Evercore Inc. (NYSE: EVR):
Second Quarter 2021
Results
2021 Year to Date
Results
U.S. GAAP
Adjusted
U.S. GAAP
Adjusted
vs.
Q2 2020
vs.
Q2 2020
vs.
YTD 2020
vs.
YTD 2020
Net Revenues ($ millions)
$
687.9
36%
$
691.2
34%
$
1,350.2
45%
$
1,361.1
43%
Operating Income ($ millions)
$
207.0
139%
$
210.3
105%
$
401.2
195%
$
412.1
122%
Net Income Attributable to Evercore Inc.
($ millions)
$
140.4
149%
$
154.0
115%
$
284.7
225%
$
316.5
144%
Diluted Earnings Per Share
$
3.21
138%
$
3.17
107%
$
6.46
211%
$
6.47
136%
Operating Margin
30.1
%
1,299 bps
30.4
%
1,044 bps
29.7
%
1,515 bps
30.3
%
1,076 bps
Business and Financial
Highlights
■
Record Second Quarter and First Half
Revenues on a U.S. GAAP and an Adjusted basis; First Half 2021
revenues increased more than 40% both versus the prior record in
2019 and versus 2020
■
More than $1 billion in First Half 2021
Advisory revenues, with strong contribution across capabilities
globally, including M&A, Capital Advisory and Strategic Defense
& Shareholder Advisory; activity levels remain high and
backlogs are strong
■
Advising our corporate client on the
largest SPAC merger of all-time and on four of the top 25 largest
announced U.S. M&A transactions of 2021
■
ECM activity continues to be diverse
across sectors and products as we continued to broaden our
capabilities, including advising on our first direct listing
assignment
■
Delivered significant margin expansion
with Second Quarter and First Half U.S. GAAP and Adjusted Operating
Margin of 30%
Talent
■
Two Advisory Senior Managing Directors
have already joined Evercore and three more are committed to join
in 2021, strengthening our coverage in the Healthcare and FinTech
sectors and our coverage of Financial Sponsors. Dialogue with
additional senior level recruits continues
■
Celeste Mellet joined Evercore on July 1
as a Senior Managing Director and will become CFO, effective
September 1, succeeding Robert Walsh who will retire from Evercore
at year-end
Capital Return
■
Quarterly dividend of $0.68 per share
■
Record levels of capital return with
$496.3 million returned to shareholders during the first six months
of 2021 through dividends and repurchases of 3.3 million shares at
an average price of $128.40
Strategic Transactions
■
In July, acquired a 20% interest in Seneca
Evercore, strengthening our strategic alliance in Brazil
ESG
■
Published inaugural Sustainability Report
in May
Evercore Inc. (NYSE: EVR) today announced its results for the
second quarter ended June 30, 2021.
LEADERSHIP COMMENTARY
John S. Weinberg, Co-Chairman and Co-Chief Executive
Officer, "Our record second quarter and year-to-date results
reflect the breadth and diversity of our capabilities, supported by
a positive macroeconomic environment. Our Advisory teams continue
to be busy across capabilities and geographies, and this pace of
activity translated into revenues – first half Advisory revenues
increased more than 50% year-over-year and surpassed $1 billion for
the first time. In our Underwriting business, we continue to
participate in assignments across diverse industries and our
revenues year-to-date increased 11% year-over-year. In Equities, we
continue to deliver high quality content to our client base and had
a very active quarter with conferences. We are pleased to have
three Advisory Senior Managing Directors committed to join Evercore
over the next few months to strengthen areas of strategic
significance and dialogues with potential recruits remain high.
Finally, we are excited to welcome Celeste Mellet to Evercore to
help guide our organization through our next stage of growth."
Ralph Schlosstein, Co-Chairman and Co-Chief Executive
Officer, "We continued to deliver for our clients, our people
and our shareholders throughout the second quarter. The positive
economic environment, pressure on business models from technology
and energy disruption, strong CEO and Board confidence and record
levels of investable capital from sponsors and SPACs led to robust
announcement activity. We maintained our #1 league table ranking in
the U.S. for announced M&A volumes among independent firms and
we continue to have meaningful dialogue with clients on capital
raising opportunities and other strategic priorities. This high
level of activity is contributing to our strong backlogs. While we
have delivered for our clients and produced extraordinary financial
results during this period of remote work over the past 16 months,
we remain firmly committed to our culture of in-the-office
collaboration and apprenticeship. Our teams started to transition
back to the office during the quarter and we are looking forward to
having more of our teams back in the office over the next several
weeks. Lastly, we are back to our pre-pandemic approach to capital
return for our shareholders and returned nearly $500 million
through dividends and repurchases of 3.3 million shares
year-to-date."
Roger C. Altman, Founder and Senior Chairman, "Evercore
continued its long standing momentum in the second quarter, as we
both increased our market share again and saw strong levels of
M&A and capital raising. The Firm’s broader platform, as
compared to earlier years, and its exceptional talent, is powering
this gratifying strength."
Selected Financial Data - U.S. GAAP
Results:
The following is a discussion of Evercore's results on a U.S.
GAAP basis.
U.S. GAAP
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
% Change
(dollars in thousands, except per
share data)
Net Revenues
$
687,865
$
507,075
36
%
$
1,350,175
$
934,082
45
%
Operating Income(1)
$
207,013
$
86,729
139
%
$
401,221
$
136,032
195
%
Net Income Attributable to Evercore
Inc.
$
140,359
$
56,412
149
%
$
284,711
$
87,587
225
%
Diluted Earnings Per Share
$
3.21
$
1.35
138
%
$
6.46
$
2.08
211
%
Compensation Ratio
59.3
%
65.9
%
59.5
%
64.7
%
Operating Margin
30.1
%
17.1
%
29.7
%
14.6
%
Effective Tax Rate
22.1
%
24.5
%
19.2
%
25.0
%
Trailing Twelve Month Compensation
Ratio
58.6
%
62.3
%
1. Operating Income includes Special
Charges, Including Business Realignment Costs, of $8.6 million
recognized in the Investment Banking segment for the three months
ended June 30, 2020 and $32.2 million and $0.1 million recognized
in the Investment Banking and Investment Management segment,
respectively, for the six months ended June 30, 2020. See "Special
Charges, Including Business Realignment Costs" below.
Net Revenues
For the three months ended June 30, 2021, Net Revenues of $687.9
million increased 36% versus the three months ended June 30, 2020,
primarily reflecting an increase in Advisory Fees of $224.4
million, partially offset by a decrease in Underwriting Fees of
$45.5 million. For the six months ended June 30, 2021, Net Revenues
of $1.4 billion increased 45% versus the six months ended June 30,
2020, primarily reflecting increases in Advisory Fees and
Underwriting Fees of $377.7 million and $12.6 million,
respectively, as well as an increase in Other Revenue, net,
primarily driven by a shift from net losses of $6.8 million for the
six months ended June 30, 2020 to gains of $16.0 million for the
six months ended June 30, 2021 on our investment funds portfolio,
which is used as an economic hedge against our deferred cash
compensation program. See the Business Line Reporting - Discussion
of U.S. GAAP Results below for further information.
