Good day and welcome to the PJT Partners, Fourth Quarter 2021 Earnings Conference 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, ma'am..

Thanks very much, Cody. Good morning and welcome to the PJT Partners full-year and fourth quarter 2021 Earnings Conference Call. 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.

Before I turn the call over to Paul, I want to point out that during the course of this conference call [Indiscernible] 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 2020 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 that 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, which is also available on our website, and with that I'll turn the call over to Paul..

Good morning. Thank you for joining us today. Full-year 2021 revenues were $992 million, down modestly from 2020's record-setting performance. In 2020, our results were driven by an extraordinary run-up in restructuring revenues coupled with market-leading growth in Strategic Advisory.

In 2021, all of our businesses away from restructuring delivered record performance. In restructuring however, the story was very different. Our 2021 restructuring results were treated two levels below 2019 performance. A greater decline than we had previously anticipated.

This sharp step-down more than offset strong performance in all of our other businesses.

The silver lining from this abrupt decline in restructuring activity, is that the headwinds we experienced in 2021 are pretty much behind us, and with our other businesses set to deliver strong performance in 2022, our firm is well positioned to resume its long-term growth match.

After Helen reviews our financial results, I will speak about our businesses in more detail..

Good morning. Beginning with revenues. Total revenues for 2021 were $992 million, down 6% year-over-year. As Paul mentioned, while we had record revenues in Strategic Advisory, PJT Park Hill, and PJT Camber view, the very significant year-over-year decline in restructuring revenues, more than offset that growth.

For the fourth quarter, total revenues were $313 million, down 3% year-over-year. In the fourth quarter, record revenues and Strategic Advisory were offset by a significant decline in restructuring revenues.

The magnitude of the year-over-year decline in restructuring in the fourth quarter of 2021 was slightly less than the decline we experienced in the third quarter 2021. We also had record corporate placement activity in the fourth quarter. Turning to expenses.

Consistent with prior quarters, we've presented the expenses with certain non-GAAP adjustments, which are more fully described in our 8-K. First adjusted compensation expense. Full-year adjusted compensation expense was $625 million down almost 7% year-over-year, with a compensation ratio of 63% down from 63.5% in 2020.

As we did last year in determining the final compensation expense for the year, we looked at the totality of the year to reflect full-year performance, full-year recruiting activity, as well as external factors such as the competitive landscape.

Given we've accrued compensation of 62.5% through the first nine months of the year, the resulting fourth quarter ratio was 64.2%. As we've done in the past, we'll communicate our accrual for compensation expense for 2022, when we report our first quarter results. Turning to adjusted non-compensation expense.

Total adjusted non-compensation expense was a $124 million for the full year 2021, up 11% year-over-year, and $31 million for the fourth quarter, up 13% year-over-year. And as a percentage of revenues, 12.5% for the full year and 10% for the fourth quarter.

For 2021, the year-over-year growth reflects increased senior advisor costs, higher recruiting costs, as well as increased expense relating to the investments and information technology. We did experience a step-up in travel and related expense in the fourth quarter as we started to return to more normal levels of business travel.

Looking ahead to 2022, outside of traveling-related expense, we expect our other non-comp expense to grow on aggregate in the low-teens percentage year-over-year, with continued investment in talent, continued investment in IT, and increased business activity.

We do expect travel and related expense to increase in 2022, although it's unclear at this stage by how much. As a point of reference, our pre -COVID travel expense was approximately $2 million per month.

Turning to adjusted pre -tax income, we reported adjusted pre -tax income of $242 million for the full-year 2021, down 11% year-over-year, and $81 million for the fourth quarter down 19% year-over-year. Our adjusted pre -tax margin was 24.4% for the full-year and 25.9% in the fourth quarter.

The provision for taxes, as with prior quarters, we've presented our results as if all partnership units had been converted to shares, and that all of our income was taxed at the corporate tax rate. Our effective tax rate for the full year was 22.3% down slightly from the 23% estimated rate we applied for the first nine months of the year.

In 2022, we would expect our effective tax rate to be approximately 25%. This rate will move depending on the ultimate value of the tax benefit realized related to share deliveries, and we will refine our view at the end of the first quarter. Earnings per share.

Our adjusted, if converted earnings, were $4.44 per share for the full-year and $1.52 in the fourth quarter. Share count for the year ending 2021. Our weighted average share count was 42.4million shares up 2% year-over-year.

