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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM           TO           

Commission File Number: 001-36869

 

 

PJT Partners Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

36-4797143

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

280 Park Avenue

New York, New York 10017

(Address of principal executive offices)(Zip Code)

(212) 364-7800

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.01 per share

 

PJT

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

 

Smaller Reporting Company

 

 

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No

As of April 27, 2020, there were 24,074,927 shares of Class A common stock, par value $0.01 per share, and 210 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

FINANCIAL STATEMENTS

 

3

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Financial Statements — March 31, 2020 and 2019:

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Financial Condition as of March 31, 2020 and December 31, 2019

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2020 and 2019

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019

 

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

24

 

 

 

 

 

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

33

 

 

 

 

 

ITEM 4.

 

CONTROLS AND PROCEDURES

 

33

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

34

 

 

 

 

 

ITEM 1A.

 

RISK FACTORS

 

34

 

 

 

 

 

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

35

 

 

 

 

 

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

36

 

 

 

 

 

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

36

 

 

 

 

 

ITEM 5.

 

OTHER INFORMATION

 

36

 

 

 

 

 

ITEM 6.

 

EXHIBITS

 

36

 

 

 

 

 

SIGNATURES

 

38

 

 

 

1


 

PJT Partners Inc. was formed in connection with certain merger and spin-off transactions whereby the financial and strategic advisory services, restructuring and reorganization advisory services and Park Hill Group businesses of The Blackstone Group Inc. (“Blackstone” or our “former Parent”) were combined with PJT Capital LP, a financial advisory firm founded by Paul J. Taubman in 2013 (together with its then affiliates, “PJT Capital”), and the combined business was distributed to Blackstone’s unitholders to create PJT Partners Inc., a stand-alone, independent publicly traded company. Throughout this Quarterly Report on Form 10-Q, we refer to this transaction as the “spin-off.” In October 2018, we acquired CamberView Partners Holdings, LLC (“CamberView” or “PJT CamberView”). PJT Partners Inc. is a holding company and its only material asset is its controlling equity interest in PJT Partners Holdings LP, a holding partnership that holds the company’s operating subsidiaries, and certain cash and cash equivalents it may hold from time to time. As the sole general partner of PJT Partners Holdings LP, PJT Partners Inc. operates and controls all of the business and affairs of PJT Partners Holdings LP and its operating subsidiaries.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, the words “PJT Partners Inc.” refers to PJT Partners Inc., and “PJT Partners,” the “Company,” “we,” “us” and “our” refer to PJT Partners Inc., together with its consolidated subsidiaries, including PJT Partners Holdings LP and its operating subsidiaries.

Forward-Looking Statements

Certain material presented herein 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 (the “Exchange Act”). Forward-looking statements include certain information concerning future results of operations, business strategies, acquisitions, 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,” “opportunity,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, many of which are outside our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance upon any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (a) changes in governmental regulations and policies; (b) the possibility of cyberattacks, security vulnerabilities, and internet disruptions, including breaches of data security and privacy leaks, data loss, and business interruptions; (c) the possibility of failure of our computer systems or communication systems during a catastrophic event, including the outbreak of COVID-19; (d) the impact of catastrophic events, such as COVID-19, on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business failures; (e) the impact of catastrophic events, such as COVID-19, on our employees and our ability to provide services to our clients and respond to their needs; (f) the failure of third-party service providers to perform their functions; and (g) volatility in the political and economic environment.

Any of these factors, as well as such other factors discussed in the “Risk Factors” sections of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019, 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 our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that are not currently expected to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements.

Website Disclosure

We use our website (www.pjtpartners.com) as a channel of distribution of company information. The information we post may be deemed material. Accordingly, investors should monitor the website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about PJT Partners when you enroll your e-mail address by visiting the “Investor Relations” page of our website at ir.pjtpartners.com/investor-relations. Although we refer to our website in this report, the contents of our website are not included or incorporated by reference into this report. All references to our website in this report are intended to be inactive textual references only.

2


 

PART I.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

PJT Partners Inc.