Compensation
For the three months ended June 30, 2021, compensation costs of
$407.8 million increased 22% versus the three months ended June 30,
2020. For the three months ended June 30, 2021, the compensation
ratio was 59.3% versus 65.9% for the three months ended June 30,
2020. The compensation ratio for the three months ended June 30,
2020 was 67.5% when the $8.2 million of separation and transition
benefits expense, which is presented within Special Charges,
Including Business Realignment Costs, is also included. For the six
months ended June 30, 2021, compensation costs of $803.2 million
increased 33% versus the six months ended June 30, 2020. For the
six months ended June 30, 2021, the compensation ratio was 59.5%
versus 64.7% for the six months ended June 30, 2020. The
compensation ratio for the six months ended June 30, 2020 was 68.0%
when the $30.2 million of separation and transition benefits
expense, which is presented within Special Charges, Including
Business Realignment Costs, is also included. See "Special Charges,
Including Business Realignment Costs" below for further
information. The increase in the amount of compensation recognized
in the three and six months ended June 30, 2021 principally
reflects higher levels of incentive compensation, higher
amortization of prior period deferred compensation awards and
higher base salaries. See "Deferred Compensation" for more
information. The compensation ratio in any given period is subject
to fluctuation based, in part, on the amount of revenue earned in
that period.
Non-Compensation Costs
For the three months ended June 30, 2021, Non-Compensation Costs
of $73.1 million decreased 6% versus the three months ended June
30, 2020, primarily driven by a decrease in bad debt expense,
partially offset by an increase in professional fees. For the six
months ended June 30, 2021, Non-Compensation Costs of $145.8
million decreased 9% versus the six months ended June 30, 2020,
primarily driven by decreased travel and related expenses, as a
substantial number of employees continued to work remotely in 2021,
as well as a decrease in bad debt expense, partially offset by an
increase in professional fees.
Special Charges, Including Business Realignment Costs
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 of
$8.2 million and $30.3 million for the three and six months ended
June 30, 2020, respectively, which have been recorded as Special
Charges, Including Business Realignment Costs, and are excluded
from our Adjusted results.
Special Charges, Including Business Realignment Costs, for the
three and six months ended June 30, 2020 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 $0.4 million and $1.9 million, respectively.
Effective Tax Rate
For the three months ended June 30, 2021, the effective tax rate
was 22.1% versus 24.5% for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the effective tax rate was
19.2% versus 25.0% for the six months ended June 30, 2020. The
effective tax rate is principally impacted by the deduction
associated with the appreciation in the Firm's share price upon
vesting of employee share-based awards above the original grant
price. The provision for income taxes for the six months ended June
30, 2021 reflects an additional tax benefit of $17.0 million versus
$0.1 million for the six months ended June 30, 2020, 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 results on an
Adjusted basis. See pages 7 and A-2 to A-11 for further information
and reconciliations of these non-GAAP metrics to our U.S. GAAP
results.
Adjusted
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands, except per
share data)
Net Revenues
$
691,191
$
513,922
34
%
$
1,361,095
$
948,899
43
%
Operating Income
$
210,339
$
102,739
105
%
$
412,148
$
185,270
122
%
Net Income Attributable to Evercore
Inc.
$
154,010
$
71,767
115
%
$
316,527
$
129,585
144
%
Diluted Earnings Per Share
$
3.17
$
1.53
107
%
$
6.47
$
2.74
136
%
Compensation Ratio
59.0
%
65.0
%
59.0
%
63.6
%
Operating Margin
30.4
%
20.0
%
30.3
%
19.5
%
Effective Tax Rate
24.7
%
26.2
%
21.0
%
25.6
%
Trailing Twelve Month Compensation
Ratio
57.3
%
60.8
%
Adjusted Net Revenues
For the three months ended June 30, 2021, Adjusted Net Revenues
of $691.2 million increased 34% versus the three months ended June
30, 2020, primarily reflecting an increase in Advisory Fees of
$224.9 million, partially offset by a decrease in Underwriting Fees
of $45.5 million. For the six months ended June 30, 2021, Adjusted
Net Revenues of $1.4 billion increased 43% versus the six months
ended June 30, 2020, primarily reflecting increases in Advisory
Fees and Underwriting Fees of $377.8 million and $12.6 million,
respectively, as well as an increase in Other Revenue, net,
primarily driven by a shift from net losses of $6.8 million for the
six months ended June 30, 2020 to gains of $16.0 million for the
six months ended June 30, 2021 on our investment funds portfolio,
which is used as an economic hedge against our deferred cash
compensation program. See the Business Line Reporting - Discussion
of Adjusted Results below for further information.
Adjusted Compensation
For the three months ended June 30, 2021, Adjusted compensation
costs of $407.8 million increased 22% versus the three months ended
June 30, 2020. For the three months ended June 30, 2021, the
Adjusted compensation ratio was 59.0% versus 65.0% for the three
months ended June 30, 2020. For the six months ended June 30, 2021,
Adjusted compensation costs of $803.2 million increased 33% versus
the six months ended June 30, 2020. For the six months ended June
30, 2021, the Adjusted compensation ratio was 59.0% versus 63.6%
for the six months ended June 30, 2020. The increase in the amount
of Adjusted compensation recognized in the three and six months
ended June 30, 2021 principally reflects higher levels of incentive
compensation, higher amortization of prior period deferred
compensation awards and higher base salaries. See "Deferred
Compensation" for more information. The Adjusted compensation ratio
in any given period is subject to fluctuation based, in part, on
the amount of revenue earned in that period.
Adjusted Non-Compensation Costs
For the three months ended June 30, 2021, Adjusted
Non-Compensation Costs of $73.1 million decreased 5% versus the
three months ended June 30, 2020, primarily driven by a decrease in
bad debt expense, partially offset by an increase in professional
fees. For the six months ended June 30, 2021, Adjusted
Non-Compensation Costs of $145.8 million decreased 9% versus the
six months ended June 30, 2020, primarily driven by decreased
travel and related expenses, as a substantial number of employees
continued to work remotely in 2021, as well as a decrease in bad
debt expense, partially offset by an increase in professional
fees.
Adjusted Effective Tax Rate
For the three months ended June 30, 2021, the Adjusted effective
tax rate was 24.7% versus 26.2% for the three months ended June 30,
2020. For the six months ended June 30, 2021, the Adjusted
effective tax rate was 21.0% versus 25.6% for the six months ended
June 30, 2020. The Adjusted effective tax rate is principally
impacted by the deduction associated with the appreciation in the
Firm's share price upon vesting of employee share-based awards
above the original grant price. The Adjusted provision for income
taxes for the six months ended June 30, 2021 reflects an additional
tax benefit of $18.1 million versus $0.1 million for the six months
ended June 30, 2020, 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.
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.
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 six months ended June 30, 2021 was also higher than U.S. GAAP
as a result of certain business acquisition-related and
disposition-related charges. Acquisition-related charges for 2021
include professional fees incurred.
The gain on the redemption of the G5 debt security in the second
quarter of 2021 has also been excluded from Adjusted Net
Revenues.
Evercore's Adjusted Diluted Shares Outstanding for the three and
six months ended June 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 six months ended June 30, 2020
are included in Annex I, pages A-2 to A-11.
