Q1 2024 PJT Partners Inc Earnings Call
Operator: Good day, and welcome to the PJT Partners first quarter 2024 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.
Good day and welcome to the PGA key partners first quarter 2024 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.
Sharon Pearson: Thanks very much, good morning, and welcome to the PJT Partners First Quarter 2024 earnings conference. 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.
Sharon Pearson: Thanks, very much and good morning, and welcome to the P. J T partners first quarter 2024 earnings conference call.
Sharon Pearson: I am Sharon Pearson head of Investor Relations at <unk>.
Sharon Pearson: And joining me today is Paul Coulson, Chairman and Chief Executive Officer.
Sharon Pearson: Eliminates our chief financial Officer.
Sharon Pearson: 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' 2023 Form 10-K, which is available on our website at pjtpartners.com.
Speaker Change: Before I turn the call David Paul I want to point out that during the course of this conference call. We may make a number of forward looking statements.
Sharon Pearson: These forward looking statements are subject to various risks and uncertainties.
Sharon Pearson: Important factors that could cause actual outcomes to differ materially from those indicated in these statements we.
Sharon Pearson: We believe that these factors are described in the risk factors section contained in <unk> Partners' 2000, <unk> Form 10-K, which is available on our web site at P. J P apartments com.
Sharon Pearson: I want to remind you that the company assumes no duty to update any forward-looking statements and that the presentation we make today contains non-GAAP financial measures that we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, you should refer to the financial data contained within the press release we issued this morning, also available on our website. And with that, I'll turn the call over to Paul.
Sharon Pearson: I want to remind you that the company assumes no duty to update any forward looking statements.
Sharon Pearson: After the presentation, we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance.
Sharon Pearson: Detailed disclosures on these non-GAAP metrics and the GAAP reconciliation you should refer to the financial data contained within the press release. We issued this morning also available on our website and with that I'll turn the call on this call.
Paul Jeffrey Taubman: Thank you, Sharon. Good morning, everyone, and thank you for joining our earnings call. Earlier today, we reported first quarter revenues of $329 million, up 65%, adjusted pre-tax income of $55 million, up 81%, and an adjusted EPS of 98 cents, up 81% from year-ago levels.
Speaker Change: Thank you Sharon good morning, everyone and thank you for joining our earnings call.
Speaker Change: Earlier today, we reported first quarter revenues.
Speaker Change: $329 million.
Speaker Change: Up 65% adjusted pre tax income of $55 million up 81% and.
Speaker Change: And adjusted EPS of <unk>, 98 up 81% from year ago levels.
Paul Jeffrey Taubman: We had our second highest revenue quarter ever, reflecting strong performance in all of our businesses, as we benefited from continued momentum in restructuring, significantly improved results in PJT Park Hill, and strong performance in Strategic Advisory. While we report results quarterly, we measure our progress not in quarters but in years. After a highly successful quarter, our focus remains on ending the year a meaningfully stronger firm than when we began the year. A core element of that progress is the continued addition of highly talented professionals, with particular emphasis on filling out our strategic advisory footprint.
Speaker Change: We had our second highest revenue quarter ever reflecting strong performance in all of our businesses as.
Speaker Change: As we benefited from continued momentum in restructuring.
Speaker Change: Significantly improved results in <unk> Park Hill.
Speaker Change: Strong performance in strategic advisory.
Speaker Change: While we report results quarterly we measure our progress not in quarters.
Speaker Change: But in years.
Speaker Change: After a highly successful quarter.
Speaker Change: Our focus remains on ending the year, a meaningfully stronger firm than when we began the year.
Speaker Change: A core element of that progress is the continued addition of highly talented professionals with particular emphasis on filling out our strategic advisory footprint.
Paul Jeffrey Taubman: The recruiting environment continues to be conducive to senior hiring, and we expect our hiring to remain elevated this year, even if it does not match 2023's record recruiting. In the first quarter, we had our highest open market repurchases ever as we remained focused on offsetting dilution from these investments. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail.
Speaker Change: The recruiting environment continues can be conducive to senior hiring.
Speaker Change: We expect our hiring to remain elevated this year Steve.
Speaker Change: Even if it does not match 2020 three's record recruiting.
Speaker Change: In the first quarter, we had our highest open market repurchases ever.
Speaker Change: We remain focused on offsetting dilution from these investments.
Speaker Change: After how long it takes you through our financial results.
Steve: I will review, our business performance and outlook in greater detail.
Helen Therese Meates: Thank you, Paul. Good morning.
Speaker Change: Thank you Paul good morning, beginning with revenues.
Helen Therese Meates: Beginning with revenues. Total revenues for the quarter were $329 million, a record first quarter, up 65% year-over-year. revenues were meaningfully higher across all businesses, with the highest growth coming from structuring.
Speaker Change: Total revenues for the quarter were $329 million, a record first quarter up 65% year over year.
Speaker Change: Revenues were meaningfully higher across all businesses with the highest growth coming from restructuring.
Helen Therese Meates: We had a number of transaction completions that met the criteria for revenues to be pulled forward in the first quarter, totaling $25 million. Excluding the impact of pull-forwards in both periods, our revenue growth would have been 52%. Turning to expenses,
Speaker Change: We had a number of transaction completions that met the criteria for revenues to be pulled forward in the first quarter totaling $25 million.
Speaker Change: Excluding the impact of pull forwards in both periods, our revenue growth would've been 52%.
Helen Therese Meates: Consistent with prior quarters, we've presented the expenses with certain non-GAAP adjustments, which are more fully described in our AK. First, compensation expense. We accrued compensation expense at 69.5% of revenues for the first quarter, compared with 69.8% for the full year 2023. This ratio represents our current best expectations for the full year 2024. Turning to Adjusted Loan Compensation, total adjusted non-compensation expense was $45 million in the first quarter, up from $36 million in the first quarter last year.
Speaker Change: Turning to expenses.
Speaker Change: System with prior quarters, we presented the exchanges for certain non-GAAP adjustments, which are more fully described in our 8-K first compensation expense, we accrued compensation expense at 69, 5% of revenues for the first quarter compared with 69, 8% for the full year 2023.
Speaker Change: This ratio represents our current best expectations for the full year 2024.
Speaker Change: Turning to adjusted non compensation expense total adjusted non compensation expense was 45 million in the first quarter up from $36 million in the first quarter last year.
Helen Therese Meates: The higher expense was primarily driven by increases in occupancy costs, travel and related expenses, as well as bad debt expense, which is included in other expenses. Despite the high year-over-year increase in first quarter non-comp expense, we continue to expect that our full year 2024 non-comp expense will grow at a similar rate to the growth rate we experienced in 2023. This growth will be primarily driven by an increase in occupancy costs, as well as increased travel and related expenses.
Speaker Change: The higher expense was primarily driven by increases in occupancy costs travel and related as well as bad debt expense, which is included in other expenses.
Speaker Change: Despite the high year over year increase in first quarter non context.
Speaker Change: We continue to expect that our full year 2024, non comp expense will grow at a similar rate to the growth rates, we experienced in 2023.
Speaker Change: This growth will be primarily driven by an increase in our occupancy costs as well as increased travel and related expense.
