PJT Partners Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Paul began by mourning the loss of life in Midtown Manhattan and then discussed earnings results: Q2 revenues $407M (+13%), adjusted pretax income $80M (+22%), adjusted EPS $1.54 (+29%); H1 revenues +6%, adjusted pretax income +13%, adjusted EPS +19%.
• Market backdrop improved with equity valuations up, volatility down, and capital more available.
• Helen discussed financial results: adjusted comp expense ratio 67.5% for H1 2025, adjusted noncomp expense up, adjusted pretax margin improved, share repurchases, balance sheet strength, and approved quarterly dividend of $0.25 per share.
• Paul detailed segment performance: restructuring's market leadership, PJT Park Hill's fundraising challenges and H2 outlook, Strategic Advisory's record performance and pipeline with 4 new partners joining.

Segment Performance:

• Strategic Advisory: Delivered record performance in Q2 and first half, driven by increased transaction closings and fee realizations. Year-to-date M&A activity mixed, but preannounced strategic advisory pipeline is at record levels.
• Restructuring: Experiencing elevated liability management activity, ranked #1 in U.S. and global restructurings for H1 2025, with H1 revenues bettering last year's record. Full-year results expected to at least match last year's record levels.
• PJT Park Hill: Primary fundraising environment challenged due to low capital return and increased first-time fund launches, resulting in lower revenues in Q2 and H1. However, expects stronger performance in H2 due to strong pipeline in primary and private capital solutions.

Guidance:

• Strategic advisory expected to be up strongly from 2024's record levels.
• Restructuring and PJT Park Hill expected to deliver results in line with last year's record levels.
• Continuation funds are here to stay with room to grow, substituting for some regular way IPOs.

Risks:

• Forward-looking statements subject to various risks and uncertainties where actual outcomes could differ materially from statements. Factors described in PJT Partners' 2024 Form 10-K.

Question and Answer: Q: James Yaro asked about sponsor M&A and when sponsor sell sides might start to come back.

A: Paul said sponsor activity is increasing with IPO market more receptive, credit markets more accommodative, and strategic interest returning, though still slow to normalize.

Q: Jim Mitchell asked about leveraging Park Hill franchise for middle market deals.

A: Paul said they're in early days but having holistic conversations with fund managers, still early to fully mine the opportunity.

Q: Brendan O'Brien asked about regulatory front and M&A trajectory.

A: Paul said better than prior administration, but still complicated in some industries, with M&A recovery gradual but improving.

Q: Alex Bond asked about Park Hill fundraising and scaling.

A: Paul said fundraising has lumpiness, more in back half, secondary business better due to supply-demand match, and flight to quality benefits PJT Park Hill.

Q: Devin Ryan asked about network effects and investments.

A: Paul said network effects seen daily, still early days, with opportunities in Japan, Europe, Gulf, etc., and optimism for scaling restructuring outside U.S.