PJT Partners (US:PJT)2020-04-28 15:03Financial Data and Key Metrics Changes - Total revenues for Q1 2020 were $200 million, up 56% year-over-year [18] - Adjusted pretax income increased to $39 million, up from $15 million in the previous year, with an adjusted pretax margin of 19.7% compared to 11.8% [20] - Adjusted earnings per share were $0.71, significantly up from $0.28 in Q1 2019 [21] Business Line Data and Key Metrics Changes - Restructuring revenues rose significantly year-over-year, with a dramatic increase in restructuring activity since the pandemic began [10][12] - Strategic advisory revenues increased to $157 million, up 50% year-over-year, with a strong backlog of announced but not yet closed transactions [18][12] - PJT Park Hill revenues increased modestly year-over-year, but are expected to decline significantly in 2020 due to market dislocations [14] Market Data and Key Metrics Changes - The firm experienced a significant uptick in client dialogues focused on capital structure and liquidity issues due to the pandemic [12][28] - The number of active client mandates increased significantly, reflecting heightened demand for advisory services [12][32] Company Strategy and Development Direction - The company aims to leverage its three synergistic business lines—restructuring, strategic advisory, and capital markets—to better serve clients during the crisis [11] - The firm is focused on maintaining a strong cash position and is unlikely to be active in share repurchases for the remainder of the year due to economic uncertainties [15][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth for 2020 despite the unprecedented economic backdrop, citing strong visibility from retainer-based business and backlog [17][34] - The firm anticipates a long cycle of restructuring activity, with clients increasingly focused on capital structure and liquidity [29][30] Other Important Information - The firm ended the quarter with $113 million in cash and no debt, expecting to end 2020 in its strongest financial position ever [22] - A dividend of $0.05 per share was approved, to be paid on June 17, 2020 [22] Q&A Session Summary Question: How did the restructuring business perform in the prior cycle? - Management noted that the restructuring business saw a significant uptick in activity during the last economic downturn, but emphasized that the current firm structure and capabilities are vastly different today [26][27] Question: Are there more companies seeking advice since the pandemic started? - Management confirmed an increase in client engagement, with more companies recognizing the need for strategic advice [31][32] Question: What could change the expectation of year-over-year revenue growth? - Management highlighted strong visibility from retainer-based business and backlog, but acknowledged the uncertainty in the current environment [34] Question: What is the appetite for strategic and sponsor M&A activity? - Management indicated that while sponsor activity may be limited in the short term due to uncertainty, there is potential for increased activity as companies reassess their capital structures [41][43] Question: How is the firm managing capacity in the restructuring business? - Management stated that they have increased headcount and resources in restructuring, ensuring they can meet the demand in the current environment [45][46] Question: Will there be opportunities for talent acquisition post-quarantine? - Management expressed confidence in attracting high-caliber talent, noting that the firm's business model is increasingly appealing to potential recruits [48][49]