Helen Therese Meates: Turning to adjusted pre-tax income, our adjusted pre-tax income was $55 million in the first quarter compared with $30 million for the same period last year, and our adjusted pre-tax margin was 16.8% for the first quarter compared with 15.2% for the same period a year ago. Provision for taxes As with prior quarters, we presented our results as if all partnership units had been converted to shares and that all of our income was taxed at a corporate tax rate.
Speaker Change: Turning to adjusted pretax income.
Speaker Change: Our adjusted pre tax income of $55 million in the first quarter compared with $13 million for the same period last year and our adjusted pretax margin was 16, 8% for the fifth quarter compared with 15, 2% for the same period a year ago.
Speaker Change: The provision for taxes as with prior year.
Speaker Change: Quarters, we've presented our results as if all partnership units had been converted to shares and all of our income was taxed at a corporate tax rate.
Helen Therese Meates: Our effective tax rate was 22% for the first quarter, below our full year 2023 rate of 25.3%. The tax benefit relating to the delivery of vested shares during the first quarter was greater than last year's benefit. We take a full year view of that benefit, and we currently expect our full year effective tax rate to be around 22%.
Speaker Change: Our effective tax rate was 22% for the first quarter below our full year 2023 rate of 25, 3%.
Speaker Change: <unk> benefit relationship at delivery of vested shares during the first quarter was greater than last year's benefit.
Speaker Change: We take a full year view of that benefit and we currently expect our full year effective tax rate to be around 22%.
Helen Therese Meates: Our Adjusted Converted Earnings were $0.98 per share for the first quarter compared with $0.54 per share in the first quarter last year. On the share count for this quarter, our weighted average share count was 43.7 million shares, up 5% versus a year ago. This increase primarily reflects the full share count impact of 1.3 million performance shares, which reached the price hurdles at the end of 2023. Additionally, during the first quarter, we repurchased the equivalent of approximately 1.5 million shares, primarily through open market repurchase.
Speaker Change: Our adjusted if converted earnings were at <unk> 98 per share for the first quarter.
Speaker Change: Compared with 54 cents per share in the first quarter last year.
Speaker Change: On the share count for the quarter, our weighted average share count was $43 7 million shares at 5% versus a year ago.
Speaker Change: This increase primarily reflects the full share count impact of $1 3 million performance shares which reached the price hurdles at the end of 2023.
Speaker Change: During the first quarter, we repurchased the equivalent of approximately one 5 million shares primarily through open market repurchases. In addition, we plan to exchange of 116000 partnership units for cash on May nine 2024, and on the balance sheet. We ended the quarter with 276 million in cash cash equivalents and short term investment.
Helen Therese Meates: In addition, we plan to exchange 116,000 partnership units for cash on May 9, 2024. And on the balance sheet, we ended the quarter with $236 million in cash, cash equivalents, and short-term investments, and 408 million in networking capital. We continue to have no funded debt outstanding. And finally, the board has approved a dividend of 25 cents per share. The dividend will be paid on June 20, 2024, to Class A common shareholders of record as of June 5.
Speaker Change: <unk>.
Speaker Change: And $408 million and net working capital and we continue to have no funded debt outstanding and finally, the board has approved a dividend of <unk> 25 per share the dividend will be paid on June 22004 to class a common shareholders of record as of June five.
Helen Therese Meates: With that, I'll turn back to Paul.
Speaker Change: That was impactful.
Paul Jeffrey Taubman: Thank you, Helen. Beginning with PKT Park Hill. Revenues in our PJT Park Hill business were up significantly quarter on quarter and year over year, driven by meaningful growth in private capital solutions. GPs and LPs alike continue to be attracted to private capital solutions as they seek to enhance liquidity, particularly given the current low levels of portfolio monetization. This, combined with a more constructive environment in which to execute secondary transactions, helped drive strong Q1 results in PJT Park Hill.
Speaker Change: Thank you Helen.
Speaker Change: Beginning with PK Key Park Hill.
Speaker Change: Revenues in our PJ Key Park Hill business were up significantly quarter on quarter and year over year, driven by meaningful growth in private capital solutions.
Speaker Change: GPS in Lp's of life continued to be attracted to private capital solutions.
Speaker Change: As they seek to enhance liquidity, particularly given the current low levels of portfolio of monetization.
Speaker Change: This combined with a more constructive environment in which to execute secondary transactions.
Speaker Change: Helped drive strong Q1 results in <unk> Park Hill.
Paul Jeffrey Taubman: On the primary side, the fundraising environment remains challenged, although somewhat improved from year-ago levels, as higher equity valuations have served to bring alternative allocations better into line for many LPs. Turning to Restructuring. Our leading restructuring team continues to be extremely active in both liability management assignments, as well as in-court restructuring.
Speaker Change: On the primary side the fund raising environment remains challenged although somewhat improved from year ago levels as higher equity valuations have served to bring alternatives allocations better into line for many Lps.
Speaker Change: Turning to restructuring.
Speaker Change: Our leading restructuring team continues to be extremely active in both liability management assignments as well as in court restructurings.
Paul Jeffrey Taubman: Revenues in our restructuring business were up sharply year over year but up more modestly quarter on quarter, reflecting continued high levels of activity. We are in a multi-year cycle of elevated activity in liability management and in-court restructuring. In many instances, more favorable financing markets will prove insufficient to support state-locked broader restructuring activities.
Speaker Change: Revenues in our restructuring business were up sharply year over year, but up more modestly quarter on quarter, reflecting continued high levels of activity.
Speaker Change: We are in a multiyear cycle of elevated activity in liability management and in court restructurings.
Speaker Change: In many instances more favorable financing markets will prove insufficient.
Speaker Change: To stave off broader restructuring activity.
Paul Jeffrey Taubman: With each passing day, it is clearer that rates will remain higher for longer, that increasing numbers of companies are being disrupted by technological innovation and changing consumer preferences, and that companies continue to contend with challenges to their business models that link back to the pandemic. While the near-term maturity wall has largely been addressed, another one looms in 2028 in this highly constructive restructuring environment. We expect our 2024 restructuring webinars to remain elevated and to approach last year's record performance.
Speaker Change: With each passing day it is clearer that rates will remain higher for longer.
Speaker Change: The increasing numbers of companies are being disrupted by technological innovation and changing consumer preferences.
Speaker Change: And that companies continue to contend with challenges to their business models that link back to the pandemic.
Speaker Change: While the near term maturity wall has largely been addressed.
Speaker Change: Another one looms in 2028.
Speaker Change: In this highly constructive restructuring environment.
Speaker Change: We expect our 2020 for restructuring revenues to remain elevated.
Speaker Change: And to approach last year's record performance.
Speaker Change: Yes.
Paul Jeffrey Taubman: Turning to Strategic Advisory. In the first quarter, our strategic advisory business delivered strong revenue growth compared to the prior year. As we highlighted on our last earnings call, we began 2024 with a near-record pre-announced pipeline but an atypically low backlog of announced pending closed transactions. Our mandate count continues to grow and stands at a record level. Our announced pending closed pipeline has also grown appreciably year-to-date, and given the momentum we see in our business, we expect it to continue to build as 2024 progresses. However, in 2023, announced global M&A volumes declined to levels not seen in a decade.