During the year, we repurchased a record 3.2 million shares in share equivalents, and we're currently in receipt of exchange notices for an additional 103,000 partnership units. As we have done in the past, we will exchange these units for cash. The board has approved an increase in our quarterly dividend from $0.05 per share to $0.25 per share.

The dividend will be paid on March 23rd, 2022, to Class A common shareholders of record as of March 9th. Consistent with our capital priorities, we will continue to focus on investing in the business, and use excess cash to reduce the diluted impact of these investments.

We continue to be mindful of our float and notwithstanding the record level of repurchases that float grew modestly this past year and has grown by a 1/3 since spin.

On the balance sheet, we ended the year with $200 million in cash, cash equivalents and short-term investments, and $261 million in net working capital and we have no funded debts outstanding. I'll now turn back to Paul..

Thank you, Helen. Beginning with restructuring. The risk on low interest rate environment that fueled markets in 2021 is increasingly under attack, as we have often said more and more companies that have been severely disrupted by COVID-19 will need to address their capital structures as financing markets become more difficult.

Recent supply chain disruptions and inflationary pressures have only increased the challenges for many of these companies. Higher levels of debt and leverage, less favorable financing markets, and mounting business locations will ultimately drive significantly increased restructuring activity.

Our restructuring and advisory practices are working closely together to ensure that we are well-positioned to advise our clients as opportunities present themselves. Our current outlook for restructuring is for similar activity levels in 2022 relative to 2021. However, it is only a matter of time before we see a meaningful uptick in activity.

Turning to PJT Park Hill. Our PJT Park Hill business delivered record performance in 2021 with strong year-over-year growth. PJT Park Hill is benefiting from the strong secular growth trends taking place in the alternative asset space.

In light of the record pace at which capital has been deployed, sponsors are coming back to market earlier than previously anticipated. And with larger fund sizes. Accordingly, we expect 2022 to be a very active fundraising year for alternative asset managers.

Our firm-wide financial sponsor initiatives are increasingly benefiting from closer collaboration and coordination between PJT Park Hill and Strategic Advisory. PJT Park Hill's pipeline continues to grow and the business is expected to have a strong 2022. Turning to Strategic Advisory.

In our Strategic Advisory business, we began 2021 with considerable momentum in most all of the leading indicators that we track. These include breadth and depth of footprint, brand recognition, level of client engagement, and number of active mandates.

Even with such positive leading indicators, it often takes time for this momentum to be reflected in our financial results, and when it does, it frequently does so in a step function manner. This was the case in Q4, where we had a record quarter in Strategic Advisory by a significant margin.

We previously spoke about 2021 Strategic Advisory results being back-end weighted, and this fourth-quarter contribution helped us deliver strong year-over-year growth in Strategic Advisory. Even with all of our success to date, our Strategic Advisory business is still early in the build-out phase and remains very much an idiosyncratic growth story.

Our success has been and continues to be far more closely linked to the pace and payoff of our many investments than it is to the health of the overall M&A market. On the investment front, we continue to make significant investments in our capital markets advisory group, adding three partners to the practice since December.

We are increasingly seeing the payoff from these investments and expect this business to generate significant growth for the foreseeable future. In Europe, we have consistently added talent at all levels. In 2021, our European Strategic Advisory headcount increased more than 25% and it's now more than three times the size it was six years ago.

We continue to gain greater traction with European clients and have steadily increased our win rates and market share in the region. Our investment in PJT Camber View has enabled us to broaden our expertise in governance, say-on-pay, shareholder activism, strategic IR, and ESG, leading to more Strategic Advisory wins.

Our overall Strategic Advisory mandate count, has grown substantially these past two years, nearly doubling during that time. While we began 2022 with activity levels up meaningfully across-the-board, we do not expect much of this momentum to be reflected in our financial results until later in the year.

We continue to be an idiosyncratic growth story. Even though we expect 2022s M&A market to cool, we remain confident in our 2022 Strategic Advisory growth prospects. Allow me to talk about our capital priorities. Our capital priorities remain unchanged. Our number one priority is to attract highly talented professionals to our firm.

We remain committed to further investment in all our businesses, with the lion's share of that investment directed to Strategic Advisory. In 2021, Strategic Advisory headcount increased 19% with overall firm-wide head-count up 11% in the same period.

