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…

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…

[Operator Instructions] 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 your 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 2. 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 to 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 was hoping that you could -- I know, Paul, I heard you sort of loud and clear that the 67.5% is your expectation for the full year. But taking a step back, what's the best way we should be thinking about operating leverage, right, and the path for pretax margin as you continue to see this strong revenue growth as you see the -- as the investments that you've made in strategic advisory begin to bear fruit. How should we be thinking about that either in the year-end and then, of course, into the coming years?

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 2 aberrational years, I think our best operating margin year in a decade.

And then when you think about the operating margin improvement that you guys are likely to generate here in 2025, is that a good way to be thinking about a path forward sort of you never want to anchor overly on one particular year, obviously, because things will move around. But is that a decent way to be thinking about it going forward? Or are there other factors -- what other factors should we consider?

Well, look, I think as a general matter, there's -- we believe in operating leverage in the business. Let's just start there. We also believe in disciplined cost, but not an obsession with cost at the expense of long-term value-enhancing growth. So that's the mix. And since we continue to believe that we should be able to grow our top line faster than our expenses, we think that there's more operating margin to be had. But in any given quarter, any given year, you're buffeted by a lot of very specific things, which makes it very difficult to manage to a number in the short-term, which is why I like to sort of step back a little bit. And what I just suggested is if you look back at our journey as a public company over 10 years and you take out the 2 fantasy years where it just wasn't a normalized world because no one was traveling, no one was entertaining, there were no conferences. There was no travel expense. There was no entertaining expense. If you just strip those out, we're sitting here today saying we're still seeing the fruits of our investment, and we're going to post on a relative basis, our best or near best operating margin. So that, to me, is just a proof point that, a, there's operating leverage in the business; and b, we can get at that operating leverage.

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?

Look, I think there's -- some of this is there's -- you have to really deconstruct the market. So, I'll just give you 2. I don't want to turn this into 3, I'll give you 2 thoughts. Number one, we clearly are dealing in a more favorable regulatory environment. Where is that going to create more momentum? It's going to be in the larger transactions. And if you're dealing with sub-billion dollar deals or $1 billion to $5 billion sizes and everything, but it's probably a pretty good correlation that that's not where there's regulatory complexity. So, it should be no surprise that as you're dealing with a more pro-growth, pro-business administration, you would see more of a skew to the high end, and that gets picked up in dollar values, doesn't get picked up in number of transactions as much. The second would be the velocity of capital with sponsors. And I continue to think that we haven't really gotten the reset with sponsor activity. We will. We hope. And when we get that, you'll start to see that reflective in number of transactions and in transaction count. I think those would be the 2 that I would highlight.

That's helpful color. And for my follow-up, I just wanted to unpack your commentary on the Park Hill business a bit. You noted in your prepared remarks that Park Hill revenues were down year-on-year so far this year and PCS revenues were up, but the placement line was also up. So, I just wanted to -- if you could just unpack that piece a bit more, whether there's some non-Park Hill fees in that placement line. And then also last quarter, you noted that you expect a significant acceleration in PCS fees in the second half. Based on the commentary, it doesn't seem like that came through in 3Q. So, I just wanted to get an update here.

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. And then on the -- just a reminder that the placement line includes Park Hill placement, but it also includes any corporate placement. So, we did have some placement fees that were outside of Park Hill.

Which is just another -- I think all you're doing is you're putting a highlight on the fact that I think we maybe need to transition away from these advisory placement designations because I'm not sure it helps give anybody any real clarity on the business. And we don't spend a lot of time apportioning it one way or the other. At the end of the day, they're advisory with a capital A revenues because they all relate to intellectual capital and intellectual advice. But I appreciate 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.

And then maybe for my follow-up, I suppose just trying to understand to what degree maybe the strong restructuring activity has been a benefit to the comp ratio in recent periods. The headcount here is obviously a little bit lower than the strategic advisory business. So, I guess just in a scenario where maybe the restructuring activity does slow a bit, is it -- is there anything that would lead you to believe that there might be less comp leverage just given the smaller headcount there? And maybe if there's anything else we should be considering in that regard?

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.