Speaker Change: Turning to strategic advisory.
Speaker Change: In the first quarter, our strategic advisory business delivered strong revenue growth.
Speaker Change: Compared to the prior year.
Speaker Change: As we highlighted on our last on our last earnings call.
Speaker Change: We began 2024 with EMEA record pre announced pipeline.
Speaker Change: But in a typically low backlog of announced pending closed transactions.
Speaker Change: Our mandate count continues to grow and stands at record levels.
Speaker Change: Our announced pending closed pipeline has also grown appreciably year to date and given the momentum we see in our business. We expect it to continue to build as 2020 for progressive.
Speaker Change: In 2023 announced global M&A volumes declined to levels not seen in a decade.
Paul Jeffrey Taubman: Over the past several months, the pieces necessary for an M&A recovery have increasingly fallen into place, driven by stronger-than-expected economic principles, such as rising global equity valuations, a significant recovery in the debt and equity capital markets, and increasing pent-up demand for strategic assets, following two years of sharply reduced transaction activity, amidst broad-based expectations for a sharp uptick in global M&A activity in 2024. Annualized year-to-date activity is tracking only modestly ahead of 2023 levels.
Speaker Change: Over the past several months the pieces necessary for.
Speaker Change: For an M&A recovery have increasingly fallen into place.
Speaker Change: Driven by stronger than expected economic Prince.
Speaker Change: Rising global equity evaluations.
Speaker Change: A significant recovery in the debt and equity capital markets.
Speaker Change: And increasing pent up demand for strategic assets following two years of sharply reduced transaction activity.
Speaker Change: Amidst broad based expectations for a sharp uptick in global M&A activity in 2024.
Speaker Change: Annualized year to date activity is tracking only modestly ahead of 2023 levels.
Paul Jeffrey Taubman: We expect to see a gradual increase in M&A activity until certain catalysts are in place, which should further propel activity, namely, central bank rate clarity and election results in the U.S. and elsewhere. The highest strategic priority for our strategic advisory business is to ensure we are best positioned to capitalize on the multi-year M&A upturn that is ahead of us. The continued addition of senior talent is an important element of that position to close.
Speaker Change: We expect to see a gradual increase in M&A activity until certain catalysts are in place.
Speaker Change: Further propel activity.
Speaker Change: Namely Central Bank, great clarity and election results in the U S and elsewhere.
Speaker Change: The highest strategic priority for our strategic advisory business.
Speaker Change: To ensure we are best positioned.
Speaker Change: To capitalize on the multi year M&A upturn that.
Speaker Change: That is ahead of us.
Speaker Change: Continued addition of senior talent is an important element of that positioning.
Speaker Change: To close.
Paul Jeffrey Taubman: Looking back, we delivered differentiated performance in 2022 and 2023 as we continued to invest in our franchise. As we look forward, we are equally committed to further investment to ensure that we are best positioned to capitalize on the future, regardless of market conditions. As before, we remain confident in our long-term growth prospects. And with that... We will now take your questions.
Speaker Change: Looking back we deliver differentiated performance in 2022 and 2023 as we continued to invest in our franchise.
Speaker Change: As we look forward, we are equally committed to further investment to ensure that we are best positioned to capitalize on the future.
Speaker Change: Regardless of market conditions.
Speaker Change: As before we remain confident in our long term growth prospects.
Speaker Change: And with that.
Speaker Change: We will now take your questions.
Speaker Change: Yeah.
Operator: Ladies and gentlemen, at this time, the floor is open to your questions. To ask a question, please press star 1 on your telephone keypad. You may remove yourself at any time by pressing star 2. Once again, to ask a question, please press star 1. Our first question comes from Devin Ryan with Citizens JMP. Please go ahead.
Speaker Change: Ladies and gentlemen at this time the floor is open for your questions.
Speaker Change: I ask a question. Please press star one on your telephone keypad.
Speaker Change: You may remove yourself at any time by pressing star two.
Speaker Change: Once again to ask a question please press star one.
Speaker Change: Our first question comes from Devin Ryan with citizens JMP. Please go ahead.
Devin Patrick Ryan: Good morning, Paul. Good morning, Helen. How are you? Good morning.
Devin Patrick Ryan: Good morning, Good morning, Paul Good morning, Hello, how are you good.
Paul Jeffrey Taubman: Welcome. We're well. Thank you.
Speaker Change: Good morning.
Devin Patrick Ryan: Thank you.
Devin Patrick Ryan: First question, I just want to kind of take a step back and think about just the broader M&A market and PJT's positioning in it. Paul, you gave some comments on the outlook, which I appreciate. But if we look at just the market overall, 2021 was the most recent kind of active year we had. That was probably a year for the backdrop that was above normal. But when we look at PJT specifically, I think strategic advisory partners have increased by over 40% since that time.
Devin Patrick Ryan: Yes.
Devin Patrick Ryan: First question just wanted to kind of take a step back and think about just the broader M&A market and <unk> positioning it.
Devin Patrick Ryan: Paul you gave some comments on the outlook, which I appreciate but.
Devin Patrick Ryan: If we look at just the market overall in 2021 was the most we can kind of activity or we have that was probably a year for the backdrop that was above normal.
Devin Patrick Ryan: When we look at <unk>, specifically I think strategic advisory partners have increased by over 40% since that since that time.
Devin Patrick Ryan: And so I just want to kind of think about what a more normalized environment means for PJT's strategic advisory business, the type of revenues or production you would expect out of partners or any other parameters, if we can think about kind of how much larger this business is and potential is today relative to that time, just because we're kind of – business has transitioned so much since there's actually been an active environment. So I think people are having a hard time kind of trying to think about what a normalized revenue potential could be for PJT. Thanks. Yeah, look, it's a lot like that.
Devin Patrick Ryan: And so I just wanted to kind of think about or how you would frame.
Devin Patrick Ryan: A more normalized environment means for PDT strategic advisory business, the type of revenues or <unk>.
Devin Patrick Ryan: Production, you would expect out of partners or any other parameters that we can think about kind of how much larger businesses the potential load today relative to that time, just because we're kind of.
Devin Patrick Ryan: This business has transitioned so much since there's actually been an active environment. So I think people have a hard time kind.
Devin Patrick Ryan: Trying to think about what a normalized.
Devin Patrick Ryan: And the potential could be for PTC.
Paul Jeffrey Taubman: Yeah, look, it's... It's really hard to sort of pinpoint what we would look like in a normalized environment, but let's try and have a go at it. If, right now... We were to experience the 2021 market environment all over again, we would be far better positioned to capitalize on that upswing than we were in actuality in 2021. We're not expecting tomorrow to wake up and be back in the 2021 M&A environment, but if we were, we would find ourselves to be able to deliver meaningfully greater performance because our coverage footprint is much greater today, because our coverage footprint better matches where the wallet is distributed, because we have fewer partially built out industry verticals and more fully built out industry verticals.
Devin Patrick Ryan: Yes.
