PJT Partners (PJT) - 2024 Q4 - Annual Results

Executive Summary & Key Highlights PJT Partners achieved record full-year and Q4 2024 financial results, marked by significant growth and strategic capital management Full Year 2024 Performance Overview PJT Partners achieved record full-year 2024 results across all businesses, with significant increases in revenues, pretax income, and EPS, demonstrating strong growth and confidence in future prospects - Paul J. Taubman, Chairman and CEO, stated the firm delivered record setting full year 2024 results with record performance in all businesses, and remains confident in future growth prospects[3] Full Year 2024 Financial Highlights | Metric | Value (2024) | YoY Change | | :--------------------- | :----------- | :--------- | | Revenues | $1.49 billion | +29% | | GAAP Pretax Income | $271 million | +52% | | Adjusted Pretax Income | $278 million | +52% | | GAAP Diluted EPS | $4.92 | +58% | | Adjusted EPS | $5.02 | +54% | Fourth Quarter 2024 Performance Overview The fourth quarter of 2024 also saw record revenues and substantial growth in both GAAP and Adjusted Pretax Income and EPS, contributing significantly to the overall strong annual performance Fourth Quarter 2024 Financial Highlights | Metric | Value (2024) | YoY Change | | :--------------------- | :----------- | :--------- | | Revenues | $477 million | +45% | | GAAP Pretax Income | $103 million | +99% | | Adjusted Pretax Income | $107 million | +102% | | GAAP Diluted EPS | $1.83 | +110% | | Adjusted EPS | $1.90 | +98% | Operational and Capital Management Highlights The company increased its firm-wide headcount by 13%, repurchased 3.1 million shares, and maintained a strong balance sheet with record cash and no funded debt - Firm-wide headcount increased by 13% to 1,143 as of December 31, 2024[4] - Repurchased 3.1 million shares and share equivalents through December 31, 2024, including record open market repurchases of 2.2 million shares[4] - Record cash, cash equivalents, and short-term investments of $547 million at year-end, with no funded debt[4] Financial Performance Analysis This section analyzes PJT Partners' financial performance, detailing revenue growth, expense trends, and tax provisions for 2024 Revenues PJT Partners reported significant revenue growth for both the full year and fourth quarter of 2024, driven primarily by increases in Advisory and Placement Fees Revenues (Dollars in Millions) | Category | Q4 2024 | Q4 2023 | Q4 % Change | FY 2024 | FY 2023 | FY % Change | | :--------------- | :------ | :------ | :---------- | :------ | :-------- | :---------- | | Advisory Fees | $434.5 | $290.6 | 49% | $1,314.0 | $1,026.6 | 28% | | Placement Fees | $32.4 | $28.3 | 14% | $146.3 | $102.6 | 43% | | Interest Income & Other | $10.4 | $9.6 | 8% | $32.9 | $23.9 | 38% | | Total Revenues | $477.3 | $328.6 | 45% | $1,493.2 | $1,153.2 | 29% | - Full year Advisory Revenues increased due to strategic advisory, restructuring, and private capital solutions revenues. Placement Revenues increased due to fund placement revenues. Interest Income & Other increased due to higher average cash balances[6] - Three months ended Advisory Revenues increased principally due to strategic advisory revenues. Placement Revenues increased due to fund placement revenues[7] Expenses Total expenses increased for both the full year and fourth quarter of 2024, primarily due to higher compensation and benefits driven by increased revenues, and non-compensation expenses related to office expansion, business travel, and technology investments Total Expenses and Pretax Income (Year Ended December 31, Dollars in Millions) | Metric | FY 2024 GAAP | FY 2024 Adjusted | FY 2023 GAAP | FY 2023 Adjusted | | :-------------------- | :------------- | :--------------- | :------------- | :--------------- | | Compensation and Benefits | $1,032.1 | $1,030.0 | $805.4 | $805.4 | | % of Revenues | 69.1% | 69.0% | 69.8% | 69.8% | | Non-Compensation | $190.5 | $184.9 | $170.2 | $165.1 | | % of