Evercore Inc. (NYSE: EVR):
Third Quarter Results
Year to Date Results
U.S. GAAP
Adjusted
U.S. GAAP
Adjusted
Q3 2023
Q3 2022
Q3 2023
Q3 2022
YTD 2023
YTD 2022
YTD 2023
YTD 2022
Net Revenues ($ mm)
$
570.2
$
576.9
$
576.1
$
583.2
$
1,641.8
$
1,930.7
$
1,659.0
$
1,948.9
Operating Income ($ mm)
$
76.8
$
130.4
$
82.7
$
136.6
$
241.4
$
485.9
$
261.6
$
504.7
Net Income Attributable to Evercore Inc.
($ mm)
$
52.1
$
82.4
$
55.5
$
95.2
$
172.7
$
336.1
$
189.1
$
376.3
Diluted Earnings Per Share
$
1.30
$
2.03
$
1.30
$
2.20
$
4.33
$
8.18
$
4.43
$
8.52
Compensation Ratio
68.7
%
61.7
%
68.0
%
61.0
%
66.8
%
60.8
%
66.1
%
60.3
%
Operating Margin
13.5
%
22.6
%
14.4
%
23.4
%
14.7
%
25.2
%
15.8
%
25.9
%
Effective Tax Rate
25.1
%
30.8
%
27.6
%
27.4
%
21.5
%
23.2
%
22.5
%
22.8
%
Business and Financial
Highlights
■
Third Quarter and Year-to-Date Net
Revenues were $570.2 million and $1.6 billion, respectively, on a
U.S. GAAP basis and $576.1 million and $1.7 billion, respectively,
on an Adjusted basis. Year-to-Date 2023 Net Revenues decreased 15%
on both a U.S. GAAP and an Adjusted basis versus 2022
■
Most recently, Evercore advised Chevron on
its $60 billion acquisition of Hess
■
In the third quarter, Evercore advised
WestRock on its $20 billion merger with Smurfit Kappa and Danaher
on its spin-off of Veralto
■
Evercore continued to participate in
several notable underwriting transactions including active
bookrunner on the second largest biotech IPO year-to-date,
RayzeBio's upsized $358 million offering
■
Our Private Capital Advisory and
Fundraising business was resilient as continuation fund activity
continues to strengthen
■
Evercore ISI achieved Institutional
Investors All-America Equity Research #1 rank on a weighted basis
for the second year in a row with the most #1 ranked analysts on
Wall Street for the first time
Talent
■
Of the 11 Advisory Senior Managing
Directors that committed to Evercore year-to-date, five have
started since our last earnings announcement
■
Carolyn Crooks joined in our Financial
Sponsors Group, Seth Bergstein and Nick Pomponi joined our
Technology practice, Laurence Hainault joined our European
Communications business, and Michael Tarulli joined our Industrials
practice
Capital Return
■
Quarterly dividend of $0.76 per share
■
Returned $490.4 million to shareholders
during the first nine months of 2023 through dividends and
repurchases of 3.0 million shares at an average price of
$128.97
Evercore Inc. (NYSE: EVR) today announced its results for the
third quarter ended September 30, 2023.
LEADERSHIP COMMENTARY
John S. Weinberg, Chairman and Chief Executive Officer,
"We are encouraged by some of the positive leading indicators we
see both internally and in the market. And while the normalization
of market activity will continue to take time, we remain focused on
serving our clients and building for the long term."
Roger C. Altman, Founder and Senior Chairman, "Evercore
just completed the largest, external hiring surge, at the SMD
level, in the Firm’s history. And, this came on top of aggressive
hiring in each recent year, which means that our productive
capacity is at an all-time high."
Evercore's quarterly results may fluctuate significantly due to
the timing and amount of transaction fees earned, as well as other
factors. Accordingly, financial results in any particular quarter
may not be representative of future results over a longer period of
time.
Business Segments:
Evercore's business results are categorized into two segments:
Investment Banking & Equities and Investment Management.
Investment Banking & Equities includes providing advice to
clients on mergers, acquisitions, divestitures and other strategic
corporate transactions, as well as services related to securities
underwriting, private placement services and commissions for
agency-based equity trading services and equity research.
Investment Management includes Wealth Management and interests in
private equity funds which are not managed by the Company, as well
as advising third-party investors through affiliates. See pages A-2
to A-7 for further information and reconciliations of these segment
results to our U.S. GAAP consolidated results.
Non-GAAP Measures:
Throughout this release certain information is presented on an
adjusted basis, which is a non-GAAP measure. Adjusted results begin
with information prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP"),
and then those results are adjusted to exclude certain items and
reflect the conversion of certain Evercore LP Units into Class A
shares. Evercore believes that the disclosed adjusted measures and
any adjustments thereto, when presented in conjunction with
comparable U.S. GAAP measures, are useful to investors to compare
Evercore's results across several periods and facilitate an
understanding of Evercore's operating results. Evercore uses these
measures to evaluate its operating performance, as well as the
performance of individual employees. These measures should not be
considered a substitute for, or superior to, measures of financial
performance prepared in accordance with U.S. GAAP.
Special Charges, Including Business Realignment Costs, have been
excluded from Adjusted Net Income Attributable to Evercore Inc.
These charges in 2023 relate to the write-off of non-recoverable
assets in connection with the wind-down of the Company's operations
in Mexico.
Evercore's Adjusted Diluted Shares Outstanding for the three and
nine months ended September 30, 2023 were higher than U.S. GAAP as
a result of the inclusion of certain Evercore LP Units and Unvested
Restricted Stock Units.
Further details of these adjustments, as well as an explanation
of similar amounts for the three and nine months ended September
30, 2022 are included in pages A-2 to A-7.
Selected Financial Data – U.S. GAAP
Results
The following is a discussion of Evercore's consolidated results
on a U.S. GAAP basis. See pages A-4 to A-6 for our business segment
results.
