PJT Partners Inc.

Good day and welcome to the PJT Partners Q1 2020 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead.

Thanks very much, Sandra. Good morning and welcome to the PJT Partners first quarter 2020 earnings conference call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners. And joining me today is Paul Taubman, our Chairman and Chief Executive Officer, and Helen Meates, our Chief Financial Officer. Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. We believe that these factors are described in the risk factors section contained in PJT Partners 2019 Form 10-K, which is available on our website at pjtpartners.com. I want to remind you that the company assumes no duty to update any forward-looking statements, and also the presentation we make today contains non-GAAP financial measures which we believe are meaningful in evaluation. This Morning, also available on our website. And with that, I'll turn the call over to Paul.

Good morning, and thank you all for joining us today. We hope all of you who are listening in are doing well under the circumstances. As you all can imagine, we're conducting this call remotely. Sharon, Helen, and I are all calling in from different locations. So please forgive us in advance if we experience any technical glitches. It is nearly impossible to convey the extent to which the world has changed since our last earnings report in early February. The enormity of this health crisis and the severity of its economic impact continues to unfold in real time. The loss of life and livelihood is hard to fathom and yet in this darkness, we have seen extraordinary heroism from healthcare professionals as well as an untold number of essential workers across industries. On behalf of our entire firm, I would like to express our collective gratitude to all those who are serving on the front lines. And in our own small way, we have tried to do our part. At the outset, we identified those non-employee support staff who would be most economically impacted by the closing of our offices and work to make sure that they continue to receive paychecks. We donated all of the N95 masks we had to local hospitals. We had previously procured these masks as part of our business continuity plan. We are donating more than $2 million from the firm and its partners to COVID-related causes with $1 million of that amount coming from the firm. and consistent with our firm's civic focus, we have restructured our summer internship programs to ensure that our interns devote meaningful time to community service. Since this crisis began, our firm has remained fully operational and client-centric with almost all of our employees working remotely. Our firm's insights, expertise and collaborative approach to problem solving have never been more differentiated or more highly valued by clients as managements and boards seek advice on how to best prepare for an uncertain future. From the outset, we have been focused on a variety of employee initiatives to support our colleagues' health, well-being, and safety. We have stepped up an already high level of communication and engagement in order to maintain our differentiated culture Even in the absence of physical presence. Our ongoing commitment to partnership and teamwork has been an essential element in enabling our firm to navigate these challenging times. Turning to our financial results. These first quarter results reflect our significant momentum heading into 2020. Revenues grew 56%. Adjusted pre-tax income grew 160%. and adjusted earnings per share grew 154% compared to a year ago. Turning to each of our businesses in a bit more detail. In restructuring, our restructuring revenues rose significantly in the first quarter versus a year ago and more modestly on a sequential basis. Since the onset of the economic shutdown resulting from the pandemic, We've experienced a dramatic increase in restructuring activity. This significant uplift in activity has continued into the second quarter. And while our first quarter restructuring results do not reflect this increased level of activity, we do, however, expect our financial results to reflect this elevated activity over time. In this volatile environment, the level of cross-divisional collaboration has never been greater. Clients are turning to us for advice on a wide array of liability management and liquidity issues arising from the crisis. Combining the expertise of our restructuring team with the capabilities of our capital markets advisors as well as the industry expertise and relationships of our advisory bankers is a difference maker for clients. I have often spoken about the benefits of having three highly synergistic and complementary Thank you for joining us today. and we announced a number of significant transactions in the first quarter prior to the market dislocations. While there has been a dearth of announced transactions post-COVID, our client dialogues have expanded in both depth and breadth and are increasingly focused on capital structure and liquidity, opportunistic M&A, sponsor related activity, shareholder engagement and shareholder activism. As a result, our number of active client mandates has increased significantly. We have always believed that in difficult times such as these, the ability to deliver extraordinarily high-quality advice from an integrated team of experienced bankers would increasingly serve as a point of differentiation for our firm. In today's environment, more and more clients are gravitating towards us, and our traction with key decision makers around the globe has never been greater. In the first quarter, we added three partners, bringing the total number of strategic advisory partners to 49. And consistent with prior updates, we continue to be in active discussions with a broad group of highly talented senior bankers to join our platform. While our desire to expand our strategic advisory franchise with the highest quality individuals remains undiminished. It will be incrementally more challenging to successfully recruit and onboard individuals as long as we are in an entirely remote work environment. We expect the pace of recruiting to slow but not to stop until things return closer to normal. Turning to PJT Park Hill. In PJT Park Hill, revenues increased modestly in the quarter versus year ago levels. Looking forward, we expect many fundraisings to be delayed as a result of these market dislocations. Until there is greater market stability, including increased clarity as to recalibrated asset values, we do not expect the fundraising cycle to return to more normalized levels. In light of the significant delays in completing many of these fundraisings, we expect PJT Park Hill's revenues to be down significantly in 2020. Reviewing our capital priorities on our 2020 outlook. Before I turn it over to Helen, I wanted to review all of this. We have the benefit of a balanced group of very attractive leading businesses that are all highly cash generative. We have always been conservatively capitalized and we ended the period debt-free and with our largest first quarter cash balance since inception. We expect these cash balances to grow throughout the year and we expect to end 2020 in our strongest financial position ever. In light of the uncertain economic backdrop and the significant share repurchases we affected in the first quarter, We are unlikely to be very active with our repurchase program for the balance of the year. Turning to our 2020 outlook, we have always said that we are built to grow in most any market environment. Four months into 2020 and we are not operating in most any environment. Rather, we are operating in unprecedented times. Notwithstanding this extraordinary backdrop, and the abrupt changes in market conditions since we last reported, we continue to expect our revenues to increase in 2020. However, any sense of specificity beyond that is no longer appropriate given the historic uncertainties we are all facing. And with that, I will now turn it over to Helen to review our financial results.