Evercore Inc. (NYSE: EVR):
Third Quarter Results
Year to Date Results
U.S. GAAP
Adjusted
U.S. GAAP
Adjusted
Q3 2021
Q3 2020
Q3 2021
Q3 2020
YTD 2021
YTD 2020
YTD 2021
YTD 2020
Net Revenues ($ mm)
$
823.6
$
402.5
$
831.6
$
408.5
$
2,173.7
$
1,336.6
$
2,192.7
$
1,357.4
Operating Income ($ mm)
$
245.2
$
63.7
$
261.8
$
77.7
$
646.4
$
199.7
$
673.9
$
262.9
Net Income Attributable to Evercore Inc.
($ mm)
$
159.5
$
42.6
$
188.3
$
52.6
$
444.3
$
130.2
$
504.9
$
182.2
Diluted Earnings Per Share
$
3.74
$
1.01
$
3.96
$
1.11
$
10.19
$
3.09
$
10.41
$
3.85
Compensation Ratio
59.1
%
64.5
%
58.5
%
63.6
%
59.3
%
64.7
%
58.8
%
63.6
%
Operating Margin
29.8
%
15.8
%
31.5
%
19.0
%
29.7
%
14.9
%
30.7
%
19.4
%
Effective Tax Rate
24.0
%
23.5
%
25.6
%
27.2
%
21.0
%
24.5
%
22.8
%
26.1
%
Business and Financial
Highlights
■
Record 3Q and YTD Revenues on a U.S. GAAP
and an Adjusted basis; fourth straight quarter of Advisory revenues
greater than $500 million
■
#1 league table ranking(1) in announced
M&A volume both globally and in the U.S. among independents and
#7 in the U.S. among all firms over the last twelve months
■
Advising on three of the top 10 largest
announced U.S. M&A transactions of 2021
■
ECM activity continues to be diverse
across sectors and products, including more diverse deals in
Healthcare and strength in TMT, Consumer and Industrials
■
Evercore ISI recognized as the top
independent research firm in the Institutional Investor All-America
Equity Research team rankings for the eighth straight year and
ranked #2 among all firms on a weighted basis
Talent
■
Three Advisory Senior Managing Directors
recently joined Evercore: Adi Jayaraman in October covering the
FinTech sector, Brad David in September strengthening coverage of
Financial Sponsors and Brad Wolff in August enhancing coverage of
the Healthcare sector
■
Celeste Mellet became CFO of Evercore
effective September 1
■
Three additional Advisory Senior Managing
Directors are committed to join Evercore in 2021, strengthening our
coverage in the Power and Renewables and Basic Materials
sectors
■
Dialogue with potential senior level
talent remains robust and lateral hiring at other levels continues
to be strong
Capital Return
■
Quarterly dividend of $0.68 per share
■
Record levels of capital return with
$631.5 million returned to shareholders during the first nine
months of 2021 through dividends and repurchases of 4.1 million
shares at an average price of $129.22
(1) Based on Refinitiv rankings
Evercore Inc. (NYSE: EVR) today announced its results for the
third quarter ended September 30, 2021.
LEADERSHIP COMMENTARY
John S. Weinberg, Co-Chairman and Co-Chief Executive
Officer, "We continue to advise our clients on a wide array of
transactions, reflecting the breadth, diversity and strength of our
franchise. The ongoing robust environment for M&A activity and
the continued success of many of our strategic growth initiatives
aimed at expanding and enhancing our platform contributed to our
second best revenue quarter ever. We ranked(1) #1 globally and in
the U.S. among independents in the M&A league tables, strong
momentum continues in our Capital Advisory businesses and our
Underwriting business continues to perform well with greater sector
diversity. And Evercore ISI was once again recognized by
Institutional Investor as the top independent research firm.
Looking ahead, our pipeline continues to be strong and we remain
focused on addressing our clients’ objectives, growing our firm and
returning capital to shareholders."
Ralph Schlosstein, Co-Chairman and Co-Chief Executive
Officer, "Our strong quarterly results indicate that our
long-term growth strategy is working. We continue to attract and
hire exceptionally talented individuals in areas that offer
significant growth opportunities, including three recent Advisory
SMD hires that enhance our coverage of the Healthcare and FinTech
sectors and our coverage of Financial Sponsors. We also have three
additional individuals committed to join Evercore in 2021 who will
further enhance key areas of strategic importance, including the
Power and Renewables and Basic Materials sectors. In addition to
executing on our growth and hiring initiatives, we continue to pass
along our financial success to our shareholders. In the third
quarter, we returned $135.2 million to shareholders through
buybacks and dividends, bringing our year-to-date capital return to
$631.5 million through a combination of dividends and buybacks. We
are committed to returning excess cash flow to our shareholders
through share repurchases."
Roger C. Altman, Founder and Senior Chairman, "The Firm
has exceptional momentum, accentuated by a strong recruiting year
which has, again, expanded our coverage and footprint."
(1) Based on Refinitiv rankings
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 and Investment Management. Investment Banking
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 and historically through Institutional Asset
Management. See pages A-2 to A-10 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 vested and certain unvested 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.
Evercore's Adjusted Net Income Attributable to Evercore Inc. for
the three and nine months ended September 30, 2021 was higher than
U.S. GAAP as a result of certain business acquisition-related and
disposition-related charges and Special Charges, Including Business
Realignment Costs. Acquisition-related charges for 2021 include
professional fees incurred. Special Charges, Including Business
Realignment Costs, in 2021 relate to the write-down of certain
assets associated with a legacy private equity investment
relationship which, consistent with the Company's current
investment strategy, the Company decided to wind down during the
third quarter of 2021.
The gain on the redemption of the G5 debt security in the second
quarter of 2021 was excluded from Adjusted Net Revenues.
Evercore's Adjusted Diluted Shares Outstanding for the three and
nine months ended September 30, 2021 were higher than U.S. GAAP, as
a result of the inclusion of certain Evercore LP Units.
