pjt-ex991

New York, February 7, 2019: PJT Partners Inc. (the “Company” or “PJT Partners”) (NYSE: PJT) today reported Total Revenues of $580.2 million for the year ended December 31, 2018 compared with $499.3 million for 2017. GAAP Pretax Income and Adjusted Pretax Income were $41.5 million and $99.2 million, respectively, for 2018 compared with GAAP Pretax Income of $10.1 million and Adjusted Pretax Income of $86.8 million, respectively, for 2017.

Total Revenues for fourth quarter 2018 were $175.4 million compared with $190.6 million for 2017. GAAP Pretax Income and Adjusted Pretax Income were $16.7 million and $32.9 million, respectively, for the current quarter compared with GAAP Pretax Income of $25.7 million and Adjusted Pretax Income of $43.8 million, respectively, for the prior year quarter.

The following table sets forth revenues for the three months and full year ended December 31, 2018 and 2017:

	Three Months Ended December 31,							Year Ended December 31,
	2018		2017		% Change			2018		2017		% Change
	(Dollars in Millions)
Revenues
Advisory	$	132.6	$	153.1		(13	%)	$	451.6	$	386.3		17	%
Placement		38.6		33.9		14	%		111.0		102.8		8	%
Interest Income & Other		4.2		3.6		18	%		17.7		10.2		73	%
Total Revenues	$	175.4	$	190.6		(8	%)	$	580.2	$	499.3		16	%

Total Revenues were $580.2 million for 2018 compared with $499.3 million for 2017, an increase of 16%.

Advisory Revenues were $451.6 million for 2018 compared with $386.3 million for 2017, an increase of 17%. The increase in Advisory Revenues primarily resulted from increases in our strategic advisory and secondary advisory businesses.

Placement Revenues were $111.0 million for 2018 compared with $102.8 million for 2017, an increase of 8%. The increase was primarily driven by increased revenues from our real estate vertical.

Interest Income & Other was $17.7 million for 2018 compared with $10.2 million for 2017 and includes $8.2 million of reimbursable expenses that are now presented on a gross basis due to adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“new revenue guidance”).

Total Revenues were $175.4 million for fourth quarter 2018, down from $190.6 million for the prior year quarter.

Advisory Revenues were $132.6 million for the current quarter compared with $153.1 million for the prior year quarter, a decrease of 13%. The decrease was primarily due to a decline in restructuring activity, partially offset by an increase in strategic advisory.

Placement Revenues were $38.6 million for the current quarter compared with $33.9 million for the prior year quarter, an increase of 14%. The increase was primarily driven by increases in revenues from our real estate and private equity verticals during the quarter.

Interest Income & Other was $4.2 million for the current quarter compared with $3.6 million for the prior year quarter and includes $1.6 million of reimbursable expenses that are now presented on a gross basis due to adoption of the new revenue guidance.

The following tables set forth information relating to the Company’s expenses for the three months and year ended December 31, 2018 and 2017:

	Year Ended December 31,
	2018						2017
	GAAP			As Adjusted			GAAP			As Adjusted
	(Dollars in Millions)
Expenses
Compensation and Benefits	$	424.5		$	371.9		$	391.5		$	320.2
% of Revenues		73.2	%		64.1	%		78.4	%		64.1	%
Non-Compensation	$	114.3		$	109.1		$	97.7		$	92.3
% of Revenues		19.7	%		18.8	%		19.6	%		18.5	%
Total Expenses	$	538.7		$	481.0		$	489.2		$	412.5
% of Revenues		92.8	%		82.9	%		98.0	%		82.6	%
Pretax Income	$	41.5		$	99.2		$	10.1		$	86.8
% of Revenues		7.2	%		17.1	%		2.0	%		17.4	%

	Three Months Ended December 31,
	2018						2017
	GAAP			As Adjusted			GAAP			As Adjusted
	(Dollars in Millions)
Expenses
Compensation and Benefits	$	126.7		$	112.8		$	140.3		$	122.6
% of Revenues		72.2	%		64.3	%		73.6	%		64.3	%
Non-Compensation	$	32.0		$	29.7		$	24.6		$	24.1
% of Revenues		18.3	%		16.9	%		12.9	%		12.7	%
Total Expenses	$	158.7		$	142.5		$	164.9		$	146.7
% of Revenues		90.5	%		81.2	%		86.5	%		77.0	%
Pretax Income	$	16.7		$	32.9		$	25.7		$	43.8
% of Revenues		9.5	%		18.8	%		13.5	%		23.0	%

GAAP Compensation and Benefits Expense was $424.5 million for 2018 compared with $391.5 million for 2017. Adjusted Compensation and Benefits Expense was $371.9 million for 2018 compared with $320.2 million for 2017. The increase in Compensation and Benefits Expense was primarily due to higher revenues and increased headcount.