Revenues | 12.8% | 12.4% | 14.8% | 14.3% | | Total Expenses | $1,222.6 | $1,214.8 | $975.6 | $970.5 | | % of Revenues | 81.9% | 81.4% | 84.6% | 84.2% | | Pretax Income | $270.6 | $278.3 | $177.6 | $182.7 | | % of Revenues | 18.1% | 18.6% | 15.4% | 15.8% | Total Expenses and Pretax Income (Three Months Ended December 31, Dollars in Millions) | Metric | Q4 2024 GAAP | Q4 2024 Adjusted | Q4 2023 GAAP | Q4 2023 Adjusted | | :-------------------- | :------------- | :--------------- | :------------- | :--------------- | | Compensation and Benefits | $326.0 | $323.9 | $232.3 | $232.3 | | % of Revenues | 68.3% | 67.9% | 70.7% | 70.7% | | Non-Compensation | $48.4 | $46.6 | $44.6 | $43.3 | | % of Revenues | 10.1% | 9.8% | 13.6% | 13.2% | | Total Expenses | $374.4 | $370.5 | $276.9 | $275.6 | | % of Revenues | 78.4% | 77.6% | 84.3% | 83.9% | | Pretax Income | $102.9 | $106.8 | $51.7 | $53.0 | | % of Revenues | 21.6% | 22.4% | 15.7% | 16.1% | Compensation and Benefits Expense Compensation and benefits expense increased significantly for both periods, primarily driven by higher revenues, partially offset by a lower accrual rate - Full Year GAAP Compensation and Benefits Expense was $1.03 billion in 2024, up from $805 million in 2023. Adjusted Compensation and Benefits Expense was $1.03 billion in 2024, up from $805 million in 2023. The increase was driven by higher revenues, partially offset by a lower accrual rate[10] - Q4 GAAP Compensation and Benefits Expense was $326 million in 2024, up from $232 million in 2023. Adjusted Compensation and Benefits Expense was $324 million in 2024, up from $232 million in 2023. The increase was driven by higher revenues, partially offset by a lower accrual rate[11] Non-Compensation Expense Non-compensation expenses rose due to increased occupancy costs from office expansions, higher business travel, and investments in technology infrastructure - Full Year GAAP Non-Compensation Expense was $191 million in 2024, up from $170 million in 2023. Adjusted Non-Compensation Expense was $185 million in 2024, up from $165 million in 2023[12] - Full Year increase was principally due to increases in Occupancy and Related (NY headquarters and London office expansion), Travel and Related (increased business travel), and Communications and Information Services (technology infrastructure investments)[13] - Q4 GAAP Non-Compensation Expense was $48 million in 2024, up from $45 million in 2023. Adjusted Non-Compensation Expense was $47 million in 2024, up from $43 million in 2023[14] - Q4 increase was principally due to increases in Occupancy and Related (NY headquarters and London office expansion), Travel and Related (increased business travel), and Professional Fees (higher senior advisor expenses), partially offset by a decrease in Other Expenses (lower bad debt expense)[15] Provision for Taxes The company's GAAP effective tax rate decreased for the full year 2024, while the Adjusted Net Income, If-Converted effective tax rate also saw a reduction Effective Tax Rates | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :-------------------------------- | :------ | :------ | :------ | :------ | | GAAP Net Income Effective Tax Rate | 11.6% | 12.0% | 11.9% | 18.0% | | Adjusted Net Income, If-Converted Effective Tax Rate | N/A | N/A | 20.6% | 25.3% | Capital Management and Shareholder Returns This section details PJT Partners' capital management strategies, including balance sheet strength, share repurchases, and dividend declarations Balance Sheet and Liquidity As of December 31, 2024, PJT Partners maintained a strong liquidity position with $547 million in cash, cash equivalents, and short-term investments, and no funded debt - Held cash, cash equivalents and short-term investments of $547 million as of December 31, 2024[19] - No funded debt as of December 31, 2024[19] Share Repurchase Program The company actively repurchased shares and share equivalents throughout 2024, including significant open market repurchases, and has a remaining