Further details of these adjustments, as well as an explanation
of similar amounts for the three and nine months ended September
30, 2020 are included in pages A-2 to A-10.
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-6 to A-8 for our business segment
results.
Net Revenues
U.S. GAAP
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
% Change
September 30, 2021
September 30, 2020
%
Change
(dollars in thousands)
Investment Banking:
Advisory Fees
$
708,333
$
270,662
162
%
$
1,781,065
$
965,662
84
%
Underwriting Fees
54,381
66,499
(18
%)
181,686
181,182
—
%
Commissions and Related Revenue(1)
46,763
44,003
6
%
151,014
153,903
(2
%)
Investment Management:
Asset Management and Administration
Fees
16,960
14,025
21
%
48,092
39,725
21
%
Other Revenue, net(1)
(2,882)
7,326
NM
11,873
(3,875)
NM
Net Revenues
$
823,555
$
402,515
105
%
$
2,173,730
$
1,336,597
63
%
1. Certain balances in the prior period
were reclassified to conform to their current presentation in this
release. "Commissions and Related Fees" has been renamed to
"Commissions and Related Revenue" and principal trading gains and
losses from our institutional equities business have been
reclassified from "Other Revenue, net" to "Commissions and Related
Revenue." For the three and nine months ended September 30, 2020,
this resulted in a reclassification of $0.2 million and $0.6
million, respectively, from "Other Revenue, net" to "Commissions
and Related Revenue." There was no impact on U.S. GAAP Net
Revenues, Operating Income, Net Income or Earnings Per Share. See
page A-3 for further information.
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
% Change
September 30, 2021
September 30, 2020
%
Change
Total Number of Fees from Advisory Client
Transactions(1)
257
206
25
%
586
475
23
%
Total Number of Fees of at Least $1
million from Advisory Client Transactions(1)
130
74
76
%
349
224
56
%
Total Number of Underwriting
Transactions
28
30
(7
%)
98
78
26
%
Total Number of Underwriting Transactions
as a Bookrunner
26
23
13
%
82
52
58
%
1. Includes Advisory and Underwriting Transactions.
As of September 30,
2021
2020
% Change
Assets Under Management ($ mm)(1)
Wealth Management(2)
$
11,316
$
9,517
19
%
Institutional Asset Management
—
1,420
NM
Total Assets Under Management
$
11,316
$
10,937
3
%
1. Assets Under Management reflect end of
period amounts from our consolidated subsidiaries.
2. Assets Under Management includes
Evercore assets which are managed by Evercore Wealth Management of
$76.3 million and $223.4 million as of September 30, 2021 and 2020,
respectively.
Advisory Fees – Third quarter Advisory Fees increased
$437.7 million, or 162%, year-over-year, reflecting an increase in
the number of fees earned and an increase in revenue earned from
large transactions. Year-to-date Advisory Fees increased $815.4
million, or 84%, year-over-year, reflecting an increase in the
number of fees earned and an increase in revenue earned from large
transactions.
Underwriting Fees – Third quarter Underwriting Fees
decreased $12.1 million, or 18%, year-over-year, reflecting a
decrease in both the number of transactions we participated in and
the relative fee size of those transactions. Year-to-date
Underwriting Fees increased $0.5 million, reflecting an increase in
the number of transactions we participated in, partially offset by
a decrease in the relative fee size of our participation in those
transactions, as we participated in several of the largest deals in
our history last year.
Commissions and Related Revenue – Third quarter
Commissions and Related Revenue increased $2.8 million, or 6%,
year-over-year, reflecting increased trading volume compared to the
prior year period. Year-to-date Commissions and Related Revenue
decreased $2.9 million, or 2%, year-over-year, reflecting lower
volatility compared to the prior year period.
Asset Management and Administration Fees – Third quarter
Asset Management and Administration Fees increased $2.9 million, or
21%, year-over-year, driven by an increase in fees from Wealth
Management clients as associated AUM increased 19%. Year-to-date
Asset Management and Administration Fees increased $8.4 million, or
21%, year-over-year, driven by an increase in fees from Wealth
Management clients as associated AUM increased 19%.
Other Revenue – Third quarter Other Revenue, net,
decreased $10.2 million year-over-year, primarily driven by lower
performance of our investment funds portfolio, which is used as an
economic hedge against our deferred cash compensation program.
Year-to-date Other Revenue, net, increased $15.7 million
year-over-year, primarily driven by higher performance of our
investment funds portfolio, as well as a gain on the redemption of
the G5 debt security in the second quarter of 2021.
Expenses
U.S. GAAP
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
% Change
September 30, 2021
September 30, 2020
%
Change
(dollars in thousands)
Employee Compensation and Benefits
$
486,471
$
259,812
87
%
$
1,289,659
$
864,600
49
%
Compensation Ratio
59.1
%
64.5
%
59.3
%
64.7
%
Non-Compensation Costs
$
83,377
$
71,637
16
%
$
229,143
$
232,665
(2
%)
Non-Compensation Ratio
10.1
%
17.8
%
10.5
%
17.4
%
Special Charges, Including Business
Realignment Costs
$
8,554
$
7,380
16
%
$
8,554
$
39,614
(78
%)
Employee Compensation and Benefits – Third quarter
Employee Compensation and Benefits increased $226.7 million, or
87%, year-over-year. The third quarter compensation ratio was 59.1%
versus 64.5% for the prior year period. Year-to-date Employee
Compensation and Benefits increased $425.1 million, or 49%,
year-over-year. The year-to-date compensation ratio was 59.3%
versus 64.7% for the prior year period. The increase in the amount
of compensation recognized in both the third quarter and
year-to-date period principally reflects a higher accrual for
incentive compensation, higher base salaries and higher
amortization of prior period deferred compensation awards, as well
as increased headcount year over year. The decrease in the
compensation ratios for both the third quarter and year-to-date
period reflects leverage achieved on higher revenues in the current
quarter and year-to-date period. See "Deferred Compensation" for
more information.