Our second highest capital priority is to offset the equity dilution from our substantial and sustained human capital investment. As Helen mentioned, we repurchased a record number of share equivalents in 2021, enabling us to end the year with fewer shares outstanding than when we began.

Even with our steadfast focus on these two priorities, we are in a very strong financial position, enabling us to increase our shareholder dividends. We paid a $3 per share special dividend in October, and we announced this morning that we are increasing our quarterly dividend from $5 to $0.25 per share.

Looking ahead, we begin 2022 with a firm that is demonstrably stronger and more powerful than a year ago. The headwinds we experienced in our restructuring business in 2021 have subsided and the business will, over time, capitalize on the enormous opportunities that will inevitably present themselves.

Our biggest growth engine, Strategic Advisory, continues on its significant growth path, becoming an ever-increasing part of our firm-wide results. In Strategic Advisory, PJT Park Hill and PJT Camber View, all are well-positioned entering 2022 with the strength of these businesses increasingly shining through as the year progresses.

Before I conclude, I would like to reflect on the passing of our board member, Dennis Hershey. Dennis joined our board in 2015 and was our lead director. He served with great distinction, playing a critical role in our formative years.

He was a big believer in the importance of culture, and helped shape the unique work environment that makes our firm so special. We will continue to build the firm that Dennis would be proud of, and we're forever grateful for his guidance and support over the years. Thank you..

Operator, we will open it up for questions..

Thank you. [Operator Instructions] We will take our first question from Devin Ryan with JMP Securities. Please go ahead.

Thanks. Good morning, everyone..

Good morning, Devin..

Just want to unpack the outlook a bit more on the overall Advisory business. And I hear the comments on restructuring and the out-look there. I'm curious on Strategic Advisory whether there is any push-out in revenues from the back half of 2021 in the early 2022.

I know you have some chunky deals and also some SPACs that have been taking longer to complete. And so just I want to get a little perspective on the back-half relative to expectations or more specifically, the fourth quarter.

And then if it's possible to parse through on the Strategic Advisory side, the outlook there into 2022, just with the significant step-up in partners that have been on the platform for less than two years, and how relevant the productivity of those partner scaling is?.

Sure. Let me take a crack at this and I'm sure I will get to some, but not all of your question in one bite and then [Indiscernible] you come back if I haven't hit all of your points.

We still have a relatively undersized footprint and as a result, when we make progress, it tends to be very much focused on where we've made investment, and the payoff on that investment.

And when we step way back and look at the mandates that we have that are active, that we're pursuing, that number continues to grow, and it continues to grow at a very substantial pace, and has continued to grow very significantly over the past two years.

Now when things hit and when they don't, that's just sort of the nature of the business, which is why it's such a lumpy business, and as our footprint gets bigger and bigger, you'll see probably less variance quarter-to-quarter, than you currently see, which is why we look at this on a one-year, two-year, three-year basis.

And if you look at how much we've grown our Strategic Advisory business over the last two years, it is very significant numbers. We were dramatically out of sync with the market in 2020 because we grew the business at a pace that no one really came close to.

We continued to grow the business at a considerable clip in 2021, but on a relative basis, it did not look as compelling as it did the year prior but over the two years, it was top of the pack.

And I see those elements of our business continuing to present themselves into 2022 but the way in which individual transactions hit as far as moving from a mandate to an announcement or an announcement to a closing, it's just lumpy. It's just the way it is..

Got it. Okay. And then, moving on a little bit here to restructuring and the outlook there. I appreciate the expectation and activity levels, at least in the model. How you guys are thinking about it? It will be flattish.

What is the risk to the downside, but also the upside there as we think about this macro backdrop evolving? And are you seeing any signs of a pickup or is it just more an indication that if your rates move significantly higher than that could essentially be a catalyst to drive more activity there?.

Sure. So, restructuring is a bit different when I talked about the lumpiness in Advisory. I think restructuring has a different dynamic to it. What we saw at the beginning of COVID, and we were there early and we were there in a leadership position, a record number of situations were resolved in an extraordinarily compressed period of time.

And as a result, traditional restructurings that might have extended into 2021, many of those resolve themselves in 2020. And as this year went on, our restructuring business, given the benign environment and the fact that there was less of an imperative to resolve some of these situations, those situations started to take longer and longer.

So, we had acceleration of the most immediate and pressing restructuring situations into late 2020. And then we had a change in the cadence with things taking longer. I certainly see a meaningful change in the dialogues that we're having.

