PJT Partners Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Devin Ryan - Citizens JMP - Analyst : I want to start with a question that touches on both the environment and productivity. And I appreciate that partner productivity is just an output, but $13 million per year-end banking partner in 2024 was a new record, just above 2020. Restructuring bankers roughly 15% of the partners were obviously well above average, maybe pushing 2 times the productivity is kind of our estimate. So maybe a little bit of upside there, but they're doing great and pulling (inaudible) average up. And then Strategic Advisory had a record year, as you mentioned, but seemingly still has a lot of upside to just productivity and the environment improves. And so just thinking about the broader backdrop for productivity, how would you frame where each business is today relative to its potential, just given that you have brought in so many bankers and then you have the environment, particularly in areas like M&A and for Park Hill recovering from tough levels.

Question: Devin Ryan - Citizens JMP - Analyst : Okay. I appreciate that. And then as a follow-up, I'll maybe try for one on the comp ratio. And I also appreciate there's a lot of variables that will go into that as we think about in that analysis. But can you give us a sense of whether you were able to bring down deferrals after a really good record 2024, if there's anything else that would help structurally. And then just more broadly, how we should think about the relationship of revenue growth versus comp expense growth as we look into the next year?

Question: James Yaro - Goldman Sachs - Analyst : Paul, I'd just like to touch on the economic growth dichotomy between the US and Europe and the ramifications of that for M&A. So GDP seems to be falling slightly in Europe versus growing fairly well in the US, and rates are falling as a result faster in Europe, but less so in the US laying out these impacts, maybe you could just compare address the health of the M&A backdrop and for each jurisdiction.

Question: James Yaro - Goldman Sachs - Analyst : Maybe just one more on advisory here. Obviously, very strong results in the quarter you talked about stronger strategic advisory being the driver there. But any additional color you could just give on the drivers of the strength? I am estimating the highest multiplier on (inaudible) revenues this quarter since 2019. And then separately, on secondaries, I think I've seen some industry estimates that secondary volume is up 40% in '24, but flowing to a central case of only 15% growth in 2025. Maybe you could just comment on the secondary's contribution in this quarter, but then on your expectations for whether the growth rate could slow in secondaries in 2025.

Question: Brennan Hawken - UBS - Analyst : Good morning. This is Brennan Hawken. You had a record year in restructuring. And I was hoping you can help us understand how much that was up versus 2023. And do you still believe revenue growth in 2025 in restructuring is feasible?

Question: Brennan Hawken - UBS - Analyst : Great. And then just for my follow-up, we've seen mixed performance in IPOs recently. What's your sense of how sponsors are reacting to the volatility and what do you expect to be the implication of sponsors don't have that option for monetization?

Question: Brendan O'Brien - Wolfe Research - Analyst : To start on your advisory business, you had previously spoken about your expectation that 2024 would be more of a transition year for activity with a more significant acceleration in 2025. And while you're certainly correct on '24, quarter-to-date announced M&A volumes are tracking down about 10% year-on-year. So I just want to get a sense as to what is driving the disconnect between some of the optimistic outlook commentary from you as well as many of your peers and the trends that we're actually seeing in announcements quarter-to-date and when we could actually begin to see activity for the broader industry to begin to accelerate more meaningfully?

Question: Brendan O'Brien - Wolfe Research - Analyst : That's helpful. And for my follow-up, also, I guess, on the Strategic Advisory business, Paul, when you entered last year with what you I believe (inaudible) as an abnormally depressed backlog, but you were able to deliver a record result in Strategic Advisory which would imply that you've seen a pretty significant improvement in the velocity or the turnover of that backlog. So it would be great to get a sense as to where we are today REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 1:30PM, PJT.N - Q4 2024 PJT Partners Inc Earnings Call in terms of time to close transactions relative to what you would categorize as a more normal level? And given many of your peers have continue to cite this elongation of deal time lines. Why would you be seeing a more significant improvement here relative to your peers? I mean I can't really comment on anyone other than ourselves. We came in the last year with a historically low level of announced pending close, but I also said that we had a very robust pre-announced pipeline. And I think what ended up happening was we had a lot of transactions that had yet to be announced that were announced relatively early in the year and completed during the year. And we had a very broad base of assignments. And there weren't that many very large deals that closed in the year for us. I think we have a much bigger backlog of large transactions that we expect to close in. So that's kind of our story. And you are correct that as the year when we became more optimistic about '24, we've always been optimistic about '25 and beyond, that continues. But I think we had an added bonus that we were able to deliver record results in 2024.

Question: Aidan Hall - Keefe, Bruyette & Woods, Inc. - Analyst : Maybe just a follow up on Brendan's question, but more on the kind of backlog of activity for restructuring. It sounds like the pipeline for advisory is considerably higher Park Hill and kind of both lines of business there continues to see strong momentum. But curious how you would characterize like the restructuring backlog relative to maybe this time last year? So like flat or slightly lower? Anything to kind of help contextualize that would be appreciated.

Question: Aidan Hall - Keefe, Bruyette & Woods, Inc. - Analyst : Got it. Okay. I appreciate that color. Maybe just as my follow-up on the talent and the outlook for 2025. I appreciate you guys have a lot of white space in advisory, but any main areas of focus you're trying to really focus on right now or teams that you think you're on the cusp of being a critical mass that you may need a couple more bankers in. And then just as a base case, any way to be thinking about hiring expectations in '25?