Devin Patrick Ryan: It's really hard to sort of pinpoint what we would look like in a normalized environment.
Speaker Change: Let's try and have a go at it.
Speaker Change: Yes, right now we were to experience a 2021 market environment all over again.
Devin Patrick Ryan: We would be far better positioned to capitalize on that upswing.
Devin Patrick Ryan: Then we were in actuality in 2021.
Devin Patrick Ryan: We're not expecting tomorrow to wake up and be back into 2021 M&A environment.
Devin Patrick Ryan: But if we were we would find ourselves to be able to deliver meaningfully greater performance.
Devin Patrick Ryan: Does our coverage footprint is much greater today.
Devin Patrick Ryan: Because our coverage footprint better matches.
Devin Patrick Ryan: Where the wallet is distributed.
Devin Patrick Ryan: Because we have.
Devin Patrick Ryan: Les partially built out industry verticals and more fully built out industry verticals.
Paul Jeffrey Taubman: Because our brand and years of sustained coverage are greater, and we're better known to clients today than we were three years ago, What we are focused on is where we believe the M&A market is going, and it's clear that 2022 and 2023 are aberrationally low levels of quote-unquote normalized M&A. Early on, we said, This is not a light switch in 2024. Do not look at the light switch that got flipped from 2020 to 2021 and just see this explosive rebound in M&A from 23 to 24. We have always viewed it as more of a slow, gradual rebuild.
Devin Patrick Ryan: Because our brand and years of sustained coverage gray.
Devin Patrick Ryan: Greater and were better known to clients today than we were three years ago.
Devin Patrick Ryan: What we are focused on is where we believe the M&A market is going.
Devin Patrick Ryan: And it's clear that 2022 and 2023.
Devin Patrick Ryan: Our aberrational low levels of quote unquote normalized M&A.
Devin Patrick Ryan: Early on we said.
Devin Patrick Ryan: This is not a light switch in 2024.
Devin Patrick Ryan: Do not look at the light switch that got flipped from 2020 to 2021 and just see this explosive rebound in M&A from 23 to 24, we.
Devin Patrick Ryan: We have always viewed it as more of a slow gradual rebuild.
Paul Jeffrey Taubman: We made the point that, two years of successive global declines in M&A volume, we didn't believe you'd see a third, that when you do have an inflection point, you typically see first-year growth of 10 to 15 percent in volume. I think year-to-date, we're tracking global annualized volume is up 8 or 9 percent. I expect that that momentum will build a bit over the year, and I continue to believe we'll end the year up 10 to 15% in global M&A volume.
Devin Patrick Ryan: We made the point that.
Devin Patrick Ryan: Two years of successive global declines in M&A volume that we didn't believe you'd see a third that when you do have an inflection point you typically see first year growth of 10% to 15% and volumes I think year to date, we're tracking global annualized <unk>.
Devin Patrick Ryan: <unk> is up 8% or 9% I expect that that momentum will build a bit over the year.
Devin Patrick Ryan: And I continue to believe we'll end up the year up 10% to 15% in global M&A volume.
Paul Jeffrey Taubman: But I do think there's an opportunity for there to be a step function change in that, in 25 and beyond. And that's what we're playing for, and there's no doubt that in any environment you pick, Devin, our ability to capitalize on that is going to be fundamentally different today than it was three or four years ago. Hopefully, that's helpful.
Devin Patrick Ryan: But I do think there is an opportunity for there to be a step function change in that in 'twenty, five and beyond and that's what we're playing for and there is no doubt that in any environment you picked Devon.
Devin Patrick Ryan: Our ability to capitalize on that is going to be fundamentally different today.
Devin Patrick Ryan: It was three or four years ago, hopefully that's helpful.
Paul Jeffrey Taubman: I appreciate that, Paul. And then just as a follow-up here on just the comp ratio, just trying to maybe dig in and square a little bit more between the 69.5% relative to the second-best-ever revenue quarter. Obviously, 69.5% is still higher than I think kind of historically where you've been, and so I just want to think about how much of that is maybe a function of [inaudible] Okay. Well, now we're going to.
Speaker Change: Yeah, I appreciate that Paul.
Speaker Change: And then just as a follow up here on just the comp ratio just trying to maybe digging in square a little bit more between that 65% relative to the second best ever revenue quarter.
Speaker Change: Obviously, you have still higher than I think.
Speaker Change: Kind of historically, where you've been at so just want to think about how much of that is maybe a function of.
Speaker Change: Seasonal dynamics like retirement eligible expense or the.
Speaker Change: The competitive backdrop that you're seeing right now or you obviously heard commentary around.
Speaker Change: Okay.
Speaker Change: The desire to leave then again on recruiting so just wanted to kind of think about that number what that means and then what the implication is on a go forward basis, particularly in an environment where.
Speaker Change: Over the next couple of years revenues potentially recovery. Thanks.
Paul Jeffrey Taubman: Well, first of all, 69.5% is our current best estimate for the full year. That is marginally below the full year comp ratio for last year. What I said on the last earnings call is, In order to see meaningful comp leverage, for the ratio to come down meaningfully, we need to see revenue growth measured in years exceed headcount growth, and you've made the point. And I think I said on the last earnings call, or Eddie called it, over the last three years, we have added 35% headcount, but we haven't thrown our revenues near 35%. I don't believe that that day is far away when those two are aligned.
Speaker Change: Right.
Speaker Change: So first of all 69, 5% is our current best estimate of the full year.
Speaker Change: That is marginally below full year comp ratio for last year, what I said on the last earnings call as <unk>.
Speaker Change: In order to see meaningful comp leverage for the ratio to come down meaningfully we need to see the revenue growth measured in years exceed the head count growth and you've made the point.
Speaker Change: I think I said on the last earnings call that over the last three years, we had added 35% head count So we haven't grown our revenues near 35%.
Speaker Change: I don't believe that that day is far away and when those two are aligned.
Devin Patrick Ryan: That's when you're likely to see meaningful reductions in comp as a percentage of revenue. But we do remain very focused on keeping recruiting elevated. We do believe that the investments we're making are bearing significant fruit, but until all of those revenues are fully realized, the ratios are likely to be out of whack. And we're still uncertain as to what the true market compensation environment will be at the end of the year. So, based on all of that, 69.5% is our current best estimate.
Speaker Change: Thats when youre likely to see meaningful reductions in the comp as a percentage of revenue, but we do remain very focused on keeping recruiting elevated.
Speaker Change: We do believe that the investments, we're making are bearing significant fruit, but until all of those revenues are fully realized the ratios are likely to be out of whack.
Speaker Change: And we're still uncertain as to what the true market compensation environment will be at the end of the year. So based on all of that 69, 5% is our current best estimate.
Devin Patrick Ryan: Okay, very clear. Thanks a lot. I appreciate it.
Speaker Change: Okay very clear thanks, a lot appreciate it.
Speaker Change: Thank you.
James Edwin Yaro: Thank you. Our next question comes from James Yaro of Goldman Sachs. Please go ahead.
Speaker Change: Thank you. Our next question comes from James <unk> with Goldman Sachs. Please go ahead.
