Good morning. Welcome to the PJT Partners Third Quarter and 9 Months 2025 Earnings Conference Call. Joining the earnings conference call today is Paul Taubman, Chairman and Chief Executive Officer; Helen Meates, Chief Financial Officer. During the course of this conference call, management 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. These factors are described in the Risk Factors section contained in PJT Partners' 2024 Form 10-K, which is available on PJT Partners' website at pjtpartners.com. The company assumes no duty to update any forward-looking statements. Also, the presentation made today contains non-GAAP financial measures, which the company believes are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, please refer to the financial data contained within the press release the firm issued this morning, also available on the firm's website. With that, I'll turn the call over to Paul Taubman.

Good morning. Thank you all for joining us today. This morning, we reported record results, revenue, adjusted pretax income and adjusted EPS, all reaching record highs for both the 3- and 9-month periods. Third quarter revenue was $447 million, up 37%. Adjusted pretax income was $94 million, up 86% and adjusted EPS was $1.85, up 99% from year ago levels. For the 9 months, revenues increased 16% to $1.18 billion. Adjusted pretax income increased 34% and adjusted EPS increased 43% from year ago levels. Since our last earnings call, we have seen further improvements in the macro environment. Equity prices are near record highs, volatility across equities and credit near historic lows, debt issuance is strong, and the IPO market has reopened. This favorable capital markets backdrop has been an important catalyst in the M&A recovery. Greater clarity on regulatory outcomes as well as increased CEO confidence has further amplified deal-making momentum with many companies revisiting their strategic wish list. That said, we still operate in a world fraught with risk, continuing geopolitical uncertainty, a weakening labor market, stubbornly high interest rates, tariff dislocations, coupled with concerns of an AI bubble have the potential to derail this pickup in activity levels. While we remain optimistic about the near to intermediate operating environment, it is a tempered optimism when balanced against these risks. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail. Helen?

Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the third quarter were $447 million, up 37% year-over-year. And for the 9 months ended September 30, total revenues were $1.179 billion, up 16% year-over-year. Revenue growth for the third quarter and first 9 months was primarily driven by strategic advisory, which was up significantly for both periods. Restructuring revenues rose slightly in the third quarter and first 9 months, while PJT Park Hill revenues were flat in the third quarter and down modestly for the first 9 months. Turning to expenses. Consistent with prior quarters, we presented the expenses with certain non-GAAP adjustments, which are more fully described in our 8-K. First, adjusted compensation expense. We accrued compensation expense at 67.5% of revenues for the first 9 months of the year compared to 69.5% for the same period last year. This ratio represents our current best estimate for the full year 2025. Turning to adjusted non-compensation expense. Total adjusted non-compensation expense was $51 million in the third quarter, up 5% year-over-year and $153 million for the first 9 months, up 10.5% year-over-year. As a percentage of revenues, 11.5% in the third quarter and 13% in the first 9 months. The main drivers of the expense increase for the first 9 months of the year were higher occupancy costs, which are up 19% year-over-year, reflecting the expansion of our New York and London offices and higher travel and related expenses, which are up 25% year-over-year, primarily reflecting higher levels of business-related travel. Overall, for the full year, we continue to expect that our non-comp expense will grow at around 12%, a similar rate to our 2024 growth rate. Turning to adjusted pretax income. We reported adjusted pretax income of $94 million in the third quarter and $230 million for the first 9 months. Our adjusted pretax margin for the third quarter was 21% compared with 15.5% for the same period last year and 19.5% for the first 9 months compared with 16.9% for the same period last year. The provision for taxes, as with prior years, we presented our results as if all partnership units have been converted to shares and that all of our income was taxed at a corporate tax rate. Our effective tax rate for the first 9 months of 2025 was 15.5%, which now represents our current expectation for the full year. This rate is slightly below our previous full year estimate of 16.5%. As a result, the effective tax rate for the third quarter was 14%. The reduction in the full year rate is primarily due to an updated estimate of our income allocation across state and foreign entities. Earnings per share. Our adjusted if converted earnings were $1.85 per share for the third quarter, up 99% and $4.43 per share for the first 9 months, up 43% from the same period last year. For the quarter, our weighted average share count was 43.8 million shares, down 2% versus a year ago. And during the third quarter, we repurchased the equivalent of approximately 186,000 shares primarily through exchanges. Our repurchases in the first 9 months of the year totaled approximately 2.3 million shares. We are in receipt of exchange notices for an additional 115,000 partnership units and subject to a Board approval, we intend to exchange these units for cash. On the balance sheet, we ended the quarter with $520 million in cash, cash equivalents and short-term investments and $558 million in net working capital, and we have no funded debt outstanding. Finally, the Board has approved a quarterly dividend of $0.25 per share. Back to Paul.