GAAP Compensation and Benefits Expense was $126.7 million for fourth quarter 2018 compared with $140.3 million for the prior year quarter. Adjusted Compensation and Benefits Expense was $112.8 million for the current quarter compared with $122.6 million for the prior year quarter. The decrease in Compensation and Benefits Expense was primarily due to lower revenues during the current quarter.

GAAP Non-Compensation Expense was $114.3 million for 2018 compared with $97.7 million for 2017. Adjusted Non-Compensation Expense was $109.1 million for 2018 compared with $92.3 million for 2017.

GAAP Non-Compensation Expense increased during 2018 compared with 2017, and includes $10.4 million of expenses reimbursable by clients that prior to adoption of the new revenue guidance were reported on a net basis.

The increase in Travel and Related was primarily related to adoption of the new revenue guidance, as well as increased business activity. The increase in Communications and Information Services was primarily driven by investments in our technology and data management infrastructure during the first half of the year. Depreciation and Amortization increased primarily due to additional amortization expense related to intangible assets recorded in the acquisition of CamberView during the fourth quarter. Other Expenses increased primarily as a result of increased headcount and business activity, as well as expense recorded during the fourth quarter related to the impairment of certain former CamberView leased space. Professional Fees included $1.5 million of expense related to the acquisition of CamberView.

Adjusted Non-Compensation Expense increased during 2018 compared with 2017, primarily due to increases in Travel and Related, Communications and Information Services and Professional Fees for the same reasons noted above, and an increase in Other Expenses primarily as a result of increased headcount and business activity.

GAAP Non-Compensation Expense was $32.0 million for fourth quarter 2018 compared with $24.6 million for the prior year quarter. Adjusted Non-Compensation Expense was $29.7 million for the current quarter compared with $24.1 million for the prior year quarter.

GAAP Non-Compensation Expense increased during the current quarter compared with the prior year quarter, and includes $3.2 million of expenses reimbursable by clients that prior to adoption of the new revenue guidance were reported on a net basis.

The increase in Travel and Related was primarily related to adoption of the new revenue guidance. Other Expenses increased primarily as a result of increased headcount and business activity as well as expense recorded during the current quarter related to the impairment of certain former CamberView leased space. Depreciation and Amortization increased primarily as a result of additional amortization expense related to intangible assets recorded in the acquisition of CamberView during the fourth quarter.

Adjusted Non-Compensation Expense increased during the current quarter compared with the prior year quarter, primarily due to an increase in Travel and Related and Professional Fees for the same reasons noted above, and an increase in Other Expenses primarily as a result of increased headcount and business activity.

As of December 31, 2018, PJT Partners Inc. owned 58.5% of PJT Partners Holdings LP. PJT Partners Inc. is subject to corporate U.S. federal and state income tax while PJT Partners Holdings LP is subject to New York City unincorporated business tax and other entity-level taxes imposed by certain state and foreign jurisdictions. Please refer to Note 11. “Stockholders’ Equity (Deficit)” in the “Notes to Consolidated and Combined Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for further information about the corporate ownership structure.

In calculating Adjusted Net Income, If-Converted, the Company has assumed that all outstanding Class A partnership units in PJT Partners Holdings LP (“Partnership Units”) (excluding the unvested partnership units that have yet to satisfy certain market conditions) have been exchanged into shares of the Company’s Class A common stock, subjecting all of the Company’s income to corporate-level tax.

The effective tax rate for Adjusted Net Income, If-Converted for the year ended December 31, 2018 was 22.9% compared with 32.3% for the same period a year ago. This tax rate excludes the tax benefits of the adjustments for transaction-related compensation expense, amortization expense and spin-off-related payable due to The Blackstone Group L.P. (“Blackstone”). The decrease in tax rate from the year ended December 31, 2017 is primarily due to the decrease in U.S. corporate income tax rate related to the passage of the Tax Cuts and Jobs Act¹ as well as an increased tax benefit related to the deliveries of vested shares during 2018 at values in excess of their amortized cost.