authorization of $278 million - During the year ended December 31, 2024, the Company repurchased 2.2 million shares of Class A common stock in the open market, exchanged 542 thousand Partnership Units for cash, and net share settled 339 thousand shares to satisfy employee tax obligations[20] - In total for FY 2024, 3.1 million share and share equivalents were repurchased at an average price of $109.14 per share[21] - During Q4 2024, 489 thousand share and share equivalents were repurchased at an average price of $149.28 per share[21] - Remaining repurchase authorization was $278 million as of December 31, 2024[22] - The Company intends to repurchase 324 thousand Partnership Units for cash on February 11, 2025[22] Dividend Declaration The Board of Directors declared a quarterly dividend of $0.25 per share of Class A common stock, payable in March 2025 - A quarterly dividend of $0.25 per share of Class A common stock was declared[23] - The dividend will be paid on March 19, 2025, to Class A common stockholders of record as of March 5, 2025[23] Additional Information This section provides context on PJT Partners' business, clarifies forward-looking statements, and explains the use of non-GAAP financial measures About PJT Partners PJT Partners is a global, advisory-focused investment bank known for providing independent, high-touch client service and attracting top talent to deliver leading advice on transformative transactions and capital raising - PJT Partners is a premier, global, advisory-focused investment bank[25] - The firm provides independent advice coupled with high-touch client service, attracting top talent[25] - Services include delivering leading advice to consequential companies, effecting transformative transactions and restructurings, and raising billions of dollars of capital globally[25] Forward-Looking Statements This section outlines the nature of forward-looking statements, emphasizing that they are based on current beliefs and subject to inherent uncertainties and risks that could cause actual results to differ materially - Forward-looking statements concern future results, business strategies, acquisitions, financing plans, competitive position, growth opportunities, operating performance improvements, effects of competition, and future legislation/regulations[26] - These statements are not historical facts or assurances of future performance, but are based on current beliefs, expectations, and assumptions, subject to inherent uncertainties, risks, and changes in circumstances[27] - Important factors that could cause actual results to differ materially include changes in governmental regulations, cyber attacks, system failures, catastrophic events, third-party service provider failures, and volatility in the political and economic environment[27][28] Non-GAAP Financial Measures Management uses specific non-GAAP measures, such as Adjusted Pretax Income and Adjusted EPS, to provide investors with a clearer understanding of operating results by removing the impact of acquisition-related expenses and certain tax adjustments - Non-GAAP measures (Adjusted Pretax Income, Adjusted Net Income, Adjusted Net Income, If-Converted, Adjusted EPS, Adjusted Compensation and Benefits Expense, Adjusted Non-Compensation Expense) are used by management for resource allocation and compensation decisions and are useful for investors[30][31] - These measures remove the impact of acquisition-related compensation expense, acquisition-related intangible asset amortization, and the net change to the amount payable to Blackstone related to compensation-related tax deductions[31] - Adjusted Net Income, If-Converted, illustrates the tax impact assuming all outstanding partnership units are exchanged for Class A common stock, subjecting all income to corporate-level tax[32] Appendix This section provides detailed unaudited GAAP consolidated statements, reconciliations of GAAP to non-GAAP financial data, and summaries of shares outstanding GAAP