NEW YORK–(BUSINESS WIRE)–Evercore Inc. (NYSE: EVR):
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Fourth Quarter Results |
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Full Year Results |
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U.S. GAAP |
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Adjusted |
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U.S. GAAP |
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Adjusted |
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Q4 2023 |
Q4 2022 |
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Q4 2023 |
Q4 2022 |
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2023 |
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2022 |
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2023 |
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2022 |
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Net Revenues ($ mm) |
$ |
784.2 |
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$ |
831.3 |
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$ |
790.3 |
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$ |
836.7 |
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$ |
2,425.9 |
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$ |
2,762.0 |
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$ |
2,449.3 |
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$ |
2,785.6 |
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Operating Income ($ mm) |
$ |
117.7 |
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$ |
210.1 |
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$ |
123.9 |
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$ |
218.0 |
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$ |
359.1 |
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$ |
696.0 |
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$ |
385.4 |
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$ |
722.7 |
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Net Income Attributable to Evercore Inc. ($ mm) |
$ |
82.7 |
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$ |
140.4 |
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$ |
87.8 |
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$ |
152.4 |
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$ |
255.5 |
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$ |
476.5 |
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$ |
276.9 |
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$ |
528.7 |
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Diluted Earnings Per Share |
$ |
2.03 |
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$ |
3.44 |
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$ |
2.02 |
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$ |
3.50 |
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$ |
6.37 |
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$ |
11.61 |
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$ |
6.46 |
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$ |
12.01 |
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Compensation Ratio |
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71.4 |
% |
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62.9 |
% |
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|
70.8 |
% |
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62.5 |
% |
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|
68.3 |
% |
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61.5 |
% |
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|
67.6 |
% |
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60.9 |
% |
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Operating Margin |
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15.0 |
% |
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25.3 |
% |
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|
15.7 |
% |
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26.1 |
% |
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|
14.8 |
% |
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25.2 |
% |
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15.7 |
% |
|
25.9 |
% |
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Effective Tax Rate |
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23.1 |
% |
|
27.7 |
% |
|
|
25.3 |
% |
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28.2 |
% |
|
|
22.0 |
% |
|
24.5 |
% |
|
|
23.4 |
% |
|
24.5 |
% |
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Business and Financial Highlights |
■ |
Fourth Quarter and Full Year Net Revenues were $784.2 million and $2.4 billion, respectively, on a U.S. GAAP basis and $790.3 million and $2.4 billion, respectively, on an Adjusted basis. Full Year 2023 Net Revenues decreased 12% on both a U.S. GAAP and an Adjusted basis versus 2022 |
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■ |
In 2023, we were involved in four of the 10 largest global deals, all of which were announced in the second half of the year. In the fourth quarter, we advised Chevron on its $60 billion acquisition of Hess, U.S. Steel on its sale to Nippon Steel for $14.9 billion and NFP on its sale to Aon for $13.4 billion |
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■ |
In the early weeks of 2024, we continue to see strong momentum as we have advised on some of the largest strategic transactions, including Synopsys on its $35 billion acquisition of Ansys, Global Infrastructure Partners on its sale to BlackRock for $12.5 billion and Chesapeake Energy on its merger with Southwestern Energy for $7.4 billion |
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■ |
Our market-leading Private Capital Advisory and Fundraising group had a strong year driven by robust continuation fund activity and our resilient fundraising practice. In the fourth quarter, Evercore priced its first ever Collateralized Fund Obligation (“CFO”), which marks the successful addition of a new product capability for this business |
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■ |
In 2023, Evercore was a bookrunner on nearly all of its underwritten equity offerings and was lead-left bookrunner on a $2.2 billion offering for GE HealthCare Technologies. Our ECM business continued to diversify across sectors and products |
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■ |
Evercore’s Equities business had its strongest fourth quarter revenue in the past five years |
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Talent |
■ |
All of the 11 Advisory Senior Managing Directors that committed to Evercore in 2023 have joined the Firm |
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■ |
Since last quarter, Tammy Kiely joined in our Technology group, focusing primarily on the semiconductor sector |
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■ |
In January, Neil Wolitzer joined in our Real Estate group, a sector that is a growth area for our firm |
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■ |
Promoted seven Advisory Managing Directors and one Equities Managing Director to Senior Managing Director in January 2024, representing our focus on developing internal talent |
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Capital Return |
■ |
Quarterly dividend of $0.76 per share |
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■ |
Returned $523.5 million to shareholders during 2023 through dividends and repurchases of 3.0 million shares at an average price of $129.04 |
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Evercore Inc. (NYSE: EVR) today announced its results for the fourth quarter and full year ended December 31, 2023.
