investor presentation -...
TRANSCRIPT
Investor Presentation
August 2, 2017
Notices and Disclaimers Forward-Looking Statements This presentation 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. Forward-looking statements include certain information concerning future results of operations, business strategies, 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,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in such forward-looking statements. You should not put undue reliance on any forward-looking statements contained herein. PJT Partners undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. The risk factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2016, 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 the results of PJT Partners to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that PJT Partners is unable to predict at this time or that are not currently expected to have a material adverse effect on its business. Any such risks could cause the results of PJT Partners to differ materially from those expressed in forward-looking statements. Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) in the statements of operations, financial condition or cash flows of the company. These measures should not be considered substitutes for, or superior to, financial measures prepared in accordance with GAAP. Management believes the following non-GAAP measures, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results: Adjusted Pretax Income; Adjusted Net Income; Adjusted Net Income, If-Converted, in total and on a per-share basis; Adjusted Compensation and Benefits Expense and Adjusted Non-Compensation Expense. These non-GAAP measures, presented and discussed in this presentation, remove the significant accounting impact of: (a) transaction-related equity-based compensation expense, including expense related to Partnership Units with both time-based vesting and market conditions as well as equity-based retention awards granted in connection with the spin-off; (b) severance incurred in connection with the spin-off (for periods through the third quarter of 2015); (c) intangible asset amortization associated with Blackstone’s initial public offering (“IPO”) and the acquisition of PJT Capital LP; and (d) the amount the Company has agreed to pay Blackstone related to the net realized cash benefit from certain compensation-related tax deductions. Reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and further detail regarding the adjustments are provided on pages 20 and 25-26 of this presentation. For additional information about our non-GAAP financial measures, see our filings with the SEC. Disclaimers This document is “as is” and is based, in part, on information obtained from other sources. Our use of such information does not imply that we have independently verified or necessarily agree with any of such information, and we have assumed and relied upon the accuracy and completeness of such information for purposes of this document. Neither we nor any of our affiliates or agents, make any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection herewith, or any data it generates and expressly disclaim any and all liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information or any errors or omissions therein. Any views or terms contained herein are preliminary, and are based on financial, economic, market and other conditions prevailing as of the date of this document and are subject to change. We undertake no obligations or responsibility to update any of the information contained in this document. Past performance does not guarantee or predict future performance. This document does not constitute an offer to sell or the solicitation of an offer to buy any security, nor does it constitute an offer or commitment to lend, syndicate or arrange a financing, underwrite or purchase or act as an agent or advisor or in any other capacity with respect to any transaction, or commit capital, or to participate in any trading strategies, and does not constitute legal, regulatory, accounting or tax advice to the recipient. This document does not constitute and should not be considered as any form of financial opinion or recommendation by us or any of our affiliates. This document is not a research report nor should it be construed as such. Presentation of Information All facts, metrics and other information provided herein are presented as of June 30, 2017 unless otherwise stated.
Copyright © 2017, PJT Partners Inc. (and its affiliates, as applicable).
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Why PJT Partners?