Thank you, Helen. Beginning with restructuring. Notwithstanding favorable economic and capital markets conditions, demand for liability management and restructuring activity remains high. Even with a relatively benign credit environment, our market-leading restructuring team continues to deliver strong performance with third quarter and year-to-date revenues at record levels. At the same time, certain corners of the economy are feeling the weight of relatively high interest rates, dislocations caused by higher tariffs, disruptions resulting from accelerating technological innovation and changing consumer preferences. While these headwinds may not yet be broad-based, they are being felt in certain industries, including technology, media, health care, automotive and consumer. For the current year, we expect our restructuring results to meet or exceed last year's record results. Looking ahead, we expect our restructuring bankers to remain highly active as they continue to address liability management opportunities resulting from this concentrated stress. Turning to PJT Park Hill. The primary fundraising environment continues to be challenged by historically low levels of capital return, coupled with a significant increase in the number of managers seeking to raise capital. This, in turn, has elongated fundraising timelines and pressured the quantum of capital raised. As GPs and LPs seek additional paths to liquidity, the same forces that have dampened primary fundraising activity have also served to catalyze continuation fund activity. And more capital has flown into the space as investors have come to better appreciate the attractive return profiles associated with secondary products, creating a virtuous cycle. For PJT Park Hill, third quarter revenues were comparable to a year ago with strength in private capital solutions offsetting lower primary revenues. For the full year, we expect overall PJT Park Hill revenues substantially in line with last year's record levels. Turning to strategic advisory. Many of the pieces necessary for a meaningful rebound in M&A activity have fallen into place as the year has progressed. However, the recovery has been uneven. While we have seen a market increase in larger M&A transactions, we have not yet seen an increase in the overall number of transactions. Even though the average deal size is up almost 40%, the aggregate number of transactions has actually declined. For the 3- and 9-month periods, our strategic advisory business delivered record revenues substantially above prior year levels. Our mandate count has increased meaningfully from a year ago and now stands at record levels. Overall, our strategic advisory business remains on track to deliver another record year as the significant investments we have made over an extended period of time continue to bear fruit. On the talent front, we continue to add talent as we invest in our strategic advisory franchise and the firm more broadly. As a result of our active recruiting efforts, our headcount overall has increased 7% from a year ago and 4 partners joined our strategic advisory franchise in the third quarter. A decade ago, we set out to build a next-generation investment bank. We envisaged a firm where complex challenges would meet creative solutions, where top professionals would build their careers and where success would be defined by excellence, impact and integrity. 10 years in, our firm has grown substantially and so too have our aspirations. Today's mission is clear, to be the world's best investment bank. As we celebrate our 10th anniversary, we would like to take this opportunity to acknowledge the dedication of our colleagues and the trust and support of our clients. And to our shareholders, thank you for your partnership. We continue to see tremendous opportunity ahead, and we remain determined to capitalize on our enormous potential. As before, we remain confident in our near, intermediate and long-term growth prospects. And with that, we will now take your questions.

We'll take a question from Devin Ryan of Citizens.

Congratulations on 10 years.

Thank you. Good to speak, Devin.

Yes, absolutely. So, I want to start, Paul, on the restructuring outlook and appreciate the framing that you gave and still sounds like you expect a strong kind of backdrop there. We've been hearing somewhat mixed trends, I would say, through earnings. And so, I just want to get a sense of how you're thinking about PJT specific relative to the broader macro backdrop for trends because you guys have a leading practice and so potentially outperform the industry in different environments. So, do you still see the environment being very good? Or is this more just about PJT maintaining or even gaining share as you're kind of always going to be active in that business?