James Edwin Yaro: Good morning and thanks for taking my questions. Maybe just start with placement, which was excellent in the quarter. I know this can be one of the lower quarters from a seasonal perspective across the year for placement, but there's obviously been a strong step up in the business versus last year. So does that suggest that there could actually be substantial growth from here, and we could see the normal seasonal improvement over the course of the year in that business in 2024?
James Edwin Yaro: Good morning, and thanks for taking my questions, maybe just starting with placement, which was excellent in the quarter I noticed this can be one of the lower quarters from a seasonal perspective across the year for placement.
James: Theres, obviously been a step up in the business versus last year. So does that suggest that there could actually be substantial growth from here.
Speaker Change: Keep it normal.
James Edwin Yaro: Seasonal improvement over the course of the year in that business for 24.
James Edwin Yaro: Yes.
Paul Jeffrey Taubman: I always hesitate to try and reduce our business to 13-week earnings cycles as to what's going to fall into any cycle. So it's easier, James, for us to talk about it on a year basis. I think we've been pretty consistent. 2023 was an aberrationally difficult year in terms of total revenue results for PJT Park Hill. The environment, while still far from perfect, is improved. And then if you just look at placement, which is really closer to primary.
James Edwin Yaro: I always hesitate to try and reduce our business to 13 week, earning cycles as to what's going to fall into any psychosis easier James for us to talk about it on a year basis.
Paul Jeffrey Taubman: I think we've been pretty consistent that.
2023 was an aberrational difficult year in terms of total revenue results for P. J P Park Hill that the environment, while still far from perfect is improved.
James: And then if you just look at placement, which really is closer to primary.
Paul Jeffrey Taubman: Capital Rays, but it also, You know, encompasses things like corporate, private placements, and the like. I think there's no doubt that we're in a more favorable environment, and we all expect that to be an up year. But where it falls quarter to quarter, I'd rather refrain from speculating.
James: Capital raise but it also.
Paul Jeffrey Taubman: Accomplices things like corporate private placements and alike, I think theres no doubt that we're in a more favorable environment and we all expect that to be an up year, but where it falls quarter to quarter I'd, rather I'd, rather refrain from speculating.
James Edwin Yaro: Okay, that makes a lot of sense. Maybe just a longer-term question on the strong growth and secondary continuation funds that we're seeing across the industry, and I think you're benefiting from that as well. Maybe just your longer-term outlook on the businesses, the ability for the strong growth to be sustained, and then, you know, how they interplay with the lack of M&A and whether that's supporting some of the activity and growth that we've seen more recently.
Speaker Change: Okay that makes a lot of sense, maybe just a longer term question on the strong growth in secondaries and continuation funds that were seeing across the industry and I think you are benefiting from that as well maybe just your longer term outlook on the business is the ability for the strong growth to be sustained and then.
James Edwin Yaro: How are they in.
James Edwin Yaro: Interplay with the lack of M&A and whether that's supporting some of the activity and growth that we've seen more recently.
Paul Jeffrey Taubman: Probably yes, yes, and yes, if I kept track of all of your questions, I think it does have some relevance to their relationship. It is related to some extent to the dearth of M&A monetization because it's been difficult for private equity to be comfortable monetizing investments in this rate environment and that that is an opportunity to create liquidity for investors. But I think this trend is far beyond that.
James Edwin Yaro: Probably yes, yes, and yes, if I kept track of all of you.
Paul Jeffrey Taubman: All of your questions I think.
Paul Jeffrey Taubman: It does have some.
Paul Jeffrey Taubman: And our relationship.
Paul Jeffrey Taubman: It is related to some extent to the dearth of M&A monetization peak.
Paul Jeffrey Taubman: Because it's been difficult for private equity to be comfortable monetize a.
Paul Jeffrey Taubman: Investments in this rate environment.
Paul Jeffrey Taubman: That is an opportunity to create liquidity.
Paul Jeffrey Taubman: For investors, but I think this trend is far beyond that.
Paul Jeffrey Taubman: I think there is increasing recognition that it is an important tool in the toolkit. I think it can be very helpful when there are high-quality assets that sponsors would like to continue to own and manage, and they recognize that selling there's probably more friction costs, more disruption than just creating a vehicle for certain LPs to exit and others to enter. I think one of the challenges has been that there's probably... far greater demand.
Paul Jeffrey Taubman: There is increasing recognition that it is an important tool and tool kit.
Paul Jeffrey Taubman: It can be very helpful. When there are high quality assets.
Paul Jeffrey Taubman: That sponsors would like to continue to own and manage and they recognize that selling theres, probably more friction caused more disruption than just creating a vehicle for certain lps to exit and others to enter.
Paul Jeffrey Taubman: I think one of the challenges has been that there's probably.
Paul Jeffrey Taubman: Far greater demand on.
Paul Jeffrey Taubman: On the part of sponsors to deploy continuation fund vehicles, then there is dedicated capital to the asset class. I think one could make a very strong. Paul Taubman, Devin Ryan, James Mitchell, Steven Chubak, Sharon Pearson, PJT Partners, Very clear.
Paul Jeffrey Taubman: On the part of sponsors to deploy continuation fund vehicles than there is dedicated capital to the asset class.
Paul Jeffrey Taubman: Think one could make a very strong.
Paul Jeffrey Taubman: Compelling case that <unk>.
Paul Jeffrey Taubman: Investors are significantly under allocated to this asset class.
Paul Jeffrey Taubman: <unk> started to see in recent time is very significant pools of capital.
Paul Jeffrey Taubman: <unk> by leading sponsors.
Paul Jeffrey Taubman: To increase the available capital and as that capital bills, which I expect it will and as more capital has redirected into secondaries and continuation funds.
Paul Jeffrey Taubman: This is a long term trend and it's a trend that we intend to capitalize on.
James Edwin Yaro: Very clear. Thank you so much.
Speaker Change: Very clear thank you so much.
Speaker Change: Thank you.
James Edwin Yaro: Okay.
James Francis Mitchell: Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Please go ahead.
James Edwin Yaro: Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Please go ahead.
James Francis Mitchell: Hey, good morning. Maybe just a follow-up on restructuring, Paul. We did have record debt issuance in the first quarter, so to your point, we had a lot of refinancing that might have solved a lot of issues for this year at least. So I guess what gives you the confidence that that won't continue and start to maybe create a little bit of a headwind in restructuring? It feels like we've been through this cycle before when refinancing really picks up, but we do eventually see some slowdown in restructuring, so I just wanted to get maybe a little more detail on your confidence level in continuing the restructuring levels that we're seeing.
James Francis Mitchell: Hey, good morning.
James Francis Mitchell: Maybe just maybe just a follow up on restructuring.
James Francis Mitchell: Yes.
James Francis Mitchell: We did have record debt issuance in the first quarter.
James Francis Mitchell: To your point, we had a lot of refinancing.
James Francis Mitchell: That might have solved a lot of issues for this year at least so I guess what gives you the confidence that that doesn't continue and start to maybe create a little bit of a headwind and restructuring.
James Francis Mitchell: It feels like we've been through this cycle before when restructure when refinancing really picks up we do get some eventually some slowdown a restructuring so I just wanted to get maybe a little more detail what your confidence level is and that continuing the restructuring levels that we're seeing.
