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Evercore Reports Full Year 2020 Results; Record Fourth Quarter and Full Year Revenues; Quarterly Dividend of $0.61 Per Share

NEW YORK--(BUSINESS WIRE)--Feb. 3, 2021--

Evercore (NYSE:EVR):

 

Fourth Quarter 2020 Results

 

2020 Full Year Results

 

U.S. GAAP

 

Adjusted

 

U.S. GAAP

 

Adjusted

 

 

vs.
Q4 2019

 

 

vs.
Q4 2019

 

 

vs.
2019

 

 

vs.
2019

Net Revenues ($ millions)

$

927.3

 

40%

 

$

969.9

 

45%

 

$

2,263.9

 

13%

 

$

2,327.3

 

14%

Operating Income ($ millions)

$

326.7

 

108%

 

$

376.4

 

110%

 

$

526.4

 

20%

 

$

639.3

 

28%

Net Income Attributable to Evercore Inc. ($ millions)

$

220.4

 

110%

 

$

277.4

 

113%

 

$

350.6

 

18%

 

$

459.6

 

23%

Diluted Earnings Per Share

$

5.02

 

102%

 

$

5.67

 

108%

 

$

8.22

 

19%

 

$

9.62

 

25%

Operating Margin

35.2

%

1,149 bps

 

38.8

%

1,195 bps

 

23.3

%

146 bps

 

27.5

%

294 bps

Business and Financial
Highlights

Record Full year Net Revenues reflect Evercore's ability to serve clients in dynamic and volatile market environments

 

Fourth quarter U.S. GAAP and Adjusted Net Revenues of $927.3 million and $969.9 million, respectively, represent new quarterly records. These results reflect the beginning of the recovery of the M&A markets, successful completion of restructuring assignments, strong capital raising activity and momentum in most other areas of our business

 

Full year U.S. GAAP and Adjusted Operating Margins of 23.3% and 27.5%, respectively

 

Maintained #1 league table ranking among independents and ranked #5 in the U.S. among all firms; advising on four of the 10 largest U.S. M&A transactions of 2020

 

Achieved #2 league table ranking by number of U.S. Restructuring deals in 2020; #1 Restructuring Energy Advisor - 2019 through 2020

 

Underwriting Revenue of $276.2 million for the full year more than tripled compared to 2019's record year; served as active bookrunner on 65 of 85 bookrun transactions in 2020

 

Evercore Wealth Management AUM surpassed $10 billion for the first time

 

 

 

 

 

 

Talent

Kristen Grippi joined Evercore as a Senior Managing Director and Head of ECM

 

Promoted three Managing Directors to Senior Managing Director in January 2021, strengthening our Advisory and Equities coverage of Healthcare, Restructuring and Healthcare Services & Technology

 

Launched convertible debt underwriting and sales and trading capabilities, further expanding our ability to serve clients

 

Strong pipeline of senior level talent additions as we enter 2021

 

 

 

 

 

 

Strategic Transactions

Completed transition of Evercore's presence in Mexico through a strategic alliance with TACTIV, a newly formed Advisory firm, and the sale of Evercore Casa de Bolsa, S.A. de C.V. to its leadership

 

 

 

 

 

 

 

Capital Return

Quarterly dividend of $0.61 per share

 

Returned $265.4 million to shareholders in 2020 through dividends and repurchases of 1.9 million shares at an average price of $76.25

 

Reduced share count for the 5th straight year

 

 

Evercore Inc. (NYSE: EVR) today announced its results for the full year ended December 31, 2020.

LEADERSHIP COMMENTARY

John S. Weinberg, Co-Chairman and Co-Chief Executive Officer, "Our ongoing initiatives over the last several years to invest in broadening and diversifying our capabilities contributed to a record year for our firm on many levels. The breadth of our Advisory capabilities – including Restructuring, Capital Advisory, Shareholder Activism and Defense – allowed us to advise our clients throughout a rapidly changing environment and contributed to overall Advisory revenue growth, even in a challenging year for the merger market. Our Underwriting business also benefited from years of investment and increasing diversification and achieved tremendous revenue growth in 2020. Momentum persists in this business and we continue to build out and expand this strategic area of importance to our firm. Evercore ISI’s strength in both macroeconomic and fundamental research led to differentiated conversations with both institutional and corporate clients, and our investment in our sales and trading and distribution capabilities facilitated strong partnerships with the Underwriting team. Finally, our Wealth Management team delivered strong returns and important financial advice to our clients in a volatile year. Our exceptional team across the board remains committed to our Core Values and we could not be more proud of how we served our clients and collaborated with each other, despite the vast majority of our firm working remotely. And while we persevered during one of the more challenging years in our history and had a very strong year, we recognize that others have not been as fortunate and it's important that we not lose sight of that."

Ralph Schlosstein, Co-Chairman and Co-Chief Executive Officer, "Our 2020 results demonstrate that Evercore is truly an all-weather firm that can advise clients on their most important strategic, financial and capital needs in widely varied environments. We are proud of our many accomplishments in a challenging environment, yet we remain focused on continuing to make progress on our long-term growth objectives. We begin 2021 in a great position – we are encouraged by the increase in M&A activity, we continue to experience momentum in many of our other businesses and our backlog is strong; we continue to plan actively for our eventual return to our offices globally; we see opportunities to add talent strategically; and our cash position and balance sheet are incredibly strong. Attracting, developing and cultivating talented individuals is the foundation of our future growth and we are proud to announce the promotion of three Managing Directors to Senior Managing Director in January 2021, strengthening our Advisory and Equities coverage of Healthcare, Restructuring and Healthcare Services & Technology. We continue to invest in our Equity Capital Markets business with several key additions to the team, including Kristen Grippi who will lead our ECM efforts in the future. We look forward to additional talent announcements throughout the firm in 2021."

Roger C. Altman, Founder and Senior Chairman, "This past year was truly unprecedented for obvious reasons. And, yet, the broader and stronger Evercore platform, as compared to even five years ago, enabled the Firm to overcome the deep challenges, serve its clients successfully and post record results. This is a source of great pride and gratitude."

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

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands, except per share data)

Net Revenues(1)

$

927,308

 

 

$

660,127

 

 

40

%

 

$

2,263,905

 

 

$

2,008,698

 

 

13

%

Operating Income(2)

$

326,715

 

 

$

156,723

 

 

108

%

 

$

526,433

 

 

$

437,711

 

 

20

%

Net Income Attributable to Evercore Inc.

$

220,377

 

 

$

105,184

 

 

110

%

 

$

350,574

 

 

$

297,436

 

 

18

%

Diluted Earnings Per Share

$

5.02

 

 

$

2.48

 

 

102

%

 

$

8.22

 

 

$

6.89

 

 

19

%

Compensation Ratio

54.8

%

 

60.2

%

 

 

 

60.6

%

 

59.8

%

 

 

Operating Margin

35.2

%

 

23.7

%

 

 

 

23.3

%

 

21.8

%

 

 

Effective Tax Rate

23.2

%

 

21.7

%

 

 

 

23.7

%

 

21.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Net Revenues for the three months ended December 31, 2020, includes a loss of $32.2 million resulting from the sale and wind-down of our businesses in Mexico, including $4.8 million related to the sale of our ECB business, as well as $27.4 million related to the release of cumulative foreign exchange losses. Net Revenues for the twelve months ended December 31, 2020, includes a loss of $30.8 million resulting from the sale and wind-down of our businesses in Mexico, including $3.4 million related to the sale of our ECB businesses, as well as $27.4 million related to the release of cumulative foreign exchange losses.

2. Operating Income for the three and twelve months ended December 31, 2020 includes Special Charges, Including Business Realignment Costs, of $7.0 million and $46.6 million, respectively, recognized in the Investment Banking segment, and $0.01 million and $0.04 million, respectively, recognized in the Investment Management segment. Operating Income for the three and twelve months ended December 31, 2019 includes Special Charges, Including Business Realignment Costs, of $4.1 million and $7.2 million, respectively, recognized in the Investment Banking segment, and $2.9 million recognized in the Investment Management segment. See "Special Charges, Including Business Realignment Costs" below and page 7 for further information.

Net Revenues

For the three months ended December 31, 2020, Net Revenues of $927.3 million increased 40% versus the three months ended December 31, 2019, primarily reflecting increases in Advisory Fees and Underwriting Fees of $226.3 million and $66.8 million, respectively. These increases were partially offset by a decrease in Other Revenue, net, primarily due to a loss of $32.2 million resulting from the sale and wind-down of our businesses in Mexico. For the twelve months ended December 31, 2020, Net Revenues of $2.26 billion increased 13% versus the twelve months ended December 31, 2019, primarily reflecting increases in Underwriting Fees and Advisory Fees of $186.5 million and $101.7 million, respectively. These increases were partially offset by a decrease in Other Revenue, net, primarily due to a loss of $30.8 million associated with the Mexico transition. See the Business Line Reporting - Discussion of U.S. GAAP Results below for further information.