Well, it's always hard to deconstruct the market versus your position in the market precisely. But we don't see any real diminution in restructuring activity. We just don't see it. So, we're operating at elevated levels relative to historic levels. But as I pointed out repeatedly, for most of that history, we're looking back at a baseline where the macroeconomic environment was far more constructive than it is today and where money was nearly free, and interest rates were nearly 0. We're also looking at a baseline where the quantum of debt outstanding was meaningfully less. And we're also looking at a baseline where there was not as much disruption, innovation and what we refer to as concentrated stress. So, in an overall accommodative environment, you can have a higher baseline of restructuring activity. We've talked about this repeatedly. We continue to see that. Now as it relates to our practice, the growth pillars beyond what the overall market conditions are, continued penetration of sponsor clients, which will give us a broader addressable market. Second is continued growth outside the United States as we build out local presence around the globe. And the third is, as we continue to build out our industry footprint, we have more relationships with which to leverage. So, I don't spend a lot of time talking about or thinking about the exact interplay of the two. But as we look at our activity levels, they remain elevated, and we expect them to be elevated for the foreseeable future. And I do think there's a call option on a meaningful shock to the system because we're not experiencing any of that today. I'm not predicting it, but none of this assumes any real deviation from the current environment.

I appreciate all that color, Paul. And then just for my follow-up, when I look at partner productivity, I appreciate it's kind of a crude number from the outside. But on a blended basis, it looks like you're on track for a record year productivity on my numbers at least. And I appreciate some of that's very strong restructuring and then you have strategic advisory ramping pretty materially as those partners on the platform mature. So, I'd love to just get an update on how you think about the productivity potential of partners from here, particularly as strategic advisory still feels like the environment is getting better, but then also the bankers on the platform are maturing as they've been doing. And I guess in that question, just love to hear about how you think about what is a reasonable number of kind of revenue per partner for strategic advisory when you're hiring somebody externally? Are you targeting $15 million to $20 million? Or is there a number? Just any more color you can give on how you're thinking about the potential from here given that you're going to have it looks like a record year there.

Yes. I never think about a number. I never talk about a number. I don't believe in a number. What I believe is if you hire difference makers, you ultimately make a difference in your financial results for the positive. I really do. And I think it's so hard to come up with a number because you need to assume an environment. You need to assume how active that sector or that product is at that time. You need to look at what else has been built out at the firm, which creates either tailwind or headwind for those individuals. And then you need to ask yourself, are you looking in year 2, year 4, year 6, year 8? So, we don't believe in that. And as far as the number, in a perverse way, I'd love nothing more than to take the number down. I mean, if tomorrow, we could find 10 incredible partners to add to the platform on day 1, by definition, our so-called partner productivity would go down because those same revenues would be divided by an extra 10 individuals. So, it's a number that we don't spend a lot of time with, but we have great confidence that what we're building is highly additive and accretive to our overall financial results and to our brand and to the service of our clients. And that's how we think about it. And I think it's more of the relative construct. And if you ask me, do I think we've hit maximum levels, I'd say no, not close because there are a lot of partially built systems in our franchise, whether it's just beginning to put our toe in the water in a geography or just beginning the journey to build out an industry group or we have that, but we don't yet have full recognition or we have the recognition from the clients, but it hasn't yet translated into revenue. So, I think we feel very good about the direction of travel, but I don't spend a lot of time thinking about it as a number.

We'll take a question from James Yaro of Goldman Sachs.

Paul, I'd love to just get your perspective on the impact of the government shutdown on the business. Do you expect this to have an impact on the fourth quarter? But really more importantly, how are you thinking about the impact going forward? Is there anything beyond the temporary impact?

Look, I think it has real implications to a lot of individuals in this country who are suffering because of the shutdown, but I don't think that it really affects our business in a meaningful way. It creates some complexities and complications and maybe some timing issues, but I think those pale in comparison to other implications. What I worry about more is ultimately what does this do to the broader macroeconomic environment in the country, which is really a function of how long does this shutdown continue, which workers aren't paid for how long, what resolution do we end up with and what are those implications? I think it's the macro implications that matter more. And the reality is no one has answers to that. So, we're all watching and waiting. I think that's the bigger question is what, if anything, does this do to overall economic output and consumer confidence and business confidence.