Net Revenues
U.S. GAAP
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
September 30, 2023
September 30, 2022
% Change
(dollars in thousands)
Investment Banking & Equities:
Advisory Fees
$
467,401
$
488,224
(4
%)
$
1,304,519
$
1,689,033
(23
%)
Underwriting Fees
30,814
28,697
7
%
91,897
78,519
17
%
Commissions and Related Revenue
48,697
49,200
(1
%)
146,810
152,583
(4
%)
Investment Management:
Asset Management and Administration
Fees
17,304
15,641
11
%
49,837
48,724
2
%
Other Revenue, net
6,004
(4,825
)
NM
48,719
(38,151
)
NM
Net Revenues
$
570,220
$
576,937
(1
%)
$
1,641,782
$
1,930,708
(15
%)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
September 30, 2023
September 30, 2022
%
Change
Total Number of Fees from Advisory and
Underwriting Client Transactions(1)
225
229
(2
%)
484
494
(2
%)
Total Number of Fees of at Least $1
million from Advisory and Underwriting Client Transactions(1)
86
99
(13
%)
241
285
(15
%)
Total Number of Underwriting
Transactions(1)
11
11
—
%
40
34
18
%
Total Number of Underwriting Transactions
as a Bookrunner(1)
10
11
(9
%)
36
29
24
%
1. Includes Equity and Debt Underwriting
Transactions.
As of September 30,
2023
2022
% Change
Assets Under Management ($ mm)(1)
$
11,273
$
9,986
13
%
1. Assets Under Management reflect end of
period amounts from our consolidated Wealth Management
business.
Advisory Fees – Third quarter Advisory Fees decreased
$20.8 million, or 4%, year-over-year, and year-to-date Advisory
Fees decreased $384.5 million, or 23%, year-over-year, reflecting a
decrease in the number of advisory fees earned and a decline in
revenue earned from large transactions during 2023.
Underwriting Fees – Third quarter Underwriting Fees
increased $2.1 million, or 7%, year-over-year. Year-to-date
Underwriting Fees increased $13.4 million, or 17%, year-over-year,
reflecting an increase in the number of transactions we
participated in due to the increase in equity issuance
activity.
Commissions and Related Revenue – Third quarter
Commissions and Related Revenue decreased $0.5 million, or 1%,
year-over-year, and year-to-date Commissions and Related Revenue
decreased $5.8 million, or 4%, year-over-year, primarily reflecting
lower trading revenues.
Asset Management and Administration Fees – Third quarter
Asset Management and Administration Fees increased $1.7 million, or
11%, year-over-year, driven by an increase in fees from Wealth
Management clients, as associated AUM increased 13%, primarily from
market appreciation. Year-to-date Asset Management and
Administration Fees increased $1.1 million, or 2%, year-over-year,
driven by an increase in fees from Wealth Management clients, as
associated AUM increased 13%, primarily from market
appreciation.
Other Revenue – Third quarter Other Revenue, net,
increased $10.8 million year-over-year, primarily reflecting higher
returns on our fixed income investment portfolios, which primarily
consist of U.S. treasury bills. Year-to-date Other Revenue, net,
increased $86.9 million year-over-year, primarily reflecting a
shift from losses of $39.0 million in 2022 to gains of $17.4
million in 2023 on our investment funds portfolio due to overall
market appreciation, as well as higher returns on our fixed income
investment portfolios, which primarily consist of U.S. treasury
bills. The investment funds portfolio is used as an economic hedge
against our deferred cash compensation program.
Expenses
U.S. GAAP
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
September 30, 2023
September 30, 2022
% Change
(dollars in thousands)
Employee Compensation and Benefits
$
391,730
$
355,794
10
%
$
1,096,976
$
1,174,500
(7
%)
Compensation Ratio
68.7
%
61.7
%
66.8
%
60.8
%
Non-Compensation Costs
$
101,664
$
90,744
12
%
$
300,439
$
269,731
11
%
Non-Compensation Ratio
17.8
%
15.7
%
18.3
%
14.0
%
Special Charges, Including Business
Realignment Costs
$
—
$
—
NM
$
2,921
$
532
449
%
Employee Compensation and Benefits – Third quarter
Employee Compensation and Benefits increased $35.9 million, or 10%,
year-over-year, reflecting a compensation ratio of 68.7% for the
third quarter of 2023 versus 61.7% for the prior year period. The
Compensation Ratio was impacted by lower net revenues, as described
above, during the current year period compared to the prior year
period. The increase in Employee Compensation and Benefits compared
to the prior year period principally reflects a higher accrual for
incentive compensation, as well as higher amortization of prior
period deferred compensation awards and higher base salaries.
Year-to-date Employee Compensation and Benefits decreased $77.5
million, or 7%, year-over-year, reflecting a year-to-date
compensation ratio of 66.8% versus 60.8% for the prior year period.
The Compensation Ratio was impacted by lower net revenues, as
described above, during the current year period compared to the
prior year period. The decrease in Employee Compensation and
Benefits compared to the prior year period principally reflects a
lower accrual for incentive compensation, partially offset by
higher amortization of prior period deferred compensation awards
and higher base salaries. See "Deferred Compensation" for more
information.
Non-Compensation Costs – Third quarter Non-Compensation
Costs increased $10.9 million, or 12%, year-over-year, primarily
related to the reversal of expense in the third quarter of 2022
associated with the decline in fair value of contingent
consideration owed to former equity interest holders in our RECA
business. The increase was also attributed to an increase in
communications and information services, primarily reflecting
higher research expenses and license fees in the third quarter of
2023. The third quarter Non-Compensation ratio of 17.8% increased
from 15.7% for the prior year period. Year-to-date Non-Compensation
Costs increased $30.7 million, or 11%, year-over-year, primarily
related to increases in travel and related expenses, as well as
communications and information services, primarily reflecting
higher license fees and research expenses in 2023. The increase was
also attributed to the reversal of expense in 2022 associated with
the decline in fair value of contingent consideration owed to
former equity interest holders in our RECA business. The
year-to-date Non-Compensation ratio of 18.3% increased from 14.0%
for the prior year period. The Non-Compensation Ratio was also
impacted by lower net revenues, as described above, during the
current year period compared to the prior year period.