Start-Up With Instant Scale
> 8 Offices
> 58 Partners
> 445+ Employees
Unique Portfolio of Complementary Businesses
> Market leading Restructuring business
> Market leading Park Hill business
> Premier Strategic Advisory business
Differentiated Growth Profile
> Significant upside from integrating and leveraging three highly complementary businesses
> Opportunity for market share gains in Strategic Advisory enables growth in most any market environment
> Scalable operating leverage
Note: Headcount as of 6/30/17 3
Three Highly Complementary Businesses
Park Hill
Fund Placement /
Advisory
Restructuring & Special
Situations
Strategic Advisory
4
5
Global Reach Beyond Physical Locations
8 offices
Clients in 43
countries
New York | London | San Francisco | Boston | Madrid | Chicago | Hong Kong | Sydney
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Big Firm Product Capabilities… Small Firm Feel
> Capital structure advisory
> Capital markets support to M&A advisory and restructuring > Capital structure optimization
> Debt execution assistance > Covenant review and assessment
> Pre-IPO advisory > IPO advisory
Capital Markets Advisory
> Mergers & acquisitions > Joint ventures > Divestitures > Takeover defenses > Distressed sales > Spin-offs > Asset swaps
M&A
Restructuring & Special Situations
> Advisory services > Recapitalizations
> Reorganizations > Exchange offers
> Capital raising > Distressed M&A
> 363 asset sales
Hedge Fund Secondary Advisory
> Long/short equity > Global macro > Event-driven > Structured finance > Commodities > Credit > Multi-strats
> LP fund portfolios > GP capital solutions > Collateralized fund
obligations
Private Equity
> Buyouts > Growth equity > Energy > Distressed > Special situations > Credit/Direct lending > Infrastructure
Real Estate
> Opportunistic & value-add
> Sector & regional operator strategies
> Core/core+ (closed & open-end)
> Debt > JV programs > Direct recaps
Hedge Fund
Private Equity
Real Estate
Secondary Advisory
In/Out- of-Court
Creditor
Debtor
Private Capital
Markets
Capital Markets Advisory
M&A
Broad Industry Experience
Select Transactions
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B T A BANK
Create long-term value
Build a premier franchise
The opportunity to:
Work with top practitioners
Client relationships
Collaboration
Premier Destination for Best-in-Class Talent
Content
Character
Alpha players with:
What We
Offer
What We
Value
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Be part of a partnership culture
An Alpha Play on Advisory
Embedded Growth
> Strategic Advisory business transformation
> Commercial impact of difference makers
> Footprint expansion
> Enhanced win rate through collaboration across other businesses
Favorable Long-Term
Trends
+
> Share/influence of smaller,
more focused firms
continues to grow
> Favorable near, intermediate
and long-term environment
for M&A activity
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Park Hill: The Leading Intermediary in the Alternative Asset Space
Notes: Headcount as of 6/30/17 (1) As of 6/30/17 (2) 2016 Preqin Global Private Equity & Venture Capital Report
2005 Year established
90+ Professionals in New York, Chicago, Hong Kong, London, San Francisco and Sydney
3,000+ Investor relationships
25+ Average years of experience across 17 partners
$300 billion Raised by Park Hill clients since inception, representing over 247 primary funds(1)
#1 Placement Agent(2)
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Park Hill: Leading Market Position in Each of the Principal Alternative Asset Categories
> Long/Short Equity
> Global Macro
> Event-Driven
> Structured Finance
> Commodities
> Credit
> Multi-strats
> LP Fund Portfolios
> GP Capital Solutions
> Collateralized Fund Obligations
> Buyouts
> Growth Equity
> Energy
> Distressed
> Special Situations
> Credit/Direct Lending
> Infrastructure
> Opportunistic & Value-Add
> Sector & Regional Operator Strategies
> Core/Core+ (Closed & Open-End)
> Debt
> JV Programs
> Direct Recaps
Private Equity
Hedge Fund
Real Estate
Secondary Advisory
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Park Hill: Leading Market Share and Brand Recognition
Scale enables product specialization
SPECIALIST MODEL
CONSISTENT PROCESS
GLOBAL REACH
Leading position in each vertical allows cross collaboration
New cross vertical products
UNRIVALED SCALE
FREQUENT MANAGER IDENTIFICATION
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Restructuring & Special Situations: Market Leadership in Advising Distressed Companies
Note: As of 6/30/17 (1) Thomson Reuters Distressed Debt Bankruptcy Restructuring Review – First Quarter 2017, by total US dollar value
1991 Year established
70+ Professionals based in New York and London