Non-Compensation Costs – Third quarter Non-Compensation
Costs increased $11.7 million, or 16%, year-over-year, primarily
driven by increases in professional fees and travel and related
expenses. The third quarter Non-Compensation ratio of 10.1%
decreased from 17.8% for the prior year period. Year-to-date
Non-Compensation Costs decreased $3.5 million, or 2%,
year-over-year, primarily driven by a decrease in travel and
related expenses, as well as a decrease in bad debt expense,
partially offset by an increase in professional fees. The
year-to-date Non-Compensation ratio of 10.5% decreased from 17.4%
for the prior year period. The decrease in the Non-Compensation
ratios for both the third quarter and year-to-date period
principally reflects leverage achieved on higher revenues in the
current quarter and year-to-date period.
Special Charges, Including Business Realignment Costs –
Third quarter and year-to-date 2021 Special Charges, Including
Business Realignment Costs, relate to the write-down of certain
assets associated with a legacy private equity investment
relationship which, consistent with the Company's current
investment strategy, the Company decided to wind down during the
third quarter of 2021.
In 2020, the Company completed a review of operations focused on
markets, sectors and people which delivered lower levels of
productivity in an effort to attain greater flexibility of
operations and better position itself for future growth. This
review generated reductions of approximately 8% of our
headcount.
In conjunction with the employment reductions, the Company
incurred separation and transition benefits and related costs for
certain employees terminated as a result of the Company's review of
its operations of $7.3 million and $37.6 million for third quarter
and year-to-date 2020, respectively, which have been recorded as
Special Charges, Including Business Realignment Costs, and are
excluded from our Adjusted results.
Third quarter and year-to-date 2020 Special Charges, Including
Business Realignment Costs, also reflect the acceleration of
depreciation expense for leasehold improvements and certain other
fixed assets in conjunction with the expansion of our headquarters
in New York and our business realignment initiatives of $0.1
million and $2.1 million, respectively.
Effective Tax Rate
The third quarter effective tax rate was 24.0% versus 23.5% for
the prior year period. The year-to-date effective tax rate was
21.0% versus 24.5% for the prior year period. The effective tax
rate is principally impacted by the deduction associated with the
appreciation or depreciation in the Firm's share price upon vesting
of employee share-based awards above or below the original grant
price. The year-to-date provision for income taxes for 2021
reflects an additional tax benefit of $17.4 million versus an
additional tax expense of $0.1 million for the prior year period,
due to the net impact associated with the appreciation or
depreciation in our share price upon vesting of employee
share-based awards above or below 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-10 for further
information and reconciliations of these metrics to our U.S. GAAP
results. See pages A-6 to A-8 for our business segment results.
Adjusted Net Revenues
Adjusted
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
% Change
September 30, 2021
September 30, 2020
%
Change
(dollars in thousands)
Investment Banking:
Advisory Fees(1)
$
708,897
$
271,232
161
%
$
1,782,347
$
966,833
84
%
Underwriting Fees
54,381
66,499
(18
%)
181,686
181,182
—
%
Commissions and Related Revenue(2)
46,763
44,003
6
%
151,014
153,903
(2
%)
Investment Management:
Asset Management and Administration
Fees(3)
20,077
16,566
21
%
56,909
47,106
21
%
Other Revenue, net(2)
1,511
10,189
(85
%)
20,768
8,364
148
%
Net Revenues
$
831,629
$
408,489
104
%
$
2,192,724
$
1,357,388
62
%
1. Advisory Fees on an Adjusted basis
reflect the reclassification of earnings related to our equity
method investment in Luminis of $0.6 million and $1.3 million for
the three and nine months ended September 30, 2021, respectively,
and $0.6 million and $1.2 million for the three and nine months
ended September 30, 2020, respectively.
2. Certain balances in the prior period
were reclassified to conform to their current presentation in this
release. "Commissions and Related Fees" has been renamed to
"Commissions and Related Revenue" and principal trading gains and
losses from our institutional equities business have been
reclassified from "Other Revenue, net" to "Commissions and Related
Revenue." For the three and nine months ended September 30, 2020,
this resulted in a reclassification of $0.2 million and $0.6
million, respectively, from "Other Revenue, net" to "Commissions
and Related Revenue." There was no impact on Adjusted Net Revenues,
Operating Income, Net Income or Earnings Per Share. See page A-3
for further information.
3. 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 $3.1 million and $8.8 million for the three and nine months
ended September 30, 2021, respectively, and $2.5 million and $7.4
million for the three and nine months ended September 30, 2020,
respectively.
See page 4 for additional business metrics.
Advisory Fees – Third quarter adjusted Advisory Fees
increased $437.7 million, or 161%, year-over-year, reflecting an
increase in the number of fees earned and an increase in revenue
earned from large transactions. Year-to-date adjusted Advisory Fees
increased $815.5 million, or 84%, year-over-year, reflecting an
increase in the number of Advisory fees earned and an increase in
revenue earned from large transactions.
Underwriting Fees – Third quarter Underwriting Fees
decreased $12.1 million, or 18%, year-over-year, reflecting a
decrease in both the number of transactions we participated in and
the relative fee size of those transactions. Year-to-date
Underwriting Fees increased $0.5 million, reflecting an increase in
the number of transactions we participated in, partially offset by
a decrease in the relative fee size of our participation in those
transactions, as we participated in several of the largest deals in
our history last year.
Commissions and Related Revenue – Third quarter
Commissions and Related Revenue increased $2.8 million, or 6%,
year-over-year, reflecting increased trading volume compared to the
prior year period. Year-to-date Commissions and Related Revenue
decreased $2.9 million, or 2%, year-over-year, reflecting lower
volatility compared to the prior year period.
