 2022, there were 24,413,796 shares of Class A common stock, par value $0.01 per share, and 163 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 — September 30, 2022 and 2021:

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Financial Condition as of September 30, 2022 and December 31, 2021

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021

 

7

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

 

9

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

10

 

 

 

 

 

ITEM 2.

 

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

 

24

 

 

 

 

 

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

33

 

 

 

 

 

ITEM 4.

 

CONTROLS AND PROCEDURES

 

33

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

34

 

 

 

 

 

ITEM 1A.

 

RISK FACTORS

 

34

 

 

 

 

 

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

34

 

 

 

 

 

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

35

 

 

 

 

 

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

35

 

 

 

 

 

ITEM 5.

 

OTHER INFORMATION

 

35

 

 

 

 

 

ITEM 6.

 

EXHIBITS

 

36

 

 

 

 

 

SIGNATURES

 

37

 

 

 

 


 

 

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 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) cyberattacks, security vulnerabilities, and internet disruptions, including breaches of data security and privacy leaks, data loss, and business interruptions; (c) failure of our computer systems or communication systems during a catastrophic event, including as a result of the increased use of remote work environments and virtual platforms; (d) the impact of catastrophic events, such as COVID-19 or other pandemics, 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 or other pandemics, on our employees and our ability to provide services to our 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, including as a result of inflation and rising interest rates.

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, 2021 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)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Assets

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

189,829

 

 

$

200,481

 

Investments

 

 

99,864

 

 

 

 

Accounts Receivable (net of allowance for credit losses of $2,312 and

   $1,853 at September 30, 2022 and December 31, 2021, respectively)

 

 

286,446

 

 

 

289,267

 

Intangible Assets, Net

 

 

19,110

 

 

 

24,386

 

Goodwill

 

 

172,725

 

 

 

172,725

 

Furniture, Equipment and Leasehold Improvements, Net

 

 

31,272

 

 

 

37,147

 

Operating Lease Right-of-Use Assets

 

 

118,230

 

 

 

137,916

 

Other Assets

 

 

77,780

 

 

 

61,921

 

Deferred Tax Asset, Net

 

 

71,304

 

 

 

63,782

 

Total Assets

 

$

1,066,560

 

 

$

987,625

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Accrued Compensation and Benefits

 

$

150,452

 

 

$

121,717

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

24,781

 

 

 

23,753

 

Operating Lease Liabilities

 

 

135,002

 

 

 

157,013

 

Amount Due Pursuant to Tax Receivable Agreement

 

 

31,827

 

 

 

31,131

 

Taxes Payable

 

 

1,085

 

 

 

3,492

 

Deferred Revenue

 

 

12,935

 

 

 

12,947

 

Total Liabilities

 

 

356,082

 

 

 

350,053

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Class A Common Stock, par value $0.01 per share (3,000,000,000

   shares authorized; 30,893,826 and 29,248,457 issued at September 30,

   2022 and December 31, 2021, respectively; 24,434,159 and 24,319,413

   outstanding at September 30, 2022 and December 31, 2021,

   respectively)

 

 

308

 

 

 

292

 

Class B Common Stock, par value $0.01 per share (1,000,000

   shares authorized; 163 issued and outstanding at September 30, 2022;

   159 issued and outstanding at December 31, 2021)

 

 

 

 

 

 

Additional Paid-In Capital

 

 

476,462

 

 

 

391,242

 

Retained Earnings (Deficit)

 

 

42,530

 

 

 

(4,933

)

Accumulated Other Comprehensive Income (Loss)

 

 

(3,847

)

 

 

631

 

Treasury Stock at Cost (6,459,667 and 4,929,044 shares at September 30,

   2022 and December 31, 2021, respectively)

 

 

(367,197

)

 

 

(267,000

)

Total PJT Partners Inc. Equity

 

 

148,256

 

 

 

120,232

 

Non-Controlling Interests

 

 

562,222

 

 

 

517,340

 

Total Equity

 

 

710,478

 

 

 

637,572

 

Total Liabilities and Equity

 

$

1,066,560

 

 

$

987,625

 

 

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

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees

 

$

224,405

 

 

$

179,900

 

 

$

592,712

 

 

$

530,124

 

Placement Fees

 

 

39,652

 

 

 

46,891

 

 

 

149,485

 

 

 

137,611

 

Interest Income and Other

 

 

2,035

 

 

 

4,507

 

 

 

3,355

 

 

 

10,944

 

Total Revenues

 

 

266,092

 

 

 

231,298

 

 

 

745,552

 

 

 

678,679

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

 

179,080

 

 

 

148,149

 

 

 

488,899

 

 

 

434,866

 

Occupancy and Related

 

 

8,231

 

 

 

8,569

 

 

 

25,831

 

 

 

25,788

 

Travel and Related

 

 

6,336

 

 

 

2,765

 

 

 