LEADERSHIP COMMENTARY
John S. Weinberg, Chairman and Chief Executive Officer, “As we start a new year, we continue to be encouraged by the strengthening of market activity and our internal dialogue levels. While 2023 presented a challenging operating environment, we continued to invest heavily in our business and we are committed to do so over the near and long-term.”
Roger C. Altman, Founder and Senior Chairman, “We begin 2024 by having advised on three of the four largest global transactions to date and with an exceptional group of newly promoted and externally hired SMDs. We believe we are better positioned than at any point in our history to gain market share across our businesses.”
Evercore’s quarterly results may fluctuate significantly due to the timing and amount of transaction fees earned, as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.
Business Segments:
Evercore’s business results are categorized into two segments: Investment Banking & Equities and Investment Management. Investment Banking & Equities includes providing advice to clients on mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private placement services and commissions for agency-based equity trading services and equity research. Investment Management includes Wealth Management and interests in private equity funds which are not managed by the Company, as well as advising third-party investors through affiliates. See pages A-2 to A-7 for further information and reconciliations of these segment results to our U.S. GAAP consolidated results.
Non-GAAP Measures:
Throughout this release certain information is presented on an adjusted basis, which is a non-GAAP measure. Adjusted results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and then those results are adjusted to exclude certain items and reflect the conversion of certain Evercore LP Units into Class A shares. Evercore believes that the disclosed adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore’s results across several periods and facilitate an understanding of Evercore’s operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
Special Charges, Including Business Realignment Costs, have been excluded from Adjusted Net Income Attributable to Evercore Inc. These charges in 2023 relate to the write-off of non-recoverable assets in connection with the wind-down of the Company’s operations in Mexico.
Evercore’s Adjusted Diluted Shares Outstanding for the three and twelve months ended December 31, 2023 were higher than U.S. GAAP as a result of the inclusion of certain Evercore LP Units and Unvested Restricted Stock Units.
Further details of these adjustments, as well as an explanation of similar amounts for the three and twelve months ended December 31, 2022 are included in pages A-2 to A-7.
Selected Financial Data – U.S. GAAP Results
The following is a discussion of Evercore’s consolidated results on a U.S. GAAP basis. See pages A-4 to A-6 for our business segment results.