Asset Management and Administration Fees – Third quarter
adjusted Asset Management and Administration Fees increased $3.5
million, or 21%, year-over-year, primarily driven by an increase in
fees from Wealth Management clients, as associated AUM increased
19%, as well as a 23% increase in equity in earnings of affiliates,
driven by higher income earned by ABS and Atalanta Sosnoff during
the quarter. Year-to-date adjusted Asset Management and
Administration Fees increased $9.8 million, or 21%, year-over-year,
primarily driven by an increase in fees from Wealth Management
clients, as associated AUM increased 19%, as well as a 19% increase
in equity in earnings of affiliates, driven by higher income earned
by ABS and Atalanta Sosnoff in 2021.
Other Revenue – Third quarter adjusted Other Revenue,
net, decreased $8.7 million, or 85%, year-over-year, primarily
driven by lower performance of our investment funds portfolio,
which is used as an economic hedge against our deferred cash
compensation program. Year-to-date adjusted Other Revenue, net,
increased $12.4 million, or 148%, year-over-year, primarily driven
by higher performance of our investment funds portfolio.
Adjusted Expenses
Adjusted
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
% Change
September 30, 2021
September 30, 2020
%
Change
(dollars in thousands)
Employee Compensation and Benefits
$
486,471
$
259,812
87
%
$
1,289,659
$
863,533
49
%
Compensation Ratio
58.5
%
63.6
%
58.8
%
63.6
%
Non-Compensation Costs
$
83,377
$
71,014
17
%
$
229,136
$
230,922
(1
%)
Non-Compensation Ratio
10.0
%
17.4
%
10.4
%
17.0
%
Employee Compensation and Benefits – Third quarter
adjusted Employee Compensation and Benefits increased $226.7
million, or 87%, year-over-year. The third quarter adjusted
compensation ratio was 58.5% versus 63.6% for the prior year
period. Year-to-date adjusted Employee Compensation and Benefits
increased $426.1 million, or 49%, year-over-year. The year-to-date
adjusted compensation ratio was 58.8% versus 63.6% for the prior
year period. The increase in the amount of adjusted compensation
recognized in both the third quarter and year-to-date period
principally reflects a higher accrual for incentive compensation,
higher base salaries and higher amortization of prior period
deferred compensation awards, as well as increased headcount year
over year. The decrease in the adjusted compensation ratios for
both the third quarter and year-to-date period reflects leverage
achieved on higher revenues in the current quarter and year-to-date
period. See "Deferred Compensation" for more information.
Non-Compensation Costs – Third quarter adjusted
Non-Compensation Costs increased $12.4 million, or 17%,
year-over-year, primarily driven by increases in professional fees
and travel and related expenses. The third quarter adjusted
Non-Compensation ratio of 10.0% decreased from 17.4% for the prior
year period. Year-to-date adjusted Non-Compensation Costs decreased
$1.8 million, or 1%, year-over-year, primarily driven by a decrease
in travel and related expenses, as well as a decrease in bad debt
expense, partially offset by an increase in professional fees. The
year-to-date adjusted Non-Compensation ratio of 10.4% decreased
from 17.0% for the prior year period. The decrease in the adjusted
Non-Compensation ratios for both the third quarter and year-to-date
period principally reflects leverage achieved on higher revenues in
the current quarter and year-to-date period.
Adjusted Effective Tax Rate
The third quarter adjusted effective tax rate was 25.6% versus
27.2% for the prior year period. The year-to-date adjusted
effective tax rate was 22.8% versus 26.1% for the prior year
period. The adjusted effective tax rate is principally impacted by
the deduction associated with the appreciation or depreciation in
the Firm's share price upon vesting of employee share-based awards
above or below the original grant price. The year-to-date adjusted
provision for income taxes for 2021 reflects an additional tax
benefit of $18.5 million versus an additional tax expense of $0.1
million for the prior year period, due to the net impact associated
with the appreciation or depreciation in our share price upon
vesting of employee share-based awards above or below the original
grant price.
Liquidity
The Company continues to maintain a strong balance sheet. As of
September 30, 2021, cash and cash equivalents were $478.8 million,
investment securities and certificates of deposit were $1.3 billion
and current assets exceeded current liabilities by $1.4 billion.
Amounts due related to the Notes Payable were $376.0 million at
September 30, 2021.
Headcount
As of September 30, 2021 and 2020, the Company employed
approximately 1,950 and 1,900 people, respectively, worldwide.
As of September 30, 2021 and 2020, the Company employed 152(1)
and 149(2) total Senior Managing Directors, respectively, of which
112(1) and 109(2), respectively, were Advisory Senior Managing
Directors.
(1) Senior Managing Director headcount as
of September 30, 2021, adjusted to include one Advisory Senior
Managing Director that joined in October 2021 and three additional
Advisory Senior Managing Directors committed to join in 2021.
(2) Senior Managing Director headcount as
of September 30, 2020, adjusted for known departures related to the
Company's realignment in 2020.
Deferred Compensation
Year-to-date, the Company granted to certain employees
approximately 2.1 million unvested restricted stock units ("RSUs")
(including 1.9 million granted in conjunction with the 2020 bonus
awards) with a grant date fair value of approximately $251.5
million. The total shares available to be granted in the future
under the Amended 2016 Plan was approximately 5.1 million as of
September 30, 2021.
In addition, during the first quarter of 2021, as part of the
2020 bonus awards, the Company granted approximately $97 million of
deferred cash awards to certain employees, related to our deferred
cash compensation program.
The Company recognized compensation expense related to RSUs and
our deferred cash compensation program of $84.6 million and $262.1
million for the three and nine months ended September 30, 2021,
respectively, and $74.1 million and $232.4 million for the three
and nine months ended September 30, 2020, respectively.
As of September 30, 2021, the Company has approximately 5.3
million unvested RSUs with an aggregate grant date fair value of
$516.6 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, 2021, the Company expects to pay an
aggregate of $324.7 million related to our deferred cash
compensation program at various dates through 2025, 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 26, 2021, the Board of Directors of Evercore declared
a quarterly dividend of $0.68 per share to be paid on December 10,
2021 to common stockholders of record on November 26, 2021.