Compensation

For the three months ended December 31, 2020, the compensation ratio was 54.8% versus 60.2% for the three months ended December 31, 2019. The compensation ratio for the three months ended December 31, 2020 and 2019 is 55.2% and 60.6%, respectively, when the $3.9 million and $2.9 million, respectively, of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included. For the twelve months ended December 31, 2020, the compensation ratio was 60.6% versus 59.8% for the twelve months ended December 31, 2019. The compensation ratio for the twelve months ended December 31, 2020 and 2019 is 62.4% and 59.9%, respectively, when the $41.3 million and $2.9 million, respectively, 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 twelve months ended December 31, 2020 principally reflects higher levels of compensation expense related to higher revenues and higher amortization of prior period deferred compensation awards, partially offset by lower compensation expense related to senior new hires. 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 December 31, 2020, Non-Compensation Costs of $85.8 million decreased 13% versus the three months ended December 31, 2019, primarily driven by decreased travel and related expenses related to prolonged travel restrictions. For the twelve months ended December 31, 2020, Non-Compensation Costs of $318.5 million decreased 11% versus the twelve months ended December 31, 2019, primarily driven by decreased travel and related expenses related to prolonged travel restrictions.

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, which began in the fourth quarter of 2019, generated reductions of approximately 8% of our headcount. In conjunction with this review, in the second quarter of 2020 we entered into an agreement for certain former employees in Mexico to purchase Evercore Casa de Bolsa, S.A. de C.V. ("ECB"), our Mexico based broker-dealer focused principally on providing Investment Management services. This transaction closed in December 2020. In addition, we completed the transition of our Advisory presence in Mexico to a strategic alliance model during the fourth quarter of 2020.

In conjunction with the employment reductions, the Company incurred separation and transition benefits and related costs of $4.1 million and $41.7 million for the three and twelve months ended December 31, 2020, respectively, and $2.9 million for the three and twelve months ended December 31, 2019, which have been recorded as Special Charges, Including Business Realignment Costs, and are excluded from our Adjusted results. The Company believes these actions will best position it to continue to provide clients with the highest quality of independent advice while delivering value to our shareholders.

Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 2020 also reflect the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the previously announced expansion of our headquarters in New York and our business realignment initiatives of $1.3 million and $3.3 million, respectively, and charges related to the impairment of assets resulting from the wind-down of our Mexico business of $1.7 million.

Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 2019 also reflect the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York of $1.3 million and $4.4 million, respectively, and the impairment of goodwill in the Institutional Asset Management reporting unit of $2.9 million.

Effective Tax Rate

For the three months ended December 31, 2020, the effective tax rate was 23.2% versus 21.7% for the three months ended December 31, 2019. For the twelve months ended December 31, 2020, the effective tax rate was 23.7% versus 21.2% for the twelve months ended December 31, 2019. The effective tax rate is impacted by the non-deductible treatment of compensation associated with Evercore LP Units, as well as the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price.

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-10 for further information and reconciliations of these non-GAAP metrics to our U.S. GAAP results.

 

Adjusted

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31, 2020

 

December 31, 2019

 

%
Change

 

(dollars in thousands, except per share data)

Net Revenues

$

969,918

 

 

$

668,460

 

 

45

%

 

$

2,327,306

 

 

$

2,032,611

 

 

14

%

Operating Income

$

376,358

 

 

$

179,529

 

 

110

%

 

$

639,291

 

 

$

498,489

 

 

28

%

Net Income Attributable to Evercore Inc.

$

277,382

 

 

$

130,131

 

 

113

%

 

$

459,595

 

 

$

373,300

 

 

23

%

Diluted Earnings Per Share

$

5.67

 

 

$

2.72

 

 

108

%

 

$

9.62

 

 

$

7.70

 

 

25

%

Compensation Ratio

52.3

%

 

58.6

%

 

 

 

58.9

%

 

58.2

%

 

 

Operating Margin

38.8

%

 

26.9

%

 

 

 

27.5

%

 

24.5

%

 

 

Effective Tax Rate

25.0

%

 

25.1

%

 

 

 

25.4

%

 

22.4

%

 

 

 

Adjusted Net Revenues

For the three months ended December 31, 2020, Adjusted Net Revenues of $969.9 million increased 45% versus the three months ended December 31, 2019, primarily reflecting increases in Advisory Fees and Underwriting Fees of $226.6 million and $66.8 million, respectively. For the twelve months ended December 31, 2020, Adjusted Net Revenues of $2.33 billion increased 14% versus the twelve months ended December 31, 2019, primarily reflecting increases in Underwriting Fees and Advisory Fees of $186.5 million and $102.3 million, respectively. See the Business Line Reporting - Discussion of Adjusted Results below for further information.

Adjusted Compensation

For the three months ended December 31, 2020, the Adjusted compensation ratio was 52.3% versus 58.6% for the three months ended December 31, 2019. For the twelve months ended December 31, 2020, the Adjusted compensation ratio was 58.9% versus 58.2% for the twelve months ended December 31, 2019. The increase in the amount of Adjusted compensation recognized in the three and twelve months ended December 31, 2020 principally reflects higher levels of compensation expense related to higher revenues and higher amortization of prior period deferred compensation awards, partially offset by lower compensation expense related to senior new hires. 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 December 31, 2020, Adjusted Non-Compensation Costs of $85.8 million decreased 12% versus the three months ended December 31, 2019, primarily driven by decreased travel and related expenses related to prolonged travel restrictions. For the twelve months ended December 31, 2020, Adjusted Non-Compensation Costs of $316.7 million decreased 10% versus the twelve months ended December 31, 2019, primarily driven by decreased travel and related expenses related to prolonged travel restrictions.

Adjusted Operating Expenses

Adjusted Operating Expenses exclude adjustments relating to Special Charges, Including Business Realignment Costs, as described in more detail on page 4.

Adjusted Effective Tax Rate

For the three months ended December 31, 2020, the Adjusted effective tax rate was 25.0% versus 25.1% for the three months ended December 31, 2019. For the twelve months ended December 31, 2020, the Adjusted effective tax rate was 25.4% versus 22.4% for the twelve months ended December 31, 2019. The Adjusted effective tax rate is impacted by the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price.

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 three and twelve months ended December 31, 2020 was higher than U.S. GAAP as a result of the exclusion of expenses associated with awards granted in conjunction with certain of the Company's acquisitions, and certain other business acquisition-related and disposition-related charges and Special Charges, Including Business Realignment Costs.

Acquisition-related compensation charges for 2020 include expenses associated with awards granted in conjunction with the Company's acquisition of ISI. Acquisition-related charges for 2020 also include professional fees incurred and amortization of intangible assets.

Special Charges, Including Business Realignment Costs, for 2020 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 previously announced expansion of our headquarters in New York and our business realignment initiatives, as well as charges related to the impairment of assets resulting from the wind-down of our Mexico business.

The gain on the sale of the ECB Trust business and loss on the sale of the remaining ECB business in the third and fourth quarters of 2020, respectively, as well as the release of cumulative foreign exchange losses in the fourth quarter of 2020 resulting from the sale and wind-down of our businesses in Mexico have also been excluded from Revenues.

Evercore's Adjusted Diluted Shares Outstanding for the three and twelve months ended December 31, 2020 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 twelve months ended December 31, 2019 are included in Annex I, pages A-2 to A-10.

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

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands)

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees

$

789,611

 

 

$

563,276

 

 

40

%

 

$

1,755,273

 

 

$

1,653,585

 

 

6

%

Underwriting Fees

95,009

 

 

28,253

 

 

236

%

 

276,191

 

 

89,681

 

 

208

%

Commissions and Related Fees

52,414

 

 

52,089

 

 

1

%

 

205,767

 

 

189,506

 

 

9

%

Other Revenue, net(1)

(14,141)

 

 

2,591

 

 

NM

 

(19,845)

 

 

19,023

 

 

NM

Net Revenues

922,893

 

 

646,209

 

 

43

%

 

2,217,386

 

 

1,951,795

 

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

497,236

 

 

388,717

 

 

28

%

 

1,335,789

 

 

1,166,795

 

 

14

%

Non-Compensation Costs

82,382

 

 

95,194

 

 

(13

%)

 

304,265

 

 

345,098

 

 

(12

%)

Special Charges, Including Business Realignment Costs

7,018

 

 

4,115

 

 

71

%

 

46,600

 

 

7,202

 

 

547

%

Total Expenses

586,636

 

 

488,026

 

 

20

%

 

1,686,654

 

 

1,519,095

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

$

336,257

 

 

$

158,183

 

 

113

%

 

$

530,732

 

 

$

432,700

 

 

23

%

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio

53.9

%

 

60.2

%

 

 

 

60.2

%

 

59.8

%

 

 

Non-Compensation Ratio

8.9

%

 

14.7

%

 

 

 

13.7

%

 

17.7

%

 

 

Operating Margin

36.4

%

 

24.5

%

 

 

 

23.9

%

 

22.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of Fees from Advisory Client Transactions(2)

324

 

281

 

 

15

%

 

687

 

661

 

4

%

Investment Banking Fees of at Least $1 million from Advisory Client Transactions(2)

162

 

105

 

 

54

%

 

386

 

328

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

1. Includes a loss of $21.1 million for the three and twelve months ended December 31, 2020, related to the release of cumulative foreign exchange losses resulting from the sale and wind-down of our businesses in Mexico.

