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Evercore Reports Third Quarter 2021 Results; Quarterly Dividend of $0.68 Per Share

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

 

Contacts

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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