Net Revenues
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U.S. GAAP |
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Three Months Ended |
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Twelve Months Ended |
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|
December 31, |
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December 31, |
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% |
|
December 31, |
|
December 31, |
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% |
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(dollars in thousands) |
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Investment Banking & Equities: |
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|
|
|
|
|
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Advisory Fees |
$ |
659,338 |
|
$ |
703,957 |
|
(6 |
%) |
|
$ |
1,963,857 |
|
$ |
2,392,990 |
|
|
(18 |
%) |
|
Underwriting Fees |
|
19,119 |
|
|
44,077 |
|
(57 |
%) |
|
|
111,016 |
|
|
122,596 |
|
|
(9 |
%) |
|
Commissions and Related Revenue |
|
55,979 |
|
|
53,624 |
|
4 |
% |
|
|
202,789 |
|
|
206,207 |
|
|
(2 |
%) |
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Investment Management: |
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|
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Asset Management and Administration Fees |
|
17,204 |
|
|
15,759 |
|
9 |
% |
|
|
67,041 |
|
|
64,483 |
|
|
4 |
% |
|
Other Revenue, net |
|
32,527 |
|
|
13,923 |
|
134 |
% |
|
|
81,246 |
|
|
(24,228 |
) |
|
NM |
|
|
Net Revenues |
$ |
784,167 |
|
$ |
831,340 |
|
(6 |
%) |
|
$ |
2,425,949 |
|
$ |
2,762,048 |
|
|
(12 |
%) |
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|
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|
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Three Months Ended |
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Twelve Months Ended |
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|
December 31, |
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December 31, |
|
% |
|
December 31, |
|
December 31, |
|
% |
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Total Number of Fees from Advisory and Underwriting Client Transactions(1) |
310 |
|
279 |
|
11 |
% |
|
666 |
|
651 |
|
2 |
% |
|
Total Number of Fees of at Least $1 million from Advisory and Underwriting Client Transactions(1) |
137 |
|
124 |
|
10 |
% |
|
378 |
|
409 |
|
(8 |
%) |
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Total Number of Underwriting Transactions(1) |
7 |
|
15 |
|
(53 |
%) |
|
47 |
|
49 |
|
(4 |
%) |
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Total Number of Underwriting Transactions as a Bookrunner(1) |
7 |
|
15 |
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(53 |
%) |
|
43 |
|
44 |
|
(2 |
%) |
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1. Includes Equity and Debt Underwriting Transactions. |
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As of December 31, |
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2023 |
|
2022 |
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% |
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Assets Under Management ($ mm)(1) |
$ |
12,272 |
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$ |
10,537 |
|
16 |
% |
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1. Assets Under Management reflect end of period amounts from our consolidated Wealth Management business. |
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Advisory Fees – Fourth quarter Advisory Fees decreased $44.6 million, or 6%, year-over-year, and full year Advisory Fees decreased $429.1 million, or 18%, year-over-year, reflecting a decline in revenue earned from large transactions during 2023.
Underwriting Fees – Fourth quarter Underwriting Fees decreased $25.0 million, or 57%, year-over-year, and full year Underwriting Fees decreased $11.6 million, or 9%, year-over-year, reflecting a decrease in the number of transactions we participated in during 2023.
Commissions and Related Revenue – Fourth quarter Commissions and Related Revenue increased $2.4 million, or 4%, year-over-year, primarily reflecting higher trading revenues. Full year Commissions and Related Revenue decreased $3.4 million, or 2%, year-over-year, primarily reflecting lower trading revenues.
Asset Management and Administration Fees – Fourth quarter Asset Management and Administration Fees increased $1.4 million, or 9%, year-over-year, driven by an increase in fees from Wealth Management clients, as associated AUM increased 16%, primarily from market appreciation. Full year Asset Management and Administration Fees increased $2.6 million, or 4%, year-over-year, driven by an increase in fees from Wealth Management clients, as associated AUM increased 16%, primarily from market appreciation.
Other Revenue – Fourth quarter Other Revenue, net, increased $18.6 million, or 134%, year-over-year, primarily reflecting higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills, and higher performance of our investment funds portfolio. Full year Other Revenue, net, increased $105.5 million year-over-year, primarily reflecting a shift from losses of $29.8 million in 2022 to gains of $34.3 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program.