2. Includes Advisory and Underwriting Transactions.

Revenues

During the three months ended December 31, 2020, fees from Advisory services increased $226.3 million, or 40%, versus the three months ended December 31, 2019, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions. Underwriting Fees of $95.0 million for the three months ended December 31, 2020 increased $66.8 million, or 236%, versus the three months ended December 31, 2019, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions. We participated in 40 underwriting transactions during the three months ended December 31, 2020 (vs. 12 in Q4 2019); 33 as a bookrunner (vs. 12 in Q4 2019). Commissions and Related Fees for the three months ended December 31, 2020 increased 1% versus the three months ended December 31, 2019.

During the twelve months ended December 31, 2020, fees from Advisory services increased $101.7 million, or 6%, versus the twelve months ended December 31, 2019, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions. Underwriting Fees of $276.2 million for the twelve months ended December 31, 2020 increased $186.5 million, or 208%, versus the twelve months ended December 31, 2019, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions. We participated in 118 underwriting transactions during the twelve months ended December 31, 2020 (vs. 71 in 2019); 85 as a bookrunner (vs. 53 in 2019). Commissions and Related Fees for the twelve months ended December 31, 2020 increased $16.3 million, or 9%, versus the twelve months ended December 31, 2019, as a result of elevated volatility during 2020.

Other Revenue, net, for the three months ended December 31, 2020 decreased versus the three months ended December 31, 2019, primarily reflecting a loss of $21.1 million resulting from the sale and wind-down of our businesses in Mexico, partially offset by higher gains on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, as the market continued to improve during the quarter. Other Revenue, net, for the twelve months ended December 31, 2020 decreased versus the twelve months ended December 31, 2019, primarily reflecting a loss of $21.1 million resulting from the sale and wind-down of our businesses in Mexico, as well as lower interest income.

Expenses

Compensation costs were $497.2 million for the three months ended December 31, 2020, an increase of 28% from the fourth quarter of last year. The compensation ratio was 53.9% for the three months ended December 31, 2020, compared to 60.2% for the three months ended December 31, 2019. The compensation ratio for the three months ended December 31, 2020 and 2019 is 54.3% and 60.6%, respectively, when the $3.8 million and $2.8 million, respectively, of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included. Compensation costs were $1.34 billion for the twelve months ended December 31, 2020, an increase of 14% compared to the twelve months ended December 31, 2019. The compensation ratio was 60.2% for the twelve months ended December 31, 2020, compared to 59.8% for the twelve months ended December 31, 2019. The compensation ratio for the twelve months ended December 31, 2020 and 2019 is 62.1% and 59.9%, respectively, when the $41.2 million and $2.8 million, respectively, 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 twelve months ended December 31, 2020 principally reflects higher levels of compensation expense related to higher revenues and higher amortization of prior period deferred compensation awards, partially offset by lower compensation expense related to senior new hires. 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 December 31, 2020 were $82.4 million, a decrease of 13% compared to the fourth quarter of last year. The decrease in Non-Compensation Costs from last year primarily reflects decreased travel and related expenses related to prolonged travel restrictions. The ratio of Non-Compensation Costs to Net Revenues for the three months ended December 31, 2020 of 8.9% decreased from 14.7% for the fourth quarter of last year. Non-Compensation Costs for the twelve months ended December 31, 2020 were $304.3 million, a decrease of 12% compared to the twelve months ended December 31, 2019. The decrease in Non-Compensation Costs versus last year primarily reflects decreased travel and related expenses related to prolonged travel restrictions. The ratio of Non-Compensation Costs to Net Revenues for the twelve months ended December 31, 2020 of 13.7% decreased from 17.7% for the twelve months ended December 31, 2019.

Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 2020 reflect $4.1 million and $41.6 million, respectively, for separation and transition benefits and related costs as a result of the Company's review of its operations and $1.3 million and $3.3 million, respectively, for the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the previously announced expansion of our headquarters in New York and our business realignment initiatives. Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 2020 also reflect $1.7 million for charges related to the impairment of assets resulting from the wind-down of our Mexico business. See page 4 for further information. Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 2019, reflect the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York of $1.3 million and $4.4 million, respectively, as well as $2.8 million for separation and transition benefits and related costs as a result of the Company's review of its operations.

Investment Management

 

U.S. GAAP

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands)

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Asset Management and Administration Fees

$

14,672

 

 

$

13,159

 

 

11

%

 

$

54,397

 

 

$

50,611

 

 

7

%

Other Revenue, net(1)

(10,257)

 

 

759

 

 

NM

 

(7,878)

 

 

6,292

 

 

NM

Net Revenues

4,415

 

 

13,918

 

 

(68

%)

 

46,519

 

 

56,903

 

 

(18

%)

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

10,503

 

 

8,603

 

 

22

%

 

36,550

 

 

34,182

 

 

7

%

Non-Compensation Costs

3,441

 

 

3,836

 

 

(10

%)

 

14,223

 

 

14,771

 

 

(4

%)

Special Charges, Including Business Realignment Costs

13

 

 

2,939

 

 

(100

%)

 

45

 

 

2,939

 

 

(98

%)

Total Expenses

13,957

 

 

15,378

 

 

(9

%)

 

50,818

 

 

51,892

 

 

(2

%)

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

$

(9,542)

 

 

$

(1,460)

 

 

(554

%)

 

$

(4,299)

 

 

$

5,011

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio

237.9

%

 

61.8

%

 

 

 

78.6

%

 

60.1

%

 

 

Non-Compensation Ratio

77.9

%

 

27.6

%

 

 

 

30.6

%

 

26.0

%

 

 

Operating Margin

(216.1

%)

 

(10.5

%)

 

 

 

(9.2

%)

 

8.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Under Management (in millions)(2)

 

 

 

 

 

 

 

 

 

 

 

Wealth Management(3)

$

10,163

 

 

$

9,058

 

 

12

%

 

$

10,163

 

 

$

9,058

 

 

12

%

Institutional Asset Management

 

 

1,634

 

 

NM

 

 

 

1,634

 

 

NM

Total Assets Under Management

$

10,163

 

 

$

10,692

 

 

(5

%)

 

$

10,163

 

 

$

10,692

 

 

(5

%)

 

 

 

 

 

 

 

 

 

 

 

 

1. For the three months ended December 31, 2020, includes a loss of $11.1 million resulting from the sale and wind-down of our businesses in Mexico, including $4.8 million related to the sale of our ECB business, as well as $6.3 million related to the release of cumulative foreign exchange losses. For the twelve months ended December 31, 2020, includes a loss of $9.7 million resulting from the sale and wind-down of our businesses in Mexico, including $3.4 million related to the sale of our ECB businesses, as well as $6.3 million related to the release of cumulative foreign exchange losses.

2. Assets Under Management reflect end of period amounts from our consolidated subsidiaries.

3. Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $76.4 million and $319.8 million as of December 31, 2020 and 2019, respectively.

Revenues

 

U.S. GAAP

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2020

 

December 31, 2019

 

%
Change

 

December 31, 2020

 

December 31, 2019

 

%
Change

 

(dollars in thousands)

Asset Management and Administration Fees:

 

 

 

 

 

 

 

 

 

 

 

Wealth Management

$

14,445

 

 

$

12,675

 

 

14

%

 

$

53,069

 

 

$

48,083

 

 

10

%

Institutional Asset Management

227

 

 

484

 

 

(53

%)

 

1,328

 

 

2,528

 

 

(47

%)

Total Asset Management and Administration Fees

$

14,672

 

 

$

13,159

 

 

11

%

 

$

54,397

 

 

$

50,611

 

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

Our historical Investment Management results include the following businesses, which were previously included in Institutional Asset Management above. These businesses were deconsolidated prior to December 31, 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.

Asset Management and Administration Fees of $14.7 million for the three months ended December 31, 2020 increased 11% compared to the fourth quarter of last year, principally driven by an increase in fees from Wealth Management clients, which increased 14% compared to the fourth quarter of last year, as associated AUM increased 12%.

Asset Management and Administration Fees of $54.4 million for the twelve months ended December 31, 2020 increased 7% compared to the twelve months ended December 31, 2019, principally driven by an increase in fees from Wealth Management clients, which increased 10% compared to the twelve months ended December 31, 2019, as associated AUM increased 12%.

Other Revenue, net, for the three months ended December 31, 2020 decreased versus the three months ended December 31, 2019, primarily driven by a loss of $11.1 million resulting from the sale and wind-down of our businesses in Mexico, partially offset by higher income from our legacy private equity investments during the three months ended December 31, 2020. Other Revenue, net, for the twelve months ended December 31, 2020 decreased versus the twelve months ended December 31, 2019, primarily driven by a loss of $9.7 million resulting from the sale and wind-down of our businesses in Mexico, and losses on our legacy private equity investments during the twelve months ended December 31, 2020.