Special Charges, Including Business Realignment Costs –
Year-to-date 2023 Special Charges, Including Business Realignment
Costs, relate to the write-off of non-recoverable assets in
connection with the wind-down of the Company's operations in
Mexico.
Year-to-date 2022 Special Charges, Including Business
Realignment Costs, relate to charges associated with the prepayment
of the Company's $67 million aggregate principal amount of its
5.23% Series B senior notes, originally due March 30, 2023 (the
"Series B Notes"), during the second quarter, as well as certain
professional fees related to the wind-down of the Company's
operations in Mexico.
Effective Tax Rate
The third quarter effective tax rate was 25.1% versus 30.8% for
the prior year period. The year-to-date effective tax rate was
21.5% versus 23.2% for the prior year period. The effective tax
rate is principally impacted by the deduction associated with the
appreciation in the Firm's share price upon vesting of employee
share-based awards above the original grant price. The year-to-date
provision for income taxes for 2023 reflects an additional tax
benefit of $14.1 million versus $19.7 million for the prior year
period, due to the net impact associated with the appreciation in
our share price upon vesting of employee share-based awards above
the original grant price.
Selected Financial Data – Adjusted
Results
The following is a discussion of Evercore's consolidated results
on an Adjusted basis. See pages 3 and A-2 to A-7 for further
information and reconciliations of these metrics to our U.S. GAAP
results. See pages A-4 to A-6 for our business segment results.
Adjusted Net Revenues
Adjusted
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
September 30, 2023
September 30, 2022
% Change
(dollars in thousands)
Investment Banking & Equities:
Advisory Fees(1)
$
467,581
$
488,675
(4
%)
$
1,304,913
$
1,690,022
(23
%)
Underwriting Fees
30,814
28,697
7
%
91,897
78,519
17
%
Commissions and Related Revenue
48,697
49,200
(1
%)
146,810
152,583
(4
%)
Investment Management:
Asset Management and Administration
Fees(2)
18,788
17,217
9
%
54,117
54,548
(1
%)
Other Revenue, net
10,188
(637
)
NM
61,255
(26,749
)
NM
Net Revenues
$
576,068
$
583,152
(1
%)
$
1,658,992
$
1,948,923
(15
%)
1.
Advisory Fees on an Adjusted basis reflect
the reclassification of earnings related to our equity method
investments in Luminis and Seneca Evercore of $0.2 million and $0.4
million for the three and nine months ended September 30, 2023,
respectively, and $0.5 million and $1.0 million for the three and
nine months ended September 30, 2022, respectively.
2.
Asset Management and Administration Fees
on an Adjusted basis reflect the reclassification of earnings
related to our equity method investments in Atalanta Sosnoff and
ABS of $1.5 million and $4.3 million for the three and nine months
ended September 30, 2023, respectively, and $1.6 million and $5.8
million for the three and nine months ended September 30, 2022,
respectively.
See page 4 for additional business metrics.
Advisory Fees – Third quarter adjusted Advisory Fees
decreased $21.1 million, or 4%, year-over-year, and year-to-date
adjusted Advisory Fees decreased $385.1 million, or 23%,
year-over-year, reflecting a decrease in the number of advisory
fees earned and a decline in revenue earned from large transactions
during 2023.
Underwriting Fees – Third quarter Underwriting Fees
increased $2.1 million, or 7%, year-over-year. Year-to-date
Underwriting Fees increased $13.4 million, or 17%, year-over-year,
reflecting an increase in the number of transactions we
participated in due to the increase in equity issuance
activity.
Commissions and Related Revenue – Third quarter
Commissions and Related Revenue decreased $0.5 million, or 1%,
year-over-year, and year-to-date Commissions and Related Revenue
decreased $5.8 million, or 4%, year-over-year, primarily reflecting
lower trading revenues.
Asset Management and Administration Fees – Third quarter
adjusted Asset Management and Administration Fees increased $1.6
million, or 9%, year-over-year, primarily driven by an increase in
fees from Wealth Management clients, as associated AUM increased
13%, primarily from market appreciation. Year-to-date adjusted
Asset Management and Administration Fees decreased $0.4 million, or
1%, year-over-year, driven by a 27% decrease in equity in earnings
of affiliates, primarily driven by lower income earned by Atalanta
Sosnoff in 2023. The decrease was partially offset by an increase
in fees from Wealth Management clients, as associated AUM increased
13%, primarily from market appreciation.
Other Revenue – Third quarter adjusted Other Revenue,
net, increased $10.8 million year-over-year, primarily reflecting
higher returns on our fixed income investment portfolios, which
primarily consist of U.S. treasury bills. Year-to-date adjusted
Other Revenue, net, increased $88.0 million year-over-year,
primarily reflecting a shift from losses of $39.0 million in 2022
to gains of $17.4 million in 2023 on our investment funds portfolio
due to overall market appreciation, as well as higher returns on
our fixed income investment portfolios, which primarily consist of
U.S. treasury bills. The investment funds portfolio is used as an
economic hedge against our deferred cash compensation program.