The increase in the effective tax rate for Adjusted Net Income, If-Converted for the year ended December 31, 2018 from the year-to-date amount as of September 30, 2018 primarily relates to an increase in the business apportionment of client engagements performed in jurisdictions with higher statutory tax rates.

As of December 31, 2018, the Company held cash, cash equivalents and short-term investments of $108.3 million. Additionally, the Company held a debt balance of $30 million, which was entered into in connection with the acquisition of CamberView.

Partnership Units may be presented to the Company for exchange on a quarterly basis and repurchased for cash or, at the Company’s election, for shares of the Company’s Class A common stock on a one-for-one basis. During fourth quarter 2018, the Company repurchased 492,986 Partnership Units for cash. An additional 216,330 Partnership Units have been presented to be exchanged, which the Company intends to repurchase for cash on February 14, 2019 at a price to be determined by the per share volume-weighted average price of the Company’s Class A common stock on February 11, 2019.

On October 26, 2017, the Company’s Board of Directors authorized the repurchase of shares of the Company’s Class A common stock in an amount up to $100 million. Under this repurchase program, shares of the Company’s Class A common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. During fourth quarter 2018, the Company repurchased 627,764 shares of Class A common stock pursuant to this share repurchase program.

Additionally, during fourth quarter 2018, the Company net share settled 16,923 shares to satisfy employee tax obligations.

In aggregate during fourth quarter 2018, the Company repurchased an equivalent of 1.1 million shares at an average price of $46.62 per share. For the year ended December 31, 2018, the total share equivalent repurchases were 3.2 million shares at an average price of $49.40 per share.

The Board of Directors of PJT Partners Inc. has declared a quarterly dividend of $0.05 per share of Class A common stock. The dividend will be paid on March 26, 2019 to Class A common stockholders of record on March 6, 2019.

PJT Partners will host a conference call on February 7, 2019 at 8:30 a.m. ET to discuss its full year and fourth quarter 2018 results. The conference call can be accessed via the internet on www.pjtpartners.com or by dialing +1 (888) 339-2688 (U.S. domestic) or +1 (617) 847-3007 (international), passcode 873 623 65#. For those unable to listen to the live broadcast, a replay will be available following the call at www.pjtpartners.com or by dialing +1 (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international), passcode 213 823 13#.

PJT Partners is a global advisory-focused investment bank. Our team of senior professionals delivers a wide array of strategic advisory, shareholder engagement, restructuring and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors and governments around the world. We offer a unique portfolio of advisory services designed to help our clients achieve their strategic objectives. We also provide, through Park Hill, private fund advisory and placement services for alternative investment managers, including private equity funds, real estate funds and hedge funds. To learn more about PJT Partners, please visit the Company’s website at www.pjtpartners.com.

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. 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,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in such forward-looking statements. You should not put undue reliance on any forward-looking statements contained herein. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

The risk factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2017, 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.

The following represent key performance measures that management uses in making resource allocation and/or compensation decisions. These measures should not be considered substitutes for, or superior to, financial measures prepared in accordance with GAAP.

Management believes the following non-GAAP measures, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results: Adjusted Pretax Income; Adjusted Net Income; Adjusted Net Income, If-Converted, in total and on a per-share basis; Adjusted Earnings Per Share; Adjusted Compensation and Benefits Expense and Adjusted Non-Compensation Expense. These non-GAAP measures, presented and discussed in this earnings release, remove the significant accounting impact of: (a) transaction-related compensation expense, including expense related to Partnership Units with both time-based vesting and market conditions as well as equity-based and cash awards granted in connection with the spin-off from Blackstone and acquisition of CamberView; (b) intangible asset amortization associated with Blackstone’s initial public offering (“IPO”), acquisition of PJT Capital LP, and acquisition of CamberView; (c) impairment of former CamberView leased space; and (d) the amount the Company has agreed to pay Blackstone related to the net realized cash benefit from certain compensation-related tax deductions. Reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and further detail regarding the adjustments are provided in the Appendix.

To help investors understand the effect of the Company’s ownership structure on its Adjusted Net Income, the Company has presented Adjusted Net Income, If-Converted. This measure illustrates the impact of taxes on Adjusted Pretax Income, assuming all Partnership Units (excluding the unvested partnership units that have yet to satisfy certain market conditions) were exchanged for shares of the Company’s Class A common stock, resulting in all of the Company’s income becoming subject to corporate-level tax, considering both current and deferred income tax effects.