Condensed Consolidated Statements of Financial Condition (Unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

88,344

 

 

$

215,950

 

Investments

 

 

24,354

 

 

 

1,543

 

Accounts Receivable (net of allowance for credit losses of $1,410 and

   $0 at March 31, 2020 and December 31, 2019, respectively)

 

 

245,746

 

 

 

227,516

 

Intangible Assets, Net

 

 

37,879

 

 

 

39,806

 

Goodwill

 

 

172,725

 

 

 

172,725

 

Furniture, Equipment and Leasehold Improvements, Net

 

 

39,946

 

 

 

37,123

 

Operating Lease Right-of-Use Assets

 

 

158,359

 

 

 

166,519

 

Other Assets

 

 

61,372

 

 

 

43,358

 

Deferred Tax Asset, Net

 

 

49,986

 

 

 

48,237

 

Total Assets

 

$

878,711

 

 

$

952,777

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Accrued Compensation and Benefits

 

$

63,275

 

 

$

120,750

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

18,822

 

 

 

24,767

 

Operating Lease Liabilities

 

 

175,552

 

 

 

182,924

 

Amount Due Pursuant to Tax Receivable Agreement

 

 

10,363

 

 

 

9,289

 

Taxes Payable

 

 

7,685

 

 

 

4,841

 

Deferred Revenue

 

 

12,701

 

 

 

14,189

 

Loan Payable

 

 

 

 

 

21,500

 

Total Liabilities

 

 

288,398

 

 

 

378,260

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Class A Common Stock, par value $0.01 per share (3,000,000,000

   shares authorized; 27,158,722 and 25,621,451 issued at March 31,

   2020 and December 31, 2019, respectively; 24,074,768 and 23,076,794

   outstanding at March 31, 2020 and December 31, 2019,

   respectively)

 

 

266

 

 

 

251

 

Class B Common Stock, par value $0.01 per share (1,000,000

   shares authorized; 210 issued and outstanding at March 31, 2020;

   204 issued and outstanding at December 31, 2019)

 

 

 

 

 

 

Additional Paid-In Capital

 

 

349,932

 

 

 

290,896

 

Accumulated Deficit

 

 

(128,214

)

 

 

(144,919

)

Accumulated Other Comprehensive Income (Loss)

 

 

(1,334

)

 

 

146

 

Treasury Stock at Cost (3,083,954 and 2,544,657 shares at March 31,

   2020 and December 31, 2019, respectively)

 

 

(140,178

)

 

 

(114,984

)

Total PJT Partners Inc. Equity

 

 

80,472

 

 

 

31,390

 

Non-Controlling Interests

 

 

509,841

 

 

 

543,127

 

Total Equity

 

 

590,313

 

 

 

574,517

 

Total Liabilities and Equity

 

$

878,711

 

 

$

952,777

 

 

See notes to condensed consolidated financial statements.

3


 

PJT Partners Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

Advisory Fees

 

$

156,591

 

 

$

104,467

 

Placement Fees

 

 

38,992

 

 

 

23,312

 

Interest Income and Other

 

 

4,588

 

 

 

277

 

Total Revenues

 

 

200,171

 

 

 

128,056

 

Expenses

 

 

 

 

 

 

 

 

Compensation and Benefits

 

 

134,024

 

 

 

95,151

 

Occupancy and Related

 

 

8,654

 

 

 

7,136

 

Travel and Related

 

 

5,296

 

 

 

6,959

 

Professional Fees

 

 

4,523

 

 

 

5,802

 

Communications and Information Services

 

 

3,546

 

 

 

3,213

 

Depreciation and Amortization

 

 

3,820

 

 

 

3,620

 

Other Expenses

 

 

6,749

 

 

 

6,262

 

Total Expenses

 

 

166,612

 

 

 

128,143

 

Income (Loss) Before Provision (Benefit) for Taxes

 

 

33,559

 

 

 

(87

)

Provision (Benefit) for Taxes

 

 

1,550

 

 

 

(1,024

)

Net Income

 

 

32,009

 

 

 

937

 

Net Income (Loss) Attributable to

   Non-Controlling Interests

 

 

13,149

 

 

 

(164

)

Net Income Attributable to PJT Partners Inc.

 

$

18,860

 

 

$

1,101

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

Basic

 

$

0.78

 

 

$

0.05

 

Diluted

 

$

0.72

 

 

$

0.04

 

Weighted-Average Shares of Class A Common

   Stock Outstanding

 

 

 

 

 

 

 

 

Basic

 

 

24,097,715

 

 

 

23,760,876

 

Diluted

 

 

40,353,624

 

 

 

40,019,889

 

 

See notes to condensed consolidated financial statements.