Adjusted Expenses
Adjusted
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
% Change
September 30, 2023
September 30, 2022
% Change
(dollars in thousands)
Employee Compensation and Benefits
$
391,730
$
355,794
10
%
$
1,096,976
$
1,174,500
(7
%)
Compensation Ratio
68.0
%
61.0
%
66.1
%
60.3
%
Non-Compensation Costs
$
101,664
$
90,744
12
%
$
300,439
$
269,731
11
%
Non-Compensation Ratio
17.6
%
15.6
%
18.1
%
13.8
%
Employee Compensation and Benefits – Third quarter
adjusted Employee Compensation and Benefits increased $35.9
million, or 10%, year-over-year, reflecting an adjusted
compensation ratio of 68.0% for the third quarter of 2023 versus
61.0% for the prior year period. The adjusted Compensation Ratio
was impacted by lower net revenues, as described above, during the
current year period compared to the prior year period. The increase
in Employee Compensation and Benefits compared to the prior year
period principally reflects a higher accrual for incentive
compensation, as well as higher amortization of prior period
deferred compensation awards and higher base salaries. Year-to-date
adjusted Employee Compensation and Benefits decreased $77.5
million, or 7%, year-over-year, reflecting a year-to-date adjusted
compensation ratio of 66.1% versus 60.3% for the prior year period.
The adjusted Compensation Ratio was impacted by lower net revenues,
as described above, during the current year period compared to the
prior year period. The decrease in Employee Compensation and
Benefits compared to the prior year period principally reflects a
lower accrual for incentive compensation, partially offset by
higher amortization of prior period deferred compensation awards
and higher base salaries. See "Deferred Compensation" for more
information.
Non-Compensation Costs – Third quarter adjusted
Non-Compensation Costs increased $10.9 million, or 12%,
year-over-year, primarily related to the reversal of expense in the
third quarter of 2022 associated with the decline in fair value of
contingent consideration owed to former equity interest holders in
our RECA business. The increase was also attributed to an increase
in communications and information services, primarily reflecting
higher research expenses and license fees in the third quarter of
2023. The third quarter adjusted Non-Compensation ratio of 17.6%
increased from 15.6% for the prior year period. Year-to-date
adjusted Non-Compensation Costs increased $30.7 million, or 11%,
year-over-year, primarily related to increases in travel and
related expenses, as well as communications and information
services, primarily reflecting higher license fees and research
expenses in 2023. The increase was also attributed to the reversal
of expense in 2022 associated with the decline in fair value of
contingent consideration owed to former equity interest holders in
our RECA business. The year-to-date adjusted Non-Compensation ratio
of 18.1% increased from 13.8% for the prior year period. The
Non-Compensation Ratio was also impacted by lower net revenues, as
described above, during the current year period compared to the
prior year period.
Adjusted Effective Tax Rate
The third quarter adjusted effective tax rate was 27.6% versus
27.4% for the prior year period. The year-to-date adjusted
effective tax rate was 22.5% versus 22.8% for the prior year
period. The adjusted effective tax rate is principally impacted by
the deduction associated with the appreciation in the Firm's share
price upon vesting of employee share-based awards above the
original grant price. The year-to-date adjusted provision for
income taxes for 2023 reflects an additional tax benefit of $15.0
million versus $20.2 million for the prior year period, due to the
net impact associated with the appreciation in our share price upon
vesting of employee share-based awards above the original grant
price.
Liquidity
The Company continues to maintain a strong balance sheet. As of
September 30, 2023, cash and cash equivalents were $492.6 million,
investment securities and certificates of deposit were $1.1 billion
and current assets exceeded current liabilities by $1.6 billion.
Amounts due related to the Notes Payable were $372.4 million at
September 30, 2023.
Headcount
As of September 30, 2023 and 2022, the Company employed
approximately 2,230 and 2,160 people, respectively, worldwide.
As of September 30, 2023 and 2022, the Company employed 175(1)
and 169(2) total Senior Managing Directors, respectively, in its
Investment Banking & Equities segment, of which 137(1) and
130(2), respectively, were Advisory Senior Managing Directors.
(1)
Senior Managing Director headcount as of September 30, 2023,
adjusted to include two additional Advisory Senior Managing
Directors committed to join and to exclude for known departures of
three Advisory Senior Managing Directors.
(2)
Senior Managing Director headcount as of September 30, 2022,
adjusted to include one additional Advisory Senior Managing
Director that joined in the fourth quarter of 2022.
Deferred Compensation
Year-to-date, the Company granted to certain employees 2.5
million unvested restricted stock units ("RSUs") (which were
primarily granted in conjunction with the 2022 bonus awards) with a
grant date fair value of $332.5 million.
In addition, year-to-date, the Company granted $163 million of
deferred cash awards to certain employees, related to our deferred
cash compensation program, principally pursuant to 2022 bonus
awards.
The Company recognized compensation expense related to RSUs and
our deferred cash compensation program of $104.8 million and $335.5
million for the three and nine months ended September 30, 2023,
respectively, and $94.1 million and $281.6 million for the three
and nine months ended September 30, 2022, respectively.
As of September 30, 2023, the Company had 5.8 million unvested
RSUs with an aggregate grant date fair value of $725.2 million.
RSUs are expensed over the service period of the award, subject to
retirement eligibility, and generally vest over four years.
As of September 30, 2023, the Company expects to pay an
aggregate of $350.2 million related to our deferred cash
compensation program at various dates through 2027, subject to
certain vesting events. Amounts due pursuant to this program are
expensed over the service period of the award, subject to
retirement eligibility, and are reflected in Accrued Compensation
and Benefits, a component of current liabilities.
Capital Return
Transactions
On October 24, 2023, the Board of Directors of Evercore declared
a quarterly dividend of $0.76 per share to be paid on December 8,
2023 to common stockholders of record on November 24, 2023.