Expenses
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|
U.S. GAAP |
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Three Months Ended |
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Twelve Months Ended |
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|
December 31, |
|
December 31, |
|
% |
|
December 31, |
|
December 31, |
|
% |
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|
|
(dollars in thousands) |
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Employee Compensation and Benefits |
$ |
559,899 |
|
|
$ |
523,019 |
|
|
7 |
% |
|
$ |
1,656,875 |
|
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$ |
1,697,519 |
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|
(2 |
%) |
|
Compensation Ratio |
|
71.4 |
% |
|
|
62.9 |
% |
|
|
|
|
68.3 |
% |
|
|
61.5 |
% |
|
|
||
|
Non-Compensation Costs |
$ |
106,579 |
|
|
$ |
95,630 |
|
|
11 |
% |
|
$ |
407,018 |
|
|
$ |
365,361 |
|
|
11 |
% |
|
Non-Compensation Ratio |
|
13.6 |
% |
|
|
11.5 |
% |
|
|
|
|
16.8 |
% |
|
|
13.2 |
% |
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||
|
Special Charges, Including Business Realignment Costs |
$ |
— |
|
|
$ |
2,594 |
|
|
NM |
|
|
$ |
2,921 |
|
|
$ |
3,126 |
|
|
(7 |
%) |
Employee Compensation and Benefits – Fourth quarter Employee Compensation and Benefits increased $36.9 million, or 7%, year-over-year, reflecting a compensation ratio of 71.4% for the fourth quarter of 2023 versus 62.9% for the prior year period. The increase in Employee Compensation and Benefits compared to the prior year period principally reflects higher amortization of prior period deferred compensation awards, a higher accrual for incentive compensation and higher base salaries. The Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. Full year Employee Compensation and Benefits decreased $40.6 million, or 2%, year-over-year, reflecting a full year compensation ratio of 68.3% versus 61.5% for the prior year period. The decrease in Employee Compensation and Benefits compared to the prior year period principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries. The Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. See “Deferred Compensation” for more information.
Non-Compensation Costs – Fourth quarter Non-Compensation Costs increased $10.9 million, or 11%, year-over-year, primarily driven by increases in travel and related expenses, as well as communications and information services, principally reflecting higher research services and license fees in the fourth quarter of 2023. The increase was also attributed to the reversal of expense in the fourth quarter of 2022 associated with the decline in the fair value of contingent consideration owed to former equity interest holders in our RECA business. The fourth quarter Non-Compensation ratio of 13.6% increased from 11.5% for the prior year period. The Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period. Full year Non-Compensation Costs increased $41.7 million, or 11%, year-over-year, primarily driven by increases in travel and related expenses, as well as communications and information services, principally reflecting higher license fees and research services in 2023. The increase was also attributed to the reversal of expense in 2022 associated with the decline in the fair value of contingent consideration owed to former equity interest holders in our RECA business. The full year Non-Compensation ratio of 16.8% increased from 13.2% for the prior year period. The Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period.
Special Charges, Including Business Realignment Costs – Full year 2023 Special Charges, Including Business Realignment Costs, relate to the write-off of non-recoverable assets in connection with the wind-down of the Company’s operations in Mexico.
Fourth quarter 2022 Special Charges, Including Business Realignment Costs, relate to separation benefits and other charges related to the wind-down of the Company’s operations in Mexico. Full year 2022 Special Charges, Including Business Realignment Costs, relate to charges associated with the prepayment of the Company’s $67 million aggregate principal amount of its 5.23% Series B senior notes, originally due March 30, 2023 (the “Series B Notes”), during the second quarter, as well as certain professional fees, separation benefits and other charges related to the wind-down of the Company’s operations in Mexico.
Effective Tax Rate
The fourth quarter effective tax rate was 23.1% versus 27.7% for the prior year period. The full year effective tax rate was 22.0% versus 24.5% for the prior year period. The effective tax rate for the year 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 full year provision for income taxes for 2023 reflects an additional tax benefit of $13.7 million versus $19.6 million for the prior year period, due to the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price.
Selected Financial Data – Adjusted Results
The following is a discussion of Evercore’s consolidated results on an Adjusted basis. See pages 3 and A-2 to A-7 for further information and reconciliations of these metrics to our U.S. GAAP results. See pages A-4 to A-6 for our business segment results.