Expenses

Investment Management's expenses for the three months ended December 31, 2020 were $14.0 million, a decrease of 9% compared to the fourth quarter of last year, due to decreases in Special Charges, Including Business Realignment Costs, and Non-Compensation Costs, partially offset by an increase in compensation costs. Investment Management's expenses for the twelve months ended December 31, 2020 were $50.8 million, a decrease of 2% compared to the twelve months ended December 31, 2019, due to decreases in Special Charges, Including Business Realignment Costs, and Non-Compensation Costs, partially offset by an increase in compensation costs.

Special Charges, Including Business Realignment Costs, for the three and twelve months ended December 31, 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-10 for further information and reconciliations of these metrics to our U.S. GAAP results.

Investment Banking

 

Adjusted

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands)

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees(1)

$

789,986

 

 

$

563,436

 

 

40

%

 

$

1,756,819

 

 

$

1,654,501

 

 

6

%

Underwriting Fees

95,009

 

 

28,253

 

 

236

%

 

276,191

 

 

89,681

 

 

208

%

Commissions and Related Fees

52,414

 

 

52,089

 

 

1

%

 

205,767

 

 

189,506

 

 

9

%

Other Revenue, net

11,532

 

 

7,154

 

 

61

%

 

19,422

 

 

31,940

 

 

(39

%)

Net Revenues

948,941

 

 

650,932

 

 

46

%

 

2,258,199

 

 

1,965,628

 

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

497,236

 

 

382,880

 

 

30

%

 

1,334,722

 

 

1,148,612

 

 

16

%

Non-Compensation Costs

82,380

 

 

93,612

 

 

(12

%)

 

302,820

 

 

336,865

 

 

(10

%)

Total Expenses

579,616

 

 

476,492

 

 

22

%

 

1,637,542

 

 

1,485,477

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

$

369,325

 

 

$

174,440

 

 

112

%

 

$

620,657

 

 

$

480,151

 

 

29

%

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio

52.4

%

 

58.8

%

 

 

 

59.1

%

 

58.4

%

 

 

Non-Compensation Ratio

8.7

%

 

14.4

%

 

 

 

13.4

%

 

17.1

%

 

 

Operating Margin

38.9

%

 

26.8

%

 

 

 

27.5

%

 

24.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of Fees from Advisory Client Transactions(2)

324

 

281

 

 

15

%

 

687

 

 

661

 

4

%

Investment Banking Fees of at Least $1 million from Advisory Client Transactions(2)

162

 

105

 

 

54

%

 

386

 

 

328

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

1. Advisory Fees on an Adjusted basis reflect the reclassification of earnings related to our equity method investment in Luminis of $0.4 million and $1.5 million for the three and twelve months ended December 31, 2020, respectively, and $0.2 million and $0.9 million for the three and twelve months ended December 31, 2019, respectively.

2. Includes Advisory and Underwriting Transactions.

Adjusted Revenues

During the three months ended December 31, 2020, fees from Advisory services on an Adjusted basis increased $226.6 million, or 40%, versus the three months ended December 31, 2019, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions. Underwriting Fees of $95.0 million for the three months ended December 31, 2020 increased $66.8 million, or 236%, versus the three months ended December 31, 2019, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions. We participated in 40 underwriting transactions during the three months ended December 31, 2020 (vs. 12 in Q4 2019); 33 as a bookrunner (vs. 12 in Q4 2019). Commissions and Related Fees for the three months ended December 31, 2020 increased 1% versus the three months ended December 31, 2019.

During the twelve months ended December 31, 2020, fees from Advisory services on an Adjusted basis increased $102.3 million, or 6%, versus the twelve months ended December 31, 2019, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions. Underwriting Fees of $276.2 million for the twelve months ended December 31, 2020 increased $186.5 million, or 208%, versus the twelve months ended December 31, 2019, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions. We participated in 118 underwriting transactions during the twelve months ended December 31, 2020 (vs. 71 in 2019); 85 as a bookrunner (vs. 53 in 2019). Commissions and Related Fees for the twelve months ended December 31, 2020 increased $16.3 million, or 9%, versus the twelve months ended December 31, 2019, as a result of elevated volatility during 2020.

Other Revenue, net, for the three months ended December 31, 2020 increased versus the three months ended December 31, 2019, primarily reflecting higher gains on the investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, as the market continued to improve during the quarter. Other Revenue, net, for the twelve months ended December 31, 2020 decreased versus the twelve months ended December 31, 2019, primarily reflecting lower interest income.

Adjusted Expenses

Adjusted compensation costs were $497.2 million for the three months ended December 31, 2020, an increase of 30% from the fourth quarter of last year. The Adjusted compensation ratio was 52.4% for the three months ended December 31, 2020, compared to 58.8% for the three months ended December 31, 2019. Adjusted compensation costs were $1.33 billion for the twelve months ended December 31, 2020, an increase of 16% compared to the twelve months ended December 31, 2019. The Adjusted compensation ratio was 59.1% for the twelve months ended December 31, 2020, compared to 58.4% for the twelve months ended December 31, 2019. The increase in the amount of Adjusted compensation recognized in the three and twelve months ended December 31, 2020 principally reflects higher levels of compensation expense related to higher revenues and higher amortization of prior period deferred compensation awards, partially offset by lower compensation expense related to senior new hires. 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 December 31, 2020 were $82.4 million, a decrease of 12% from the fourth quarter of last year. The decrease in Adjusted Non-Compensation Costs versus last year primarily reflects decreased travel and related expenses related to prolonged travel restrictions. The ratio of Adjusted Non-Compensation Costs to Adjusted Net Revenues for the three months ended December 31, 2020 of 8.7% decreased from 14.4% for the fourth quarter of last year. Adjusted Non-Compensation Costs for the twelve months ended December 31, 2020 were $302.8 million, a decrease of 10% from the twelve months ended December 31, 2019. The decrease in Non-Compensation Costs versus last year primarily reflects decreased travel and related expenses related to prolonged travel restrictions. The ratio of Adjusted Non-Compensation Costs to Adjusted Net Revenues for the twelve months ended December 31, 2020 of 13.4% decreased from 17.1% for the twelve months ended December 31, 2019.

Investment Management

 

Adjusted

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands)

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Asset Management and Administration Fees

$

20,143

 

 

$

16,769

 

 

20

%

 

$

67,249

 

 

$

60,691

 

 

11

%

Other Revenue, net

834

 

 

759

 

 

10

%

 

1,858

 

 

6,292

 

 

(70

%)

Net Revenues

20,977

 

 

17,528

 

 

20

%

 

69,107

 

 

66,983

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

10,503

 

 

8,603

 

 

22

%

 

36,550

 

 

34,182

 

 

7

%

Non-Compensation Costs

3,441

 

 

3,836

 

 

(10

%)

 

13,923

 

 

14,463

 

 

(4

%)

Total Expenses

13,944

 

 

12,439

 

 

12

%

 

50,473

 

 

48,645

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

$

7,033

 

 

$

5,089

 

 

38

%

 

$

18,634

 

 

$

18,338

 

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio

50.1

%

 

49.1

%

 

 

 

52.9

%

 

51.0

%

 

 

Non-Compensation Ratio

16.4

%

 

21.9

%

 

 

 

20.1

%

 

21.6

%

 

 

Operating Margin

33.5

%

 

29.0

%

 

 

 

27.0

%

 

27.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Under Management (in millions)(1)

 

 

 

 

 

 

 

 

 

 

 

Wealth Management(2)

$

10,163

 

 

$

9,058

 

 

12

%

 

$

10,163

 

 

$

9,058

 

 

12

%

Institutional Asset Management

 

 

1,634

 

 

NM

 

 

 

1,634

 

 

NM

Total Assets Under Management

$

10,163

 

 

$

10,692

 

 

(5

%)

 

$

10,163

 

 

$

10,692

 

 

(5

%)

 

 

 

 

 

 

 

 

 

 

 

 

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 $76.4 million and $319.8 million as of December 31, 2020 and 2019, respectively.

Adjusted Revenues

 

Adjusted

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

December 31,

2020

 

December 31,

2019

 

%
Change

 

(dollars in thousands)

Asset Management and Administration Fees:

 

 

 

 

 

 

 

 

 

 

 

Wealth Management

$

14,445

 

 

$

12,675

 

 

14

%

 

$

53,069

 

 

$

48,083

 

 

10

%

Institutional Asset Management

227

 

 

484

 

 

(53

%)

 

1,328

 

 

2,528

 

 

(47

%)

Equity in Earnings of Affiliates(1)

5,471

 

 

3,610

 

 

52

%

 

12,852

 

 

10,080

 

 

28

%

Total Asset Management and Administration Fees

$

20,143

 

 

$

16,769

 

 

20

%

 

$

67,249

 

 

$

60,691

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

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 prior to December 31, 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 $20.1 million for the three months ended December 31, 2020 increased 20% compared to the fourth quarter of last year, driven by an increase in fees from Wealth Management clients, which increased 14% compared to the fourth quarter of last year, as associated AUM increased 12%, as well as an increase in Equity in Earnings of Affiliates of 52%, primarily driven by higher income earned by ABS in the fourth quarter of 2020.