During the third quarter, the Company repurchased 17 thousand
shares from employees for the net settlement of stock-based
compensation awards at an average price per share of $135.28, and
0.3 million shares at an average price per share of $137.79 in open
market transactions pursuant to the Company's share repurchase
program. The aggregate 0.3 million shares were acquired at an
average price per share of $137.65. Year-to-date, the Company
repurchased 1.0 million shares from employees for the net
settlement of stock-based compensation awards at an average price
per share of $131.34, and 2.0 million shares at an average price
per share of $127.85 in open market transactions pursuant to the
Company's share repurchase program. The aggregate 3.0 million
shares were acquired at an average price per share of $128.97.
Conference Call
Evercore will host a related conference call beginning at 8:00
a.m. Eastern Time, Wednesday, October 25, 2023, accessible via
telephone and webcast. Investors and analysts may participate in
the live conference call by dialing (800) 343-4136 (toll-free
domestic) or (203) 518-9814 (international); passcode: EVRQ323.
Please register at least 10 minutes before the conference call
begins.
A live audio webcast of the conference call will be available on
the For Investors section of Evercore’s website at
www.evercore.com. The webcast will be archived on Evercore’s
website for 30 days.
About Evercore
Evercore (NYSE: EVR) is a premier global independent investment
banking advisory firm. We are dedicated to helping our clients
achieve superior results through trusted independent and innovative
advice on matters of strategic significance to boards of directors,
management teams and shareholders, including mergers and
acquisitions, strategic shareholder advisory, restructurings, and
capital structure. Evercore also assists clients in raising public
and private capital and delivers equity research and equity sales
and agency trading execution, in addition to providing wealth and
investment management services to high net worth and institutional
investors. Founded in 1995, the Firm is headquartered in New York
and maintains offices and affiliate offices in major financial
centers in the Americas, Europe, the Middle East and Asia. For more
information, please visit www.evercore.com.
Basis of Alternative Financial
Statement Presentation
Our Adjusted results are a non-GAAP measure. As discussed
further under "Non-GAAP Measures", Evercore believes that the
disclosed Adjusted measures and any adjustments thereto, when
presented in conjunction with comparable U.S. GAAP measures, are
useful to investors to compare Evercore's results across several
periods and better reflects how management views its operating
results. These measures should not be considered a substitute for,
or superior to, measures of financial performance prepared in
accordance with U.S. GAAP. A reconciliation of our U.S. GAAP
results to Adjusted results is presented in the tables included in
the following pages.
Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, which reflect our
current views with respect to, among other things, Evercore's
operations and financial performance. In some cases, you can
identify these forward-looking statements by the use of words such
as "outlook," "backlog," "believes," "expects," "potential,"
"probable," "continues," "may," "will," "should," "seeks,"
"approximately," "predicts," "intends," "plans," "estimates,"
"anticipates" or the negative version of these words or other
comparable words. All statements, other than statements of
historical fact, included in this release are forward-looking
statements and are based on various underlying assumptions and
expectations and are subject to known and unknown risks,
uncertainties and assumptions, and may include projections of our
future financial performance based on our growth strategies and
anticipated trends in Evercore's business. Accordingly, there are
or will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. Evercore believes these factors include, but are not
limited to, those described under "Risk Factors" discussed in
Evercore's Annual Report on Form 10-K for the year ended December
31, 2022, subsequent quarterly reports on Form 10-Q, current
reports on Form 8-K and Registration Statements. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this release. In addition, new risks and uncertainties emerge
from time to time, and it is not possible for Evercore to predict
all risks and uncertainties, nor can Evercore assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
Accordingly, you should not rely upon forward-looking statements as
a prediction of actual results and Evercore does not assume any
responsibility for the accuracy or completeness of any of these
forward-looking statements. Evercore undertakes no obligation to
publicly update or review any forward-looking statement, whether as
a result of new information, future developments or otherwise.
EVERCORE INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2023 AND 2022
(dollars in thousands, except per
share data)
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues
Investment Banking & Equities:
Advisory Fees
$
467,401
$
488,224
$
1,304,519
$
1,689,033
Underwriting Fees
30,814
28,697
91,897
78,519
Commissions and Related Revenue
48,697
49,200
146,810
152,583
Asset Management and Administration
Fees
17,304
15,641
49,837
48,724
Other Revenue, Including Interest and
Investments
10,188
(637
)
61,255
(25,455
)
Total Revenues
574,404
581,125
1,654,318
1,943,404
Interest Expense(1)
4,184
4,188
12,536
12,696
Net Revenues
570,220
576,937
1,641,782
1,930,708
Expenses
Employee Compensation and Benefits
391,730
355,794
1,096,976
1,174,500
Occupancy and Equipment Rental
22,094
19,680
63,994
58,465
Professional Fees
28,390
29,294
79,992
81,207
Travel and Related Expenses
13,465
12,862
46,090
35,474
Communications and Information
Services
18,435
15,333
52,006
45,745
Depreciation and Amortization
5,848
7,065
18,373
20,772
Execution, Clearing and Custody Fees
3,115
2,378
8,845
7,806
Special Charges, Including Business
Realignment Costs
—
—
2,921
532
Other Operating Expenses
10,317
4,132
31,139
20,262
Total Expenses
493,394
446,538
1,400,336
1,444,763
Income Before Income from Equity Method
Investments and Income Taxes
76,826
130,399
241,446
485,945
Income from Equity Method Investments
1,664
2,027
4,674
6,813
Income Before Income Taxes
78,490
132,426
246,120
492,758
Provision for Income Taxes
19,717
40,790
52,945
114,134
Net Income
58,773
91,636
193,175
378,624
Net Income Attributable to Noncontrolling
Interest
6,625
9,198
20,444
42,543
Net Income Attributable to Evercore
Inc.
