Evercore Inc. (NYSE: EVR):
Second Quarter Results | Year to Date Results | ||||||||||||||||||||||||||
U.S. GAAP | Adjusted | U.S. GAAP | Adjusted | ||||||||||||||||||||||||
Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | ||||||||||||||||||||
Net Revenues ($ mm) | $ | 499.4 | $ | 630.9 | $ | 505.1 | $ | 637.4 | $ | 1,071.6 | $ | 1,353.8 | $ | 1,082.9 | $ | 1,365.8 | |||||||||||
Operating Income ($ mm) | $ | 57.7 | $ | 146.2 | $ | 63.4 | $ | 153.2 | $ | 164.6 | $ | 355.5 | $ | 178.9 | $ | 368.1 | |||||||||||
Net Income Attributable to Evercore Inc. ($ mm) | $ | 37.2 | $ | 95.6 | $ | 40.4 | $ | 107.8 | $ | 120.6 | $ | 253.6 | $ | 133.6 | $ | 281.1 | |||||||||||
Diluted Earnings Per Share | $ | 0.95 | $ | 2.33 | $ | 0.96 | $ | 2.46 | $ | 3.02 | $ | 6.13 | $ | 3.13 | $ | 6.29 | |||||||||||
Compensation Ratio | 67.8 | % | 61.7 | % | 67.0 | % | 61.0 | % | 65.8 | % | 60.5 | % | 65.1 | % | 59.9 | % | |||||||||||
Operating Margin | 11.6 | % | 23.2 | % | 12.6 | % | 24.0 | % | 15.4 | % | 26.3 | % | 16.5 | % | 27.0 | % | |||||||||||
Effective Tax Rate | 28.9 | % | 26.0 | % | 29.6 | % | 27.0 | % | 19.8 | % | 20.4 | % | 20.2 | % | 21.2 | % | |||||||||||
Business and Financial Highlights | â– | Second Quarter and First Half Net Revenues were $499.4 million and $1.1 billion, respectively, on a U.S. GAAP basis and $505.1 million and $1.1 billion, respectively, on an Adjusted basis. First Half 2023 Net Revenues decreased 21% on both a U.S. GAAP and an Adjusted basis versus 2022 | |
■| Evercore participated in two of the top three largest follow-on offerings in the quarter, including lead-left bookrunner on GE Healthcare Technologies, Inc.’s $2.2 billion follow-on offering and active bookrunner on Mobileye Global Inc.’s $1.6 billion follow-on offering, a testament to the strength of our ECM franchise | ||
â– | Evercore advised Chevron on its $7.6 billion acquisition of PDC Energy and Arconic on its $5.2 billion sale to Apollo | ||
â– | Our Private Capital (Trades, Portfolio) Advisory and Fundraising business remained active among continuation funds, in which Evercore is the market leader | ||
Talent | â– | Year-to-date, 11 Advisory Senior Managing Directors have joined or committed to join Evercore, seven since our prior earnings announcement | |
â– | One Advisory Senior Managing Director joined Evercore in June; Giuseppe Monarchi, in our European Telecommunications group | ||
â– | In the second quarter, an additional six Advisory Senior Managing Directors committed to join our Firm, strengthening our coverage in European Telecommunications, Technology, Sponsors, Industrials, Business Services and Real Estate | ||
â– | One Equities Senior Managing Director joined Evercore ISI in June; Michael Binetti, covering Department Stores and Specialty Retail | ||
Capital Return | â– | Quarterly dividend of $0.76 per share | |
â– | Returned $418.7 million to shareholders during the first six months of 2023 through dividends and repurchases of 2.7 million shares at an average price of $128.01 | ||
Evercore Inc. (NYSE: EVR) today announced its results for the second quarter ended June 30, 2023.
LEADERSHIP COMMENTARY
John S. Weinberg, Chairman and Chief Executive Officer, "We continue to focus on serving our clients. It has been an extraordinary time to recruit exceptional talent and we are proud of our hiring success so far this year, positioning the Firm for when the market recovers."