Paul Jeffrey Taubman: Well, there are two different things. One is, you know... Are we going to set records every year? Or are we going to fall back to earth the way we did from 2020 to 2021? And what I've said repeatedly is that 2020 to 2021 is not, in any way, indicative of the environment that we're in today. So I can't sit here and say that every year is going to be a record year. But I think we're going to enjoy elevated levels of liability management for an extended period of time because of all of the factors I've discussed. The sum is simply that rates are not coming down nearly as quickly as people had hoped or expected, and that way There is real disruption, and lots of winners.
James Francis Mitchell: So theres two different things one is.
Paul Jeffrey Taubman: Or are we going to set records every year or are we going to fall back to Earth.
Paul Jeffrey Taubman: We did from 2020 to 2021 and what I've said repeatedly is.
Paul Jeffrey Taubman: 2020 to 2021, not in any way indicative of the environment that we're in today.
Paul Jeffrey Taubman: So I can't sit here and say that every year is going to be a record year.
Paul Jeffrey Taubman: But I think we're going to enjoy elevated levels of liability management.
Paul Jeffrey Taubman: For an extended period of time for all of the factors I've talked about.
Paul Jeffrey Taubman: Some at assembly that rates are not coming down.
Paul Jeffrey Taubman: Nearly as quickly as people hoped or expected.
Paul Jeffrey Taubman: And that weighs there is real disruption.
Paul Jeffrey Taubman: And there's the new economy. And there's all of these incredible success stories, but there's creative destruction. And you can't just have a world where there are winners, and there are no losers.
Paul Jeffrey Taubman: And lots of winners and there is all the new economy.
Paul Jeffrey Taubman: And as all of these incredible success stories, but theres creative destruction and you can't just have a world where there are winners.
Paul Jeffrey Taubman: And there are no losers.
Paul Jeffrey Taubman: So, there are companies that we didn't even talk about 5 or 10 years ago who are incredibly disruptive, and all of these trends, decarbonization, electrification, AI, digitization, they're all highly disruptive, and that means that you can have a robust economy and you can have companies that fundamentally have business models that no longer work. That is not going to diminish; that is going to increase, also. I think we were right, but only for a little bit.
Paul Jeffrey Taubman: So there are companies, who we didn't even talk about five or 10 years ago, who are incredibly disruptive and all of these trends decarbonization electrification.
Paul Jeffrey Taubman: Hi.
Paul Jeffrey Taubman: Digitization, they're all highly disruptive and that means that.
Paul Jeffrey Taubman: You can have a robust economy and you can have companies that fundamentally have business models that no longer work.
Paul Jeffrey Taubman: That is not going to diminish that is going to increase.
Paul Jeffrey Taubman: And also.
Paul Jeffrey Taubman: I think we were right, but we will wait for the.
Paul Jeffrey Taubman: The long term and wrong in the short term, which is we talked about COVID doing permanent damage to a very significant number of companies. And the reality is that the extraordinary fiscal and monetary stimulus that appeared at the end of 2020 and into 2021 covered up a lot of things. And what that did was it enabled companies to continue, but they're really the walking wounded. And at some point, they need to address their issues.
Paul Jeffrey Taubman: The long term and wrong in the short term, which as we've talked about COVID-19.
Paul Jeffrey Taubman: Doing permanent damage to a very.
Paul Jeffrey Taubman: A significant number of companies.
Paul Jeffrey Taubman: And the reality is the extraordinary fiscal and monetary stimulus that all appeared at the end of 2020 and into 2021 covered up a lot of sense.
Paul Jeffrey Taubman: And with that data as it enabled companies to continue but they are really the walking wounded.
Paul Jeffrey Taubman: And at some point they need to address their issues. So we see this as a multi year cycle.
Paul Jeffrey Taubman: So we see this as a multi-year cycle. But a multi-year cycle can operate at elevated levels but not necessarily be at record levels every year, just as we expect there to be a very robust multi-year M&A wave. But that doesn't mean we're predicting that every year is going to stairstep be better than the year before. And I think if you step back and widen the lens and look at sort of where historical default rates were, that's an aberration. That's not sustainable, and we're in a different environment, and it's a multi-year cycle.
Paul Jeffrey Taubman: Multiyear cycle can operate at elevated levels, but not necessarily be at elevated at record levels. Every year, just as we expect there to be a very robust multiyear M&A way, but that doesn't mean, we're predicting that every year is going to stair step be better than the year before and I think.
Paul Jeffrey Taubman: If you step back and widen the lens and look at sort of where historical default rates were that's the aberration.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: That's what's not sustainable.
Paul Jeffrey Taubman: And we are in a different environment and it's a multi year cycle.
James Francis Mitchell: No, that's helpful. Maybe just switching to buybacks and or capital return. If we assume some sort of activity, and therefore profitability and cash flow are improving in the coming years. I'm not putting words in your mouth, but I guess that's the expectation for most people.
Paul Jeffrey Taubman: No no. That's that's that's helpful. Maybe just switching to buybacks.
James Francis Mitchell: And our capital return, if we assume sort of activity and therefore profitability and cash flow are improving in the coming years I'm not putting words in your mouth, but I guess, that's the expectation for most people.
Speaker Change: How do you think about the priorities of that that extra cash flow putting it to work is it.
James Francis Mitchell: First in net buybacks could we start seeing that buybacks versus offsetting dilution or is it a higher dividend how do you think about that.
James Francis Mitchell: How do you think about the price priorities of that extra cash flow? Putting it to work? Is it first in net buybacks? Can we start to see net buybacks versus offsetting dilution? Or is it a higher dividend? How do you think about a scenario where, you know, cash flow is growing pretty nice?
James Francis Mitchell: Scenario, where cash flow is growing pretty nicely.
Paul Jeffrey Taubman: Well, the first thing is investing in the business, and whether it's organic or inorganic, we're investing in our business. That has to be priority one, two, and three. It's all of the above.
James Francis Mitchell: The first thing is is investing in the business and whether it is organic inorganic we're investing in our business that has to be priority. One two and three it's all of the above we can focus on that.
Paul Jeffrey Taubman: You've got to focus on that. What we, if you look at all of the incentive awards. In the first six years, and Helen can add to this commentary, we ultimately got it all back. And I think we've talked about these performance awards, which were triggered. They've worked beautifully.
Paul Jeffrey Taubman: What we if you look at all of the incentive awards.
Paul Jeffrey Taubman: In the first six years and Helen can augment this commentary.
Paul Jeffrey Taubman: We ultimately got it all back.
Paul Jeffrey Taubman: And I think we've talked about these performance awards, which were triggered they've worked beautifully we wanted to get them all back.
Paul Jeffrey Taubman: We want to get them all back, and we're going to work to do it. I think what we've done, you know, in a quarter is we've neutralized, and then pretty much, we pretty much neutralized all of last year's regular way issuance. Pretty darn close.
Paul Jeffrey Taubman: And we're going to work to do it I think what we've done in a quarter is.