$
52,148
$
82,438
$
172,731
$
336,081
Net Income Attributable to Evercore
Inc. Common Shareholders
$
52,148
$
82,438
$
172,731
$
336,081
Weighted Average Shares of Class A
Common Stock Outstanding:
Basic
37,823
39,114
38,179
39,375
Diluted
40,000
40,527
39,907
41,104
Net Income Per Share Attributable to
Evercore Inc. Common Shareholders:
Basic
$
1.38
$
2.11
$
4.52
$
8.54
Diluted
$
1.30
$
2.03
$
4.33
$
8.18
(1) Includes interest expense on long-term
debt.
Adjusted Results
Throughout the discussion of Evercore's business and elsewhere
in this release, information is presented on an Adjusted basis,
which is a non-generally accepted accounting principles
("non-GAAP") measure. Adjusted results begin with information
prepared in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP"), adjusted to
exclude certain items and reflect the conversion of certain
Evercore LP Units, as well as Unvested Restricted Stock Units, into
Class A shares. Evercore believes that the disclosed Adjusted
measures and any adjustments thereto, when presented in conjunction
with comparable U.S. GAAP measures, are useful to investors to
compare Evercore's results across several periods and facilitate an
understanding of Evercore's operating results. The Company uses
these measures to evaluate its operating performance, as well as
the performance of individual employees. These measures should not
be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP. These
Adjusted amounts are allocated to the Company's two business
segments: Investment Banking & Equities and Investment
Management. The differences between the Adjusted and U.S. GAAP
results are as follows:
- Assumed Exchange of Evercore LP Units
into Class A Shares. The Adjusted results assume
substantially all Evercore LP Units have been exchanged for Class A
shares. Accordingly, the noncontrolling interest related to these
units is converted to a controlling interest. The Company's
management believes that it is useful to provide the per-share
effect associated with the assumed conversion of substantially all
of these previously granted equity interests and IPO related
restricted stock units, and thus the Adjusted results reflect their
exchange into Class A shares.
- Adjustments Associated with Business
Combinations and Divestitures. The following charges
resulting from business combinations and divestitures have been
excluded from the Adjusted results because the Company's Management
believes that operating performance is more comparable across
periods excluding the effects of these acquisition-related charges:
- Gain on Sale of Interests in ABS.
The gain on the sale of a portion of the Company's interests in ABS
in the first quarter of 2022 is excluded from the Adjusted
presentation.
- Special Charges, Including Business
Realignment Costs. Expenses during 2023 that are excluded
from the Adjusted presentation relate to the write-off of
non-recoverable assets in connection with the wind-down of the
Company's operations in Mexico. Expenses during 2022 that are
excluded from the Adjusted presentation relate to charges
associated with the prepayment of the Company's Series B Notes
during the second quarter, as well as certain professional fees
related to the wind-down of the Company's operations in
Mexico.
- Income Taxes. Evercore is
organized as a series of Limited Liability Companies, Partnerships,
C-Corporations and a Public Corporation in the U.S. as the ultimate
parent. Certain of the subsidiaries, particularly Evercore LP, have
noncontrolling interests held by management or former members of
management. As a result, not all of the Company’s income is subject
to corporate level taxes and certain other state and local taxes
are levied. The assumption in the Adjusted earnings presentation is
that substantially all of the noncontrolling interest is eliminated
through the exchange of Evercore LP units into Class A common stock
of the ultimate parent. As a result, the Adjusted earnings
presentation assumes that the allocation of earnings to Evercore
LP’s noncontrolling interest holders is substantially eliminated
and is therefore subject to statutory tax rates of a C-Corporation
under a conventional tax structure in the U.S. and that certain
state and local taxes are reduced accordingly.
- Presentation of Interest Expense.
The Adjusted results present Adjusted Investment Banking &
Equities Operating Income before interest expense on debt, which is
included in interest expense on a U.S. GAAP basis.
- Presentation of Income from Equity Method
Investments. The Adjusted results present Income from Equity
Method Investments within Revenue as the Company's Management
believes it is a useful presentation.
EVERCORE INC.
U.S. GAAP RECONCILIATION TO
ADJUSTED RESULTS
(dollars in thousands, except per
share data)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net Revenues - U.S. GAAP
$
570,220
$
576,937
$
1,641,782
$
1,930,708
Income from Equity Method Investments
(1)
1,664
2,027
4,674
6,813
Interest Expense on Debt (2)
4,184
4,188
12,536
12,696
Gain on Sale of Interests in ABS (3)
—
—
—
(1,294
)
Net Revenues - Adjusted
$
576,068
$
583,152
$
1,658,992
$
1,948,923
Other Revenue, net - U.S. GAAP
$
6,004
$
(4,825
)
$
48,719
$
(38,151
)
Interest Expense on Debt (2)
4,184
4,188
12,536
12,696
Gain on Sale of Interests in ABS (3)
—
—
—
(1,294
)
Other Revenue, net - Adjusted
$
10,188
$
(637
)
$
61,255
$
(26,749
)
Operating Income - U.S. GAAP
$
76,826
$
130,399
$
241,446
$
485,945
Income from Equity Method Investments
(1)
1,664
2,027
4,674
6,813
Pre-Tax Income - U.S. GAAP
78,490
132,426
246,120
492,758
Gain on Sale of Interests in ABS (3)
—
—
—
(1,294
)
Special Charges, Including Business
Realignment Costs (4)
—
—
2,921
532
Pre-Tax Income - Adjusted
78,490
132,426
249,041
491,996
Interest Expense on Debt (2)
4,184
4,188
12,536
12,696
Operating Income - Adjusted
$
82,674
$
136,614
$
261,577
$
504,692
Provision for Income Taxes - U.S.
