PJT Partners (US:PJT)2021-10-26 15:10Financial Data and Key Metrics Changes - Total revenues for Q3 2021 were $231 million, down 22% year-over-year [10] - Advisory revenues were $180 million, down 31% year-over-year, primarily due to a decline in restructuring revenues [10] - Placement revenues increased by 48% year-over-year to $47 million, driven by strong fund placement activity [10] - For the nine months ended September 30, total revenues were $679 million, down 7% year-over-year [11] - Adjusted pre-tax income for Q3 was $54 million, with an adjusted pre-tax margin of 23.3% [12] Business Line Data and Key Metrics Changes - Strategic Advisory revenues continued to grow year-over-year, but overall growth was offset by a decline in restructuring revenues [10][11] - Restructuring revenues saw a nearly $100 million decline compared to last year's record levels [8] - PJT Park Hill is delivering record performance, benefiting from strong growth trends in the alternative asset investment market [19] - PJT CamberView is also expected to deliver record performance in 2021, entering 2022 with a strong backlog [21] Market Data and Key Metrics Changes - The restructuring environment is currently dampened due to benign credit markets and unprecedented monetary policy support, returning to 2019 levels [7][17] - Early signs of stress are building in the system, with rising labor costs and inflationary expectations [18] Company Strategy and Development Direction - The company remains focused on long-term growth, investing in its business despite current headwinds in restructuring [18] - There is a strong emphasis on building trusted relationships and long-term opportunities rather than chasing immediate gains [28] - The company is positioned to take advantage of expanded opportunities with financial sponsors and asset managers [19] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the long-term outlook for restructuring, expecting increased demand due to the fallout from COVID-19 [17] - The company anticipates a significant increase in Strategic Advisory revenues in Q4 2021 and into 2022 [20] - Rising interest rates are expected to create a more favorable environment for restructuring activities [36] Other Important Information - The company ended the quarter with $334 million in cash and no funded debt outstanding [15] - A special dividend of $3.00 per share was paid, with a regular dividend of $0.05 per share approved for December [15] Q&A Session Summary Question: Outlook for Strategic Advisory and productivity of partners - Management noted that all partners are showing increased productivity, with a long-term view on building relationships [27] Question: Capital return priorities and future buybacks - The company plans to continue aggressive share repurchases, with potential for increased dividends in the future [31] Question: Impact of rising interest rates on business - Rising rates may create a more favorable environment for restructuring, but the Strategic Advisory business is less affected by macro trends [36][40] Question: Expectations for restructuring business in 2022 - Management is confident that restructuring revenues will return to 2019 levels, with a neutral outlook for 2022 [43] Question: Competitive positioning and growth expectations - The company views itself as still in the early stages of growth, with significant potential for future expansion [55]