During the third quarter, the Company repurchased approximately
21 thousand shares from employees for the net settlement of
stock-based compensation awards at an average price per share of
$137.39, and approximately 0.8 million shares at an average price
per share of $132.52 in open market transactions pursuant to the
Company's share repurchase program. The aggregate approximately 0.8
million shares were acquired at an average price per share of
$132.64. Year-to-date, the Company repurchased approximately 1.0
million shares from employees for the net settlement of stock-based
compensation awards at an average price per share of $117.46, and
approximately 3.1 million shares at an average price per share of
$132.79 in open market transactions pursuant to the Company's share
repurchase program. The aggregate approximately 4.1 million shares
were acquired at an average price per share of $129.22.
Conference Call
Evercore will host a related conference call beginning at 8:00
a.m. Eastern Time, Wednesday, October 27, 2021, accessible via
telephone and the Internet. Investors and analysts may participate
in the live conference call by dialing (877) 359-9508 (toll-free
domestic) or (224) 357-2393 (international); passcode: 2485748.
Please register at least 10 minutes before the conference call
begins. A replay of the call will be available for one week via
telephone starting approximately one hour after the call ends. The
replay can be accessed at (855) 859-2056 (toll-free domestic) or
(404) 537-3406 (international); passcode: 2485748. 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 after
the call.
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, 2020, 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, 2021 AND 2020
(dollars in thousands, except per
share data)
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenues
Investment Banking:
Advisory Fees
$
708,333
$
270,662
$
1,781,065
$
965,662
Underwriting Fees
54,381
66,499
181,686
181,182
Commissions and Related Revenue
46,763
44,003
151,014
153,903
Asset Management and Administration
Fees
16,960
14,025
48,092
39,725
Other Revenue, Including Interest and
Investments
1,511
12,329
25,142
12,497
Total Revenues
827,948
407,518
2,186,999
1,352,969
Interest Expense(1)
4,393
5,003
13,269
16,372
Net Revenues
823,555
402,515
2,173,730
1,336,597
Expenses
Employee Compensation and Benefits
486,471
259,812
1,289,659
864,600
Occupancy and Equipment Rental
19,191
18,043
55,413
54,318
Professional Fees
24,851
17,324
67,859
53,165
Travel and Related Expenses
5,895
3,182
11,902
23,089
Communications and Information
Services
14,082
13,868
42,191
40,704
Depreciation and Amortization
7,122
6,214
20,914
20,060
Execution, Clearing and Custody Fees
2,484
2,840
8,949
10,230
Special Charges, Including Business
Realignment Costs
8,554
7,380
8,554
39,614
Acquisition and Transition Costs
—
454
7
560
Other Operating Expenses
9,752
9,712
21,908
30,539
Total Expenses
578,402
338,829
1,527,356
1,136,879
Income Before Income from Equity Method
Investments and Income Taxes
245,153
63,686
646,374
199,718
Income from Equity Method Investments
3,681
3,111
10,099
8,552
Income Before Income Taxes
248,834
66,797
656,473
208,270
Provision for Income Taxes
59,712
15,677
137,871
51,042
Net Income
189,122
51,120
518,602
157,228
Net Income Attributable to Noncontrolling
Interest
29,577
8,510
74,346
27,031
Net Income Attributable to Evercore
Inc.
$
159,545
$
42,610
$
444,256
$
130,197
Net Income Attributable to Evercore
Inc. Common Shareholders
$
159,545
$
42,610
$
444,256
$
130,197
Weighted Average Shares of Class A
Common Stock Outstanding:
Basic
39,467
40,694
40,492
40,441
Diluted
42,697
42,343
43,597
42,185
Net Income Per Share Attributable to
Evercore Inc. Common Shareholders:
Basic
$
4.04
$
1.05
$
10.97
$
3.22
Diluted
$
3.74
$
1.01
$
10.19
$
3.09
1. Includes interest expense on long-term debt and interest
expense on short-term repurchase agreements.
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
granted to ISI employees, 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 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. In prior periods, the Company incurred
expenses, in Employee Compensation and Benefits, resulting from the
vesting of Evercore LP Units issued in conjunction with the
acquisition of ISI. The Adjusted results assume substantially all
of the LP Units have been exchanged for Class A shares.
Accordingly, any expense associated with these units, is excluded
from the Adjusted results, and 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 these
previously granted equity interests and IPO related restricted
stock units, and thus the Adjusted results reflect the exchange of
substantially all Evercore LP Units and IPO related restricted
stock unit awards 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:
1. Amortization of Intangible Assets and
Other Purchase Accounting-related Amortization. Amortization
of intangible assets and other purchase accounting-related
amortization from the acquisition of ISI and certain other
acquisitions. 2. Acquisition and Transition
Costs. Primarily professional fees incurred and costs
related to transitioning acquisitions or divestitures. 3.
Gain on Sale of ECB Trust Business.
The gain resulting from the sale of the ECB Trust business in the
third quarter of 2020 is excluded from the Adjusted presentation.
4. Gain on Redemption of G5 Debt
Security. The gain on the redemption of the G5 debt security
in the second quarter of 2021 is excluded from the Adjusted
presentation.
- Special Charges, Including Business
Realignment Costs. Expenses during 2021 that are excluded
from the Adjusted presentation relate to the write-down of certain
assets associated with a legacy private equity investment
relationship which, consistent with the Company's current
investment strategy, the Company decided to wind down during the
third quarter. Expenses during 2020 that are excluded from the
Adjusted presentation relate to separation and transition benefits
and related costs for certain employees terminated as a result of
the Company's review of its operations and the acceleration of
depreciation expense for leasehold improvements and certain other
fixed assets in conjunction with the expansion of our headquarters
in New York and our business realignment initiatives.