Adjusted Asset Management and Administration Fees of $67.2 million for the twelve months ended December 31, 2020 increased 11% compared to the twelve months ended December 31, 2019, principally driven by an increase in fees from Wealth Management clients, which increased 10% compared to the twelve months ended December 31, 2019, as associated AUM increased 12%, as well as an increase in Equity in Earnings of Affiliates of 28%, driven by higher income earned by ABS and Atalanta Sosnoff in 2020.

Other Revenue, net, for the three months ended December 31, 2020 increased 10% versus the three months ended December 31, 2019, primarily reflecting higher income from our legacy private equity investments during the three months ended December 31, 2020. Other Revenue, net, for the twelve months ended December 31, 2020, decreased 70% versus the twelve months ended December 31, 2019, primarily reflecting losses from our legacy private equity investments during the twelve months ended December 31, 2020.

Adjusted Expenses

Investment Management's Adjusted expenses for the three months ended December 31, 2020 were $13.9 million, an increase of 12% compared to the fourth quarter of last year, primarily due to an increase in compensation costs, partially offset by a decrease in Non-Compensation Costs. Investment Management's Adjusted expenses for the twelve months ended December 31, 2020 were $50.5 million, an increase of 4% compared to the twelve months ended December 31, 2019, primarily due to an increase in compensation costs, partially offset by a decrease in Non-Compensation Costs.

Liquidity

The Company continues to maintain a strong balance sheet, holding cash and cash equivalents of $829.6 million and investment securities of $1.1 billion at December 31, 2020. Current assets exceed current liabilities by $1.3 billion at December 31, 2020. Amounts due related to the Notes Payable were $376.5 million at December 31, 2020.

Deferred Compensation

During the twelve months ended December 31, 2020, the Company granted to certain employees approximately 1.9 million unvested RSUs. In June 2020, the Company's stockholders approved the Amended and Restated 2016 Evercore Inc. Stock Incentive Plan (the "Amended 2016 Plan"). The total shares available to be granted in the future under the Amended 2016 Plan was approximately 7.0 million as of December 31, 2020.

The Company recognized compensation expense related to our deferred compensation programs of $71.9 million and $304.3 million for the three and twelve months ended December 31, 2020, respectively, and $62.0 million and $275.2 million for the three and twelve months ended December 31, 2019, respectively.

As of December 31, 2020, the Company expects to pay an aggregate of $315.9 million related to our deferred cash compensation program at various dates through 2024. Amounts due pursuant to this program are expensed over the service period of the award and are reflected in Accrued Compensation and Benefits, a component of current liabilities.

During the first quarter of 2021, as part of the 2020 bonus awards, the Company will grant approximately $330 million of deferred compensation to certain employees in the form of restricted stock units and deferred cash awards. The proportion of this amount to be granted in the form of restricted stock units and deferred compensation, and the specific number of restricted stock units, will be determined prior to the grant date of such deferred compensation. These awards will generally vest over four years. It is the Company's intention to offset the dilution associated with restricted stock units through share repurchases and to hold investments to satisfy future settlement of deferred cash awards.

Capital Return Transactions

On February 2, 2021, the Board of Directors of Evercore declared a quarterly dividend of $0.61 per share to be paid on March 12, 2021 to common stockholders of record on February 26, 2021.

During the three months ended December 31, 2020, the Company repurchased approximately 36 thousand shares from employees for the net settlement of stock-based compensation awards at an average price per share of $86.04. During the twelve months ended December 31, 2020, the Company repurchased approximately 1.1 million shares from employees for the net settlement of stock-based compensation awards at an average price per share of $76.51, and approximately 0.9 million shares at an average price per share of $75.93 in open market transactions pursuant to the Company's share repurchase program. The aggregate approximately 1.9 million shares were acquired at an average price per share of $76.25.

Conference Call

Evercore will host a related conference call beginning at 8:00 a.m. Eastern Time, Wednesday, February 3, 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: 8631259. 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: 8631259. 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, 2019, 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 Twelve Months Ended December 31, 2020 and 2019

A-1

Adjusted:

 

Adjusted Results (Unaudited)

A-2

U.S. GAAP Reconciliation to Adjusted Results (Unaudited)

A-4

U.S. GAAP Segment Reconciliation to Adjusted Results for the Three and Twelve Months ended December 31, 2020 (Unaudited)

A-5

U.S. GAAP Segment Reconciliation to Adjusted Results for the Three and Twelve Months ended December 31, 2019 (Unaudited)

A-6

U.S. GAAP Segment Reconciliation to Consolidated Results (Unaudited)

A-7

Notes to Unaudited Condensed Consolidated Adjusted Financial Data

A-8

EVERCORE INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019

(dollars in thousands, except per share data)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

Advisory Fees

$

789,611

 

 

$

563,276

 

 

$

1,755,273

 

 

$

1,653,585

 

Underwriting Fees

95,009

 

 

28,253

 

 

276,191

 

 

89,681

 

Commissions and Related Fees

52,414

 

 

52,089

 

 

205,767

 

 

189,506

 

Asset Management and Administration Fees

14,672

 

 

13,159

 

 

54,397

 

 

50,611

 

Other Revenue, Including Interest and Investments(1)

(19,356)

 

 

9,568

 

 

(6,309)

 

 

45,454

 

Total Revenues

932,350

 

 

666,345

 

 

2,285,319

 

 

2,028,837

 

Interest Expense(2)

5,042

 

 

6,218

 

 

21,414

 

 

20,139

 

Net Revenues

927,308

 

 

660,127

 

 

2,263,905

 

 

2,008,698

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Employee Compensation and Benefits

507,739

 

 

397,320

 

 

1,372,339

 

 

1,200,977

 

Occupancy and Equipment Rental

19,789

 

 

17,060

 

 

74,107

 

 

68,285

 

Professional Fees

27,718

 

 

20,939

 

 

80,883

 

 

81,851

 

Travel and Related Expenses

2,798

 

 

20,745

 

 

25,887

 

 

75,395

 

Communications and Information Services

13,570

 

 

12,542

 

 

54,274

 

 

47,315

 

Depreciation and Amortization

6,185

 

 

7,900

 

 

26,245

 

 

31,023

 

Execution, Clearing and Custody Fees

3,362

 

 

3,484

 

 

13,592

 

 

12,967

 

Special Charges, Including Business Realignment Costs

7,031

 

 

7,054

 

 

46,645

 

 

10,141

 

Acquisition and Transition Costs

2

 

 

525

 

 

562

 

 

1,013

 

Other Operating Expenses

12,399

 

 

15,835

 

 

42,938

 

 

42,020

 

Total Expenses

600,593

 

 

503,404

 

 

1,737,472

 

 

1,570,987

 

 

 

 

 

 

 

 

 

Income Before Income from Equity Method Investments and Income Taxes

326,715

 

 

156,723

 

 

526,433

 

 

437,711

 

Income from Equity Method Investments

5,846

 

 

3,770

 

 

14,398

 

 

10,996

 

Income Before Income Taxes

332,561

 

 

160,493

 

 

540,831

 

 

448,707

 

Provision for Income Taxes

77,109

 

 

34,793

 

 

128,151

 

 

95,046

 

Net Income

255,452

 

 

125,700

 

 

412,680

 

 

353,661

 

Net Income Attributable to Noncontrolling Interest

35,075

 

 

20,516

 

 

62,106

 

 

56,225

 

Net Income Attributable to Evercore Inc.

$

220,377

 

 

$

105,184

 

 

$

350,574

 

 

$

297,436

 

 

 

 

 

 

 

 

 

Net Income Attributable to Evercore Inc. Common Shareholders

$

220,377

 

 

$

105,184

 

 

$

350,574

 

 

$

297,436

 

 

 

 

 

 

 

 

 

Weighted Average Shares of Class A Common Stock Outstanding:

 

 

 

 

 

 

 

Basic

40,845

 

 

39,247

 

 

40,553

 

 

39,994

 

Diluted

43,892

 

 

42,472

 

 

42,623

 

 

43,194

 

 

 

 

 

 

 

 

 

Net Income Per Share Attributable to Evercore Inc. Common Shareholders:

 

 

 

 

 

 

 

Basic

$

5.40

 

 

$

2.68

 

 

$

8.64

 

 

$

7.44

 

Diluted

$

5.02

 

 

$

2.48

 

 

$

8.22

 

 

$

6.89

 

 

 

 

 

 

 

 

 

1. For the three months ended December 31, 2020, includes a loss of $32.2 million resulting from the sale and wind-down of our businesses in Mexico, including $4.8 million related to the sale of our ECB business, as well as $27.4 million related to the release of cumulative foreign exchange losses. For the twelve months ended December 31, 2020, includes a loss of $30.8 million resulting from the sale and wind-down of our businesses in Mexico, including $3.4 million related to the sale of our ECB businesses, as well as $27.4 million related to the release of cumulative foreign exchange losses.

