A very good day to you all and welcome to the PJT Partners Third Quarter 2018 Earnings Call. Your lines will remain on listen-only throughout the call and there will be question-and-answer session at the end. [Operator Instructions]. I’d like to advise all parties that the call is being recorded for replay purposes. I would now like to hand the call over to Head of Investor Relations, Sharon Pearson. Please proceed. Thank you.

Thanks very much. And good morning and welcome to PJT Partners third quarter 2018 earnings conference call. Joining me today is Paul Taubman, our Chairman and Chief Executive Officer, Helen Meates, our Chief Financial Officer. But 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 the 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' 2017 Form 10-K, which is available on our website at pjtpartners.com. I want to remind you that the company assumes no duty to update any forward-looking statements and also the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in 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.

Good morning and thank you for all for joining us today. For the third quarter, we generated revenues of $140 million versus $78 million a year earlier. For the nine months period our revenues were $405 million, up 31%% compared to the prior year with advisory revenues up 37%. Looking at our third quarter results in greater detail, firmwide revenues were 79% with advisory revenues up 94% from year earlier levels. Strategic advisory restructuring and Park Hill all generated higher revenues for the third quarter and the nine months period compared to a year ago results. These businesses also showed sequential growth from the second to the third quarter of this year. Turning to each of our businesses in a bit more detail. In restructuring, our leading global restructuring franchise grew its revenues in both the quarter and nine-months period compared to prior year levels and continues to benefit from close collaboration with strategic advisory. As our strategic advisory business grows in scale and scope, it makes our restructuring business all the more powerful enabling our restructuring business to maintain its financial performance in the face of historically low default rates. Overall, our global restructuring franchise continued its leadership position for 2018 year-to-date with top rankings and announced restructuring both globally and in the U.S. While our fourth quarter restructuring revenues will be down relative to a year-ago levels, due to difficult comparisons, we expect full year restructuring revenues to be flat to only modestly below 2017 results. Turning to Park Hill. Park Hill revenues rose significantly for both the quarter and the nine month period versus year ago levels, driven by real estate and secondary advisory, where we have made sizable investments. Overtime, we expect the breadth of client relationships across the firm to enhance Park Hill’s growth opportunities…

Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the quarter were $140 million, up 79% compared with the third quarter of 2017. The breakdown of revenues, advisory revenues were $117 million up 94% year-over-year with significant growth in strategic advisory, secondaries, and restructuring. Placement revenues were $18 million, up 15% year-over-year. The increase in placement revenues was driven by higher closing volume in the real estate vertical. Other revenues included $2.3 million in reimbursable expenses that we build to clients during the quarter. For the nine months ended September 30, total revenues were $405 million, up 31% comparable to the same period last year, and the breakdown of nine month revenues, advisory revenues were $319 million, up 37% year-over-year with significant growth in strategic advisory and secondaries and solid year-over-year growth in restructuring. Placement revenues were $72 million, up 5% year-over-year. Other revenues for the nine months included $6.7 million in reimbursable expenses that we build to clients during the period. 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. In the third quarter, adjusted compensation expense continued to be accrued at 64% of revenues. Adjusted non-compensation expense was $27.3 million and included approximately $2.6 million of expense which is billable to clients and was historically recorded on the balance sheet. On an apples-to-apples basis excluding the impact of the change in accounting for this expense, adjusted non compensation expense was $24.7 million up 2% year-over-year. And this $24.7 million total expense includes approximately $1.7 million in expense relating to the CamberView acquisition. For the nine month periods excluding the year-to-date reimbursable expense of $7.2 million, our adjusted non-compensation expense was $72.2 million up 6% year-over-year again, including CamberView costs. Turning to adjusted…

Thank you, Helen. Now turning to our outlook. We are still so early in the build out of our strategic advisory business, that we have a tremendous opportunity to take market share and build and a meaningfully larger strategic advisory franchise, almost regardless of market environment. In building out our strategic advisory business, we have consciously aligned it with a broad based set of advisory capabilities, including leading, restructuring and fundraising businesses and now enhanced by the leading shareholder engagement franchise. Overall, we continue to be very pleased with our firm's overall progress and with the contribution of each of our businesses to the overall strength and stability of our franchise. We are confident that we have the right suite of capabilities to best serve clients and that we are well positioned to take market share and grow in almost any market environment. And with that we will now take your questions.