- 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 Operating
Income before interest expense on debt, which is included in
interest expense on a U.S. GAAP basis. In addition, in prior
periods, interest expense on short-term repurchase agreements,
within the Investment Management segment, was presented in Other
Revenue, net, as the Company's Management believes it is useful to
present the spread on net interest resulting from the matched
financial assets and liabilities.
- 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.
Reclassifications:
Certain balances in the prior period were reclassified to
conform to their current presentation in this release. "Commissions
and Related Fees" has been renamed to "Commissions and Related
Revenue" and principal trading gains and losses from our
institutional equities business have been reclassified from "Other
Revenue, Including Interest and Investments" to "Commissions and
Related Revenue." For the three and nine months ended September 30,
2020, this resulted in a reclassification of $150 thousand and $550
thousand, respectively, from "Other Revenue, Including Interest and
Investments" to "Commissions and Related Revenue." There was no
impact on U.S. GAAP or Adjusted Net Revenues, Operating Income, Net
Income or Earnings Per Share.
The prior period reclassifications from "Other Revenue,
Including Interest and Investments" to "Commissions and Related
Revenue" are as follows: Q1 2020: $185 thousand; Q2 2020: $215
thousand; Q3 2020: $150 thousand; Q4 2020: $375 thousand; Q1 2019:
($2) thousand; Q2 2019: $25 thousand; Q3 2019: $320 thousand; Q4
2019: $249 thousand.
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, 2021
September 30, 2020
September 30, 2021
September 30, 2020
Net Revenues - U.S. GAAP
$
823,555
$
402,515
$
2,173,730
$
1,336,597
Income from Equity Method Investments
(1)
3,681
3,111
10,099
8,552
Interest Expense on Debt (2)
4,393
4,218
13,269
13,594
Gain on Redemption of G5 Debt Security
(3)
—
—
(4,374
)
—
Gain on Sale of ECB Trust Business (4)
—
(1,355
)
—
(1,355
)
Net Revenues - Adjusted
$
831,629
$
408,489
$
2,192,724
$
1,357,388
Other Revenue, net - U.S. GAAP
$
(2,882
)
$
7,326
$
11,873
$
(3,875
)
Interest Expense on Debt (2)
4,393
4,218
13,269
13,594
Gain on Redemption of G5 Debt Security
(3)
—
—
(4,374
)
—
Gain on Sale of ECB Trust Business (4)
—
(1,355
)
—
(1,355
)
Other Revenue, net - Adjusted
$
1,511
$
10,189
$
20,768
$
8,364
Compensation Expense - U.S.
GAAP
$
486,471
$
259,812
$
1,289,659
$
864,600
Amortization of LP Units and Certain Other
Awards (5)
—
—
—
(1,067
)
Compensation Expense - Adjusted
$
486,471
$
259,812
$
1,289,659
$
863,533
Operating Income - U.S. GAAP
$
245,153
$
63,686
$
646,374
$
199,718
Income from Equity Method Investments
(1)
3,681
3,111
10,099
8,552
Pre-Tax Income - U.S. GAAP
248,834
66,797
656,473
208,270
Gain on Redemption of G5 Debt Security
(3)
—
—
(4,374
)
—
Gain on Sale of ECB Trust Business (4)
—
(1,355
)
—
(1,355
)
Amortization of LP Units and Certain Other
Awards (5)
—
—
—
1,067
Special Charges, Including Business
Realignment Costs (6)
8,554
7,380
8,554
39,614
Intangible Asset Amortization / Other
Purchase Accounting-related Amortization (7a)
—
169
—
1,183
Acquisition and Transition Costs (7b)
—
454
7
560
Pre-Tax Income - Adjusted
257,388
73,445
660,660
249,339
Interest Expense on Debt (2)
4,393
4,218
13,269
13,594
Operating Income - Adjusted
$
261,781
$
77,663
$
673,929
$
262,933
Provision for Income Taxes - U.S.
GAAP
$
59,712
$
15,677
$
137,871
$
51,042
Income Taxes (8)
6,155
4,292
12,684
14,002
Provision for Income Taxes -
Adjusted
$
65,867
$
19,969
$
150,555
$
65,044
Net Income Attributable to Evercore
Inc. - U.S. GAAP
$
159,545
$
42,610
$
444,256
$
130,197
Gain on Redemption of G5 Debt Security
(3)
—
—
(4,374
)
—
Gain on Sale of ECB Trust Business (4)
—
(1,355
)
—
(1,355
)
Amortization of LP Units and Certain Other
Awards (5)
—
—
—
1,067
Special Charges, Including Business
Realignment Costs (6)
8,554
7,380
8,554
39,614
Intangible Asset Amortization / Other
Purchase Accounting-related Amortization (7a)
—
169
—
1,183
Acquisition and Transition Costs (7b)
—
454
7
560
Income Taxes (8)
(6,155
)
(4,292
)
(12,684
)
(14,002
)
Noncontrolling Interest (9)
26,399
7,662
69,111
24,949
Net Income Attributable to Evercore
Inc. - Adjusted
$
188,343
$
52,628
$
504,870
$
182,213
Diluted Shares Outstanding - U.S.
GAAP
42,697
42,343
43,597
42,185
LP Units (10)
4,840
5,071
4,871
5,161
Unvested Restricted Stock Units - Event
Based (10)
12
12
12
12
Diluted Shares Outstanding -
Adjusted
47,549
47,426
48,480
47,358
EVERCORE INC.