2. 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 vested and unvested Class A Evercore LP Units, as well as Acquisition Related Class E and J Evercore LP Units and Unvested Restricted Stock Units granted to ISI employees, into Class A shares. Evercore believes that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore's results across several periods and facilitate an understanding of Evercore's operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. These Adjusted amounts are allocated to the Company's two business segments: Investment Banking and Investment Management. The differences between the Adjusted and U.S. GAAP results are as follows:

  1. Assumed Vesting of Evercore LP Units and Exchange into Class A Shares. The Company incurred expenses, in Employee Compensation and Benefits, resulting from the vesting of Class E and Class J Evercore LP Units issued in conjunction with the acquisition of ISI. All of the remaining Class J Evercore LP Units vested and were converted to Class E Evercore LP Units in 2020. The Adjusted results assume these LP Units have vested and have been exchanged for Class A shares. Accordingly, any expense associated with these units, and related awards, 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 vested and unvested Class A and E Evercore LP Units and IPO related restricted stock unit awards into Class A shares.
  2. Adjustments Associated with Business Combinations and Divestitures. The following charges resulting from business combinations and divestitures have been excluded from the Adjusted results because the Company's Management believes that operating performance is more comparable across periods excluding the effects of these acquisition-related charges:
    1. Amortization of Intangible Assets and Other Purchase Accounting-related Amortization. Amortization of intangible assets and other purchase accounting-related amortization from the acquisition of ISI and certain other acquisitions.
    2. Acquisition and Transition Costs. Primarily professional fees incurred and costs related to transitioning acquisitions or divestitures.
    3. 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.
    4. 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 are excluded from the Adjusted presentation.
  3. 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 previously announced expansion of our headquarters in New York and our business realignment initiatives, as well as charges related to the impairment of assets resulting from the wind-down of our Mexico business. Expenses during 2019 that are excluded from the Adjusted presentation relate to the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York, the impairment of goodwill in the Institutional Asset Management reporting unit and separation and transition benefits for certain employees terminated as a result of the Company's review of its operations.

  4. Income Taxes. Evercore is organized as a series of Limited Liability Companies, Partnerships, C-Corporations and a Public Corporation and therefore, not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted earnings to assume that the Company is subject to the statutory tax rates of a C-Corporation under a conventional corporate tax structure in the U.S. at the prevailing corporate rates and that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis. This assumption is consistent with the assumption that certain Evercore LP Units are vested and exchanged into Class A shares, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.

  5. Presentation of Interest Expense. The Adjusted results present interest expense on short-term repurchase agreements, within the Investment Management segment, in Other Revenues, 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. In addition, Adjusted Investment Banking and Investment Management Operating Income are presented before interest expense on debt, which is included in interest expense on a U.S. GAAP basis.

  6. Presentation of Income from Equity Method Investments. The Adjusted results present Income from Equity Method Investments within Revenue as the Company's Management believes it is a more meaningful presentation.

EVERCORE INC.

U.S. GAAP RECONCILIATION TO ADJUSTED RESULTS

(dollars in thousands, except per share data)

(UNAUDITED)

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

December 31,

2020

 

December 31,

2019

Net Revenues - U.S. GAAP

$

927,308

 

 

$

660,127

 

 

$

2,263,905

 

 

$

2,008,698

 

Income from Equity Method Investments (1)

5,846

 

 

3,770

 

 

14,398

 

 

10,996

 

Interest Expense on Debt (2)

4,603

 

 

4,563

 

 

18,197

 

 

12,917

 

Mexico Transition - Net Loss on Sale of ECB Businesses (3)

4,796

 

 

 

 

3,441

 

 

 

Mexico Transition - Release of Foreign Exchange Losses (4)

27,365

 

 

 

 

27,365

 

 

 

Net Revenues - Adjusted

$

969,918

 

 

$

668,460

 

 

$

2,327,306

 

 

$

2,032,611

 

 

 

 

 

 

 

 

 

Compensation Expense - U.S. GAAP

$

507,739

 

 

$

397,320

 

 

$

1,372,339

 

 

$

1,200,977

 

Amortization of LP Units and Certain Other Awards (5)

 

 

(5,837)

 

 

(1,067)

 

 

(18,183)

 

Compensation Expense - Adjusted

$

507,739

 

 

$

391,483

 

 

$

1,371,272

 

 

$

1,182,794

 

 

 

 

 

 

 

 

 

Operating Income - U.S. GAAP

$

326,715

 

 

$

156,723

 

 

$

526,433

 

 

$

437,711

 

Income from Equity Method Investments (1)

5,846

 

 

3,770

 

 

14,398

 

 

10,996

 

Pre-Tax Income - U.S. GAAP

332,561

 

 

160,493

 

 

540,831

 

 

448,707

 

Mexico Transition - Net Loss on Sale of ECB Businesses (3)

4,796

 

 

 

 

3,441

 

 

 

Mexico Transition - Release of Foreign Exchange Losses (4)

27,365

 

 

 

 

27,365

 

 

 

Amortization of LP Units and Certain Other Awards (5)

 

 

5,837

 

 

1,067

 

 

18,183

 

Special Charges, Including Business Realignment Costs (6)

7,031

 

 

7,054

 

 

46,645

 

 

10,141

 

Intangible Asset Amortization / Other Purchase Accounting-related Amortization (7a)

 

 

1,057

 

 

1,183

 

 

7,528

 

Acquisition and Transition Costs (7b)

2

 

 

525

 

 

562

 

 

1,013

 

Pre-Tax Income - Adjusted

371,755

 

 

174,966

 

 

621,094

 

 

485,572

 

Interest Expense on Debt (2)

4,603

 

 

4,563

 

 

18,197

 

 

12,917

 

Operating Income - Adjusted

$

376,358

 

 

$

179,529

 

 

$

639,291

 

 

$

498,489

 

 

 

 

 

 

 

 

 

Provision for Income Taxes - U.S. GAAP

$

77,109

 

 

$

34,793

 

 

$

128,151

 

 

$

95,046

 

Income Taxes (8)

15,729

 

 

9,172

 

 

29,731

 

 

13,727

 

Provision for Income Taxes - Adjusted

$

92,838

 

 

$

43,965

 

 

$

157,882

 

 

$

108,773

 

 

 

 

 

 

 

 

 

Net Income Attributable to Evercore Inc. - U.S. GAAP

$

220,377

 

 

$

105,184

 

 

$

350,574

 

 

$

297,436

 

Mexico Transition - Net Loss on Sale of ECB Businesses (3)

4,796

 

 

 

 

3,441

 

 

 

Mexico Transition - Release of Foreign Exchange Losses (4)

27,365

 

 

 

 

27,365

 

 

 

Amortization of LP Units and Certain Other Awards (5)

 

 

5,837

 

 

1,067

 

 

18,183

 

Special Charges, Including Business Realignment Costs (6)

7,031

 

 

7,054

 

 

46,645

 

 

10,141

 

Intangible Asset Amortization / Other Purchase Accounting-related Amortization (7a)

 

 

1,057

 

 

1,183

 

 

7,528

 

Acquisition and Transition Costs (7b)

2

 

 

525

 

 

562

 

 

1,013

 

Income Taxes (8)

(15,729)

 

 

(9,172)

 

 

(29,731)

 

 

(13,727)

 

Noncontrolling Interest (9)

33,540

 

 

19,646

 

 

58,489

 

 

52,726

 

Net Income Attributable to Evercore Inc. - Adjusted

$

277,382

 

 

$

130,131

 

 

$

459,595

 

 

$

373,300

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding - U.S. GAAP

43,892

 

 

42,472

 

 

42,623

 

 

43,194

 

LP Units (10)

5,021

 

 

5,302

 

 

5,126

 

 

5,254

 

Unvested Restricted Stock Units - Event Based (10)

12

 

 

12

 

 

12

 

 

12

 

Diluted Shares Outstanding - Adjusted

48,925

 

 

47,786

 

 

47,761

 

 

48,460

 

 

 

 

 

 

 

 

 

Key Metrics: (a)

 

 

 

 

 

 

 

Diluted Earnings Per Share - U.S. GAAP

$

5.02

 

 

$

2.48

 

 

$

8.22

 

 

$

6.89

 

Diluted Earnings Per Share - Adjusted

$

5.67

 

 

$

2.72

 

 

$

9.62

 

 

$

7.70

 

 

 

 

 

 

 

 

 

Compensation Ratio - U.S. GAAP

54.8

%

 

60.2

%

 

60.6

%

 

59.8

%

Compensation Ratio - Adjusted

52.3

%

 