	Three Months Ended December 31,					Year Ended December 31,
	2018		2017			2018			2017
Revenues
Advisory	$	132,635	$	153,118		$	451,553		$	386,263
Placement		38,554		33,873			111,035			102,785
Interest Income and Other		4,204		3,562			17,660			10,234
Total Revenues		175,393		190,553			580,248			499,282
Expenses
Compensation and Benefits		126,679		140,256			424,459			391,514
Occupancy and Related		7,108		7,278			27,125			26,889
Travel and Related		6,468		4,292			23,374			13,617
Professional Fees		5,341		3,910			20,631			19,276
Communications and Information Services		3,018		2,947			12,539			10,770
Depreciation and Amortization		3,611		1,991			9,973			8,143
Other Expenses		6,494		4,216			20,634			19,019
Total Expenses		158,719		164,890			538,735			489,228
Income Before Provision (Benefit) for Taxes		16,674		25,663			41,513			10,054
Provision (Benefit) for Taxes		4,144		54,027			(1,045	)		38,380
Net Income (Loss)		12,530		(28,364	)		42,558			(28,326	)
Net Income Attributable to Non-Controlling Interests		5,091		9,081			15,388			4,228
Net Income (Loss) Attributable to PJT Partners Inc.	$	7,439	$	(37,445	)	$	27,170		$	(32,554	)
Net Income (Loss) Per Share of Class A Common Stock
Basic	$	0.32	$	(1.98	)	$	1.23		$	(1.73	)
Diluted	$	0.22	$	(1.98	)	$	1.16		$	(1.73	)
Weighted-Average Shares of Class A Common Stock Outstanding
Basic		23,226,095		18,899,800			21,879,574			18,858,010
Diluted		39,883,039		18,899,800			24,254,061			18,858,010

	Three Months Ended December 31,						Year Ended December 31,
	2018			2017			2018			2017
GAAP Net Income (Loss)	$	12,530		$	(28,364	)	$	42,558		$	(28,326	)
Less: GAAP Provision (Benefit) for Taxes		4,144			54,027			(1,045	)		38,380
GAAP Pretax Income		16,674			25,663			41,513			10,054

Adjustments to GAAP Pretax Income
Transaction-Related Compensation Expense⁽²⁾		13,893			17,681			52,566			71,343
Amortization of Intangible Assets⁽³⁾		1,984			584			3,735			2,418
Spin-Off-Related Payable Due to Blackstone⁽⁴⁾		70			(79	)		1,145			2,995
Impairment⁽⁵⁾		266			—			266			—
Adjusted Pretax Income		32,887			43,849			99,225			86,810
Adjusted Taxes⁽⁶⁾		7,762			38,446			16,513			45,476
Adjusted Net Income		25,125			5,403			82,712			41,334

If-Converted Adjustments
Less: Adjusted Taxes⁽⁶⁾		(7,762	)		(38,446	)		(16,513	)		(45,476	)
Add: If-Converted Taxes⁽⁷⁾		8,005			13,592			22,718			28,073
Adjusted Net Income, If-Converted	$	24,882		$	30,257		$	76,507		$	58,737

GAAP Net Income (Loss) Per Share of Class A Common Stock
Basic	$	0.32		$	(1.98	)	$	1.23		$	(1.73	)
Diluted	$	0.22		$	(1.98	)	$	1.16		$	(1.73	)
GAAP Weighted-Average Shares of Class A Common Stock Outstanding
Basic		23,226,095			18,899,800			21,879,574			18,858,010
Diluted		39,883,039			18,899,800			24,254,061			18,858,010

Adjusted Net Income, If-Converted Per Share	$	0.60		$	0.79		$	1.91		$	1.54
Weighted-Average Shares Outstanding, If-Converted		41,278,100			38,227,666			40,067,556			38,048,652

	Three Months Ended December 31,						Year Ended December 31,
	2018			2017			2018			2017
GAAP Compensation and Benefits Expense	$	126,679		$	140,256		$	424,459		$	391,514
Transaction-Related Compensation Expense⁽²⁾		(13,893	)		(17,681	)		(52,566	)		(71,343	)
Adjusted Compensation and Benefits Expense	$	112,786		$	122,575		$	371,893		$	320,171