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 six months ended June 30, 2020,
this resulted in a reclassification of $215 thousand and $400
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.
Business Line Reporting - Discussion of
U.S. GAAP Results
The following is a discussion of Evercore's segment results on a
U.S. GAAP basis.
Investment Banking
U.S. GAAP
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Net Revenues:
Investment Banking:
Advisory Fees
$
560,814
$
336,436
67%
$
1,072,732
$
695,000
54%
Underwriting Fees
48,048
93,565
(49%)
127,305
114,683
11%
Commissions and Related Revenue
50,725
54,334
(7%)
104,251
109,900
(5%)
Other Revenue, net
11,233
11,039
2%
13,817
(10,553)
NM
Net Revenues
670,820
495,374
35%
1,318,105
909,030
45%
Expenses:
Employee Compensation and Benefits
398,164
325,706
22%
784,846
587,697
34%
Non-Compensation Costs
69,996
74,375
(6%)
139,847
153,761
(9%)
Special Charges, Including Business
Realignment Costs
—
8,558
NM
—
32,202
NM
Total Expenses
468,160
408,639
15%
924,693
773,660
20%
Operating Income
$
202,660
$
86,735
134%
$
393,412
$
135,370
191%
Compensation Ratio
59.4
%
65.7
%
59.5
%
64.7
%
Non-Compensation Ratio
10.4
%
15.0
%
10.6
%
16.9
%
Operating Margin
30.2
%
17.5
%
29.8
%
14.9
%
Total Number of Fees from Advisory Client
Transactions(1)
255
222
15%
418
358
17%
Investment Banking Fees of at Least $1
million from Advisory Client Transactions(1)
115
77
49%
218
150
45%
Total Number of Underwriting
Transactions
31
36
(14%)
70
48
46%
Total Number of Underwriting Transactions
as a Bookrunner
25
21
19%
56
29
93%
1. Includes Advisory and Underwriting Transactions.
Revenues
During the three months ended June 30, 2021, fees from Advisory
services increased $224.4 million, or 67%, versus the three months
ended June 30, 2020, reflecting an increase in the number of
Advisory fees earned and an increase in revenue earned from large
transactions. Underwriting Fees of $48.0 million for the three
months ended June 30, 2021 decreased $45.5 million, or 49%, versus
the three months ended June 30, 2020, reflecting a decrease in the
number of transactions we participated in, as well as the relative
fee size of those transactions. Commissions and Related Revenue for
the three months ended June 30, 2021 decreased $3.6 million, or 7%,
versus the three months ended June 30, 2020.
During the six months ended June 30, 2021, fees from Advisory
services increased $377.7 million, or 54%, versus the six months
ended June 30, 2020, reflecting an increase in the number of
Advisory fees earned and an increase in revenue earned from large
transactions. Underwriting Fees of $127.3 million for the six
months ended June 30, 2021 increased $12.6 million, or 11%, versus
the six months ended June 30, 2020, reflecting an increase in the
number of transactions we participated in, as well as the relative
size of our participation in those transactions. Commissions and
Related Revenue for the six months ended June 30, 2021 decreased
$5.6 million, or 5%, versus the six months ended June 30, 2020.
Other Revenue, net, for the three months ended June 30, 2021
increased versus the three months ended June 30, 2020, primarily
driven by the gain on the redemption of the G5 debt security in the
second quarter of 2021, partially offset by lower performance of
our investment funds portfolio, which is used as an economic hedge
against our deferred cash compensation program. Other Revenue, net,
for the six months ended June 30, 2021 increased versus the six
months ended June 30, 2020, primarily driven by a shift from net
losses of $6.8 million for the six months ended June 30, 2020 to
gains of $16.0 million for the six months ended June 30, 2021 on
our investment funds portfolio, which is used as an economic hedge
against our deferred cash compensation program, as well as the gain
on the redemption of the G5 debt security in the second quarter of
2021.
Expenses
Compensation costs were $398.2 million for the three months
ended June 30, 2021, an increase of 22% from the second quarter of
last year. The compensation ratio was 59.4% for the three months
ended June 30, 2021, compared to 65.7% for the three months ended
June 30, 2020. The compensation ratio for the three months ended
June 30, 2020 was 67.4% when the $8.2 million of separation and
transition benefits expense, which is presented within Special
Charges, Including Business Realignment Costs, is also included.
Compensation costs were $784.8 million for the six months ended
June 30, 2021, an increase of 34% compared to the six months ended
June 30, 2020. The compensation ratio was 59.5% for the six months
ended June 30, 2021, compared to 64.7% for the six months ended
June 30, 2020. The compensation ratio for the six months ended June
30, 2020 was 68.0% when the $30.1 million of separation and
transition benefits expense, which is presented within Special
Charges, Including Business Realignment Costs, is also included.
See page 4 for further information. The increase in the amount of
compensation recognized in the three and six months ended June 30,
2021 principally reflects higher levels of incentive compensation,
higher amortization of prior period deferred compensation awards
and higher base salaries. See "Deferred Compensation" for more
information. The compensation ratio in any given period is subject
to fluctuation based, in part, on the amount of revenue earned in
that period.
Non-Compensation Costs for the three months ended June 30, 2021
were $70.0 million, a decrease of 6% compared to the second quarter
of last year. The decrease in Non-Compensation Costs versus last
year primarily reflects a decrease in bad debt expense, partially
offset by an increase in professional fees. The ratio of
Non-Compensation Costs to Net Revenues for the three months ended
June 30, 2021 of 10.4% decreased from 15.0% for the second quarter
of last year. Non-Compensation Costs for the six months ended June
30, 2021 were $139.8 million, a decrease of 9% compared to the six
months ended June 30, 2020. The decrease in Non-Compensation Costs
versus last year primarily reflects decreased travel and related
expenses, as a substantial number of employees continued to work
remotely in 2021, as well as a decrease in bad debt expense,
partially offset by an increase in professional fees. The ratio of
Non-Compensation Costs to Net Revenues for the six months ended
June 30, 2021 of 10.6% decreased from 16.9% for the six months
ended June 30, 2020.
Special Charges, Including Business Realignment Costs, for the
three and six months ended June 30, 2020 reflect $8.2 million and
$30.3 million, respectively, of separation and transition benefits
and related costs as a result of the Company's review of its
operations, and $0.4 million and $1.9 million, respectively, for
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. See page 4 for further information.
Investment Management
U.S. GAAP
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Net Revenues:
Asset Management and Administration
Fees
$
16,183
$
12,953
25%
$
31,132
$
25,700
21%
Other Revenue, net
862
(1,252)
NM
938
(648)
NM
Net Revenues
17,045
11,701
46%
32,070
25,052
28%
Expenses:
Employee Compensation and Benefits
9,634
8,340
16%
18,342
17,091
7%
Non-Compensation Costs
3,058
3,367
(9%)
5,919
7,267
(19%)
Special Charges, Including Business
Realignment Costs
—
—
NM
—
32
NM
Total Expenses
12,692
11,707
8%
24,261
24,390
(1%)
Operating Income (Loss)
$
4,353
$
(6)
NM
$
7,809
$
662
NM
Compensation Ratio
56.5
%
71.3
%
57.2
%
68.2
%
Non-Compensation Ratio
17.9
%
28.8
%
18.5
%
29.0
%
Operating Margin
25.5
%
(0.1
%)
24.3
%
2.6
%
Assets Under Management (in
millions)(1)
Wealth Management(2)
$
11,134
$
9,081
23%
$
11,134
$
9,081
23%
Institutional Asset Management
—
1,328
NM
—
1,328
NM
Total Assets Under Management
$
11,134
$
10,409
7%
$
11,134
$
10,409
7%
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 June 30, 2021 and 2020,
respectively.
