Evercore 4Q Profit Rises 29% On Higher Investment Banking Revenue
February 02 2012 - 10:43AM
Dow Jones News
Evercore Partners Inc. (EVR), the advisory firm founded by
former Deputy U.S. Treasury Secretary Roger Altman, said its
fourth-quarter adjusted profit climbed 29% from a year ago as its
investment banking revenue rose 19%.
But shares of Evercore fell 0.75% to $29.02 as its revenue
missed analysts' estimates. The stock is up 7% year-to-date.
Excluding discontinued operations, Evercore reported
fourth-quarter adjusted net income -- a figure which analysts
typically cite -- of $14.1 million, or 32 cents a share, up from
$10.9 million, or 27 cents a year earlier.
Analysts polled by Thomson Reuters had expected adjusted
earnings of 28 cents on revenue of $130 million.
On a reported basis, earnings from continuing operations swung
to a loss of $3,000, compared with earnings of $3.5 million, a year
ago.
Evercore, one of Wall Street's boutique investment banks, is
heavily tied to the health of the mergers and acquisitions market
as bankers in its core business earn fees from such transactions
and other advisory work.
During a conference call with analysts, Altman said "the outlook
for 2012 on an industry-wide basis would seem to be solid," adding
the ingredients are in place for higher levels of M&A,
including "low interest rates, an abundance of credit availability
for strong borrowers, a upward trend in equity values, moderately
improving business conditions and pretty good levels of management
confidence."
Evercore, which has been aggressive in adding bankers from bulge
bracket rivals since the financial crisis, said adjusted revenue in
investment banking rose to $90.3 million, up from $76.1 million, a
year ago.
Total reported revenue rose 10% to $113 million.
While dealmaking was strong in the first half of 2011, Evercore,
along with its industry rivals, was affected by the European
sovereign debt crisis and concerns about a slowing economic
recovery, which sent many clients to the sidelines.
On the call though, Altman said deal activity year-to-date has
reflected a "good environment," noting that the firm's "own backlog
reflects that" trend.
Last year, the firm advised on notable transactions including
Kinder Morgan Inc.'s (KMI) $21.1 billion pending deal to buy El
Paso Corp. (EP) and Exelon Corp.'s (EXC) proposed $8 billion
acquisition of Constellation Energy Group Inc. (CEG).
On the call, Altman said Evercore generated 26 fees from clients
of $1 million or more, including a "particularly strong"
contribution from its European business. The figure was unchanged
from the third quarter.
Chief Executive Ralph Schlosstein told analysts more than half
of the firm's advisory revenue was "booked outside of the U.S.,"
adding "I can say with confidence that we are no longer punching
below our weight in Europe."
On the compensation front, Evercore said its adjusted
compensation to net revenue ratio was 56%, down from 61% a year
ago.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com
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