U.S. GAAP RECONCILIATION TO
ADJUSTED RESULTS (cont'd)
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2020
September 30, 2021
September 30, 2020
Key Metrics:
(a)
Diluted Earnings Per Share - U.S. GAAP
$
3.74
$
1.01
$
10.19
$
3.09
Diluted Earnings Per Share - Adjusted
$
3.96
$
1.11
$
10.41
$
3.85
Compensation Ratio - U.S. GAAP
59.1
%
64.5
%
59.3
%
64.7
%
Compensation Ratio - Adjusted
58.5
%
63.6
%
58.8
%
63.6
%
Operating Margin - U.S. GAAP
29.8
%
15.8
%
29.7
%
14.9
%
Operating Margin - Adjusted
31.5
%
19.0
%
30.7
%
19.4
%
Effective Tax Rate - U.S. GAAP
24.0
%
23.5
%
21.0
%
24.5
%
Effective Tax Rate - Adjusted
25.6
%
27.2
%
22.8
%
26.1
%
(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, 2021
(dollars in thousands)
(UNAUDITED)
Investment Banking
Segment
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Investment Banking:
Advisory Fees
$
708,333
$
564
(1)
$
708,897
$
1,781,065
$
1,282
(1)
$
1,782,347
Underwriting Fees
54,381
—
54,381
181,686
—
181,686
Commissions and Related Revenue
46,763
—
46,763
151,014
—
151,014
Other Revenue, net
(2,559
)
4,393
(2)
1,834
11,258
8,895
(2)(3)
20,153
Net Revenues
806,918
4,957
811,875
2,125,023
10,177
2,135,200
Expenses:
Employee Compensation and Benefits
476,217
—
476,217
1,261,063
—
1,261,063
Non-Compensation Costs
80,060
—
80,060
219,907
(7
)
(7)
219,900
Total Expenses
556,277
—
556,277
1,480,970
(7
)
1,480,963
Operating Income (a)
$
250,641
$
4,957
$
255,598
$
644,053
$
10,184
$
654,237
Compensation Ratio (b)
59.0
%
58.7
%
59.3
%
59.1
%
Operating Margin (b)
31.1
%
31.5
%
30.3
%
30.6
%
Investment Management
Segment
Three Months Ended September
30, 2021
Nine Months Ended September
30, 2021
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
$
16,960
$
3,117
(1)
$
20,077
$
48,092
$
8,817
(1)
$
56,909
Other Revenue, net
(323
)
—
(323
)
615
—
615
Net Revenues
16,637
3,117
19,754
48,707
8,817
57,524
Expenses:
Employee Compensation and Benefits
10,254
—
10,254
28,596
—
28,596
Non-Compensation Costs
3,317
—
3,317
9,236
—
9,236
Special Charges, Including Business
Realignment Costs
8,554
(8,554
)
(6)
—
8,554
(8,554
)
(6)
—
Total Expenses
22,125
(8,554
)
13,571
46,386
(8,554
)
37,832
Operating Income (Loss) (a)
$
(5,488
)
$
11,671
$
6,183
$
2,321
$
17,371
$
19,692
Compensation Ratio (b)
61.6
%
51.9
%
58.7
%
49.7
%
Operating Margin (b)
(33.0
%)
31.3
%
4.8
%
34.2
%
(a) Operating Income (Loss) 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, 2020
(dollars in thousands)
(UNAUDITED)
Investment Banking
Segment
Three Months Ended September
30, 2020
Nine Months Ended September
30, 2020
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
U.S. GAAP Basis
Adjustments
Non-GAAP Adjusted
Basis
Net Revenues:
Investment Banking:
Advisory Fees
$
270,662
$
570
(1)
$
271,232
$
965,662
$
1,171
(1)
$
966,833
Underwriting Fees
66,499
—
66,499
181,182
—
181,182
Commissions and Related Revenue
44,003
—
44,003
153,903
—
153,903
Other Revenue, net
4,299
4,218
(2)
8,517
(6,254
)
13,594
(2)
7,340
Net Revenues
385,463
4,788
390,251
1,294,493
14,765
1,309,258
Expenses:
Employee Compensation and Benefits
250,856
—
250,856
838,553
(1,067
)
(5)
837,486
Non-Compensation Costs
68,122
(323
)
(7)
67,799
221,883
(1,443
)
(7)
220,440
Special Charges, Including Business
Realignment Costs
7,380
(7,380
)
(6)
—
39,582
(39,582
)
(6)
—
Total Expenses
326,358
(7,703
)
318,655
1,100,018
(42,092
)
1,057,926
Operating Income (a)
$
59,105
$
12,491
$
71,596
$
194,475
$
56,857
$
251,332
Compensation Ratio (b)
65.1
%
64.3
%
64.8
%
64.0
%
Operating Margin (b)
15.3
%
18.3
%
15.0
%
19.2
%
Investment Management
Segment
Three Months Ended September
30, 2020
Nine Months Ended September
30, 2020
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
$
14,025
$
2,541
(1)
$
16,566
$
39,725
$
7,381
(1)
$
47,106
Other Revenue, net
3,027
(1,355
)
(4)
1,672
2,379
(1,355
)
(4)
1,024
Net Revenues
17,052
1,186
18,238
42,104
6,026
48,130
Expenses:
Employee Compensation and Benefits
8,956
—
8,956
26,047
—
26,047
Non-Compensation Costs
3,515
(300
)
(7)
3,215
10,782
(300
)
(7)
10,482
Special Charges, Including Business
Realignment Costs
—
—
—
32
(32
)
(6)
—
Total Expenses
12,471
(300
)
12,171
36,861
(332
)
36,529
Operating Income (a)
$
4,581
$
1,486
$
6,067
$
5,243
$
6,358
$
11,601
Compensation Ratio (b)
52.5
%
49.1
%
61.9
%
54.1
%
Operating Margin (b)
26.9
%
33.3
%
12.5
%
24.1
%
(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,
2021
2020
2021
2020
Investment Banking
Net Revenues:
Investment Banking:
Advisory Fees
$
708,333
$
270,662
$
1,781,065
$
965,662
Underwriting Fees
54,381
66,499
181,686
181,182
Commissions and Related Revenue
46,763
44,003
151,014
153,903
Other Revenue, net
(2,559
)
4,299
11,258
(6,254
)
Net Revenues
806,918
385,463
2,125,023
1,294,493
Expenses:
Employee Compensation and Benefits
476,217
250,856
1,261,063
838,553
Non-Compensation Costs
80,060
68,122
219,907
221,883
Special Charges, Including Business
Realignment Costs
—
7,380
—
39,582
Total Expenses
556,277
326,358
1,480,970
1,100,018
Operating Income (a)
$
250,641
$
59,105
$
644,053
$
194,475
Investment Management
Net Revenues:
Asset Management and Administration
Fees
$
16,960
$
14,025
$
48,092
$
39,725
Other Revenue, net
(323
)
3,027
615
2,379
Net Revenues