Revenues
U.S. GAAP
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Asset Management and Administration
Fees:
Wealth Management
$
16,183
$
12,632
28%
$
31,132
$
24,960
25%
Institutional Asset Management
—
321
NM
—
740
NM
Total Asset Management and Administration
Fees
$
16,183
$
12,953
25%
$
31,132
$
25,700
21%
Our historical Investment Management results include the
following businesses, which were previously included in
Institutional Asset Management above. These businesses were
deconsolidated in 2020:
- On July 2, 2020, we sold the trust business of Evercore Casa de
Bolsa, S.A. de C.V. ("ECB").
- On December 16, 2020, we sold the remaining ECB business to
certain former employees.
Following these transactions, there are no remaining
consolidated businesses in Institutional Asset Management.
Asset Management and Administration Fees of $16.2 million for
the three months ended June 30, 2021 increased 25% compared to the
second quarter of last year, driven by an increase in fees from
Wealth Management clients, which increased 28% compared to the
second quarter of last year, as associated AUM increased 23%.
Asset Management and Administration Fees of $31.1 million for
the six months ended June 30, 2021 increased 21% compared to the
six months ended June 30, 2020, driven by an increase in fees from
Wealth Management clients, which increased 25% compared to the six
months ended June 30, 2020, as associated AUM increased 23%.
Other Revenue, net, includes income from our legacy private
equity investments.
Expenses
Investment Management's expenses for the three months ended June
30, 2021 were $12.7 million, an increase of 8% compared to the
second quarter of last year, due to an increase in compensation
costs, partially offset by a decrease in Non-Compensation costs.
Investment Management's expenses for the six months ended June 30,
2021 were $24.3 million, a decrease of 1% compared to the six
months ended June 30, 2020, due to a decrease in Non-Compensation
costs, partially offset by an increase in compensation costs.
Special Charges, Including Business Realignment Costs, for the
six months ended June 30, 2020 primarily reflect separation and
transition benefits and related costs. See page 4 for further
information.
Business Line Reporting - Discussion of
Adjusted Results
The following is a discussion of Evercore's segment results on
an Adjusted basis. See pages 7 and A-2 to A-11 for further
information and reconciliations of these metrics to our U.S. GAAP
results.
Investment Banking
Adjusted
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Net Revenues:
Investment Banking:
Advisory Fees(1)
$
561,363
$
336,501
67%
$
1,073,450
$
695,601
54%
Underwriting Fees
48,048
93,565
(49%)
127,305
114,683
11%
Commissions and Related Revenue
50,725
54,334
(7%)
104,251
109,900
(5%)
Other Revenue, net
11,165
15,573
(28%)
18,319
(1,177)
NM
Net Revenues
671,301
499,973
34%
1,323,325
919,007
44%
Expenses:
Employee Compensation and Benefits
398,164
325,706
22%
784,846
586,630
34%
Non-Compensation Costs
69,996
73,770
(5%)
139,840
152,641
(8%)
Total Expenses
468,160
399,476
17%
924,686
739,271
25%
Operating Income
$
203,141
$
100,497
102%
$
398,639
$
179,736
122%
Compensation Ratio
59.3
%
65.1
%
59.3
%
63.8
%
Non-Compensation Ratio
10.4
%
14.8
%
10.6
%
16.6
%
Operating Margin
30.3
%
20.1
%
30.1
%
19.6
%
Total Number of Fees from Advisory Client
Transactions(2)
255
222
15%
418
358
17%
Investment Banking Fees of at Least $1
million from Advisory Client Transactions(2)
115
77
49%
218
150
45%
Total Number of Underwriting
Transactions
31
36
(14%)
70
48
46%
Total Number of Underwriting Transactions
as a Bookrunner
25
21
19%
56
29
93%
1. Advisory Fees on an Adjusted basis
reflect the reclassification of earnings related to our equity
method investment in Luminis of $0.5 million and $0.7 million for
the three and six months ended June 30, 2021, respectively, and
$0.1 million and $0.6 million for the three and six months ended
June 30, 2020, respectively.
2. Includes Advisory and Underwriting
Transactions.
Adjusted Revenues
During the three months ended June 30, 2021, fees from Advisory
services on an Adjusted basis increased $224.9 million, or 67%,
versus the three months ended June 30, 2020, reflecting an increase
in the number of Advisory fees earned and an increase in revenue
earned from large transactions. Underwriting Fees of $48.0 million
for the three months ended June 30, 2021 decreased $45.5 million,
or 49%, versus the three months ended June 30, 2020, reflecting a
decrease in the number of transactions we participated in, as well
as the relative fee size of those transactions. Commissions and
Related Revenue for the three months ended June 30, 2021 decreased
$3.6 million, or 7%, versus the three months ended June 30,
2020.
During the six months ended June 30, 2021, fees from Advisory
services on an Adjusted basis increased $377.8 million, or 54%,
versus the six months ended June 30, 2020, reflecting an increase
in the number of Advisory fees earned and an increase in revenue
earned from large transactions. Underwriting Fees of $127.3 million
for the six months ended June 30, 2021 increased $12.6 million, or
11%, versus the six months ended June 30, 2020, reflecting an
increase in the number of transactions we participated in, as well
as the relative size of our participation in those transactions.
Commissions and Related Revenue for the six months ended June 30,
2021 decreased $5.6 million, or 5%, versus the six months ended
June 30, 2020.
Adjusted Other Revenue, net, for the three months ended June 30,
2021 decreased versus the three months ended June 30, 2020,
primarily driven by lower performance of our investment funds
portfolio, which is used as an economic hedge against our deferred
cash compensation program. Adjusted Other Revenue, net, for the six
months ended June 30, 2021 increased versus the six months ended
June 30, 2020, primarily driven by a shift from net losses of $6.8
million for the six months ended June 30, 2020 to gains of $16.0
million for the six months ended June 30, 2021 on our investment
funds portfolio, which is used as an economic hedge against our
deferred cash compensation program.
Adjusted Expenses
Adjusted compensation costs were $398.2 million for the three
months ended June 30, 2021, an increase of 22% from the second
quarter of last year. The Adjusted compensation ratio was 59.3% for
the three months ended June 30, 2021, compared to 65.1% for the
three months ended June 30, 2020. Adjusted compensation costs were
$784.8 million for the six months ended June 30, 2021, an increase
of 34% compared to the six months ended June 30, 2020. The Adjusted
compensation ratio was 59.3% for the six months ended June 30,
2021, compared to 63.8% for the six months ended June 30, 2020. The
increase in the amount of Adjusted compensation recognized in the
three and six months ended June 30, 2021 principally reflects
higher levels of incentive compensation, higher amortization of
prior period deferred compensation awards and higher base salaries.
