Brennan Hawkin

Brennen Hawkin of Bank of Montreal inquired about the operating leverage and the projected path for PJT Partners' pre-tax margin, considering strong revenue growth and investments in Strategic Advisory. He also asked if the operating margin improvement seen in 2025 is a sustainable path forward.

Answer

Chairman and CEO Paul Taubman stated that PJT Partners expects its operating margins for the current year to be at the high end of its 10-year history, excluding the "aberrational" years of 2020 and 2021. He affirmed belief in further margin improvement through operating leverage and disciplined cost management, aiming to grow the top line faster than expenses, despite short-term fluctuations.

Brennan Hawkin asked about the restructuring business, specifically if Houlihan Lokey is seeing a slowdown in new business activity despite a robust backlog, and inquired about the return of sponsors to the corporate finance market and the outlook for M&A activity.

Answer

Scott Adelson, CEO, confirmed a slowing pace in new restructuring business but noted the backlog remains robust, with episodic shocks still contributing. Lindsey Alley, CFO, added that sponsors have been active for Houlihan Lokey since the beginning of the fiscal year, unlike some larger cap peers, and momentum continues to increase in corporate finance.

Brennan Hawkin asked about the restructuring business backlog and new business formation slowdown, as well as the return of sponsors to the corporate finance market and the outlook for activity.

Answer

Scott Adelson, CEO, confirmed a slowing pace in new restructuring business but noted a robust backlog and potential for episodic spikes. Lindsey Alley, CFO, clarified that sponsors have been active for Houlihan Lokey since the fiscal year began, differing from some larger cap peers, and momentum continues to increase. Scott Adelson added that corporate finance activity is improving quarter by quarter, with a significant uptick post-Labor Day.

Brennan Hawkin asked about Northern Trust's strategy of allowing more marginal business to roll off, questioning if this prioritizes profit growth over top-line growth and if it might lead to top-line headwinds offset by better unit economics. He also sought clarity on any fee rate pressure experienced in the Asset Servicing and Investment Management businesses, separate from GFO.

Answer

Michael O'Grady, Chairman and CEO, confirmed the focus on profitability, particularly in Asset Servicing, aiming for greater profitability and growth in profitability even if it impacts gross top-line growth. He detailed efforts to improve margins through accretive new business, optimizing existing activities, and enhancing operational efficiency via the client-centric, capability-driven operating model. O'Grady noted consistent, persistent pressure on asset management fees but no specific reduction in servicing fee levels, emphasizing disciplined pricing for accretive margins.

Brennan Hawkin inquired about Northern Trust's strategy of allowing more marginal business to roll off, asking if this indicates a focus on profit growth over top-line growth and potential top-line headwinds. He also asked if there was fee rate pressure in the servicing and investment management businesses, separate from GFO.

Answer

Chairman and CEO Michael O'Grady confirmed the focus on profitability, ensuring new business comes in at accretive margins, and improving efficiency through their client-centric, capability-driven operating model. CFO David Fox noted consistent, persistent pressure on asset management fees but no specific reduction in servicing fees, emphasizing disciplined pricing for accretive margins.

Brennan Hawkin inquired about how much more substantial the private markets base (Carta + Solium) is now compared to 2021, given the robust capital markets activity.

Answer

CFO Sharon Yeshaya stated that it's 'just the beginning,' emphasizing how the workplace channel, across net new assets and IPOs, is building out the integrated firm. She highlighted the ecosystem's potential to work with companies and founders throughout their entire lifecycle, from inception to market.