Roger C. Altman, Founder and Senior Chairman, "This year, taking advantage of our momentum, Evercore has done more external hiring at the Senior Managing Director level than at any time in the Firm’s history. Together with the extraordinary talent we already had, this means that our productive capacity going forward will be considerably higher than ever before."
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 six months ended June 30, 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 six months ended June 30, 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
U.S. GAAP | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2023 | June 30, 2022 | %
| June 30, 2023 | June 30, 2022 | %
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(dollars in thousands) | |||||||||||||||||||
Investment Banking & Equities: | |||||||||||||||||||
Advisory Fees | $ | 374,556 | $ | 576,245 | (35 | %) | $ | 837,118 | $ | 1,200,809 | (30 | %) | |||||||
Underwriting Fees | 38,200 | 13,516 | 183 | % | 61,083 | 49,822 | 23 | % | |||||||||||
Commissions and Related Revenue | 50,048 | 52,485 | (5 | %) | 98,113 | 103,383 | (5 | %) | |||||||||||
Investment Management: | |||||||||||||||||||
Asset Management and Administration Fees | 16,575 | 15,968 | 4 | % | 32,533 | 33,083 | (2 | %) | |||||||||||
Other Revenue, net | 20,040 | (27,297 | ) | NM | 42,715 | (33,326 | ) | NM | |||||||||||
Net Revenues | $ | 499,419 | $ | 630,917 | (21 | %) | $ | 1,071,562 | $ | 1,353,771 | (21 | %) | |||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2023 | June 30, 2022 | %
| June 30, 2023 | June 30, 2022 | %
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Total Number of Fees from Advisory and Underwriting Client Transactions(1) | 236 | 217 | 9 | % | 360 | 354 | 2 | % | ||||||
Total Number of Fees of at Least $1 million from Advisory and Underwriting Client Transactions(1) | 77 | 100 | (23 | %) | 155 | 186 | (17 | %) | ||||||
Total Number of Underwriting Transactions(1) | 15 | 7 | 114 | % | 29 | 21 | 38 | % | ||||||
Total Number of Underwriting Transactions as a Bookrunner(1) | 14 | 5 | 180 | % | 26 | 18 | 44 | % | ||||||
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As of June 30, | ||||||||
2023 | 2022 | %
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Assets Under Management ($ mm)(1) | $ | 11,488 | $ | 10,462 | 10 | % | ||
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Advisory Fees – Second quarter Advisory Fees decreased $201.7 million, or 35%, year-over-year, and year-to-date Advisory Fees decreased $363.7 million, or 30%, year-over-year, primarily reflecting a decline in revenue earned from large transactions during 2023.
Underwriting Fees –Second quarter Underwriting Fees increased $24.7 million, or 183%, year-over-year, and year-to-date Underwriting Fees increased $11.3 million, or 23%, year-over-year, reflecting an increase in the number of transactions we participated in due to the increase in overall market issuances.
Commissions and Related Revenue –Second quarter Commissions and Related Revenue decreased $2.4 million, or 5%, year-over-year, and year-to-date Commissions and Related Revenue decreased $5.3 million, or 5%, year-over-year, primarily reflecting lower trading revenues.
Asset Management and Administration Fees –Second quarter Asset Management and Administration Fees increased $0.6 million, or 4%, year-over-year, driven by an increase in fees from Wealth Management clients, as associated AUM increased 10%, primarily from market appreciation. Year-to-date Asset Management and Administration Fees decreased $0.6 million, or 2%, year-over-year, driven by a decrease in fees from Wealth Management clients.
Other Revenue –Second quarter Other Revenue, net, increased $47.3 million year-over-year, primarily reflecting a shift from losses of $26.4 million in the second quarter of 2022 to gains of $12.2 million in the second quarter of 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. Year-to-date Other Revenue, net, increased $76.0 million year-over-year, primarily reflecting a shift from losses of $31.5 million in 2022 to gains of $22.3 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
U.S. GAAP | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, 2023 | June 30, 2022 | %
| June 30, 2023 | June 30, 2022 | |||||||||||||||||