58.6

%

 

58.9

%

 

58.2

%

 

 

 

 

 

 

 

 

Operating Margin - U.S. GAAP

35.2

%

 

23.7

%

 

23.3

%

 

21.8

%

Operating Margin - Adjusted

38.8

%

 

26.9

%

 

27.5

%

 

24.5

%

 

 

 

 

 

 

 

 

Effective Tax Rate - U.S. GAAP

23.2

%

 

21.7

%

 

23.7

%

 

21.2

%

Effective Tax Rate - Adjusted

25.0

%

 

25.1

%

 

25.4

%

 

22.4

%

 

 

 

 

 

 

 

 

(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 TWELVE MONTHS ENDED DECEMBER 31, 2020

(dollars in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Banking Segment

 

Three Months Ended December 31, 2020

 

Twelve Months Ended December 31, 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

$

789,611

 

 

$

375

 

(1)

$

789,986

 

 

$

1,755,273

 

 

$

1,546

 

(1)

$

1,756,819

 

Underwriting Fees

95,009

 

 

 

 

95,009

 

 

276,191

 

 

 

 

276,191

 

Commissions and Related Fees

52,414

 

 

 

 

52,414

 

 

205,767

 

 

 

 

205,767

 

Other Revenue, net

(14,141)

 

 

25,673

 

(2)(4)

11,532

 

 

(19,845)

 

 

39,267

 

(2)(4)

19,422

 

Net Revenues

922,893

 

 

26,048

 

 

948,941

 

 

2,217,386

 

 

40,813

 

 

2,258,199

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

497,236

 

 

 

 

497,236

 

 

1,335,789

 

 

(1,067)

 

(5)

1,334,722

 

Non-Compensation Costs

82,382

 

 

(2)

 

(7)

82,380

 

 

304,265

 

 

(1,445)

 

(7)

302,820

 

Special Charges, Including Business Realignment Costs

7,018

 

 

(7,018)

 

(6)

 

 

46,600

 

 

(46,600)

 

(6)

 

Total Expenses

586,636

 

 

(7,020)

 

 

579,616

 

 

1,686,654

 

 

(49,112)

 

 

1,637,542

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (a)

$

336,257

 

 

$

33,068

 

 

$

369,325

 

 

$

530,732

 

 

$

89,925

 

 

$

620,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio (b)

53.9

%

 

 

 

52.4

%

 

60.2

%

 

 

 

59.1

%

Operating Margin (b)

36.4

%

 

 

 

38.9

%

 

23.9

%

 

 

 

27.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management Segment

 

Three Months Ended December 31, 2020

 

Twelve Months Ended December 31, 2020

 

U.S. GAAP Basis

 

Adjustments

 

Non-GAAP Adjusted Basis

 

U.S. GAAP Basis

 

Adjustments

 

Non-GAAP Adjusted Basis

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Asset Management and Administration Fees

$

14,672

 

 

$

5,471

 

(1)

$

20,143

 

 

$

54,397

 

 

$

12,852

 

(1)

$

67,249

 

Other Revenue, net

(10,257)

 

 

11,091

 

(3)(4)

834

 

 

(7,878)

 

 

9,736

 

(3)(4)

1,858

 

Net Revenues

4,415

 

 

16,562

 

 

20,977

 

 

46,519

 

 

22,588

 

 

69,107

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

10,503

 

 

 

 

10,503

 

 

36,550

 

 

 

 

36,550

 

Non-Compensation Costs

3,441

 

 

 

 

3,441

 

 

14,223

 

 

(300)

 

(7)

13,923

 

Special Charges, Including Business Realignment Costs

13

 

 

(13)

 

(6)

 

 

45

 

 

(45)

 

(6)

 

Total Expenses

13,957

 

 

(13)

 

 

13,944

 

 

50,818

 

 

(345)

 

 

50,473

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss) (a)

$

(9,542)

 

 

$

16,575

 

 

$

7,033

 

 

$

(4,299)

 

 

$

22,933

 

 

$

18,634

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio (b)

237.9

%

 

 

 

50.1

%

 

78.6

%

 

 

 

52.9

%

Operating Margin (b)

(216.1

%)

 

 

 

33.5

%

 

(9.2

%)

 

 

 

27.0

%

 

 

 

 

 

 

 

 

 

 

 

 

(a) Operating Income (Loss) for U.S. GAAP excludes Income (Loss) from Equity Method Investments.

(b) Reconciliations of the key metrics from U.S. GAAP to Adjusted results are a derivative of the reconciliations of their components above.

EVERCORE INC.

U.S. GAAP SEGMENT RECONCILIATION TO ADJUSTED RESULTS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019

(dollars in thousands)

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Banking Segment

 

Three Months Ended December 31, 2019

 

Twelve Months Ended December 31, 2019

 

U.S. GAAP Basis

 

Adjustments

 

Non-GAAP Adjusted Basis

 

U.S. GAAP Basis

 

Adjustments

 

Non-GAAP Adjusted Basis

Net Revenues:

 

 

 

 

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees

$

563,276

 

 

$

160

 

(1)

$

563,436

 

 

$

1,653,585

 

 

$

916

 

(1)

$

1,654,501

 

Underwriting Fees

28,253

 

 

 

 

28,253

 

 

89,681

 

 

 

 

89,681

 

Commissions and Related Fees

52,089

 

 

 

 

52,089

 

 

189,506

 

 

 

 

189,506

 

Other Revenue, net

2,591

 

 

4,563

 

(2)

7,154

 

 

19,023

 

 

12,917

 

(2)

31,940

 

Net Revenues

646,209

 

 

4,723

 

 

650,932

 

 

1,951,795

 

 

13,833

 

 

1,965,628

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

388,717

 

 

(5,837)

 

(5)

382,880

 

 

1,166,795

 

 

(18,183)

 

(5)

1,148,612

 

Non-Compensation Costs

95,194

 

 

(1,582)

 

(7)

93,612

 

 

345,098

 

 

(8,233)

 

(7)

336,865

 

Special Charges, Including Business Realignment Costs

4,115

 

 

(4,115)

 

(6)

 

 

7,202

 

 

(7,202)

 

(6)

 

Total Expenses

488,026

 

 

(11,534)

 

 

476,492

 

 

1,519,095

 

 

(33,618)

 

 

1,485,477

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (a)

$

158,183

 

 

$

16,257

 

 

$

174,440

 

 

$

432,700

 

 

$

47,451

 

 

$

480,151

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio (b)

60.2

%

 

 

 

58.8

%

 

59.8

%

 

 

 

58.4

%

Operating Margin (b)

24.5

%

 

 

 

26.8

%

 

22.2

%

 

 

 

24.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management Segment

 

Three Months Ended December 31, 2019

 

Twelve Months Ended December 31, 2019

 

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

$

13,159

 

 

$

3,610

 

(1)

$

16,769

 

 

$

50,611

 

 

$

10,080

 

(1)

$

60,691

 

Other Revenue, net

759

 

 

 

 

759

 

 

6,292

 

 

 

 

6,292

 

Net Revenues

13,918

 

 

3,610

 

 

17,528

 

 

56,903

 

 

10,080

 

 

66,983

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Employee Compensation and Benefits

8,603

 

 

 

 

8,603

 

 

34,182

 

 

 

 

34,182

 

Non-Compensation Costs

3,836

 

 

 

 

3,836

 

 

14,771

 

 

(308)

 

(7)

14,463

 

Special Charges, Including Business Realignment Costs

2,939

 

 

(2,939)

 

(6)

 

 

2,939

 

 

(2,939)

 

(6)

 

Total Expenses

15,378

 

 

(2,939)

 

 

12,439

 

 

51,892

 

 

(3,247)

 

 

48,645

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss) (a)

$

(1,460)

 

 

$

6,549

 

 

$

5,089

 

 

$

5,011

 

 

$

13,327

 

 

$

18,338

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Ratio (b)

61.8

%

 

 

 

49.1

%

 

60.1

%

 

 

 

51.0

%

Operating Margin (b)

(10.5

%)

 

 

 

29.0

%

 

8.8

%

 

 

 

27.4

%

 

 

 

 

 

 

 

 

 

 

 

 

(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 December 31,

 

Twelve Months Ended December 31,

 

2020

 

2019

 

2020

 

2019

Investment Banking

 

 

 

 

 

 

 

Net Revenues:

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

Advisory Fees

$

789,611

 

 

$

563,276

 

 

$

1,755,273

 

 

$

1,653,585

 

Underwriting Fees

95,009

 

 

28,253

 

 

276,191

 

 

89,681

 

Commissions and Related Fees

52,414

 

 

52,089

 

 

205,767

 

 

189,506

 

Other Revenue, net (a)

(14,141)

 

 

2,591

 

 

(19,845)

 

 

19,023

 

Net Revenues

922,893

 

 

646,209

 

 

2,217,386

 

 

1,951,795

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Employee Compensation and Benefits

497,236

 

 

388,717

 

 

1,335,789

 

 