Paul Jeffrey Taubman: Neutralized and then pretty much we pretty much neutralized all of last year's regular way issuance pretty darn close and if not then certainly by.
Paul Jeffrey Taubman: And if not then, certainly by, you know, by the second of May. Now the next objective is going to be too late to get at that. I think that's a higher priority than, you know, increasing the dividend, but that doesn't mean we can't do a little bit of both. It doesn't mean we do all of one and none of another, but if you ask just sort of directionally the priorities, invest in the business.
Paul Jeffrey Taubman: The second of May now the next objective is going to be over time.
Paul Jeffrey Taubman: At that I think thats, a higher priority than <unk>.
Paul Jeffrey Taubman: Increasing the dividend, but that doesn't mean, we can't do a little bit of both.
Paul Jeffrey Taubman: It doesn't mean, we do all of one and none of another but if you ask just sort of directionally priorities invest in the business.
Paul Jeffrey Taubman: And I think lessons should be well understood by everyone that you need to focus on growing and investing in your core business. Then, the second is to make sure that we're not diluting our precious equity. Just to confirm. All right.
Paul Jeffrey Taubman: I think lessons.
Paul Jeffrey Taubman: Should be well understood by everyone that you need to focus on growing and investing in your core business and then the second is to make sure that we're not diluting our precious equity and then I'm confident we can do both of those at the appropriate time and at the appropriate.
Paul Jeffrey Taubman: And the appropriate cadence to grow the dividend, but it's 123.
Helen Therese Meates: To date, most of their repurchases have been to neutralize the issuance. So, as Paul said, maybe in the future, we can take that further, but for now, that's where we are.
Justin: Hey, Justin.
Helen Therese Meates: To date most of their attention has had been at tin utilizes the issuances.
Helen Therese Meates: Steve maybe I can take that says that that somehow that Sylvia.
Speaker Change: Okay, great. Thank you.
Helen Therese Meates: Okay.
Steven Joseph Chubak: Thank you. Our next question will come from Steven Chubak with Wolf Research. Please go ahead.
Helen Therese Meates: Thank you. Our next question will come from Steven <unk> with Wolfe Research. Please go ahead.
Brennan O'Brien: Good morning, this is Brennan O'Brien filling in for Steven. I guess, sorry, I just want to talk a bit about the revenue outlook commentary you provided. I mean, if we put the pieces together with restructuring down modestly, strategic advisory likely to be up slightly depending on how the back half plays out and Park Hill expected to be up more meaningfully, it sounds like you're pointing to a similar level of revenue growth as you guys saw last year. Is that a fair interpretation of your comments?
Steven Joseph Chubak: Good morning, This is Brian O'brien filling in for Steven.
Brennan O'Brien: So sorry, I just wanted to talk a bit about the revenue outlook commentary you provided I mean, if we put the pieces together with restructuring down modestly strategic advisory likely to be up slightly depending on how the back half plays out.
Brennan O'Brien: Plays out in Park Hill expected to be up more meaningfully.
Brennan O'Brien: It sounds like Youre pointing to a similar level of revenue growth. As you guys saw last year is that a fair interpretation of your comments.
Paul Jeffrey Taubman: We can interpret my comments many different ways, but let me be really precise. What we said was that we currently expect our restructuring business to approach last year's record level. We expect the Park Hill business to enjoy a very significant recovery from last year's levels. And I've talked about all of the puts and takes in strategic advisory, which there's tremendous momentum. The mandate count continues to grow. It sits at record levels.
Brennan O'Brien:
Speaker Change: We can interpret my comments many different ways, but let me be really precise.
Paul Jeffrey Taubman: What we said was that restrict we currently expect our restructuring business to approach.
Paul Jeffrey Taubman: Last year's.
Paul Jeffrey Taubman: The record levels, we expect the park Hill business to enjoy a very significant recovery from last year's levels.
Paul Jeffrey Taubman: And I've talked about all of the puts and takes in strategic advisory which is there is tremendous momentum the mandate count continues to grow it sits at record levels, we talked a quarter ago about.
Paul Jeffrey Taubman: We talked a quarter ago about, you know, record or near-record, preannounced pipeline. That pipeline continues to grow. We see the environment getting more constructed by the day. We talked about the one Achilles heel at the beginning of the year being a typically low announced pending close. That number has grown appreciably. We expect it will continue to grow. How that all works out with closings and the like, TBD.
Paul Jeffrey Taubman: Record or near record pre announced pipeline that pipeline continues to grow we see the environment getting more constructed by the day, we talked about the one achilles' heel to the beginning of the year It was a.
Paul Jeffrey Taubman: As a typically low.
Paul Jeffrey Taubman: Announced pending close that number has grown appreciably, we expect it will continue to grow how that all works out with closings in the lake.
Paul Jeffrey Taubman: TBD.
Brennan O'Brien: Got you. Thanks for the color. And I guess for my follow-up, I just wanted to touch on the election, which you called out as a potential catalyst last quarter. It sounded like the election had not yet been top of mind for clients. However, given we're just a few months away, I just want to get a sense as to what type of impact this is having on that possible conversion from the pending and our pre-announced to that pending close backlog Yeah,
Speaker Change: Got you thanks for the color and I guess for my follow up.
Brennan O'Brien: Wanted to touch on the election, which you called out as a potential catalyst last quarter. It sounded like the election or not yet been top of mind for clients. However, given where just a few months away I just wanted to get a census.
Brennan O'Brien: What type of impact this is having.
Brennan O'Brien: On that maybe conversion from the pending.
Brennan O'Brien: And our pre announce to that pending at close backlog.
Paul Jeffrey Taubman: Yeah, look, I don't think it's a light switch that all of a sudden everyone is obsessing about the election. What we said early on is that we think that that's a risk activity that's not well understood and not appreciated, but over time, it will be.
Brennan O'Brien: Look I.
Brennan O'Brien: Again, I don't think it is a light switch then all of a sudden everyone is obsessing about the election and what we've said early on as we think that that's a risk to activity that's not well understood.
Paul Jeffrey Taubman: And not appreciate it but over time it will be I think youre, starting to see more and more commentary that people are.
Paul Jeffrey Taubman: I think you're starting to see more and more commentary that people are, you know, very much focused on the election. You know, if you look at sort of forward bets on volatility, they've increased appreciably as you get closer to the election. There are two things. I think companies that are thinking about transformative M&A that involves an interpretation of policy, Law Enforcement at the FTC and the DOJ.
Paul Jeffrey Taubman: Very much focused on the election.
Paul Jeffrey Taubman: If you look at sort.
Paul Jeffrey Taubman: The forward bets on volatility they've increased appreciably as you get closer to the election I think it's two things I think companies that are thinking about transformative M&A that involves an interpretation.
Paul Jeffrey Taubman: <unk> policy.
Paul Jeffrey Taubman: Enforcement at the FTC and the Doj.
Paul Jeffrey Taubman: I think this weighs on them and that for a number of clients, they're going to wait and see the results of the election and then decide what their course of action is. And it could be that they were thinking of a larger target and they now believe it's unlikely, and they're going to pivot to a different target or a different way to scratch the itch, or it could mean that the second term of the current administration might have a So that is freezing some activity. I can't say it's freezing tremendous amounts, but there are pockets where that affects it number one.