That's super clear. Just maybe turning to the primary fundraising business. I'd love to just get your perspective on the ability for that to continue to improve. Obviously, it was down for a couple of years there, and you've seen a nice bounce back there over the past few quarters. So, is this sustainable? And how are you thinking about the outlook for that business?

Well, there's good news, bad news and then back to good news. So, the good news is it's getting better. The bad news is, as it gets better, everyone is going to want to come to tap the market because they've been on the sidelines. So that's going to make it a crowded trade. And then the good news from the bad news is in a crowded market, they're going to want the best fundraising team, and that's going to play to our strength. So, I think overall, it's positive, but it's like everything else; it's never 100% positive. There are some puts and takes there.

We'll take our next question from Brennan Hawken of Bank of Montreal.

I heard you clearly, Paul, that you expect 67.5% for the full year. However, what is the best way to think about operating leverage and the trajectory for pretax margin as you experience strong revenue growth and the investments in strategic advisory start to show results? How should we approach this for year-end and into the future?

Well, I think into year-end, we've given you our best estimate for this year. You talked about operating leverage, which I appreciate the question because to me, operating leverage is what's the pretax margin because ultimately, that's what drives shareholder value. And if you look at our operating margin for this year and you look at it in the historical context of where we've operated, I suspect that if you ex-out 2020 and 2021 when we lived in this surreal world where there was no travel, there was no entertainment, there was no discretionary spend and margins were overly inflated, I think our margins this year are going to be at the high end of anything we've produced in our 10-year journey as a public company. So, we're quite proud of that and we are focused on it. We don't like to focus on any one individual component of that because, a, there's a lot of interrelationships between all of these line items; and b, you're trying not to manage the firm for the here and now, you're trying to manage it for the long-term. But if you're asking me, do we think that there's further margin improvement along the journey, I think the answer is yes. And I just don't want to lose sight of the fact that while we may be running with comp to revenue margins that are higher than our historical levels have been, we also have run this firm at, I think, the lowest non-comp to revenue margins that we've had as a firm. And if you take all of that together, the overall output is quite attractive. But to answer your question, there's more upside from here, and we're going to get at it. But exactly how and when, I don't know. But when I look at it over 10 years, this is going to be ex those two aberrational years, I think our best operating margin year in a decade.

When considering the potential improvement in operating margins for 2025, is this a reasonable way to think about the future? It’s important not to overly focus on any single year due to variability, but is this a valid perspective for moving forward? Are there additional factors we should take into account?

I believe in the concept of operating leverage in our business. We also emphasize disciplined cost management, but we don't prioritize cost-cutting to the detriment of long-term value-driven growth. We maintain that we can grow our revenues faster than our expenses, which suggests that there is potential for improved operating margins. However, various specific factors in any given quarter or year can impact our ability to meet short-term targets, which is why I prefer to take a broader view. Looking back over our decade-long journey as a public company, if we exclude the two unusual years when travel and events were virtually nonexistent, we can still see the benefits of our investments. Currently, we are on track to achieve our best or nearly best operating margin in years, indicating that we do have operating leverage in the business and we can access that potential.

We'll take a question from Brendan O'Brien of Wolfe Research.

To start, I just wanted to touch on the dynamic you flagged, which is the divergence of deal value versus deal count, which is something we've been keeping an eye on ourselves. The drivers of the increase in the larger activity is apparent around derive and things of that nature. But I just wanted to get a sense as to what you think is behind the lack of breadth and activity so far and what could maybe drive an improvement in that dynamic over the next coming year?

I believe we need to really analyze the market. Let me share two thoughts. First, we are clearly experiencing a more favorable regulatory environment, which is likely to drive momentum in larger transactions. Deals under a billion dollars or in the one to five billion range typically involve less regulatory complexity. Therefore, it’s not surprising that in a pro-growth, pro-business administration, we see a tendency towards higher value deals. This results in increased dollar amounts but doesn’t significantly impact the number of transactions. Second, we need to consider the velocity of capital with sponsors. I still think we haven't experienced a reset in sponsor activity, but we anticipate that happening. When it does, we should begin to see a reflection of that in the number of transactions and overall transaction count. Those would be the two key points I want to emphasize.