But I will own the fact that I was perhaps with hindsight too optimistic about our restructuring business in 2021 and as a result I'm going to be cautious for now and say, I see it to be pretty much the same, but we certainly are seeing increasing stress building in the system, and we are seeing companies having more difficulty in refinancing.

We're seeing companies more nervous about their business prospects, and that to me is an essential element for a change in restructuring. But I certainly think that the headwinds are behind us, when we get the tailwinds, it will happen I'm just not yet prepared to say it's going to happen soon..

Okay. Terrific context there, Paul and then just last quick one here if I can squeeze in on the shareholder advisory or PJT Camber View, given that it's hard for us to kind of see the contribution there.

I appreciate it's integrated with the overall business, but any way to kind of frame out how that business has been growing and contributing since it was acquired in late 2018 or size and scale today relative to that?.

Well, it's more than doubled its business since then in terms of resources that are committed to it and its results, but what we look at more than anything else is how that business integrates into our broader Strategic Advisory footprint. Because at the end of the day, they have a market-leading presence.

They have enormous footprint and the opportunity for us to provide an integrated opportunity is what really squares the circle.

It makes all of our businesses better, and increasingly what you should see is, as we continue our momentum in Strategic Advisory, that if you go back and look at where some of those relationships or introductions or initial relationship with our firm originated from -- it will be from the shareholder Advisory side, and given what is going on in the broader environment, with increase in shareholder activism, increase in shareholder engagement, the need to crisply and powerfully tell one's story to investors.

All of the ESG threads, as you put all of that together, our offering becomes of greater relevance and it just helps us scale and get our message out to a much broader audience. So increasingly, it's just going to be one integrated offering..

Okay, great. I'll leave it there, but I appreciate it..

Thank you, Devin..

Thank you. We'll take our next question from Richard Ramsden with Goldman Sachs..

Okay. Good morning, everyone. Paul, can you just expand a bit on your comment that you expect the M&A market to cool a bit in 2022.

What are the factors that you think are going to drive that? Is that interest rates? Is that this pickup in market volatility? And then, within that, are there any either product verticals or geographies that you think will see greater normalization than others? Thanks..

Sure. We'll look. I think that the current market broadly remains quite hospitable to M&A, so I think we're going to continue to see elevated M&A activity by historic standards. But if you're asking me, how does this year compare to last year? I think financing markets are a bit more challenging.

But more to the point, what it does, is it creates price volatility, and when you have price volatility, it makes it more difficult for many parties to come to agreement on valuation, the whole valuation, discovery process becomes elongated and a bit more complicated. So, I suspect that that probably affects things a bit.

I think we've already seen in a very large transactions, there have been a lot of self [Indiscernible] where companies are not prepared to embark on quite ambitious transactions because of fear of anti-trust review, or very long reviews which add to the risks, so I think we've already seen that trend.

I suspect that that trend continues, and may at the margin increase. I think with just a little bit more uncertainty around the world with some European elections and the like, my sense is that you probably have a lot of individual factors that probably will serve to cause activity levels to cool a bit, from the year before.

So, if you had to ask me, my crystal ball -- I think it'll be it'll be quite active, but it will be less..

Okay, that's helpful.

And then secondly, maybe it's just not possible at this point in the year to answer this, but I'm going to just try anyway, which is, if you just take a step back, can you just frame what your revenue growth expectations are in totality for the business for this year? And obviously there's a lot of different moving parts around what you think the market will do, the 19% growth that you talked about in head-count in Strategic Advisory, different cost currents in the restructuring business and obviously strength in the Park Hill business.

What do you think is a reasonable revenue growth rate for 2022? Is it going to revert back to the longer-term average or do you think it's going to be below that level?.

That is very hard to give you a direct answer on because I just don't know. What I do know is we had three businesses that were growing handsomely in one enormous headwind, which sort of more than offset all of that. That headwind is gone, but I just don't know whether or not we're going to get any lift in restructuring this year.

So, we may have one of our important businesses is clearly a much smaller percentage of our business today than it was a year ago. But it may be treading water this year which obviously tamps down growth. Our Strategic Advisory business continues to grow at very significant rates.

And the Park Hill and Camber View business grow, but they grow at lower rates. So, it's a little bit of how that all comes together in a consolidated manner.