1,166,795

 

Non-Compensation Costs

82,382

 

 

95,194

 

 

304,265

 

 

345,098

 

Special Charges, Including Business Realignment Costs

7,018

 

 

4,115

 

 

46,600

 

 

7,202

 

Total Expenses

586,636

 

 

488,026

 

 

1,686,654

 

 

1,519,095

 

 

 

 

 

 

 

 

 

Operating Income (c)

$

336,257

 

 

$

158,183

 

 

$

530,732

 

 

$

432,700

 

 

 

 

 

 

 

 

 

Investment Management

 

 

 

 

 

 

 

Net Revenues:

 

 

 

 

 

 

 

Asset Management and Administration Fees

$

14,672

 

 

$

13,159

 

 

$

54,397

 

 

$

50,611

 

Other Revenue, net (b)

(10,257)

 

 

759

 

 

(7,878)

 

 

6,292

 

Net Revenues

4,415

 

 

13,918

 

 

46,519

 

 

56,903

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Employee Compensation and Benefits

10,503

 

 

8,603

 

 

36,550

 

 

34,182

 

Non-Compensation Costs

3,441

 

 

3,836

 

 

14,223

 

 

14,771

 

Special Charges, Including Business Realignment Costs

13

 

 

2,939

 

 

45

 

 

2,939

 

Total Expenses

13,957

 

 

15,378

 

 

50,818

 

 

51,892

 

 

 

 

 

 

 

 

 

Operating Income (Loss) (c)

$

(9,542)

 

 

$

(1,460)

 

 

$

(4,299)

 

 

$

5,011

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

Net Revenues:

 

 

 

 

 

 

 

Investment Banking:

 

 

 

 

 

 

 

Advisory Fees

$

789,611

 

 

$

563,276

 

 

$

1,755,273

 

 

$

1,653,585

 

Underwriting Fees

95,009

 

 

28,253

 

 

276,191

 

 

89,681

 

Commissions and Related Fees

52,414

 

 

52,089

 

 

205,767

 

 

189,506

 

Asset Management and Administration Fees

14,672

 

 

13,159

 

 

54,397

 

 

50,611

 

Other Revenue, net (a)(b)

(24,398)

 

 

3,350

 

 

(27,723)

 

 

25,315

 

Net Revenues

927,308

 

 

660,127

 

 

2,263,905

 

 

2,008,698

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Employee Compensation and Benefits

507,739

 

 

397,320

 

 

1,372,339

 

 

1,200,977

 

Non-Compensation Costs

85,823

 

 

99,030

 

 

318,488

 

 

359,869

 

Special Charges, Including Business Realignment Costs

7,031

 

 

7,054

 

 

46,645

 

 

10,141

 

Total Expenses

600,593

 

 

503,404

 

 

1,737,472

 

 

1,570,987

 

 

 

 

 

 

 

 

 

Operating Income (c)

$

326,715

 

 

$

156,723

 

 

$

526,433

 

 

$

437,711

 

 

 

 

 

 

 

 

 

(a) For the three and twelve months ended December 31, 2020, includes a loss of $21.1 million resulting from the sale and wind-down of our businesses in Mexico, related to the release of cumulative foreign exchange losses.

(b) For the three months ended December 31, 2020, includes a loss of $11.1 million resulting from the sale and wind-down of our businesses in Mexico, including $4.8 million related to the sale of our ECB business, as well as $6.3 million related to the release of cumulative foreign exchange losses. For the twelve months ended December 31, 2020, includes a loss of $9.7 million resulting from the sale and wind-down of our businesses in Mexico, including $3.4 million related to the sale of our ECB businesses, as well as $6.3 million related to the release of cumulative foreign exchange losses.

(c) 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 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.

(4) Release of cumulative foreign exchange losses in the fourth quarter of 2020 resulting from the sale and wind-down of our businesses in Mexico are excluded from the Adjusted presentation.

(5) Expenses incurred from the assumed vesting of Class J Evercore LP Units issued in conjunction with the acquisition of ISI are excluded from the Adjusted presentation.

(6) 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 previously announced expansion of our headquarters in New York and our business realignment initiatives, as well as charges related to the impairment of assets resulting from the wind-down of our Mexico business. Expenses during 2019 that are excluded from the Adjusted presentation relate to the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York, the impairment of goodwill in the Institutional Asset Management reporting unit and separation and transition benefits for certain employees terminated as a result of the Company's review of its operations.

(7) Non-Compensation Costs on an Adjusted basis reflect the following adjustments:

 

Three Months Ended December 31, 2020

 

U.S. GAAP

 

Adjustments

 

Adjusted

 

(dollars in thousands)

Occupancy and Equipment Rental

$

19,789

 

 

$

 

 

$

19,789

 

Professional Fees

27,718

 

 

 

 

27,718

 

Travel and Related Expenses

2,798

 

 

 

 

2,798

 

Communications and Information Services

13,570

 

 

 

 

13,570

 

Depreciation and Amortization

6,185

 

 

 

 

6,185

 

Execution, Clearing and Custody Fees

3,362

 

 

 

 

3,362

 

Acquisition and Transition Costs

2

 

 

(2)

 

(7b)

 

Other Operating Expenses

12,399

 

 

 

 

12,399

 

Total Non-Compensation Costs

$

85,823

 

 

$

(2)

 

 

$

85,821

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

U.S. GAAP

 

Adjustments

 

Adjusted

 

(dollars in thousands)

Occupancy and Equipment Rental

$

17,060

 

 

$

 

 

$

17,060

 

Professional Fees

20,939

 

 

 

 

20,939

 

Travel and Related Expenses

20,745

 

 

 

 

20,745

 

Communications and Information Services

12,542

 

 

 

 

12,542

 

Depreciation and Amortization

7,900

 

 

(1,057)

 

(7a)

6,843

 

Execution, Clearing and Custody Fees

3,484

 

 

 

 

3,484

 

Acquisition and Transition Costs

525

 

 

(525)

 

(7b)

 

Other Operating Expenses

15,835

 

 

 

 

15,835

 

Total Non-Compensation Costs

$

99,030

 

 

$

(1,582)

 

 

$

97,448

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2020

 

U.S. GAAP

 

Adjustments

 

Adjusted

 

(dollars in thousands)

Occupancy and Equipment Rental

$

74,107

 

 

$

 

 

$

74,107

 

Professional Fees

80,883

 

 

 

 

80,883

 

Travel and Related Expenses

25,887

 

 

 

 

25,887

 

Communications and Information Services

54,274

 

 

 

 

54,274

 

Depreciation and Amortization

26,245

 

 

(1,183)

 

(7a)

25,062

 

Execution, Clearing and Custody Fees

13,592

 

 

 

 

13,592

 

Acquisition and Transition Costs

562

 

 

(562)

 

(7b)

 

Other Operating Expenses

42,938

 

 

 

 

42,938

 

Total Non-Compensation Costs

$

318,488

 

 

$

(1,745)

 

 

$

316,743

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2019

 

U.S. GAAP

 

Adjustments

 

Adjusted

 

(dollars in thousands)

Occupancy and Equipment Rental

$

68,285

 

 

$

 

 

$

68,285

 

Professional Fees

81,851

 

 

 

 

81,851

 

Travel and Related Expenses

75,395

 

 

 

 

75,395

 

Communications and Information Services

47,315

 

 

 

 

47,315

 

Depreciation and Amortization

31,023

 

 

(7,528)

 

(7a)

23,495

 

Execution, Clearing and Custody Fees

12,967

 

 

 

 

12,967

 

Acquisition and Transition Costs

1,013

 

 

(1,013)

 

(7b)

 

Other Operating Expenses

42,020

 

 

 

 

42,020

 

Total Non-Compensation Costs

$

359,869

 

 

$

(8,541)

 

 

$

351,328

 

(7a) The exclusion from the Adjusted presentation of expenses associated with amortization of intangible assets and other purchase accounting-related amortization from the acquisition of ISI and certain other acquisitions.

(7b) Primarily the exclusion from the Adjusted presentation of professional fees incurred and costs related to transitioning acquisitions or divestitures.

(8) Evercore is organized as a series of Limited Liability Companies, Partnerships, C-Corporations and a Public Corporation and therefore, not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted earnings to assume that the Company is subject to the statutory tax rates of a C-Corporation under a conventional corporate tax structure in the U.S. at the prevailing corporate rates and that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis. This assumption is consistent with the assumption that certain Evercore LP Units are vested and exchanged into Class A shares, as the assumed exchange would change the tax structure of the Company.

(9) Reflects an adjustment to eliminate noncontrolling interest related to all Evercore LP partnership units which are assumed to be converted to Class A common stock in the Adjusted presentation.

(10) Assumes the vesting, and exchange into Class A shares, of Class A and E 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.

Investor Contact:
Hallie Miller
Head of Investor Relations, Evercore
917-386-7856

Media Contact:
Dana Gorman
Abernathy MacGregor, for Evercore
212-371-5999

Source: Evercore Inc.