GAAP
$
19,717
$
40,790
$
52,945
$
114,134
Income Taxes (5)
1,915
(4,545
)
3,115
(1,805
)
Provision for Income Taxes -
Adjusted
$
21,632
$
36,245
$
56,060
$
112,329
Net Income Attributable to Evercore
Inc. - U.S. GAAP
$
52,148
$
82,438
$
172,731
$
336,081
Gain on Sale of Interests in ABS (3)
—
—
—
(1,294
)
Special Charges, Including Business
Realignment Costs (4)
—
—
2,921
532
Income Taxes (5)
(1,915
)
4,545
(3,115
)
1,805
Noncontrolling Interest (6)
5,254
8,199
16,563
39,195
Net Income Attributable to Evercore
Inc. - Adjusted
$
55,487
$
95,182
$
189,100
$
376,319
Diluted Shares Outstanding - U.S.
GAAP
40,000
40,527
39,907
41,104
LP Units (7)
2,790
2,650
2,787
3,078
Unvested Restricted Stock Units - Event
Based (7)
12
12
12
12
Diluted Shares Outstanding -
Adjusted
42,802
43,189
42,706
44,194
Key Metrics:
(a)
Diluted Earnings Per Share - U.S. GAAP
$
1.30
$
2.03
$
4.33
$
8.18
Diluted Earnings Per Share - Adjusted
$
1.30
$
2.20
$
4.43
$
8.52
Operating Margin - U.S. GAAP
13.5
%
22.6
%
14.7
%
25.2
%
Operating Margin - Adjusted
14.4
%
23.4
%
15.8
%
25.9
%
Effective Tax Rate - U.S. GAAP
25.1
%
30.8
%
21.5
%
23.2
%
Effective Tax Rate - Adjusted
27.6
%
27.4
%
22.5
%
22.8
%
(a) Reconciliations of the key metrics
from U.S. GAAP to Adjusted results are a derivative of the
reconciliations of their components above.
EVERCORE INC.
U.S. GAAP SEGMENT
RECONCILIATION TO ADJUSTED RESULTS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2023
(dollars in thousands)
(UNAUDITED)
Investment Banking &
Equities Segment
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Investment Banking & Equities:
Advisory Fees
$
467,401
$
180
(1
)
$
467,581
$
1,304,519
$
394
(1
)
$
1,304,913
Underwriting Fees
30,814
—
30,814
91,897
—
91,897
Commissions and Related Revenue
48,697
—
48,697
146,810
—
146,810
Other Revenue, net
5,729
4,184
(2
)
9,913
46,472
12,536
(2
)
59,008
Net Revenues
552,641
4,364
557,005
1,589,698
12,930
1,602,628
Expenses:
Employee Compensation and Benefits
381,117
—
381,117
1,066,686
—
1,066,686
Non-Compensation Costs
98,312
—
98,312
290,167
—
290,167
Special Charges, Including Business
Realignment Costs
—
—
—
2,921
(2,921
)
(4
)
—
Total Expenses
479,429
—
479,429
1,359,774
(2,921
)
1,356,853
Operating Income (a)
$
73,212
$
4,364
$
77,576
$
229,924
$
15,851
$
245,775
Compensation Ratio (b)
69.0
%
68.4
%
67.1
%
66.6
%
Operating Margin (b)
13.2
%
13.9
%
14.5
%
15.3
%
Investment Management
Segment
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Asset Management and Administration
Fees
$
17,304
$
1,484
(1
)
$
18,788
$
49,837
$
4,280
(1
)
$
54,117
Other Revenue, net
275
—
275
2,247
—
2,247
Net Revenues
17,579
1,484
19,063
52,084
4,280
56,364
Expenses:
Employee Compensation and Benefits
10,613
—
10,613
30,290
—
30,290
Non-Compensation Costs
3,352
—
3,352
10,272
—
10,272
Total Expenses
13,965
—
13,965
40,562
—
40,562
Operating Income (a)
$
3,614
$
1,484
$
5,098
$
11,522
$
4,280
$
15,802
Compensation Ratio (b)
60.4
%
55.7
%
58.2
%
53.7
%
Operating Margin (b)
20.6
%
26.7
%
22.1
%
28.0
%
(a) Operating Income for U.S. GAAP
excludes Income (Loss) from Equity Method Investments.
(b) Reconciliations of the key metrics
from U.S. GAAP to Adjusted results are a derivative of the
reconciliations of their components above.
EVERCORE INC.
U.S. GAAP SEGMENT
RECONCILIATION TO ADJUSTED RESULTS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2022
(dollars in thousands)
(UNAUDITED)
Investment Banking &
Equities Segment
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Investment Banking & Equities:
Advisory Fees
$
488,224
$
451
(1
)
$
488,675
$
1,689,033
$
989
(1
)
$
1,690,022
Underwriting Fees
28,697
—
28,697
78,519
—
78,519
Commissions and Related Revenue
49,200
—
49,200
152,583
—
152,583
Other Revenue, net
(5,603
)
4,188
(2
)
(1,415
)
(40,066
)
12,696
(2
)
(27,370
)
Net Revenues
560,518
4,639
565,157
1,880,069
13,685
1,893,754
Expenses:
Employee Compensation and Benefits
346,280
—
346,280
1,145,006
—
1,145,006
Non-Compensation Costs
87,319
—
87,319
259,705
—
259,705
Special Charges, Including Business
Realignment Costs
—
—
—
532
(532
)
(4
)
—
Total Expenses
433,599
—
433,599
1,405,243
(532
)
1,404,711
Operating Income (a)
$
126,919
$
4,639
$
131,558
$
474,826
$
14,217
$
489,043
Compensation Ratio (b)
61.8
%
61.3
%
60.9
%
60.5
%
Operating Margin (b)
22.6
%
23.3
%
25.3
%
25.8
%
Investment Management
Segment
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Asset Management and Administration
Fees
$
15,641
$
1,576
(1
)
$
17,217
$
48,724
$
5,824
(1
)
$
54,548
Other Revenue, net
778
—
778
1,915
(1,294
)
(3
)
621
Net Revenues
16,419
1,576
17,995
50,639
4,530
55,169
Expenses:
Employee Compensation and Benefits
9,514
—
9,514
29,494
—
29,494
Non-Compensation Costs
3,425
—
3,425
10,026
—
10,026
Total Expenses
12,939
—
12,939
39,520
—
39,520
Operating Income (a)
$
3,480
$
1,576
$
5,056
$
11,119
$
4,530
$
15,649
Compensation Ratio (b)
57.9
%
52.9
%
58.2
%
53.5
%
Operating Margin (b)
21.2
%
28.1
%
22.0
%
28.4
%
(a) Operating Income for U.S. GAAP
excludes Income (Loss) from Equity Method Investments.