~535 Distressed advisory situations
2016 IFR Restructuring Adviser of the Year
~25 Average years of experience across 14 partners
~$1.9 trillion Total liabilities restructured
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Restructurings in more than 30 Countries and Across Industries
OUT-OF-COURT ASSIGNMENTS IN-COURT ASSIGNMENTS CREDITOR ASSIGNMENTS
Restructuring & Special Situations: Global Reach and Unmatched Expertise
B T A BANK
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Strategic Advisory: Small Firm Feel with Big Firm Capabilities
Note: Headcount as of 6/30/17 15
6 Offices, headquartered in New York
140+ Professionals
25+ Average years of Partner experience
23 Partners
100% Former Group Heads/Senior Management Positions
Momentum in Strategic Advisory
Select Announced Transactions Since Spin
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Attract the best possible talent
Perfect a differentiated culture and brand
Integrate three complementary businesses
Offer clients big firm capabilities with a small firm feel
Make consistent and steady progress
Play and build for the long term
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Our Focus
Financials
18
GAAP Statements of Operations
(Amounts in millions, except per share data)
Note: Totals may not add due to rounding. 19
12 Months Ended 12/31, 6 Months Ended 6/30, 3 Months Ended 6/30,
2016 2015 2017 2016 2017 2016
Revenues
Advisory $377.6 $286.0 $172.7 $140.6 $73.3 $59.1
Placement 115.0 114.1 53.0 60.6 33.5 28.7
Interest Income and Other 6.9 5.9 4.6 3.4 2.5 1.6
Total Revenues 499.4 405.9 230.3 204.6 109.3 89.3
Expenses
Compensation and Benefits 381.0 315.2 183.2 160.1 87.6 72.0
Occupancy and Related 25.8 32.7 12.9 13.0 6.7 6.6
Travel and Related 11.5 14.1 6.0 5.5 3.1 2.8
Professional Fees 18.9 19.8 9.0 10.2 4.8 6.7
Communications and Information Services 8.9 7.6 5.3 4.7 2.9 2.6
Depreciation and Amortization 14.0 14.9 4.1 7.9 2.0 4.0
Other Expenses 24.8 7.6 9.8 10.6 4.4 4.8
Total Expenses 484.9 411.9 230.3 212.1 111.4 99.5
Income (Loss) Before Provision (Benefit) for Taxes $14.5 ($5.9) $0.0 ($7.5) ($2.1) ($10.3)
Provision (Benefit) for Taxes 9.4 0.2 (2.4) (4.2) (1.5) (5.5)
Net Income (Loss) $5.1 ($6.2) $2.4 ($3.3) ($0.6) ($4.7)
Net Income (Loss) Attributable to Redeemable Non
Controlling Interests8.1 (13.8) 0.8 (3.2) (0.8) (4.4)
Net Income (Loss) Attributable to PJT Partners Inc. ($3.0) $7.6 $1.5 ($0.1) $0.2 ($0.3)
Net Income (Loss) Per Share of Class A Common
Stock — Basic and Diluted($0.17) $0.08 ($0.00) $0.01 ($0.02)
Weighted-Average Shares of Class A Common Stock
Outstanding — Basic and Diluted18.3 18.7 18.3 18.8 18.3
12 Months Ended 12/31, 6 Months Ended 6/30, 3 Months Ended 6/30,
2016 2015 2017 2016 2017 2016
GAAP Net I ncome (Loss) $5.1 ($6.2) $2.4 ($3.3) ($0.6) ($4.7)
Less: GAAP Provision (Benefit) for Taxes 9.4 0.2 (2.4) (4.2) (1.5) (5.5)
GAAP Pretax I ncome (Loss) $14.5 ($5.9) $0.0 ($7.5) ($2.1) ($10.3)
Adjustments to GAAP Pretax I ncome (Loss)
Transaction-Related Compensation Expense (1) 65.8 36.9 35.9 31.3 17.6 16.0
Amortization of Intangible Assets (2) 8.9 10.9 1.3 5.6 0.6 2.8
Spin-Off-Related Payable Due to Blackstone (3) 4.1 - 1.7 - 0.1 -
Adjusted Pretax I ncome $93.3 $41.9 $38.9 $29.4 $16.2 $8.5
Adjusted Taxes 19.3 1.7 7.4 6.5 3.8 1.9
Adjusted Net I ncome 74.1 40.2 31.5 22.9 12.5 6.6
I f-Converted Adjustments
Less: Adjusted Taxes (4) (19.3) (7.4) (6.5) (3.8) (1.9)
Add: If-Converted Taxes (5) 35.8 14.1 11.4 5.9 3.3
Adjusted Net I ncome, I f-Converted (6) $57.5 $24.8 $18.0 $10.4 $5.2
GAAP Net Income (Loss) Per Share of Class A Common Stock -
Basic and Diluted ($0.17) $0.08 ($0.00) $0.01 ($0.02)
GAAP Weighted-Average Shares of Class A Common
Stock Outstanding - Basic and Diluted 18.3 18.7 18.3 18.8 18.3
Adjusted Net Income, If-Converted Per Share (6) $1.55 $0.65 $0.49 $0.27 $0.14
Weighted-Average Shares Outstanding, If-Converted 37.2 37.8 36.8 37.9 36.8
Reconciliations of GAAP to Non-GAAP Financial Data
ADJUSTED NET INCOME, IF-CONVERTED (Amounts in millions, except per share data)
Note: Totals may not add due to rounding. (1) This adjustment adds back to GAAP Pretax Income (Loss) transaction-related equity-based compensation expense associated with the vesting during the periods presented of awards granted in connection with the Blackstone IPO in 2007
and severance incurred in connection with the spin-off (for periods through the third quarter of 2015). Additionally, for periods after October 1, 2015, the transaction-related equity-based compensation adjustment includes expense for Partnership Units with both time-based vesting and market conditions as well as equity-based retention awards granted in connection with the spin-off.