But I certainly feel quite comfortable that we're going to resume our growth March this year because, when you look at 2020 and 2021, you need to look at them together, you can't really look at 2021 with the step down in restructuring without looking at 2020 with the step up, and if you look at those two years together, and see that in those two years, our restructuring business actually retreated a bit.

And then look at the growth in our other businesses that took us from 2019 to 2021 levels. You start to get a sense of the underlying trajectory of our other businesses..

Okay. All right. That's helpful. Thanks a lot, Paul..

Thank you, Richard..

Okay. We'll take the next question from Steven Chubak with Wolfe Research..

Hi, good morning..

Good morning..

I wanted to spend some time just talking about the expense outlook. The comp accrual for 4Q was a little bit higher than we were anticipating.

How much did inflationary pressures impact the comp ratio, and what comp accruals should we be contemplating for the coming year given the combination of a better revenue outlook, some easier restructuring comps, but at the same time, just the headwinds from general wage inflation and intensifying competition?.

Sure. So, if you step way back, we made our initial comp accrual in the first quarter. We played out four quarters, and at the end of the year, our comp accrual for the year was 50 basis points off of what we accrued at the beginning of the year.

And I think we've been pretty clear that the restructuring environment was more negative than we had believed it to be at the beginning of the year and throughout the year.

So, when I step way back, if our initial comp accrual can pretty much hold up within 60 basis points, given what we saw in one of our important businesses, I think we've just been exercising a bit of judgment to reflect the fact that revenues were a bit disappointing relative to our expectations. And we're always cognizant of the competitive market.

And our view is that we want to make sure that we're always investing in our people, in our business, and we're always moving forward and not being overly tethered to a comp ratio for one quarter.

The second thing I'd say is you need to look at 2020 and 2021 together, really as a pair trade because of what I said, the run up and the run down in restructuring. Over that period of time, we took our comp ratio from 64.1% to 63%. So, we continue to believe that over time you're going to see our comp ratio come down.

But how much it comes down in a given year is just going to be a function of what our business performance is that year, the quantum of recruiting that we do, and the competitive environment, but I do believe it will continue to come down.

But the pace and exactly how that happens, we need to actually play out the years and the quarters to figure that out with exactitude..

Thanks for that context, Paul. It's really helpful. Just for a follow-up on placement fees, which it's interesting you were talking about Strategic Advisory and some of the other top-line drivers maybe growing more slowly, but your placement revenue is actually growing at a 25% CAGR over the last three years.

And you noted that the backdrop for alternative fundraising remains quite constructive.

What do you see as a sustainable growth rate for that business? Can you provide some context on some of the other drivers there as well, recognizing that maybe SPAC related pipe placements, things of that sort might slow down in the face? What's still a pretty constructive fundraising backdrop for alternatives?.

Look I think increasingly, the way to look at this is on a total revenue basis because when you talked about the Strategic Advisory, there are a number of Strategic Advisory initiatives and revenues that show up in the placement line. So, when we do a SPAC underwriting or when we do a placement of a pipe or a corporate private placement.

So, we are increasingly seeing Strategic Advisory revenues show up in both lines and in a similar vein in our Park Hill business. As we continue to grow the secondary advisory business, some of the Park Hill revenues related to secondaries and GP solutions, show up in Advisory.

So, it's not nearly as pure a distinction as it was 6 years ago, and as a result, I think the best to understand our firm is to rely on the commentary that I've given you and to look at the total revenue. Because if you try and allocate it to business unit based on advisory or placement, I don't think you'll be getting at the underlying trends..

Thanks for that, Paul. Maybe just if I could squeeze in one more just on this SPAC -related outlook. SPAC M&A had certainly been a big contributor to your results in 2021, and we even see a big contribution just in terms of the overall backlog composition.

I was hoping you could help size the contribution from SPAC -related M&A since I know there's some imprecision in [Indiscernible] related forecasts, and your outlook given the drop-off in SPAC -related issuance and some of the poor performance we've seen in SPAC -related deals?.

Yes. I think when I gave my outlook for Strategic Advisory, it was inclusive of SPAC.

I think we certainly see the market to be more challenged this year than it was last year so none of that is lost on us, but we're increasingly seeing just the totality of our strategic dialogue across all products in all geographies and in an industry, that's continuing to expand and we may or may not get to the levels we enjoyed last year.

We just announced a significant SPAC transaction a week or so ago so we're going to continue to do those. We're not relying on that market staying anywhere near at the frenetic pace. It was a year ago.