[Operator Instructions]. We have the first question, it’s from the line of Devin Ryan from JMP Securities. Please proceed.

Great. Good morning, everyone. How are you?

Very well, good morning.

Good morning. I guess first question here. I heard the comment on the shadow backlog increasing significantly. I just want to clarify first, is that business that you've been mandated on but it's just yet to be announced kind of into the public domain? And then if you can, any other context around what the client list of the firm looks like today relative to a year ago. I know, you are obviously as time goes on here you have more bankers have been on the platform for a couple of years, so just trying to get some flavor for kind of how the client list is developing and then maybe if you can even kind of what were you're seeing some momentum from a sector perspective?

I think Devin, as I mentioned previously, this is a migration from being an active client dialogue to client mandates. Client mandates often, but not by any means you know all of the time lead to announced transactions, announced transactions lead to completions and booked revenues. And as our number of advisory partners continues to build, particularly for those who were in their early days, what we're seeing is significant traction and take up with clients. The awarding of mandates and it's changing shape in the sense, that as we have bankers in more and more industry verticals we're seeing a broader mix of mandates across industry verticals, as we continue to build out our European franchise. We're seeing additional traction in Europe and as our brand becomes better known as we're in front of more boards of directors, advising more [Indiscernible] executives. I think we're benefiting from that word of mouth. So what we're just trying to capture and I've said this many times is we report out on a lagging basis in terms of revenues and yet we manage the business based on leading indicators. And not surprisingly, now that we've been at this for three years with a broader array of very talented senior bankers, and we're better known to clients around the globe, we're seeing that in terms of the number, the quality, the revenue opportunity, the complexity all of those elements on a forward-looking basis.

Okay, terrific. Thanks for all that perspective. Maybe a bigger picture one on the environment obviously you know a lot of talk this earning season around the volatility of the market and whether growth was slowing and whether that could have an effect on M&A activity, yet it seems at least historically that you need pretty sustain period of volatility to really have a lasting effect. So I'm just curious what your speaking to strategics today, meaning, has anything shifted even over the last month or so with this volatility? And then kind of second part to that is a financial sponsor which I know an important client list of your firm, you have over $1 trillion of dry powder which is a record level and well above kind of the prior cycle peak. So I'm just curious kind of how that also is factoring in here in terms of just the ongoing outlook just to the extent sponsors should remain active kind of through even periods of volatility because they have lot dry powder in kind of the business models to transact?

Well, I think you mentioned volatility and the potential for slowing growth. And I think there are really two different factors here. Volatility is not the trend of the M&A marketplace. So when you have whipsaws in equity valuations on a daily basis it just makes it more difficult to get grounded and to agree to fair valuations, but volatility tends to be more short-term in duration. So from our perspective if you’re going to continue to see heightened volatility I think it incrementally makes getting deals more difficult to get done and makes them more challenging. But over the longer term it’s not at all clear that the volatility that we’re seeing today will itself persist for an extended period of time. I think the bigger issue is whether or not this economy is slowing and there is a whole host of economic data to suggest that it isn't. There is in any dataset some information which is a bit cautionary. From our perspective we step way back. We've always maintained that the M&A business is in a secular growth because companies, all else equal in any given economic cycle or more likely to transact and to transact with higher frequency than they would have previously and we talked about all of those reasons. But we've also said that our M&A business is not immune or any M&A business is not immune to business cycles and we are reasonably long in the tooth on this economic expansion. So, my sense is it continues for some period of time, but it does it continue indefinitely. And therefore we should expect cyclicality and may be a regression to the mean in M&A. But our business model is not predicated on meeting any of that to be successful. Our business model is…