(2) This adjustment adds back to GAAP Pretax Income (Loss) amounts for the amortization of intangible assets that are associated with Blackstone’s IPO and amounts for the amortization of intangible assets identified in connection with the acquisition of PJT Capital LP on October 1, 2015.
(3) This adjustment adds back to GAAP Pretax Income (Loss) the amount the Company has agreed to pay Blackstone related to the net realized cash benefit from certain compensation-related tax deductions. Such expense is reflected in Other Expenses in the Consolidated Statements of Operations.
(4) Represents taxes on Adjusted Pretax Income, considering both current and deferred income tax effects for the current ownership structure. (5) Represents taxes on Adjusted Pretax Income, assuming all Partnership Units (excluding the unvested partnership units that have yet to satisfy market conditions) were exchanged for shares of Class A common stock, resulting in all of the
Company’s income becoming subject to corporate-level tax, considering both current and deferred income tax effects and the annualization of discrete permanent differences. (6) Presented for periods beginning in 2016.
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Revenues
($ in millions)
2015/2016 1H16/1H17 2Q16/2Q17
$286
$378
$120
$122 $406
$499
2015 2016
$59
$73
$30
$36 $89
$109
2Q16 2Q17
Note: Totals may not add due to rounding. (1) Includes Interest Income and Other revenue.
$141
$173
$64
$58
$205
$230
1H16 1H17
(1)
$244 $256 $271 $286
$110
$141 $130
$120
$355
$397 $401 $406
2012 2013 2014 2015
Advisory Revenues Placement Revenues/Other(1)(1)
$244 $256 $271 $286
$110
$141 $130
$120
$355
$397 $401 $406
2012 2013 2014 2015
Advisory Revenues Placement Revenues/Other(1)
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Adjusted Compensation and Benefits Expense
($ in millions)
2015/2016 1H16/1H17 2Q16/2Q17
$278
$315
2015 2016
$129
$147
1H16 1H17
$56
$70
2Q16 2Q17
Note: See page 25 of this presentation for a reconciliation of GAAP to non-GAAP financial data.
Adj. Comp. / Revenue
68.6% 63.1% 63.0% 64.0% 62.7% 64.0%
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Adjusted Non-Compensation Expense
($ in millions)
2015/2016 1H16/1H17 2Q16/2Q17
Note: See page 25 of this presentation for a reconciliation of GAAP to non-GAAP financial data.
Adj. Non- Comp. / Revenue
21.1% 18.2% 22.7% 19.1% 27.8% 21.1%
$86 $91
2015 2016
$46 $44
1H16 1H17
$25 $23
2Q16 2Q17
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Adjusted Pretax Income
($ in millions)
2015/2016 1H16/1H17 2Q16/2Q17
Note: See page 26 of this presentation for a reconciliation of GAAP to non-GAAP financial data.