Thank you for the clarification. For my follow-up, I wanted to explore your comments on the Park Hill business. You mentioned in your prepared remarks that Park Hill revenues have declined year-on-year this year, while PCS revenues have increased, and the placement line has also risen. Could you elaborate on that aspect, specifically whether there are any non-Park Hill fees included in the placement line? Additionally, last quarter you mentioned expecting a significant increase in PCS fees in the second half, but it seems that didn't materialize in the third quarter. I would appreciate an update on this.

Well, just let me just take the latter part. I think it did. And just to recall, those get booked in advisory. So just to be clear, what we said is exactly what happened, and that strength is counted as advisory as distinct from placement in most instances, and that's reflected in our financials. But on the former, I'll turn it back to you.

Yes. Just a reminder that the placement line includes Park Hill placement, but it also covers any corporate placement. We did have some placement fees that were outside of Park Hill.

I believe we need to reconsider the importance of our advisory placement designations because they may not provide clear insight into the business. We don't spend a lot of time categorizing them in one way or another. Ultimately, they generate advisory revenues because they all pertain to intellectual capital and advice. Thank you for your question.

We'll take a question from Alex Bond of KBW.

Just wondering if there's anything that stood out from you in your recent dialogues with clients in regard to the overall credit backdrop. Curious how you're thinking about this broadly given your obviously strong presence in the restructuring market, the fact that private credit remains in the headlines, and we've got a couple of high-profile bankruptcies here recently. So, any color you can add here would be great.

Well, look, I'll just make some general observations. One is when you see spreads tighten as much, I'm not sure that credit has been appropriately priced. I think that's maybe more the issue. And I suspect that over time, you'll probably see sort of more normalized spreads. And as it relates to these situations, unfortunately, malfeasance is a risk factor, and it occurs in bull markets, it occurs in bad markets. And I'm not yet seeing evidence that this is widespread. But when you're putting out an enormous quantum of capital, it does put pressure on diligence, diligence standards. And if you're dealing with individuals or entities that are not forthright and are engaged in improper activity, you're not going to catch all of it, which is why I just come back to some of this may not have been fully reflected in just how credit overall has been priced. What we're much more focused on is the fact that you can't have a world of enormous technological dislocation, all this innovation changes in market sizes, customer behaviors, demand and not have losers alongside winners. Everyone can't be a winner. And we're creating all of these new economy technology companies and new ways for efficiency; there are going to be companies left behind. So, I suspect that if you just take a slightly longer-term lens, the number of companies that are going to need to address their balance sheets is probably more likely to grow than to shrink. It may not happen immediately, but I think there's a longer-term trend at play here.

For my follow-up, I'd like to understand how the recent strong restructuring activity has influenced the compensation ratio. The headcount here is noticeably lower than in the strategic advisory business. If the restructuring activity were to slow down, do you think there might be a decrease in compensation leverage due to the smaller headcount? Are there any other factors we should consider regarding this issue?

Look, obviously, if there are big dislocations to our revenue, good or not, that will affect because this is a roll-up of all of the businesses. But if we continue to have steady growth or if we're going to have a reasonable match between the headcount growth and revenue, then you're just going to see a steady decline in the comp ratio. If you see a disconnect between those as we saw in '23, where you have the overall strategic advisory market meaningfully down. At the same time, you're adding meaningful heads, you're going to see real pressure to the comp line. So, it's like anything else; we see a baseline direction of travel, which is to get our comp ratio lower. But if there is a shock to the system in one place, good or bad, that could either accelerate or retard the improvement. But that's why we never want to lock in precisely to a number. We're much more comfortable talking about the direction of travel and what factors would cause that to no longer be operative.

We have a follow-up question from James Yaro of Goldman Sachs.

I just wanted to ask a nitty-gritty one. Any, I guess, pull forward in the quarter that we should be aware of?

It was relatively modest. It was $8 million this quarter. Last year, it was $6 million, so pretty similar.

That concludes our question-and-answer period. I would now like to turn the call back over to Mr. Taubman for closing remarks.

Well, we thank everyone for their interest and for participating in this morning's earnings report, and we look forward to speaking with all of you in the new year when we report full year results. Thank you, and have a good day.