See "Deferred Compensation" for more information. The Adjusted
compensation ratio in any given period is subject to fluctuation
based, in part, on the amount of revenue earned in that period.
Adjusted Non-Compensation Costs for the three months ended June
30, 2021 were $70.0 million, a decrease of 5% from the second
quarter of last year. The decrease in Adjusted Non-Compensation
Costs versus last year primarily reflects a decrease in bad debt
expense, partially offset by an increase in professional fees. The
ratio of Adjusted Non-Compensation Costs to Adjusted Net Revenues
for the three months ended June 30, 2021 of 10.4% decreased from
14.8% for the second quarter of last year. Adjusted
Non-Compensation Costs for the six months ended June 30, 2021 were
$139.8 million, a decrease of 8% from the six months ended June 30,
2020. The decrease in Non-Compensation Costs versus last year
primarily reflects decreased travel and related expenses, as a
substantial number of employees continued to work remotely in 2021,
as well as a decrease in bad debt expense, partially offset by an
increase in professional fees. The ratio of Adjusted
Non-Compensation Costs to Adjusted Net Revenues for the six months
ended June 30, 2021 of 10.6% decreased from 16.6% for the six
months ended June 30, 2020.
Investment Management
Adjusted
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Net Revenues:
Asset Management and Administration
Fees
$
19,028
$
15,201
25%
$
36,832
$
30,540
21%
Other Revenue, net
862
(1,252)
NM
938
(648)
NM
Net Revenues
19,890
13,949
43%
37,770
29,892
26%
Expenses:
Employee Compensation and Benefits
9,634
8,340
16%
18,342
17,091
7%
Non-Compensation Costs
3,058
3,367
(9%)
5,919
7,267
(19%)
Total Expenses
12,692
11,707
8%
24,261
24,358
—%
Operating Income
$
7,198
$
2,242
221%
$
13,509
$
5,534
144%
Compensation Ratio
48.4
%
59.8
%
48.6
%
57.2
%
Non-Compensation Ratio
15.4
%
24.1
%
15.7
%
24.3
%
Operating Margin
36.2
%
16.1
%
35.8
%
18.5
%
Assets Under Management (in
millions)(1)
Wealth Management(2)
$
11,134
$
9,081
23%
$
11,134
$
9,081
23%
Institutional Asset Management
—
1,328
NM
—
1,328
NM
Total Assets Under Management
$
11,134
$
10,409
7%
$
11,134
$
10,409
7%
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 June 30, 2021 and 2020,
respectively.
Adjusted Revenues
Adjusted
Three Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
% Change
June 30, 2021
June 30, 2020
%
Change
(dollars in thousands)
Asset Management and Administration
Fees:
Wealth Management
$
16,183
$
12,632
28
%
$
31,132
$
24,960
25
%
Institutional Asset Management
—
321
NM
—
740
NM
Equity in Earnings of Affiliates(1)
2,845
2,248
27
%
5,700
4,840
18
%
Total Asset Management and Administration
Fees
$
19,028
$
15,201
25
%
$
36,832
$
30,540
21
%
1. Equity in ABS and Atalanta Sosnoff on a
U.S. GAAP basis are reclassified from Asset Management and
Administration Fees to Income from Equity Method Investments.
Our historical Investment Management results include the
following businesses, which were previously included in
Institutional Asset Management above. These businesses were
deconsolidated in 2020:
- On July 2, 2020, we sold the trust business of ECB.
- On December 16, 2020, we sold the remaining ECB business to
certain former employees.
Following these transactions, there are no remaining
consolidated businesses in Institutional Asset Management.
Adjusted Asset Management and Administration Fees of $19.0
million for the three months ended June 30, 2021 increased 25%
compared to the second quarter of last year, primarily driven by an
increase in fees from Wealth Management clients, which increased
28% compared to the second quarter of last year, as associated AUM
increased 23%, as well as an increase in Equity in Earnings of
Affiliates of 27%, driven by higher income earned by ABS and
Atalanta Sosnoff in the second quarter of 2021.
Adjusted Asset Management and Administration Fees of $36.8
million for the six months ended June 30, 2021 increased 21%
compared to the six months ended June 30, 2020, primarily driven by
an increase in fees from Wealth Management clients, which increased
25% compared to the six months ended June 30, 2020, as associated
AUM increased 23%, as well as an increase in Equity in Earnings of
Affiliates of 18%, driven by higher income earned by ABS and
Atalanta Sosnoff in 2021.
Adjusted Other Revenue, net, includes income from our legacy
private equity investments.
Adjusted Expenses
Investment Management's Adjusted expenses for the three months
ended June 30, 2021 were $12.7 million, an increase of 8% compared
to the second quarter of last year, due to an increase in
compensation costs, partially offset by a decrease in
Non-Compensation costs. Investment Management's Adjusted expenses
for the six months ended June 30, 2021 were $24.3 million, flat
compared to the six months ended June 30, 2020, due to a decrease
in Non-Compensation costs, offset by an increase in compensation
costs.
Liquidity
The Company continues to maintain a strong balance sheet,
holding cash and cash equivalents of $442.2 million and investment
securities of $1.1 billion at June 30, 2021. Current assets exceed
current liabilities by $1.3 billion at June 30, 2021. Amounts due
related to the Notes Payable were $376.8 million at June 30,
2021.
Deferred Compensation
During the six months ended June 30, 2021, the Company granted
to certain employees approximately 2.0 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 $240.6 million. The total shares available to be
granted in the future under the Amended 2016 Plan was approximately
5.1 million as of June 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 $94.6 million and $177.5
million for the three and six months ended June 30, 2021,
respectively, and $85.8 million and $158.4 million for the three
and six months ended June 30, 2020, respectively.
As of June 30, 2021, the Company expects to pay an aggregate of
$326.2 million related to our deferred cash compensation program at
various dates through 2025. 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 July 27, 2021, the Board of Directors of Evercore declared a
quarterly dividend of $0.68 per share to be paid on September 10,
2021 to common stockholders of record on August 27, 2021.
During the three months ended June 30, 2021, the Company
repurchased approximately 17 thousand shares from employees for the
net settlement of stock-based compensation awards at an average
price per share of $139.24, and approximately 1.4 million shares at
an average price per share of $138.85 in open market transactions
pursuant to the Company's share repurchase program. The aggregate
approximately 1.4 million shares were acquired at an average price
per share of $138.86. During the six months ended June 30, 2021,
the Company repurchased approximately 0.9 million shares from
employees for the net settlement of stock-based compensation awards
at an average price per share of $117.02, and approximately 2.4
million shares at an average price per share of $132.88 in open
market transactions pursuant to the Company's share repurchase
program. The aggregate approximately 3.3 million shares were
acquired at an average price per share of $128.40.
On March 29, 2021, the Company issued $38 million aggregate
principal amount of unsecured Senior Notes with a 1.97% coupon
through a private placement. The Company used the proceeds from the
notes to refinance Senior Notes that matured on March 30, 2021.
Conference Call
Evercore will host a related conference call beginning at 8:00
a.m. Eastern Time, Wednesday, July 28, 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: 1299676.