(b) Reconciliations of the key metrics
from U.S. GAAP to Adjusted results are a derivative of the
reconciliations of their components above.
EVERCORE INC.
U.S. GAAP SEGMENT AND
CONSOLIDATED RESULTS
(dollars in thousands)
(UNAUDITED)
U.S. GAAP
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Investment Banking &
Equities
Net Revenues:
Investment Banking & Equities:
Advisory Fees
$
467,401
$
488,224
$
1,304,519
$
1,689,033
Underwriting Fees
30,814
28,697
91,897
78,519
Commissions and Related Revenue
48,697
49,200
146,810
152,583
Other Revenue, net
5,729
(5,603
)
46,472
(40,066
)
Net Revenues
552,641
560,518
1,589,698
1,880,069
Expenses:
Employee Compensation and Benefits
381,117
346,280
1,066,686
1,145,006
Non-Compensation Costs
98,312
87,319
290,167
259,705
Special Charges, Including Business
Realignment Costs
—
—
2,921
532
Total Expenses
479,429
433,599
1,359,774
1,405,243
Operating Income (a)
$
73,212
$
126,919
$
229,924
$
474,826
Investment Management
Net Revenues:
Asset Management and Administration
Fees
$
17,304
$
15,641
$
49,837
$
48,724
Other Revenue, net
275
778
2,247
1,915
Net Revenues
17,579
16,419
52,084
50,639
Expenses:
Employee Compensation and Benefits
10,613
9,514
30,290
29,494
Non-Compensation Costs
3,352
3,425
10,272
10,026
Total Expenses
13,965
12,939
40,562
39,520
Operating Income (a)
$
3,614
$
3,480
$
11,522
$
11,119
Total
Net Revenues:
Investment Banking & Equities:
Advisory Fees
$
467,401
$
488,224
$
1,304,519
$
1,689,033
Underwriting Fees
30,814
28,697
91,897
78,519
Commissions and Related Revenue
48,697
49,200
146,810
152,583
Asset Management and Administration
Fees
17,304
15,641
49,837
48,724
Other Revenue, net
6,004
(4,825
)
48,719
(38,151
)
Net Revenues
570,220
576,937
1,641,782
1,930,708
Expenses:
Employee Compensation and Benefits
391,730
355,794
1,096,976
1,174,500
Non-Compensation Costs
101,664
90,744
300,439
269,731
Special Charges, Including Business
Realignment Costs
—
—
2,921
532
Total Expenses
493,394
446,538
1,400,336
1,444,763
Operating Income (a)
$
76,826
$
130,399
$
241,446
$
485,945
(a) Operating Income excludes Income
(Loss) from Equity Method Investments.
Notes to Unaudited Condensed Consolidated Adjusted Financial
Data
For further information on these adjustments, see page A-2.
(1)
Income (Loss) from Equity Method
Investments has been reclassified to Revenue in the Adjusted
presentation.
(2)
Interest Expense on Debt is excluded from
Net Revenues and presented below Operating Income in the Adjusted
results and is included in Interest Expense on a U.S. GAAP
basis.
(3)
The gain on the sale of a portion of the
Company's interests in ABS in the first quarter of 2022 is excluded
from the Adjusted presentation.
(4)
Expenses during 2023 that are excluded
from the Adjusted presentation relate to the write-off of
non-recoverable assets in connection with the wind-down of the
Company's operations in Mexico. Expenses during 2022 that are
excluded from the Adjusted presentation relate to charges
associated with the prepayment of the Company's Series B Notes
during the second quarter, as well as certain professional fees
related to the wind-down of the Company's operations in Mexico.
(5)
Evercore is organized as a series of
Limited Liability Companies, Partnerships, C-Corporations and a
Public Corporation in the U.S. as the ultimate parent. Certain of
the subsidiaries, particularly Evercore LP, have noncontrolling
interests held by management or former members of management. As a
result, not all of the Company’s income is subject to corporate
level taxes and certain other state and local taxes are levied. The
assumption in the Adjusted earnings presentation is that
substantially all of the noncontrolling interest is eliminated
through the exchange of Evercore LP units into Class A common stock
of the ultimate parent. As a result, the Adjusted earnings
presentation assumes that the allocation of earnings to Evercore
LP’s noncontrolling interest holders is substantially eliminated
and is therefore subject to statutory tax rates of a C-Corporation
under a conventional tax structure in the U.S. and that certain
state and local taxes are reduced accordingly.
(6)
Reflects an adjustment to eliminate
noncontrolling interest related to substantially all Evercore LP
partnership units which are assumed to be converted to Class A
common stock in the Adjusted presentation.
(7)
Assumes the exchange into Class A shares
of substantially all Evercore LP Units and IPO related restricted
stock unit awards in the Adjusted presentation. In the computation
of outstanding common stock equivalents for U.S. GAAP net income
per share, the Evercore LP Units are anti-dilutive.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024900037/en/
Investor Contact: Katy Haber Head of Investor Relations
& ESG InvestorRelations@Evercore.com Media Contacts:
Jamie Easton Head of Communications & External Affairs
Communications@Evercore.com Shree Dhond / Zach Kouwe Dukas Linden
Public Relations Evercore@DLPR.com (646) 722-6531
Evercore (NYSE:EVR)
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