PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements, including financial condition, operations, and cash flows, for PJT Partners Inc Condensed Consolidated Statements of Financial Condition The company's financial condition as of September 30, 2021, shows a decrease in total assets and equity compared to year-end 2020, while total liabilities remained stable Condensed Consolidated Statements of Financial Condition | Financial Metric | Sep 30, 2021 ($ in thousands) | Dec 31, 2020 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | $1,078,066 | $1,171,607 | | Cash and Cash Equivalents | $261,102 | $299,513 | | Investments | $72,696 | $137,889 | | Accounts Receivable, Net | $250,443 | $233,166 | | Total Liabilities | $483,346 | $483,761 | | Accrued Compensation and Benefits | $178,611 | $253,456 | | Total Equity | $594,720 | $687,846 | Condensed Consolidated Statements of Operations The company's operations for Q3 and the nine months ended September 30, 2021, show a decrease in total revenues and net income, primarily due to lower Advisory Fees Condensed Consolidated Statements of Operations | Metric ($ in thousands) | Q3 2021 | Q3 2020 | YoY Change | 9 Months 2021 | 9 Months 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $231,298 | $297,563 | -22% | $678,679 | $730,297 | -7% | | Advisory Fees | $179,900 | $262,400 | -31% | $530,124 | $611,530 | -13% | | Placement Fees | $46,891 | $31,774 | +48% | $137,611 | $106,026 | +30% | | Total Expenses | $183,023 | $227,467 | -20% | $534,069 | $576,965 | -7% | | Compensation and Benefits | $148,149 | $196,896 | -25% | $434,866 | $485,650 | -10% | | Net Income | $39,185 | $58,107 | -33% | $125,837 | $131,033 | -4% | | Diluted EPS | $0.82 | $1.22 | -33% | $2.72 | $2.87 | -5% | Condensed Consolidated Statements of Cash Flows Cash flow analysis for the nine months ended September 30, 2021, indicates a decrease in operating cash, a shift to positive investing cash, and increased cash usage in financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Activity ($ in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $133,645 | $300,056 | | Net Cash Provided by (Used in) Investing Activities | $60,423 | $(235,465) | | Net Cash Used in Financing Activities | $(230,906) | $(140,018) | | Net Decrease in Cash and Cash Equivalents | $(38,411) | $(77,489) | Notes to Condensed Consolidated Financial Statements Notes to the financial statements provide details on revenue recognition, equity compensation, related party transactions, and significant subsequent events including share repurchases and dividends - As of September 30, 2021, the company had $33.2 million in transaction price allocated to unsatisfied performance obligations, which is expected to be recognized as revenue within the next twelve months39 - During the nine months ended September 30, 2021, the company repurchased 1.3 million shares of Class A common stock for an aggregate of $94.6 million, with $91.9 million remaining available for repurchase under the program55 - On October 18, 2021, the company paid a special dividend of $3.00 per share, totaling $73.0 million. A regular quarterly dividend of $0.05 per share was also declared, payable on December 22, 20219798 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the financial performance, attributing revenue declines to decreased restructuring activity and highlighting the company's strong liquidity position Business Environment The business environment in the first nine months of 2021 saw increased M&A volumes, slowed restructuring activity, and a focus on existing relationships in fundraising - Worldwide M&A announced volumes were up significantly in the first nine months of 2021 compared to the same period in 2020104 - Global restructuring activity slowed from elevated 2020 levels through the first nine months of 2021, driven by economic recovery and stimulus105 - In the fundraising market, investors are focused on existing relationships, and secondary market activity, particularly GP-led continuation vehicles, continues to increase107 Condensed Consolidated Results of Operations The company's consolidated results show a decline in Q3 and nine-month revenues, primarily due to lower Advisory Fees, partially offset by increased Placement Fees, with expenses decreasing in line with revenues - Q3 2021 Advisory Fees decreased by $82.5 million YoY, as an increase in strategic advisory revenues was more than offset by a decline in restructuring revenues from 2020's record levels124 - Q3 2021 Placement Fees increased by $15.1 million YoY, driven by an increase in fund placement activity124 - The decrease in Compensation and Benefits expense for both the three and nine-month periods was principally the result of lower revenues126127 Liquidity and Capital Resources The company maintains a strong liquidity position with substantial cash and an undrawn credit facility, despite significant cash usage for share repurchases and partnership unit redemptions - As of September 30, 2021, the company had cash, cash equivalents, and short-term investments of $333.8 million135 - The company has a $60 million revolving credit facility which was undrawn as of September 30, 20217981 - For the nine months ended September 30, 2021, the company used $95.9 million for cash exchanges of Partnership Units and $94.6 million for share repurchases145147 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company identifies primary market risks as credit risk from receivables and foreign currency exchange rate risk, noting minimal exposure to interest rate or commodity price fluctuations - The company's primary financial risks are credit risk from receivables and foreign currency exchange rate risk, particularly with the pound sterling, euro, Japanese yen, and Hong Kong dollar160163 - For the nine months ended September 30, 2021, foreign currency fluctuations resulted in a loss of $1.5 million recorded in Other Comprehensive Income and a loss of $1.4 million in Interest Income and Other163 ITEM 4. CONTROLS AND PROCEDURES Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2021164 - No material changes in internal control over financial reporting occurred during the third quarter of 2021165 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is subject to ordinary course legal and regulatory proceedings, with no material pending matters expected to significantly impact its financial condition - The company states that it is not currently party to any material pending legal proceedings that would have a material effect on its financial statements167 ITEM 1A. RISK FACTORS No material changes were reported to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes were reported from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020168 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During Q3 2021, the company repurchased 187,754 shares of Class A common stock, with $91.9 million remaining available under the repurchase program Share Repurchases in Q3 2021 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2021 | 64,254 | $72.17 | | August 2021 | 71,000 | $78.93 | | September 2021 | 52,500 | $77.72 | | Q3 2021 Total | 187,754 | $76.28 | - As of the end of Q3 2021, the approximate dollar value of shares that may yet be purchased under the repurchase program was $91.9 million170 ITEM 6. EXHIBITS This section provides a list of exhibits filed with the Form 10-Q, including governance documents and certifications
PJT Partners (PJT) - 2021 Q3 - Quarterly Report