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: 1299676. 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 North America, 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 reflect management's view of 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
Annex I.
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.
With respect to any securities offered by any private equity
fund referenced herein, such securities have not been, and will not
be registered, under the Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
ANNEX I
Schedule
Page Number
Unaudited Condensed Consolidated
Statements of Operations for the Three and Six Months Ended June
30, 2021 and 2020
A-1
Adjusted:
Adjusted Results (Unaudited)
A-2
U.S. GAAP Reconciliation to Adjusted
Results (Unaudited)
A-4
U.S. GAAP Reconciliation to Adjusted
Results for the Trailing Twelve Months (Unaudited)
A-5
U.S. GAAP Segment Reconciliation to
Adjusted Results for the Three and Six Months ended June 30, 2021
(Unaudited)
A-6
U.S. GAAP Segment Reconciliation to
Adjusted Results for the Three and Six Months ended June 30, 2020
(Unaudited)
A-7
U.S. GAAP Segment Reconciliation to
Consolidated Results (Unaudited)
A-8
Notes to Unaudited Condensed Consolidated
Adjusted Financial Data
A-9
EVERCORE INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED
JUNE 30, 2021 AND 2020
(dollars in thousands, except per
share data)
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenues
Investment Banking:
Advisory Fees
$
560,814
$
336,436
$
1,072,732
$
695,000
Underwriting Fees
48,048
93,565
127,305
114,683
Commissions and Related Revenue
50,725
54,334
104,251
109,900
Asset Management and Administration
Fees
16,183
12,953
31,132
25,700
Other Revenue, Including Interest and
Investments
16,401
15,116
23,631
168
Total Revenues
692,171
512,404
1,359,051
945,451
Interest Expense(1)
4,306
5,329
8,876
11,369
Net Revenues
687,865
507,075
1,350,175
934,082
Expenses
Employee Compensation and Benefits
407,798
334,046
803,188
604,788
Occupancy and Equipment Rental
17,513
17,365
36,222
36,275
Professional Fees
21,401
18,875
43,008
35,841
Travel and Related Expenses
3,715
3,756
6,007
19,907
Communications and Information
Services
14,080
14,269
28,109
26,836
Depreciation and Amortization
7,151
6,975
13,792
13,846
Execution, Clearing and Custody Fees
2,913
3,204
6,465
7,390
Special Charges, Including Business
Realignment Costs
—
8,558
—
32,234
Acquisition and Transition Costs
—
98
7
106
Other Operating Expenses
6,281
13,200
12,156
20,827
Total Expenses
480,852
420,346
948,954
798,050
Income Before Income from Equity Method
Investments and Income Taxes
207,013
86,729
401,221
136,032
Income from Equity Method Investments
3,394
2,313
6,418
5,441
Income Before Income Taxes
210,407
89,042
407,639
141,473
Provision for Income Taxes
46,478
21,814
78,159
35,365
Net Income
163,929
67,228
329,480
106,108
Net Income Attributable to Noncontrolling
Interest
23,570
10,816
44,769
18,521
Net Income Attributable to Evercore
Inc.
$
140,359
$
56,412
$
284,711
$
87,587
Net Income Attributable to Evercore
Inc. Common Shareholders
$
140,359
$
56,412
$
284,711
$
87,587
Weighted Average Shares of Class A
Common Stock Outstanding:
Basic
40,667
40,635
41,010
40,313
Diluted
43,661
41,894
44,053
42,105
Net Income Per Share Attributable to
Evercore Inc. Common Shareholders:
Basic
$
3.45
$
1.39
$
6.94
$
2.17
Diluted
$
3.21
$
1.35
$
6.46
$
2.08
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 segments 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 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 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:
- 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.
- Acquisition and Transition Costs.
Primarily professional fees incurred and costs related to
transitioning acquisitions or divestitures.
- Net Loss on Sale of ECB
businesses. The net loss resulting from the gain on the sale
of the ECB Trust business and the loss on the sale of the remaining
ECB business incurred in the third and fourth quarters of 2020,
respectively, is excluded from the Adjusted presentation.
- Foreign Exchange Gains / (Losses).
Release of cumulative foreign exchange losses in the fourth quarter
of 2020 resulting from the sale and wind-down of our businesses in
Mexico is excluded from the Adjusted presentation.
- 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 2020 that are excluded
from the Adjusted presentation relate to separation and transition
benefits and related costs 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, is presented in Other
Revenue, net, as the Company's Management believes it is more
meaningful 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 more meaningful 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 six months ended June 30, 2020,
this resulted in a reclassification of $215 thousand and $400
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
Six Months Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
Net Revenues - U.S. GAAP
$
687,865
$
507,075
$
1,350,175
$
934,082
Income from Equity Method Investments
(1)
3,394
2,313
6,418
5,441
Interest Expense on Debt (2)
4,306
4,534
8,876
9,376
Gain on Redemption of G5 Debt Security
(3)
(4,374)
—
(4,374)
—
Net Revenues - Adjusted
$
691,191
$
513,922
$
1,361,095
$
948,899
Compensation Expense - U.S.
GAAP
$
407,798
$
334,046
$
803,188
$
604,788
Amortization of LP Units and Certain Other
Awards (4)
—
—
—
(1,067)
Compensation Expense - Adjusted
$
407,798
$
334,046
$
803,188
$
603,721
Operating Income - U.S. GAAP
$
207,013
$
86,729
$
401,221
$
136,032
Income from Equity Method Investments
(1)
3,394
2,313
6,418
5,441
Pre-Tax Income - U.S. GAAP
210,407
89,042
407,639
141,473
Gain on Redemption of G5 Debt Security
(3)
(4,374)
—
(4,374)
—
Amortization of LP Units and Certain Other
Awards (4)
—
—
—
1,067
Special Charges, Including Business
Realignment Costs (5)
—
8,558
—
32,234
Intangible Asset Amortization / Other
Purchase Accounting-related Amortization (6a)
—
507
—
1,014
Acquisition and Transition Costs (6b)
—
98
7
106
Pre-Tax Income - Adjusted
206,033
98,205
403,272
175,894
Interest Expense on Debt (2)
4,306
4,534
8,876
9,376
Operating Income - Adjusted
$
210,339
$
102,739
$
412,148
$
185,270
Provision for Income Taxes - U.S.
GAAP
$
46,478
$
21,814
$
78,159
$
35,365
Income Taxes (7)
4,403
3,955
6,529
9,710
Provision for Income Taxes -
Adjusted
$
50,881
$
25,769
$
84,688
$
45,075
Net Income Attributable to Evercore
Inc. - U.S. GAAP
$
140,359
$
56,412
$
284,711
$
87,587
Gain on Redemption of G5 Debt Security
(3)
(4,374)
—
(4,374)
—
Amortization of LP Units and Certain Other
Awards (4)
—
—
—
1,067
Special Charges, Including Business
Realignment Costs (5)
—
8,558
—
32,234
Intangible Asset Amortization / Other
Purchase Accounting-related Amortization (6a)
—
507
—
1,014
Acquisition and Transition Costs (6b)
—
98
7
106
Income Taxes (7)
(4,403)
(3,955)
(6,529)
(9,710)
Noncontrolling Interest (8)
22,428
10,147
42,712
17,287
Net Income Attributable to Evercore
Inc. - Adjusted
$
154,010
$
71,767
$
316,527
$
129,585
Diluted Shares Outstanding - U.S.