I will also point out that a year ago we said that the market was tolerating a lot of marginal transactions, and that we were only focused on the highest of high-grade situations. And that continues to be the case.

So, to the extent there are transactions to do, they're more likely to be with companies that meet our underwriting standards and who were prepared to commit time to. But as a broader trend, we see enormous opportunities in capital markets advisory.

But I'm loathe to start talking about each one of these as their own business, because at the end of the day, we're about relationships, we're about clients, we're about advice.

And if you're going to have the best firm delivering the best advice, you need to have holistic conversations with clients and that starts sometimes with a capital markets issue. Sometimes it starts with strategic issue related to a particular industry.

Sometimes it relates to activist engagement and as we just build out the tools and as we have more ways to connect with clients and to serve clients, it'll ultimately manifest itself in our Strategic Advisory business. But what the linchpin was is beside the point.

So while we talk about this individual capabilities, what makes Our firm unique is how integrated we are, and how it's all about client relationships and solutions and SPACS have their plates, but we're not a firm that's organized around how to just do specs or do one particular type of transaction is if it makes sense, and if there's a market opportunity, and we can move our clients further along by using that as an option, we will, but we're sort of agnostic to the technology and much more focused on what's the right advice for our clients..

That's great color, Paul. Thanks so much for taking my questions..

Absolutely, Steven. Thank you..

Thank you will take our final question from Michael Brown with KBW..

Great. Thank you, Operator. Most of my questions have been touched on but I did want to dig in a little bit on Europe. Paul, in your prepared remarks, you talked about the growth of the franchise there. And then in your commentary about 2022, you mentioned there's some uncertainty with elections there. There's also rising tensions on the Ukraine border.

So, I just wanted to hear a little bit about what you've been seeing year-to-date.

I know it's still early in the year, but how is activity performing right now? Is it generally kind of quieter in the region or is there still activity progressing at this time?.

I appreciate the question, because you really got to the heart of the matter, which is we are an idiosyncratic growth story and I think both of those things are correct, and they can both coexist, which is we continue to see enormous opportunities for our global franchise.

And we see enormous opportunities for us to continue to build out our European presence. I'm not sure that Europe as a market will grow this year. It may be challenging to match last year's levels. I think there are some puts and takes. You'll probably continue to see more sponsor activity in Europe.

I suspect that with French elections with as you said, rising tensions and just some unease amongst corporates, you may well have a less than record-setting year in Europe, but we're still quite comfortable in our European prospects, no different than how we see the U.S.

and the rest of the world and our growth is very much a function of where resources are committed, how long those resources are out there.

The capabilities that we can build around it, and we're literally building our firm -- one client at a time from the bottom up, and we're mindful of the macro, but we're much less tethered to it and I think you've seen that the last two years, and I think you'll see it again this year.

I suspect that we're just going to continue to grow pretty much regardless of what the macro environment is..

Okay, great. And then, just one last one for me on the talent front.

Where is your Partner headcount today? It looks like it ended the year at 97, and if you just give us that update? And then, what is your outlook here in terms of hiring? How is that competitive landscape? Is it fair to assume that 2022 could be a bit better than 2021? Obviously, it's always idiosyncratic, but would love some commentary there..

What -- let me start and then I'll turn it over to Helen. So just some statistics to maybe help a bit. So, as we mentioned in our remarks, Strategic Advisory headcount grew 19% this year. From Strategic Advisory Partner count we expect year-in and year-out.

If you look at our experience, the net adds if you will, net additions, they've been about 6, or 7 Strategic Advisory partners a year. I think this year that number will have been 6. COVID has not helped our recruiting efforts. It is just more difficult to appreciate how special a place this is when you cannot walk the halls and engage with folks.

And for a significant part of the year, a lot of the dialogues that we were having, we did not get as far as we would been back in the office. It's interesting to note that with our return to office, how much the recruiting picked up and we've added and will add four Strategic Advisory partners starting between the months of December and February.

So, we see the way we ended the year from a recruiting perspective is much more indicative of what the partner growth will be in 2022. And I think Zoom works for lots of things.

If you're recruiting best-in-class individuals who are quite successful at their incumbent firm, the best way to get people to make that commitment is to have everybody back in the office. And as we return to the office, not surprisingly, we've seen a big uptick in our partner onboardings.

But if there are other questions, Helen can give you more specifics..

