PJT Partners Inc.

Good day and welcome to the PJT Partners second quarter 2021 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead, ma'am.

Thanks very much, Catherine. Good morning and welcome to the PJT Partners second quarter 2021 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 Mates, 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 2020 Form 10-K, which is available on our website at pjtpartners.com. And I want to remind you that the company assumes no duty to update any forward-looking statements. Also, the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance. for detailed disclosures on these non-GAAP metrics and their GAAP reconciliations. You should also refer to the financial data contained within the press release we issued this morning, which is also available on our website. And with that, I'll turn the call over to Paul.

Thank you, Sharon. Good morning, everyone, and thank you for joining us today. Today's economic environment has turned 180 degrees from that of a year ago. This time last year, most M&A activity was put on hold and advisory work centered around securing rescue capital and providing liability management and restructuring advice to companies severely impacted by the pandemic. Since then, the combination of extraordinary fiscal and monetary stimulus, vaccine rollouts and reopenings, coupled with highly receptive capital markets, have helped propel an extraordinary global economic recovery. This has provided a dramatic catalyst to strategic activity while also tamping down restructuring activity. Not surprisingly, the financial performance of our businesses mirrors that turn. As this robust recovery takes hold, our businesses away from restructuring have benefited. We are seeing significantly elevated levels of activity across our strategic advisory, capital advisory, shareholder advisory, and fund placement businesses. The gap created by the abrupt decline in restructuring activity is being filled by strong performance in our strategic advisory, PJT Park Hill, and PJT Camberview businesses. Against this macroeconomic backdrop, we are pleased to report record second quarter results as measured by revenues, adjusted pre-tax income, and adjusted earnings per share. Our year-to-date results are also at record levels. Now, turning to each of our businesses in more detail. Beginning with restructuring. We continue to believe that the fallout from COVID-19 will trigger an extended period of elevated restructuring activity. The pandemic has inflicted damage on many companies with business models disrupted and dislocated by changes in consumer behavior, as well as accelerated technological innovation. Nearly one and a half years after the onset of this global health crisis, we continue to believe this longer-term restructuring outlook remains intact. This year, however, we are seeing less restructuring activity than we had previously anticipated. While we remain a market leader in restructurings globally, given today's extraordinarily benign credit conditions, our 2021 restructuring results are now unlikely to be much above 2019 levels. Notwithstanding these near-term headwinds, our restructuring business was up sequentially in the second quarter. Additionally, our restructuring business is poised for meaningfully stronger results in the second half of this year compared to the first half of the year, with most of that increase appearing in Q4. Turning to PJT Park Hill. Many of the current economic conditions presenting challenges for restructuring are providing opportunities for PJT Park Hill. Strong demand for risk assets has stimulated fundraising activity in alternatives. This heightened demand coupled with a roster of best-in-class fund managers has been an important catalyst in PJT Park Hill's significant year-over-year revenue growth. PJT Park Hill's six-month performance stands at record levels, and the business is well on track to deliver record results for full year 2021. Turning to strategic advisory. In strategic advisory, we had our second best quarter ever, just slightly below Q2 2020's record results and up dramatically from Q2 2019. The momentum in our strategic advisory business continues to build as our mandate count has grown meaningfully from a quarter ago and stands at record levels. Accordingly, we expect our strategic advisory results to increase significantly in the second half of the year with most of that increase coming in the fourth quarter. For full year 2021, we expect our strategic advisory results to be up significantly as well. Reviewing our capital priorities. Our approach to capital investment and capital return remains unchanged. The greatest return on investment continues to come from the people we attract to our platform. We continue to methodically add best in class talent as we build out our world class strategic advisory franchise. To that end, we have grown the number of professionals in strategic advisory by nearly 20% in the past year. Much of that additional investment has been directed towards capital markets advisory sponsor coverage, and ESG, as well as further deepening a number of existing industry verticals. We are also continuing to invest in our other businesses as we position ourselves for continued growth and market share expansion. PJT remains the destination for best-in-class talent at all levels. As our summer programs draw to a close, I wanted to highlight the extraordinary success of our campus recruiting efforts. This year we received more than 8,500 applications for just 81 summer positions. Our summer class of analysts and associates were able to join us in person and will be engaging in two weeks of community service after concluding the in-office program. We have received extremely positive feedback from our interns, and it is clear that our unique culture of collaboration, integrity, and excellence is broadly recognized. Our second highest capital priority continues to be our efforts to offset the sheer issuance from this substantial and sustained human capital investment. Even after our significant recruitment of talented individuals at all levels, our fully diluted share count today is essentially unchanged from where it was at the end of 2016, excluding the vesting of earn-out units. In the first six months of this year, we repurchased a record 2.3 million share equivalents. Our full year 2021 share repurchases, whether measured in dollars or shares, are tracking at record levels. At current share prices, we continue to see compelling value in our shares. Our success these past six years has resulted in a significantly larger and more profitable firm. As a result, we are now able to return additional capital to shareholders as well as continuing to aggressively invest in our business and continuing to offset the growth in share count. As it pertains to additional capital returns, Helen will discuss in greater detail the board's decision to approve a special dividend of $3 per share. Now over to Helen.