Paul Jeffrey Taubman: I think this weighs on them.
Paul Jeffrey Taubman: <unk> for a number of clients theyre going to wait and see.
Paul Jeffrey Taubman: The results of the election, and then decide what their course of action is and it could be.
Paul Jeffrey Taubman: They were thinking of a larger target.
Paul Jeffrey Taubman: Now believe it's.
Paul Jeffrey Taubman: Unlikely and theyre going to pivot to a different target or a different way to scratch the edge or it could mean that the second term of.
Paul Jeffrey Taubman: The current administration might have a different focus on enforcement once you get past the reelection campaign or it could mean that was a change in administration of a fundamentally different approach. So that is freezing some activity I can't say, it's freezing tremendous announced but there is there are <unk>.
Paul Jeffrey Taubman: Where that affects it number one number two I believe that as we get a lot closer to the election, we're going to see a lot more volatility a lot more uncertainty.
Paul Jeffrey Taubman: Number two, I believe that as we get a lot closer to the election, we're going to see a lot more volatility, a lot more uncertainty, a lot of dueling policy prescriptions which are going to create different sets of winners and losers, different proposed tax policies, regulatory policies, different approaches to China, and as a result, as we get closer, I think you're going to see activity dip. As a result of that, because of that volatility, people are going to want to get through it.
Paul Jeffrey Taubman: A lot of dueling policy prescriptions, which are going to create different sets.
Paul Jeffrey Taubman: Winners and losers different proposed tax policies regulatory policies different approaches to China.
Paul Jeffrey Taubman: And as a result, as we get closer.
Paul Jeffrey Taubman: I think youre going to see activity dip.
Paul Jeffrey Taubman: As a result of that because of that volatility if people don't want to get through it. So it's going to manifest itself over time, it's going to manifest itself in different ways, depending upon what type of M&A, you're looking at but in the aggregate I think when you get behind it and we're past the elections I believe all else equal.
Paul Jeffrey Taubman: So it's going to manifest itself over time. It's going to manifest itself in different ways, depending upon what type of M&A you're looking at, but in the aggregate, I think when you get behind it and we're past the elections, I believe, all else equal, we're going to end up with more activity, not less, post-election than pre-election.
Paul Jeffrey Taubman: End up with more activity not less post election.
Paul Jeffrey Taubman: Okay.
Brennan O'Brien: Thank you for taking my questions.
Speaker Change: Alright, Thank you for taking my questions absolutely. Thank you.
Paul Jeffrey Taubman: Absolutely. Thank you.
Brennan Hawken: Thank you. The next question comes from Brennan Hawken with UBS.
Paul Jeffrey Taubman: Thank you. Our next question comes from Brennan Hawken with UBS.
Brennan Hawken: Please go ahead.
Ben Rubin: Good morning, this is Ben Rubin filling in for Brennan. Thanks for taking my question.
Brennan Hawken: Good morning. This is Ben Rubin filling in for Brandon Thanks for taking my questions.
Ben Rubin: My first question is on restructuring after a record year last year. It looks like you guys had another strong quarter this 1Q, and it seems like the commentary was quite bullish in that respect. I was wondering if you could just give me a sense of where your restructuring pipeline sits today. And you also spoke of record mandate counts within the strategic advisory practice. So I was just curious, how does that compare for the restructuring group? And then, just lastly, any type of color you can provide around the overall contribution in terms of revenue that the restructuring practice had on this quarter's results would be helpful. Thanks.
Ben Rubin: First question.
Ben Rubin: First question is on restructuring after a record year last year. It looks like you guys had another strong quarter. This one came in it seemed like the commentary was quite bullish with that respect I was wondering if you could just give me a sense of where your restructuring pipeline sits today and you also spoke to record mandate counts within the strategic advisory practice. So I was just curious.
Ben Rubin: How does that compare for the restructuring group and then just lastly, any type of color you can provide around the overall contribution in terms of revenue that the restructuring practice had on this quarter's results would be helpful. Thanks.
Helen Therese Meates: I'll answer the last question first. We don't break out the contribution from each of the businesses; I think we've been pretty consistent on that. And then, in terms of the pipeline, I think Paul's commentary about where we see the year ending up versus last year, as you can imagine, the pipeline would look consistent with that.
Speaker Change: I'll answer the last question and we don't break out the contribution from each of the businesses I think we've been pretty consistent on that.
Ben Rubin: Okay, great. Thanks.
Ben Rubin: And then in terms of.
Ben Rubin: The pipeline I think both commentary about where we see the year ending up versus last year.
Ben Rubin: As you can imagine the pipeline, that's all consistent with that.
Ben Rubin: And then for my follow-up, just on recruiting, obviously, last year was a record year, and it sounds like, you know, it will stay elevated in terms of the pace of this year. And according to the slide deck, which I thought was interesting, there are actually several hires outside of strategic advisory. Could you speak to your latest expectations for the overall pace of recruiting this year? And will you continue to add senior-level talent in areas outside of strategic advisory? Thanks.
Ben Rubin: Okay, great. Thanks, and then for my follow up just about recruiting obviously last year was a record year and it sounds like it will stay elevated in terms of the pace of this year.
Ben Rubin: According to the slide deck, which I thought was interesting there actually are several hires outside of strategic advisory could you speak to your latest expectations for the overall pace of recruiting this year and will you continue to add senior level talent in areas outside of strategic advisory.
Helen Therese Meates: I'll talk about the increase in the partner count, which we disclosed in our report this morning. That does include promotions. Historically, the growth in partners in the businesses outside of strategic advisory has usually been from internal promotions. And within advisory, it's a combination of internal promotions and new hiring. So when you see increases, you shouldn't assume that all of that comes from outside.
Ben Rubin: I will talk about the increase in our patent count, which we disclosed and NII for this morning that doesn't seem promotion.
Helen Therese Meates: Historically, the growth and partners and the businesses outside of strategic advisory has usually been from internal promotes.
Helen Therese Meates: And Levein advisor at the combination of internal promotes and new hiring.
Helen Therese Meates: So when you see increases and you shouldnt assume that all of that comes from.
Ben Rubin: Great, thanks for taking my question.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you.
Operator: That concludes today's Q&A session. I will now turn the call back to Mr. Taubman for his closing remarks.
Speaker Change: That does conclude today's Q&A session.
Paul Jeffrey Taubman: I'll now turn the call back to Mr. Taubman for closing remarks.
Operator: Okay.
Paul Jeffrey Taubman: Thank you all for joining us this morning. We very much appreciate your interest and your support, and we look forward to reconvening after second quarter earnings are released. Thank you very much.
Paul Jeffrey Taubman: Well. Thank you all for joining us. This morning, we very much appreciate your interest and your support and we look forward to Reconvening. After second quarter earnings release, Thank you very much.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Yeah.
Paul Jeffrey Taubman: Right.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Yes.
Paul Jeffrey Taubman: Yes.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Yes.
Paul Jeffrey Taubman: Yes.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Okay.
Paul Jeffrey Taubman: Okay.