Great. Thanks, Paul. And then just last one here on the CamberView transaction and the closing of the deal, we have our estimate for contribution, but we would love to just get some additional contexts, clearly a number of complementary elements of the transaction, so we see the merits and the revenue synergy opportunities for the firm also seen clear, but maybe hard to parse through on the outlook. I’m just looking for some sense of if you can how trailing production or margins of that business compare to PJT? I’ve just gotten some questions since the announcement. And I know you're not running the firm and you kind of separate groups moving forward. But bringing this large team in how does that affect if at all kind of the longer term operating margin potential of the company? Is it enhancing? Does it track because your to bringing in I guess expense that will add to revenues, but maybe be negative of margins. Just trying to kind of think about it holistically and just how that will contribute financially to the firm?

I mean, I think if you don't give any credit to all of the combination benefits which we think are substantial, it's accretive to our margin.

Well. Okay, great.

Thanks for your question, Devin. We have a next question from the line of Mike Needham from Bank of America. Please proceed, Mike. Your line is now open.

Hey, good morning. The first I’ve got is just a clarification point on the comments you made on the shadow backlog. When you’re saying significant growth, what time period are you thinking about? Was that significant growth versus this time last year, versus the last earnings call, just trying to get context? Thanks.

It relates to one year ago just to track, because it’s hard to look week-to-week, quarter-to-quarter, but if you look year-to-year you can start to see the progress of a firm. And we've always said that we – while we report quarterly and we enjoy these conversations with you all we really do want to build this for the long term, so we try look at longer-term metrics and that was referring to a year ago.

Okay, got you. And for the restructuring business I heard the comments on the fourth quarter outlook and the full-year. How strong was that business this quarter? And do you think it's kind of still operating around a trough run rate level barring any change in the environment? I don't know if there are any quantitative metrics that make sense to share for that business like level of retainers or trended mandates or anything like that?

I think the restructuring business has been relatively stable post that pop that was due to energy prices collapsing in a big level of activity. So since we’ve been operating at these levels for multiple periods and multiple years our presumption is it may not be trough but its a lot closer trough than it is to the peak. And we see a lot of signs that we look out a couple years, this restructuring business is going to be meaningfully more active than it is today. And the fact that we been now want to keep it pretty close to flat with near record low default rates and such benign credit environment gives us confidence that we are in the very good spot here.

Okay. Thanks. And for the CamberView acquisition if we’re not getting the historical financials today, when will we get that?

We will be providing some more thoughts [ph] on pro formas in the next month or so.

Okay. Thanks. And last one just on CamberView. I’m just trying to get sense for, specifically for revenue synergies. How do you anticipate their people are going to work with your Advisory bankers? Will they like physically join them for meetings to corporate clients or will be more of a kind of independent standalone business, and the revenue synergies come from kind of a referral business?

No. It’s a highly integrated effort. There will be certain clients and certain of their expertise where there won’t really be a desire or a need to change anything. And they spend an awful lot of time with their clients on a whole host of governance matters. And there will be many issues where the client would be better served by having a larger more integrated team working together. So they're going to be co-located with us and really a part of our fabric. So we see this as another weapon in our arsenal and it's just enhancing our ability to serve clients. And as you can imagine depending upon the dialogue with the needs of the clients very little may change and we’ll just continue to serve them with best-in-class execution with the core CamberView team. There will be no many instances where clients will want the broader more integrated approach and like everything else we’re going to be driven and guided by our clients. I mean that's what sets this firm apart. We have all of these capabilities, all the ways in which we can support our clients, but at the end of the day it's what the client needs are and how they wish to be covered. And our belief is based on the early feedback that a large number of CamberView client are quite in sync with the broader opportunity to better serve them, and at the same time virtually all of the PGT clients view this additional capability as incredibly creative to their existing client relationships.

Thank you.

You’re welcome.

Thank you for your question Mike. We have a next question from the line of Sumeet Mody from Sandler O'Neill. Please proceed. Sumeet, your line is now open.