Adj. Non- Comp. / Revenue
10.3% 18.7% 14.4% 16.9% 9.5% 14.9%
$42
$93
2015 2016
$9
$16
2Q16 2Q17
$29
$39
1H16 1H17
NON-COMPENSATION EXPENSE ($ in millions)
COMPENSATION AND BENEFITS EXPENSE ($ in millions)
Reconciliations of GAAP to Non-GAAP Financial Data
Note: Totals may not add due to rounding. (1) See Footnote 1 on page 20. (2) See Footnote 2 on page 20. (3) See Footnote 3 on page 20. 25
12 Months Ended 12/31, 6 Months Ended 6/30, 3 Months Ended 6/30,
2016 2015 2017 2016 2017 2016
GAAP Compensation and Benefits Expense $381.0 $315.2 $183.2 $160.1 $87.6 $72.0
Transaction-Related Compensation Expense (1) (65.8) (36.9) (35.9) (31.3) (17.6) (16.0)
Adjusted Compensation and Benefits Expense $315.2 $278.3 $147.4 $128.8 $70.0 $56.0
12 Months Ended 12/31, 6 Months Ended 6/30, 3 Months Ended 6/30,
2016 2015 2017 2016 2017 2016
GAAP Total Expenses $484.9 $411.9 $230.3 $212.1 $111.4 $99.5
GAAP Compensation and Benefits Expense (381.0) (315.2) (183.2) (160.1) (87.6) (72.0)
Amortization of Intangible Assets (2) (8.9) (10.9) (1.3) (5.6) (0.6) (2.8)
Spin-Off-Related Payable Due to Blackstone (3) (4.1) – (1.7) – (0.1) –
Adjusted Non-Compensation Expense $91.0 $85.7 $44.0 $46.4 $23.1 $24.8
Reconciliations of GAAP to Non-GAAP Financial Data
ADJUSTED PRETAX INCOME ($ in millions)
Note: Totals may not add due to rounding. (1) See Footnote 1 on page 20. (2) See Footnote 2 on page 20. (3) See Footnote 3 on page 20.
12 Months Ended 12/31, 6 Months Ended 6/30, 3 Months Ended 6/30,
2016 2015 2017 2016 2017 2016
Income (Loss) Before Provision (Benefit) for Taxes $14.5 ($5.9) $0.0 ($7.5) ($2.1) ($10.3)
Transaction-Related Adjustments
Transaction-Related Compensation Expense (1) 65.8 36.9 35.9 31.3 17.6 16.0
Amortization of Intangible Assets (2) 8.9 10.9 1.3 5.6 0.6 2.8
Spin-Off-Related Payable Due to Blackstone (3) 4.1 – 1.7 – 0.1 –
Adjusted Pretax Income $93.3 $41.9 $38.9 $29.4 $16.2 $8.5
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18.5
8.7
6.1
6.6 39.937.9
0.0
10.0
20.0
30.0
40.0
Class A
Common Shares
Vested Holdings Units
Held by Non-PJT
Employees
Unvested
Holdings Units
Unvested
RSUs
Fully-Diluted Shares
Outstanding
(If-Converted)
Wtd. Avg.
FD Shares
Outstanding
(Treasury Stock
Method)
Note: Totals may not add due to rounding. (1) Less than 2% held by Blackstone employees who transferred to PJT. (2) Includes undelivered awards with no remaining service requirement. (3) As of June 30, 2017. Assumes all Partnership Units and unvested RSUs are fully converted to Class A Common Stock. Excluded from Fully Diluted Shares Outstanding are
6.5 million unvested Partnership Units in PJT Partners Holdings LP that have yet to satisfy certain market conditions. (4) Weighted-average for the three months ended June 30, 2017. Assumes all Partnership Units are fully converted and unvested RSUs are converted under the Treasury
Stock Method to Class A Common Stock.
Share Count
(1)
(4)
(3)
4.3
15.0
18.5
As of June 30, 2017 (shares in millions)
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(2)
(2)
28
2Q17 Balance Sheet & Other Financial Updates
(1) 3Q ‘16 units exchanged in November 2016. (2) 4Q ‘16 units exchanged in February 2017. (3) 1Q ‘17 units exchanged in May 2017. (4) 2Q ‘17 units to be exchanged in August 2017.
Debt-free
Cash, Cash equivalents and Short-term Investments: $96mm
Net Working Capital: $172mm
Exchanges
> 3Q16: 594k units – settled in cash (1)
> 4Q16: 362k units – settled in cash (2)
> 1Q17: 527k units – settled in cash (3)
> 2Q17: 180k units – to be settled in cash (4)
> Vested Partnership Units are owned primarily by current and former Blackstone employees and can be exchanged on a quarterly basis
> Post the August exchange, there will be approximately 8.6 million Partnership Units eligible for exchange
> We have the option to settle exchanges in either cash or Class A shares
> These units provide a potential repurchase opportunity without impacting our public float
Approximately 1.7mm Partnership Units Exchanged to Date
PJT Partners www.pjtpartners.com
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