17,471

 

 

 

4,979

 

Professional Fees

 

 

7,375

 

 

 

8,066

 

 

 

21,652

 

 

 

24,016

 

Communications and Information Services

 

 

4,155

 

 

 

4,341

 

 

 

12,819

 

 

 

13,548

 

Depreciation and Amortization

 

 

3,755

 

 

 

3,892

 

 

 

12,156

 

 

 

11,535

 

Other Expenses

 

 

9,518

 

 

 

7,241

 

 

 

25,246

 

 

 

19,337

 

Total Expenses

 

 

218,450

 

 

 

183,023

 

 

 

604,074

 

 

 

534,069

 

Income Before Provision for Taxes

 

 

47,642

 

 

 

48,275

 

 

 

141,478

 

 

 

144,610

 

Provision for Taxes

 

 

8,601

 

 

 

9,090

 

 

 

22,776

 

 

 

18,773

 

Net Income

 

 

39,041

 

 

 

39,185

 

 

 

118,702

 

 

 

125,837

 

Net Income Attributable to

   Non-Controlling Interests

 

 

17,953

 

 

 

17,740

 

 

 

52,742

 

 

 

54,565

 

Net Income Attributable to PJT Partners Inc.

 

$

21,088

 

 

$

21,445

 

 

$

65,960

 

 

$

71,272

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.84

 

 

$

0.86

 

 

$

2.63

 

 

$

2.85

 

Diluted

 

$

0.82

 

 

$

0.82

 

 

$

2.56

 

 

$

2.72

 

Weighted-Average Shares of Class A Common

   Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,966,527

 

 

 

24,908,606

 

 

 

25,032,151

 

 

 

24,979,925

 

Diluted

 

 

26,519,173

 

 

 

42,010,543

 

 

 

26,497,177

 

 

 

42,414,461

 

 

See notes to condensed consolidated financial statements.

5


 

PJT Partners Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in Thousands)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Income

 

$

39,041

 

 

$

39,185

 

 

$

118,702

 

 

$

125,837

 

Other Comprehensive Loss, Net of Tax

   Currency Translation Adjustment

 

 

(3,055

)

 

 

(1,966

)

 

 

(8,150

)

 

 

(1,457

)

Comprehensive Income

 

 

35,986

 

 

 

37,219

 

 

 

110,552

 

 

 

124,380

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income Attributable to Non-

   Controlling Interests

 

 

16,578

 

 

 

16,834

 

 

 

49,070

 

 

 

53,897

 

Comprehensive Income Attributable to PJT Partners Inc.

 

$

19,408

 

 

$

20,385

 

 

$

61,482

 

 

$

70,483

 

 

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 September 30, 2022

 

 

 

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 June 30, 2022

 

 

30,597,580

 

 

 

161

 

 

 

(6,220,049

)

 

$

305

 

 

$

 

 

$

445,961

 

 

$

27,573

 

 

$

(2,167

)

 

$

(350,926

)

 

$

556,905

 

 

$

677,651

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,088

 

 

 

 

 

 

 

 

 

17,953

 

 

 

39,041

 

Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,680

)

 

 

 

 

 

(1,375

)

 

 

(3,055

)

Dividends Declared ($0.25 Per Share of

   Class A Common Stock)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,131

)

 

 

 

 

 

 

 

 

 

 

 

(6,131

)

Tax Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,889

)

 

 

(16,889

)

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,047

 

 

 

 

 

 

 

 

 

 

 

 

5,599

 

 

 

36,646

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,298

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,298

)

Deliveries of Vested Shares of

   Class A Common Stock

 

 

296,246

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Ownership Interest

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

755

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

784

 

Treasury Stock Purchases

 

 

 

 

 

 

 

 

(239,618

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,271

)

 

 

 

 

 

(16,271

)

Balance at September 30, 2022

 

 

30,893,826

 

 

 

163

 

 

 

(6,459,667

)

 

$

308

 

 

$

 

 

$

476,462

 

 

$

42,530

 

 

$

(3,847

)

 

$

(367,197

)

 

$

562,222

 

 

$

710,478

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

Retained

 

 

Other

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Earnings

 

 

Comprehensive

 

 

Treasury

 

 

Controlling

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

(Deficit)

 

 

Income (Loss)

 

 

Stock

 

 

Interests

 

 

Total

 

Balance at December 31, 2021

 

 

29,248,457

 

 

 

159

 

 

 

(4,929,044

)

 

$

292

 

 

$

 

 

$

391,242

 

 

$

(4,933

)

 

$

631

 

 

$

(267,000

)

 

$

517,340

 

 

$

637,572

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,960

 

 

 

 

 

 

 

 

 

52,742

 

 

 

118,702

 

Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,478

)

 

 

 

 

 

(3,672

)

 

 

(8,150

)

Dividends Declared ($0.75 Per Share of

   Class A Common Stock)