GAAP
43,661
41,894
44,053
42,105
LP Units (9)
4,847
5,077
4,887
5,207
Unvested Restricted Stock Units - Event
Based (9)
12
12
12
12
Diluted Shares Outstanding -
Adjusted
48,520
46,983
48,952
47,324
Key Metrics: (a)
Diluted Earnings Per Share - U.S. GAAP
$
3.21
$
1.35
$
6.46
$
2.08
Diluted Earnings Per Share - Adjusted
$
3.17
$
1.53
$
6.47
$
2.74
Compensation Ratio - U.S. GAAP
59.3
%
65.9
%
59.5
%
64.7
%
Compensation Ratio - Adjusted
59.0
%
65.0
%
59.0
%
63.6
%
Operating Margin - U.S. GAAP
30.1
%
17.1
%
29.7
%
14.6
%
Operating Margin - Adjusted
30.4
%
20.0
%
30.3
%
19.5
%
Effective Tax Rate - U.S. GAAP
22.1
%
24.5
%
19.2
%
25.0
%
Effective Tax Rate - Adjusted
24.7
%
26.2
%
21.0
%
25.6
%
(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 RECONCILIATION TO
ADJUSTED RESULTS
TRAILING TWELVE MONTHS
(dollars in thousands)
(UNAUDITED)
Consolidated
Twelve Months Ended
June 30, 2021
June 30, 2020
Net Revenues - U.S. GAAP
$
2,679,998
$
1,996,407
Income from Equity Method Investments
(1)
15,375
11,773
Interest Expense on Debt (2)
17,697
17,725
Gain on Redemption of G5 Debt Security
(3)
(4,374)
—
Mexico Transition - Net Loss on Sale of
ECB Businesses (10)
3,441
—
Mexico Transition - Release of Foreign
Exchange Losses (11)
27,365
—
Net Revenues - Adjusted
$
2,739,502
$
2,025,905
Compensation Expense - U.S.
GAAP
$
1,570,739
$
1,243,810
Amortization of LP Units and Certain Other
Awards (4)
—
(11,455)
Compensation Expense - Adjusted
$
1,570,739
$
1,232,355
Compensation Ratio - U.S. GAAP (a)
58.6
%
62.3
%
Compensation Ratio - Adjusted (a)
57.3
%
60.8
%
Investment Banking
Twelve Months Ended
June 30, 2021
June 30, 2020
Net Revenues - U.S. GAAP
$
2,626,461
$
1,943,251
Income from Equity Method Investments
(1)
1,663
1,043
Interest Expense on Debt (2)
17,697
17,725
Gain on Redemption of G5 Debt Security
(3)
(4,374)
—
Mexico Transition - Release of Foreign
Exchange Losses (11)
21,070
—
Net Revenues - Adjusted
$
2,662,517
$
1,962,019
Compensation Expense - U.S.
GAAP
$
1,532,938
$
1,209,492
Amortization of LP Units and Certain Other
Awards (4)
—
(11,455)
Compensation Expense - Adjusted
$
1,532,938
$
1,198,037
Compensation Ratio - U.S. GAAP (a)
58.4
%
62.2
%
Compensation Ratio - Adjusted (a)
57.6
%
61.1
%
(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 SIX MONTHS
ENDED JUNE 30, 2021
(dollars in thousands)
(UNAUDITED)
Investment Banking
Segment
Three Months Ended June 30,
2021
Six Months Ended June 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
$
560,814
$
549
(1)
$
561,363
$
1,072,732
$
718
(1)
$
1,073,450
Underwriting Fees
48,048
—
48,048
127,305
—
127,305
Commissions and Related Revenue
50,725
—
50,725
104,251
—
104,251
Other Revenue, net
11,233
(68)
(2)(3)
11,165
13,817
4,502
(2)(3)
18,319
Net Revenues
670,820
481
671,301
1,318,105
5,220
1,323,325
Expenses:
Employee Compensation and Benefits
398,164
—
398,164
784,846
—
784,846
Non-Compensation Costs
69,996
—
69,996
139,847
(7)
(6)
139,840
Total Expenses
468,160
—
468,160
924,693
(7)
924,686
Operating Income (a)
$
202,660
$
481
$
203,141
$
393,412
$
5,227
$
398,639
Compensation Ratio (b)
59.4
%
59.3
%
59.5
%
59.3
%
Operating Margin (b)
30.2
%
30.3
%
29.8
%
30.1
%
Investment Management
Segment
Three Months Ended June 30,
2021
Six Months Ended June 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
$
16,183
$
2,845
(1)
$
19,028
$
31,132
$
5,700
(1)
$
36,832
Other Revenue, net
862
—
862
938
—
938
Net Revenues
17,045
2,845
19,890
32,070
5,700
37,770
Expenses:
Employee Compensation and Benefits
9,634
—
9,634
18,342
—
18,342
Non-Compensation Costs
3,058
—
3,058
5,919
—
5,919
Total Expenses
12,692
—
12,692
24,261
—
24,261
Operating Income (a)
$
4,353
$
2,845
$
7,198
$
7,809
$
5,700
$
13,509
Compensation Ratio (b)
56.5
%
48.4
%
57.2
%
48.6
%
Operating Margin (b)
25.5
%
36.2
%
24.3
%
35.8
%
(a) Operating Income for U.S. GAAP
excludes Income (Loss) from Equity Method Investments.
(b) Reconciliations of the key metrics
from U.S. GAAP to Adjusted results are a derivative of the
reconciliations of their components above.
EVERCORE INC.