Non-Compensation Expenses
Occupancy and Related	$	7,108		$	7,278		$	27,125		$	26,889
Travel and Related		6,468			4,292			23,374			13,617
Professional Fees		5,341			3,910			20,631			19,276
Communications and Information Services		3,018			2,947			12,539			10,770
Depreciation and Amortization		3,611			1,991			9,973			8,143
Other Expenses		6,494			4,216			20,634			19,019
GAAP Non-Compensation Expense		32,040			24,634			114,276			97,714
Amortization of Intangible Assets⁽³⁾		(1,984	)		(584	)		(3,735	)		(2,418	)
Spin-Off-Related Payable Due to Blackstone⁽⁴⁾		(70	)		79			(1,145	)		(2,995	)
Impairment⁽⁵⁾		(266	)		—			(266	)		—
Adjusted Non-Compensation Expense	$	29,720		$	24,129		$	109,130		$	92,301

The following table provides a summary of adjustments made to Interest Income & Other and Non-Compensation Expense as it pertains to the presentation of reimbursable expenses upon adoption of the new revenue guidance:

	Three Months Ended December 31, 2018									Year Ended December 31, 2018
	As Reported			Adjustments			Without Adoption of Revenue Standard			As Reported			Adjustments			Without Adoption of Revenue Standard
Interest Income & Other	$	4,204		$	(1,577	)	$	2,627		$	17,660		$	(8,235	)	$	9,425
Non-Compensation Expenses
Occupancy and Related	$	7,108		$	(45	)	$	7,063		$	27,125		$	(174	)	$	26,951
Travel and Related		6,468			(2,458	)		4,010			23,374			(8,119	)		15,255
Professional Fees		5,341			(532	)		4,809			20,631			(1,498	)		19,133
Communications and Information Services		3,018			(88	)		2,930			12,539			(385	)		12,154
Depreciation and Amortization		3,611			—			3,611			9,973			—			9,973
Other Expenses		6,494			(89	)		6,405			20,634			(232	)		20,402
GAAP Non-Compensation Expense		32,040			(3,212	)		28,828			114,276			(10,408	)		103,868
Amortization of Intangible Assets⁽³⁾		(1,984	)		—			(1,984	)		(3,735	)		—			(3,735	)
Spin-Off-Related Payable Due to Blackstone⁽⁴⁾		(70	)		—			(70	)		(1,145	)		—			(1,145	)
Impairment⁽⁵⁾		(266	)		—			(266	)		(266	)		—			(266	)
Adjusted Non-Compensation Expense	$	29,720		$	(3,212	)	$	26,508		$	109,130		$	(10,408	)	$	98,722

The following table provides a summary of weighted-average shares outstanding for the three months and year ended December 31, 2018 and 2017 for both basic and diluted shares. The table also provides a reconciliation to If-Converted Shares Outstanding assuming that all Partnership Units and unvested PJT Partners Inc. restricted stock units (“RSUs”) were converted to shares of the Company’s Class A common stock:

	Three Months Ended December 31,				Year Ended December 31,
	2018		2017		2018		2017
Weighted-Average Shares Outstanding - GAAP
Shares of Class A Common Stock Outstanding		22,544,473		18,564,981		20,772,112		18,477,827
Vested, Undelivered RSUs		681,622		334,819		1,107,462		380,183
Basic Shares Outstanding, GAAP		23,226,095		18,899,800		21,879,574		18,858,010
Dilutive Impact of Unvested Common RSUs⁽⁸⁾		1,658,498		—		2,374,487		—
Dilutive Impact of Partnership Units⁽⁹⁾		14,998,446		—		—		—
Diluted Shares Outstanding, GAAP		39,883,039		18,899,800		24,254,061		18,858,010

Weighted-Average Shares Outstanding - If-Converted
Shares of Class A Common Stock Outstanding		22,544,473		18,564,981		20,772,112		18,477,827
Vested, Undelivered RSUs		681,622		334,819		1,107,462		380,183
Conversion of Unvested Common RSUs⁽⁸⁾		1,658,498		4,338,171		2,374,487		3,767,622
Conversion of Participating RSUs		128,913		361,726		139,519		450,718
Conversion of Partnership Units		16,264,594		14,627,969		15,673,976		14,972,302
If-Converted Shares Outstanding		41,278,100		38,227,666		40,067,556		38,048,652

	As of December 31,
	2018		2017
Fully-Diluted Shares Outstanding^(10)(11)		43,028,153		39,705,207

During the year ended December 31, 2018, 2.5 million Partnership Units were added to the Company’s fully-diluted share count due to the satisfaction of certain market conditions. As of December 31, 2018, there were 3.8 million Partnership Units subject to market conditions that are not included in fully-diluted shares outstanding.