4


 

PJT Partners Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in Thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Net Income

 

$

32,009

 

 

$

937

 

Other Comprehensive Income (Loss), Net of Tax

   Currency Translation Adjustment

 

 

(2,782

)

 

 

1,261

 

Comprehensive Income

 

 

29,227

 

 

 

2,198

 

Less:

 

 

 

 

 

 

 

 

Comprehensive Income Attributable to Non-

   Controlling Interests

 

 

11,847

 

 

 

437

 

Comprehensive Income Attributable to PJT Partners Inc.

 

$

17,380

 

 

$

1,761

 

 

See notes to condensed consolidated financial statements.

 

5


 

PJT Partners Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(Dollars in Thousands, Except Share Data)

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Treasury

 

 

Controlling

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Stock

 

 

Interests

 

 

Total

 

Balance at December 31, 2018

 

 

23,940,185

 

 

 

199

 

 

 

(1,353,398

)

 

$

240

 

 

$

 

 

$

210,939

 

 

$

(169,836

)

 

$

(627

)

 

$

(67,172

)

 

$

514,205

 

 

$

487,749

 

Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,101

 

 

 

 

 

 

 

 

 

(164

)

 

 

937

 

Other Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

660

 

 

 

 

 

 

601

 

 

 

1,261

 

Dividends Declared ($0.05 Per Share of

   Class A Common Stock)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,188

)

 

 

 

 

 

 

 

 

 

 

 

(1,188

)

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,884

 

 

 

 

 

 

 

 

 

 

 

 

11,089

 

 

 

34,973

 

Forfeiture Liability for Equity Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,604

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,604

)

Deliveries of Vested Shares of

   Class A Common Stock

 

 

1,088,396

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-Related Equity Issuance

 

 

49,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,889

 

 

 

 

 

 

 

 

 

 

 

 

398

 

 

 

2,287

 

Change in Ownership Interest

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

53,377

 

 

 

 

 

 

 

 

 

 

 

 

(62,642

)

 

 

(9,265

)

Balance at March 31, 2019

 

 

25,078,345

 

 

 

200

 

 

 

(1,353,398

)

 

$

251

 

 

$

 

 

$

281,480

 

 

$

(169,923

)

 

$

33

 

 

$

(67,172

)

 

$

463,487

 

 

$

508,156

 

 

(continued)

See notes to condensed consolidated financial statements.

6


 

PJT Partners Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(Dollars in Thousands, Except Share Data)

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Non-

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Treasury

 

 

Controlling

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Stock

 

 

Interests

 

 

Total

 

Balance at December 31, 2019

 

 

25,621,451

 

 

 

204

 

 

 

(2,544,657

)

 

$

251

 

 

$

 

 

$

290,896

 

 

$

(144,919

)

 

$

146

 

 

$

(114,984

)

 

$

543,127

 

 

$

574,517

 

Adoption of Accounting Standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(938

)

 

 

 

 

 

 

 

 

 

 

 

(938

)

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,860

 

 

 

 

 

 

 

 

 

13,149

 

 

 

32,009

 

Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,480

)

 

 

 

 

 

(1,302

)

 

 

(2,782

)

Dividends Declared ($0.05 Per Share of Class A

   Common Stock)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,217

)

 

 

 

 

 

 

 

 

 

 

 

(1,217

)

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,043

 

 

 

 

 

 

 

 

 

 

 

 

2,289

 

 

 

37,332

 

Forfeiture Liability for Equity Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,124

)

Deliveries of Vested Shares of

   Class A Common Stock

 

 

1,537,271

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Ownership Interest

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

36,131

 

 

 

 

 

 

 

 

 

 

 

 

(47,422

)

 

 

(11,291

)

Treasury Stock Purchases

 

 

 

 

 

 

 

 

(539,297

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,194

)

 

 

 

 

 

(25,194

)

Balance at March 31, 2020

 

 

27,158,722

 

 

 

210

 

 

 

(3,083,954

)

 

$

266

 

 

$

 

 

$

349,932

 

 

$

(128,214

)

 

$

(1,334

)

 

$

(140,178

)

 

$

509,841

 

 

$

590,313

 

See notes to condensed consolidated financial statements.

 

7


 

PJT Partners Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in Thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating Activities