U.S. GAAP SEGMENT
RECONCILIATION TO ADJUSTED RESULTS
FOR THE THREE AND SIX MONTHS
ENDED JUNE 30, 2020
(dollars in thousands)
(UNAUDITED)
Investment Banking
Segment
Three Months Ended June 30,
2020
Six Months Ended June 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
$
336,436
$
65
(1)
$
336,501
$
695,000
$
601
(1)
$
695,601
Underwriting Fees
93,565
—
93,565
114,683
—
114,683
Commissions and Related Revenue
54,334
—
54,334
109,900
—
109,900
Other Revenue, net
11,039
4,534
(2)
15,573
(10,553)
9,376
(2)
(1,177)
Net Revenues
495,374
4,599
499,973
909,030
9,977
919,007
Expenses:
Employee Compensation and Benefits
325,706
—
325,706
587,697
(1,067)
(4)
586,630
Non-Compensation Costs
74,375
(605)
(6)
73,770
153,761
(1,120)
(6)
152,641
Special Charges, Including Business
Realignment Costs
8,558
(8,558)
(5)
—
32,202
(32,202)
(5)
—
Total Expenses
408,639
(9,163)
399,476
773,660
(34,389)
739,271
Operating Income (a)
$
86,735
$
13,762
$
100,497
$
135,370
$
44,366
$
179,736
Compensation Ratio (b)
65.7
%
65.1
%
64.7
%
63.8
%
Operating Margin (b)
17.5
%
20.1
%
14.9
%
19.6
%
Investment Management
Segment
Three Months Ended June 30,
2020
Six Months Ended June 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
$
12,953
$
2,248
(1)
$
15,201
$
25,700
$
4,840
(1)
$
30,540
Other Revenue, net
(1,252)
—
(1,252)
(648)
—
(648)
Net Revenues
11,701
2,248
13,949
25,052
4,840
29,892
Expenses:
Employee Compensation and Benefits
8,340
—
8,340
17,091
—
17,091
Non-Compensation Costs
3,367
—
3,367
7,267
—
7,267
Special Charges, Including Business
Realignment Costs
—
—
—
32
(32)
(5)
—
Total Expenses
11,707
—
11,707
24,390
(32)
24,358
Operating Income (Loss) (a)
$
(6)
$
2,248
$
2,242
$
662
$
4,872
$
5,534
Compensation Ratio (b)
71.3
%
59.8
%
68.2
%
57.2
%
Operating Margin (b)
(0.1
%)
16.1
%
2.6
%
18.5
%
(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 CONSOLIDATED RESULTS
(dollars in thousands)
(UNAUDITED)
U.S. GAAP
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Investment Banking
Net Revenues:
Investment Banking:
Advisory Fees
$
560,814
$
336,436
$
1,072,732
$
695,000
Underwriting Fees
48,048
93,565
127,305
114,683
Commissions and Related Revenue
50,725
54,334
104,251
109,900
Other Revenue, net
11,233
11,039
13,817
(10,553)
Net Revenues
670,820
495,374
1,318,105
909,030
Expenses:
Employee Compensation and Benefits
398,164
325,706
784,846
587,697
Non-Compensation Costs
69,996
74,375
139,847
153,761
Special Charges, Including Business
Realignment Costs
—
8,558
—
32,202
Total Expenses
468,160
408,639
924,693
773,660
Operating Income (a)
$
202,660
$
86,735
$
393,412
$
135,370
Investment Management
Net Revenues:
Asset Management and Administration
Fees
$
16,183
$
12,953
$
31,132
$
25,700
Other Revenue, net
862
(1,252)
938
(648)
Net Revenues
17,045
11,701
32,070
25,052
Expenses:
Employee Compensation and Benefits
9,634
8,340
18,342
17,091
Non-Compensation Costs
3,058
3,367
5,919
7,267
Special Charges, Including Business
Realignment Costs
—
—
—
32
Total Expenses
12,692
11,707
24,261
24,390
Operating Income (Loss) (a)
$
4,353
$
(6)
$
7,809
$
662
Total
Net Revenues:
Investment Banking:
Advisory Fees
$
560,814
$
336,436
$
1,072,732
$
695,000
Underwriting Fees
48,048
93,565
127,305
114,683
Commissions and Related Revenue
50,725
54,334
104,251
109,900
Asset Management and Administration
Fees
16,183
12,953
31,132
25,700
Other Revenue, net
12,095
9,787
14,755
(11,201)
Net Revenues
687,865
507,075
1,350,175
934,082
Expenses:
Employee Compensation and Benefits
407,798
334,046
803,188
604,788
Non-Compensation Costs
73,054
77,742
145,766
161,028
Special Charges, Including Business
Realignment Costs
—
8,558
—
32,234
Total Expenses
480,852
420,346
948,954
798,050
Operating Income (a)
$
207,013
$
86,729
$
401,221
$
136,032
(a) Operating Income (Loss) excludes
Income (Loss) from Equity Method Investments.
Notes to Unaudited Condensed Consolidated Adjusted Financial
Data
For further information on these adjustments, see page A-2.
(1)
Income (Loss) from Equity Method
Investments has been reclassified to Revenue in the Adjusted
presentation.
(2)
Interest Expense on Debt is excluded from
Net Revenues and presented below Operating Income in the Adjusted
results and is included in Interest Expense on a U.S. GAAP
basis.
(3)
The gain resulting from the redemption of
the G5 debt security in the second quarter of 2021 is excluded from
the Adjusted presentation.
(4)
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.
(5)
Expenses during 2020 that are excluded
from the Adjusted presentation relate to separation and transition
benefits and related costs 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.
(6)
Non-Compensation Costs on an Adjusted
basis reflect the following adjustments:
Three Months Ended June 30,
2021
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
17,513
$
—
$
17,513
Professional Fees
21,401
—
21,401
Travel and Related Expenses
3,715
—
3,715
Communications and Information
Services
14,080
—
14,080
Depreciation and Amortization
7,151
—
7,151
Execution, Clearing and Custody Fees
2,913
—
2,913
Other Operating Expenses
6,281
—
6,281
Total Non-Compensation Costs
$
73,054
$
—
$
73,054
Three Months Ended June 30,
2020
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
17,365
$
—
$
17,365
Professional Fees
18,875
—
18,875
Travel and Related Expenses
3,756
—
3,756
Communications and Information
Services
14,269
—
14,269
Depreciation and Amortization
6,975
(507)
(6a)
6,468
Execution, Clearing and Custody Fees
3,204
—
3,204
Acquisition and Transition Costs
98
(98)
(6b)
—
Other Operating Expenses
13,200
—
13,200
Total Non-Compensation Costs
$
77,742
$
(605)
$
77,137
Six Months Ended June 30,
2021
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
36,222
$
—
$
36,222
Professional Fees
43,008
—
43,008
Travel and Related Expenses
6,007
—
6,007
Communications and Information
Services
28,109
—
28,109
Depreciation and Amortization
13,792
—
13,792
Execution, Clearing and Custody Fees
6,465
—
6,465
Acquisition and Transition Costs
7
(7)
(6b)
—
Other Operating Expenses
12,156
—
12,156
Total Non-Compensation Costs
$
145,766
$
(7)
$
145,759
Six Months Ended June 30,
2020
U.S. GAAP
Adjustments
Adjusted
(dollars in thousands)
Occupancy and Equipment Rental
$
36,275
$
—
$
36,275
Professional Fees
35,841
—
35,841
Travel and Related Expenses
19,907
—
19,907
Communications and Information
Services
26,836
—
26,836
Depreciation and Amortization
13,846
(1,014)
(6a)
12,832
Execution, Clearing and Custody Fees
7,390
—
7,390
Acquisition and Transition Costs
106
(106)
(6b)
—
Other Operating Expenses
20,827
—
20,827
Total Non-Compensation Costs
$
161,028
$
(1,120)
$
159,908
(6a)
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.
(6b)
Primarily the exclusion from the Adjusted
presentation of professional fees incurred and costs related to
transitioning acquisitions or divestitures.
(7)
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.
(8)
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.
(9)
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.
(10)
The net loss resulting from the gain on
the sale of the ECB Trust business and the loss on the sale of the
remaining ECB business in the third and fourth quarters of 2020,
respectively, is excluded from the Adjusted presentation.
(11)
Release of cumulative foreign exchange
losses in the fourth quarter of 2020 resulting from the sale and
wind-down of our businesses in Mexico is excluded from the Adjusted
presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005192/en/
Investors: Hallie Miller Head of Investor Relations,
Evercore 917-386-7856
Media: Dana Gorman Abernathy MacGregor, for Evercore
212-371-5999
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