16,637
17,052
48,707
42,104
Expenses:
Employee Compensation and Benefits
10,254
8,956
28,596
26,047
Non-Compensation Costs
3,317
3,515
9,236
10,782
Special Charges, Including Business
Realignment Costs
8,554
—
8,554
32
Total Expenses
22,125
12,471
46,386
36,861
Operating Income (Loss) (a)
$
(5,488
)
$
4,581
$
2,321
$
5,243
Total
Net Revenues:
Investment Banking:
Advisory Fees
$
708,333
$
270,662
$
1,781,065
$
965,662
Underwriting Fees
54,381
66,499
181,686
181,182
Commissions and Related Revenue
46,763
44,003
151,014
153,903
Asset Management and Administration
Fees
16,960
14,025
48,092
39,725
Other Revenue, net
(2,882
)
7,326
11,873
(3,875
)
Net Revenues
823,555
402,515
2,173,730
1,336,597
Expenses:
Employee Compensation and Benefits
486,471
259,812
1,289,659
864,600
Non-Compensation Costs
83,377
71,637
229,143
232,665
Special Charges, Including Business
Realignment Costs
8,554
7,380
8,554
39,614
Total Expenses
578,402
338,829
1,527,356
1,136,879
Operating Income (a)
$
245,153
$
63,686
$
646,374
$
199,718
(a) Operating Income (Loss) excludes
Income (Loss) from Equity Method Investments.
EVERCORE INC.
U.S. GAAP RECONCILIATION TO
ADJUSTED NON-COMPENSATION COSTS
(dollars in thousands)
(UNAUDITED)
Three Months Ended September
30, 2021
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
19,191
$
—
$
19,191
Professional Fees
24,851
—
24,851
Travel and Related Expenses
5,895
—
5,895
Communications and Information
Services
14,082
—
14,082
Depreciation and Amortization
7,122
—
7,122
Execution, Clearing and Custody Fees
2,484
—
2,484
Other Operating Expenses
9,752
—
9,752
Total Non-Compensation Costs
$
83,377
$
—
$
83,377
Three Months Ended September
30, 2020
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
18,043
$
—
$
18,043
Professional Fees
17,324
—
17,324
Travel and Related Expenses
3,182
—
3,182
Communications and Information
Services
13,868
—
13,868
Depreciation and Amortization
6,214
(169
)
(7a)
6,045
Execution, Clearing and Custody Fees
2,840
—
2,840
Acquisition and Transition Costs
454
(454
)
(7b)
—
Other Operating Expenses
9,712
—
9,712
Total Non-Compensation Costs
$
71,637
$
(623
)
$
71,014
Nine Months Ended September
30, 2021
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
55,413
$
—
$
55,413
Professional Fees
67,859
—
67,859
Travel and Related Expenses
11,902
—
11,902
Communications and Information
Services
42,191
—
42,191
Depreciation and Amortization
20,914
—
20,914
Execution, Clearing and Custody Fees
8,949
—
8,949
Acquisition and Transition Costs
7
(7
)
(7b)
—
Other Operating Expenses
21,908
—
21,908
Total Non-Compensation Costs
$
229,143
$
(7
)
$
229,136
Nine Months Ended September
30, 2020
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
54,318
$
—
$
54,318
Professional Fees
53,165
—
53,165
Travel and Related Expenses
23,089
—
23,089
Communications and Information
Services
40,704
—
40,704
Depreciation and Amortization
20,060
(1,183
)
(7a)
18,877
Execution, Clearing and Custody Fees
10,230
—
10,230
Acquisition and Transition Costs
560
(560
)
(7b)
—
Other Operating Expenses
30,539
—
30,539
Total Non-Compensation Costs
$
232,665
$
(1,743
)
$
230,922
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 resulting from the
redemption of the G5 debt security in the second quarter of 2021 is
excluded from the Adjusted presentation.
(4)
The gain resulting from the sale
of the ECB Trust business in the third quarter of 2020 is excluded
from the Adjusted presentation.
(5)
Expenses incurred from the
vesting of Class J Evercore LP Units issued in conjunction with the
acquisition of ISI are excluded from the Adjusted presentation.
(6)
Expenses during 2021 that are
excluded from the Adjusted presentation relate to the write-down of
certain assets associated with a legacy private equity investment
relationship which, consistent with the Company's current
investment strategy, the Company decided to wind down during the
third quarter. Expenses during 2020 that are excluded from the
Adjusted presentation relate to separation and transition benefits
and related costs for certain employees terminated as a result of
the Company's review of its operations and the acceleration of
depreciation expense for leasehold improvements and certain other
fixed assets in conjunction with the expansion of our headquarters
in New York and our business realignment initiatives.
(7)
Non-Compensation Costs on an
Adjusted basis reflect the following adjustments:
(7a)
The exclusion from the Adjusted
presentation of expenses associated with amortization of intangible
assets and other purchase accounting-related amortization from the
acquisition of ISI and certain other acquisitions.
(7b)
The exclusion from the Adjusted
presentation of professional fees incurred and costs related to
transitioning acquisitions or divestitures.
(8)
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.
(9)
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.
(10)
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/20211027005228/en/
Investor Contact: Hallie Miller Head of Investor
Relations, Evercore 917-386-7856 Media Contact: Dana Gorman
Abernathy MacGregor, for Evercore 212-371-5999
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