Adjusted Net Revenues
|
|
Adjusted |
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|
Three Months Ended |
|
Twelve Months Ended |
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|
|
December 31, |
|
December 31, |
|
% |
|
December 31, |
|
December 31, |
|
% |
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|
|
(dollars in thousands) |
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|
Investment Banking & Equities: |
|
|
|
|
|
|
|
|
|
|
|
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|
Advisory Fees(1) |
$ |
659,564 |
|
$ |
704,185 |
|
(6 |
%) |
|
$ |
1,964,477 |
|
$ |
2,394,207 |
|
|
(18 |
%) |
|
Underwriting Fees |
|
19,119 |
|
|
44,077 |
|
(57 |
%) |
|
|
111,016 |
|
|
122,596 |
|
|
(9 |
%) |
|
Commissions and Related Revenue |
|
55,979 |
|
|
53,624 |
|
4 |
% |
|
|
202,789 |
|
|
206,207 |
|
|
(2 |
%) |
|
Investment Management: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Asset Management and Administration Fees(2) |
|
18,959 |
|
|
16,717 |
|
13 |
% |
|
|
73,076 |
|
|
71,265 |
|
|
3 |
% |
|
Other Revenue, net |
|
36,708 |
|
|
18,077 |
|
103 |
% |
|
|
97,963 |
|
|
(8,672 |
) |
|
NM |
|
|
Net Revenues |
$ |
790,329 |
|
$ |
836,680 |
|
(6 |
%) |
|
$ |
2,449,321 |
|
$ |
2,785,603 |
|
|
(12 |
%) |
|
1. |
Advisory Fees on an Adjusted basis reflect the reclassification of earnings related to our equity method investments in Luminis and Seneca Evercore of $0.2 million and $0.6 million for the three and twelve months ended December 31, 2023, respectively, and $0.2 million and $1.2 million for the three and twelve months ended December 31, 2022, respectively. |
|
|
2. |
Asset Management and Administration Fees on an Adjusted basis reflect the reclassification of earnings related to our equity method investments in Atalanta Sosnoff and ABS of $1.8 million and $6.0 million for the three and twelve months ended December 31, 2023, respectively, and $1.0 million and $6.8 million for the three and twelve months ended December 31, 2022, respectively. |
See page 4 for additional business metrics.
Advisory Fees – Fourth quarter adjusted Advisory Fees decreased $44.6 million, or 6%, year-over-year, and full year adjusted Advisory Fees decreased $429.7 million, or 18%, year-over-year, reflecting a decline in revenue earned from large transactions during 2023.
Underwriting Fees – Fourth quarter Underwriting Fees decreased $25.0 million, or 57%, year-over-year, and full year Underwriting Fees decreased $11.6 million, or 9%, year-over-year, reflecting a decrease in the number of transactions we participated in during 2023.
Commissions and Related Revenue – Fourth quarter Commissions and Related Revenue increased $2.4 million, or 4%, year-over-year, primarily reflecting higher trading revenues. Full year Commissions and Related Revenue decreased $3.4 million, or 2%, year-over-year, primarily reflecting lower trading revenues.
Asset Management and Administration Fees – Fourth quarter adjusted Asset Management and Administration Fees increased $2.2 million, or 13%, year-over-year, primarily driven by an increase in fees from Wealth Management clients, as associated AUM increased 16%, primarily from market appreciation. The increase was also driven by an 83% increase in equity in earnings of affiliates. Full year adjusted Asset Management and Administration Fees increased $1.8 million, or 3%, year-over-year, primarily driven by an increase in fees from Wealth Management clients, as associated AUM increased 16%, primarily from market appreciation. This was partially offset by an 11% decrease in equity in earnings of affiliates.