Hey, good morning, guys.

Good morning.

Just wanted to get a gauge of your repurchase appetite going forward, taking a look at cash and investments once again at the second quarter at roughly 121, this quarter at 192, spent 35 million of cash on the acquisition considering the share price move we’ve seen thus far in the fourth quarter along with timing to deal close while some vesting of the shares with service market condition. Just wanted to know all of that was kind of performing your strategy around repurchases going forward?

Well, I think the first indication of that is we’re presented with nearly 0.5 million units for exchange and we’ve elected to continue our repurchase to them for cash. So we’re going to repurchase in short order nearly 0.5 million units. So I think that gives you a pretty good sense as to how we think about our stock and our willingness to put capital behind it.

Okay. Thanks.

Thank you for your questions, Sumeet. We have our final question is from the line of Jim Mitchell from Buckingham Research. Please proceed. Your line is now open.

Thanks. Good morning. Maybe just a question on back to restructuring; we have interest rates backing up. We’ve have record levels of leverage loans. Do you see any near term opportunity as rates potentially backup further for that business to peak up over the near and medium term? Or is it still – we kind of need to wait for the cycle before we get that kind of an opportunity to grow the business again?

I think this is the micro and the macro. And what we’ve seen over the last few years is there are meaningful pockets of distress that are disproportionately affecting certain industry and that those industries that are being disrupted with meaningful dislocations are finding themselves in need of major restructurings. And that’s why with a very benign macro environment you saw a big wave of energy restructurings. You’re seeing a big wave of retail restructurings. There’s a big wave of technology restructurings. There is wave of pharmaceutical restructurings and specialty pharma and the like. So that continue migration from one industry to another, we don’t expect to stop. And I think that’s one of thing which has enabled the set rate for restructuring activity to be higher in this macro environment that it has been in past. At the same time one of the things that keeps companies from needing to restructure is incredibly accommodating capital markets. And as refinancing opportunities dry up and as the cost of refinancing gets higher you see stress in the system and you see an acceleration of that day of reckoning. And there are in any macro environment there are significant number of companies and/or industries that are hobbled. And I think this volatility, the fact that money is likely to be less available and when available at higher cost just means that over time restructuring will turn. One of the great luxuries of this firm is we don’t spend the lot of time focuses on where the macro is going because if we build the right macro we’re going to be able to deliver significant growth, repeatable growth for quarters, after quarter, after quarter to come and that’s how we think about it, but certainly if you said to me to look out some number of years as oppose to some number of quarters I have to believe for a variety of reasons that the level of restructuring activity should grow significantly not least in which is the quantum of paper that’s out there that would need to be dealt with is just massively larger than it was a decade or so ago.

Absolutely. Okay. Thanks. And then maybe another question on -- follow-up question on the buyback capacity; I just want to make sure understand, I mean, number one you have a 100 million authorization, I think that just for Class A shares that doesn’t necessarily apply to partnership unit of repurchases. Is that right? I guess is the first question. And then I guess what is sort of – question number two; what sort of the limit of your capacity? Is there a certain cash level that you don’t want to go below? How do we think about your capacity to do more exchanges?

Okay. Well, I think the first is we view the exchanges separate from the open market repurchases. The board granted us the authorization. It’s still got meaningful room and if we get towards the end we’ll revisit that. And on a quarterly basis when exchanges are presented to us the board makes a decision quarter-by-quarter how to settle those and continuing with past practice we’re going to settle this in cash. I think it’s fair to say that we are big believers in our stock. We’re big believers in making sure that we contain any dilution that occurs from value-added growth, but at the same time we also want to be discipline and make sure that we don’t commit dollars beyond their means. And right now we’re very comfortable with that. But you should know that you have a conservative but forward-leaning management time, conservative in financial policy but forward-leaning and being prepared to commit resources to buy stock and what we believe to be compelling values.

Okay. Thanks.

I think with that, we will close this call. And we look forward to speaking with your on our next quarterly review. Thank you all for joining.