Condensed Consolidated Statements of Operations (unaudited) This section provides the unaudited GAAP condensed consolidated statements of operations, detailing revenues, expenses, net income, and earnings per share for the three months and year ended December 31, 2024 and 2023 GAAP Condensed Consolidated Statements of Operations (unaudited) (Dollars in Thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Advisory Fees | $434,453 | $290,633 | $1,314,003 | $1,026,646 | | Placement Fees | $32,432 | $28,338 | $146,258 | $102,611 | | Interest Income and Other | $10,396 | $9,583 | $32,916 | $23,925 | | Total Revenues | $477,281 | $328,554 | $1,493,177 | $1,153,182 | | Compensation and Benefits | $326,022 | $232,271 | $1,032,070 | $805,385 | | Total Expenses | $374,401 | $276,861 | $1,222,608 | $975,573 | | Income Before Provision for Taxes | $102,880 | $51,693 | $270,569 | $177,609 | | Provision for Taxes | $11,883 | $6,202 | $32,096 | $31,927 | | Net Income | $90,997 | $45,491 | $238,473 | $145,682 | | Net Income Attributable to PJT Partners Inc. | $51,304 | $24,912 | $134,393 | $81,799 | | Diluted EPS | $1.83 | $0.87 | $4.92 | $3.12 | Reconciliations of GAAP to Non-GAAP Financial Data (unaudited) This section presents the reconciliations between GAAP and non-GAAP financial measures, including pretax income, net income, and per-share data, along with adjustments for compensation and non-compensation expenses Reconciliations of GAAP to Non-GAAP Financial Data (unaudited) (Dollars in Thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | | GAAP Net Income | $90,997 | $45,491 | $238,473 | $145,682 | | GAAP Pretax Income | $102,880 | $51,693 | $270,569 | $177,609 | | Adjusted Pretax Income | $106,766 | $52,959 | $278,342 | $182,665 | | Adjusted Net Income | $94,001 | $46,259 | $244,634 | $149,897 | | Adjusted Net Income, If-Converted | $85,558 | $41,293 | $221,103 | $136,368 | | GAAP Diluted EPS | $1.83 | $0.87 | $4.92 | $3.12 | | Adjusted Net Income, If-Converted Per Share | $1.90 | $0.96 | $5.02 | $3.27 | Reconciliations of GAAP to Non-GAAP Expenses (unaudited) (Dollars in Thousands) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------ | :------ | :------ | :------ | :------ | | GAAP Compensation and Benefits Expense | $326,022 | $232,271 | $1,032,070 | $805,385 | | Adjusted Compensation and Benefits Expense | $323,919 | $232,271 | $1,029,967 | $805,385 | | GAAP Non-Compensation Expense | $48,379 | $44,590 | $190,538 | $170,188 | | Adjusted Non-Compensation Expense | $46,596 | $43,324 | $184,868 | $165,132 | Summary of Shares Outstanding (unaudited) This table provides a summary of weighted-average shares outstanding for basic, diluted, and If-Converted shares for both the three months and year ended December 31, 2024 and 2023, including the dilutive impact of unvested RSUs and Partnership Units Weighted-Average Shares Outstanding (unaudited) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :------------------------------------ | :---------- | :---------- | :---------- | :---------- | | Basic Shares Outstanding, GAAP | 25,401,719 | 25,362,576 | 25,454,445 | 25,255,327 | | Diluted Shares Outstanding, GAAP | 44,948,361 | 43,472,884 | 44,105,131 | 41,882,034 | | If-Converted Shares Outstanding | 44,948,160 | 42,943,082 | 44,051,384 | 41,749,633 | | Fully-Diluted Shares Outstanding (as of Dec 31) | 46,675,815 | 46,046,461 | N/A | N/A | Footnotes This section provides detailed explanations for the adjustments made in the non-GAAP financial reconciliations and the calculations for shares outstanding - Footnotes explain adjustments for acquisition-related compensation expense, amortization of intangible assets, and the net change to the payable due to Blackstone[41] - Footnotes clarify the calculation of Adjusted Taxes and If-Converted Taxes, detailing assumptions for partnership unit exchanges[41] - Footnotes provide details on the dilutive impact of unvested RSUs and Partnership Units for GAAP and If-Converted shares outstanding calculations[41]