Other Revenue – Fourth quarter adjusted Other Revenue, net, increased $18.6 million, or 103%, year-over-year, primarily reflecting higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills, and higher performance of our investment funds portfolio. Full year adjusted Other Revenue, net, increased $106.6 million year-over-year, primarily reflecting a shift from losses of $29.8 million in 2022 to gains of $34.3 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S. treasury bills. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program.
Adjusted Expenses
|
|
Adjusted |
||||||||||||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||||
|
|
December 31, |
|
December 31, |
|
% |
|
December 31, |
|
December 31, |
|
% |
||||||||||
|
|
(dollars in thousands) |
||||||||||||||||||||
|
Employee Compensation and Benefits |
$ |
559,899 |
|
|
$ |
523,019 |
|
|
7 |
% |
|
$ |
1,656,875 |
|
|
$ |
1,697,519 |
|
|
(2 |
%) |
|
Compensation Ratio |
|
70.8 |
% |
|
|
62.5 |
% |
|
|
|
|
67.6 |
% |
|
|
60.9 |
% |
|
|
||
|
Non-Compensation Costs |
$ |
106,579 |
|
|
$ |
95,630 |
|
|
11 |
% |
|
$ |
407,018 |
|
|
$ |
365,361 |
|
|
11 |
% |
|
Non-Compensation Ratio |
|
13.5 |
% |
|
|
11.4 |
% |
|
|
|
|
16.6 |
% |
|
|
13.1 |
% |
|
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Employee Compensation and Benefits – Fourth quarter adjusted Employee Compensation and Benefits increased $36.9 million, or 7%, year-over-year, reflecting an adjusted compensation ratio of 70.8% for the fourth quarter of 2023 versus 62.5% for the prior year period. The increase in adjusted Employee Compensation and Benefits compared to the prior year period principally reflects higher amortization of prior period deferred compensation awards, a higher accrual for incentive compensation and higher base salaries. The adjusted Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. Full year adjusted Employee Compensation and Benefits decreased $40.6 million, or 2%, year-over-year, reflecting a full year adjusted compensation ratio of 67.6% versus 60.9% for the prior year period. The decrease in adjusted Employee Compensation and Benefits compared to the prior year period principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries. The adjusted Compensation Ratio was impacted by lower net revenues, as described above, during the current year period compared to the prior year period. See “Deferred Compensation” for more information.
Non-Compensation Costs – Fourth quarter adjusted Non-Compensation Costs increased $10.9 million, or 11%, year-over-year, primarily driven by increases in travel and related expenses, as well as communications and information services, principally reflecting higher research services and license fees in the fourth quarter of 2023. The increase was also attributed to the reversal of expense in the fourth quarter of 2022 associated with the decline in the fair value of contingent consideration owed to former equity interest holders in our RECA business. The fourth quarter adjusted Non-Compensation ratio of 13.5% increased from 11.4% for the prior year period. The adjusted Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period. Full year adjusted Non-Compensation Costs increased $41.7 million, or 11%, year-over-year, primarily driven by increases in travel and related expenses, as well as communications and information services, principally reflecting higher license fees and research services in 2023. The increase was also attributed to the reversal of expense in 2022 associated with the decline in fair value of contingent consideration owed to former equity interest holders in our RECA business. The full year adjusted Non-Compensation ratio of 16.6% increased from 13.1% for the prior year period. The adjusted Non-Compensation Ratio was also impacted by lower net revenues, as described above, during the current year period compared to the prior year period.
Adjusted Effective Tax Rate
The fourth quarter adjusted effective tax rate was 25.3% versus 28.2% for the prior year period. The full year adjusted effective tax rate was 23.4% versus 24.5% for the prior year period. The adjusted effective tax rate for the year 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.
Contacts
Investor Contact:
Katy Haber
Head of Investor Relations & ESG
[email protected]
Media Contacts:
Jamie Easton
Head of Communications & External Affairs
[email protected]
Shree Dhond / Zach Kouwe
Dukas Linden Public Relations
[email protected]
(646) 722-6531