Just a concern, that's correct Michael. 97 partners as of 12-31, which includes 56 partners and advisory. And as Paul said, since then, we have gone through the promotion process, so we've added some partners and also hide some partners, when we report one, all of that will be reflected in our updated headcount numbers..

Okay. Great thank you Helen and Paul..

Great..

Thank you, you have another question from Jeff Harte, with Piper Sandler..

Good morning. A couple left for me. Thinking about the alts fund-raising and what's going on with Park Hill. Can you talk a bit about the longer-term secular outlook which I get investor demand for all keeps rising versus maybe any potential near-term headwinds? I mean, the market has been awfully volatile, I'm not sure how big of an impact that has.

Do higher interest rates provide more competition for capital, maybe slow things down, do you but kind of near-term versus long-term Perspective there?.

The tailwind is a headwind, right? With everybody coming back to market, you're going to have a crowded marketplace, and given the spectacular performance, certainly in PE, you have a lot of LPs that are over-allocated to the asset class.

One of the challenges to the fundraising environment will be everybody coming back so there's a lot of asks out there and you've got to create the supply.

Now I think where that does dovetail nicely is that causes a lot of LPs to need to readjust their portfolios and create more liquidity whether it's through sales of existing LP interest or working with GPs to create liquidity through whether it's a continuation fund or SPBs or other technologies.

So, I think the market is continuing to evolve because this has been such a successful asset class and it's continuing to attract more and more capital. But you need to be much nimbler as to how you manage all of this to ensure that you have successful fundraisers.

So, I suspect that with everyone -- not everyone, but with most everyone returning to the market, it's going to be a highly competitive place to get the attention of LPs. And we're going to need to continue to attract additional capital to the space.

And I see that being there and continuing for a long time, so it could be that in order to create more opportunity on the primary side, you're going to need to be more creative on the secondary side..

Okay. And on the dividend increase.

May I add that the meaningful regular dividend increase dividend increase, should we read anything into that? As far as kind of your confidence in the sustainability of cash flows, I know buybacks you could turn on an off specialty can do it will I think that big increase in the fixed dividend, is it signal anything to us?.

I don't know what it signals, but I certainly wouldn't do it if we thought that we weren't in there creating a rock-solid dividend at $0.25 a quarter, and I would note that we introduced our firm with a $0.05 dividend. It's been six years plus; we haven't touched that dividend.

We're a dramatically different firm today with different growth and just size, scale, etc. So, I think we're very, very comfortable that that dividend is a rock-solid dividend. Otherwise, we would not have gone to that level, but you do need to look at it in the context of not having touched it for six-plus years..

Good point. Thank you..

Thank you. We'll now take a follow-up from Devin Ryan with JMP Securities..

Yes. Thanks for the follow-up here. Just want to dovetail on that and just capital return more broadly, you did touch on, but as you think about the dividend and just the excess cash position today, I appreciate yourself to pay bonuses. But you're still creating a lot of excess capital and a fair amount more than the dividend.

So, I'm curious how you guys are thinking about the stock and the buy-back and balancing the stock price here versus liquidity and float and how much you maybe want to lean in on the stock you're at these prices..

Well for thank you for giving me yet another opportunity to talk about our undervalued stock. I appreciate I appreciate that. Look, we have always been big believers in our prospects, and we have directed the vast majority of our free cash flow to buybacks as opposed to dividends.

I think even moving the dividend to a dollar share, that's not going to change in all that. And if you go back to our priorities, priority 1 Is to invest in the business. Priority number 2 Is to buy back as much of that cheap stock as we can. And then if there's money left over, there is a dividend and we're quite comfortable at a dollar a share.

I don't think those buy back change much on a going-forward basis, but we have to evolve and we have to tweak it, and when you think about how much additional capital, we're generating to have none of it reflected in the dividend, and just to keep the dividend that we introduced ourselves with in October of 2015, that's not the right balance either.

So, we're going to continue to buy back stock and we're going to continue to find ways to capitalize on these dislocations..

Got it. Okay. Thanks, Paul..

Absolutely..

Thank you. That was today's final question. I would like to turn the conference back over to Mr. Taubman for any additional closing remarks..

Just want to thank everyone for joining us this morning and thank you for your interest and your support. And we look forward to meeting again when we report our first quarter results. Thank you and have a good day..

Thank you. And that does conclude today's conference. We do thank you all for your participation. You may now disconnect..