Release Details

NEW YORK, Feb. 3, 2016 /PRNewswire/ --

Highlights

• Full Year Financial Summary
  • Record U.S. GAAP Net Revenues of $1.223 billion, up 34% compared to 2014
  • U.S. GAAP Net Income Attributable to Evercore Partners Inc. of $42.9 million, down 51% compared to 2014, or $0.98 per share, down 53% compared to 2014
  • Record Adjusted Pro Forma Net Revenues of $1.216 billion, up 33% compared to 2014
  • Record Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. of $171 million, up 38% compared to 2014, or $3.23 per share, up 25% compared to 2014
• Fourth Quarter Financial Summary
  • Record U.S. GAAP Net Revenues of $408 million, up 27% compared to Q4 2014
  • U.S. GAAP Net Income Attributable to Evercore Partners Inc. of $20.6 million, down 26% compared to Q4 2014, or $0.45 per share, down 32% compared to Q4 2014
  • Record Adjusted Pro Forma Net Revenues of $404 million, up 26% compared to Q4 2014
  • Record Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. of $65 million, up 41% compared to Q4 2014, or $1.22 per share, up 36% compared to Q4 2014
• Investment Banking
  • Announced two Advisory Senior Managing Directors in the first quarter; Bill Anderson, who will head the Firm's Strategic Shareholder Advisory Business, and Jim Renwick, who will lead the European Equity Capital Markets Advisory capability.
  • Advising clients on significant transactions globally:
    • Advised DuPont on its successful defense in the largest proxy contest ever taken to a vote
    • Advising on two of the five largest M&A transactions announced in the US in 2015: DuPont on its $68 billion merger of equals with The Dow Chemical Company and EMC on its $67 billion sale to Dell and its owners
    • Advising Shire plc on its $34.9 billion acquisition of Baxalta Incorporated, as well as its $6.2 billion acquisition of Dyax Corp
    • Advising the Board of Directors of Targa Resources Corp. on its acquisition of Targa Resources Partners LP
    • Advising Cable & Wireless Communications Plc on its sale to Liberty Global plc
    • Advised Chesapeake Energy Corporation on its $3.9 billion Senior Notes exchange offer
• Completed the first full year of operations of Evercore ISI, growing secondary and underwriting revenues and delivering full year operating margins of 19.0%
• Investment Management
  • Completed the restructuring of our investment in Atalanta Sosnoff. After this restructuring, Assets Under Management in consolidated businesses were $8.2 billion
• Returned $334.5 million of capital to shareholders during the year through dividends and repurchases, including $146.0 million in the fourth quarter. Quarterly dividend of $0.31 per share

Evercore Partners Inc. (NYSE: EVR) today announced that its U.S. GAAP Net Revenues were a record $1.223 billion for the twelve months ended December 31, 2015, an increase of 34% compared to $915.9 million for the twelve months ended December 31, 2014. U.S. GAAP Net Revenues were a record $408.2 million for the quarter ended December 31, 2015, compared to $321.9 million for the quarter ended December 31, 2014. U.S. GAAP Net Income Attributable to Evercore Partners Inc. for the twelve months ended December 31, 2015 was $42.9 million, or $0.98 per share, compared to $86.9 million, or $2.08 per share, for the same period last year. U.S. GAAP Net Income Attributable to Evercore Partners Inc. for the fourth quarter was $20.6 million, or $0.45 per share, compared to $27.7 million, or $0.66 per share, a year ago.  

Adjusted Pro Forma Net Revenues were a record $1.216 billion for the twelve months ended December 31, 2015, an increase of 33% compared to $911.9 million for the twelve months ended December 31, 2014. Adjusted Pro Forma Net Revenues were a record $404.1 million for the quarter ended December 31, 2015, an increase of 26% compared to $320.9 million for the quarter ended December 31, 2014. Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. was a record $171.3 million for the twelve months ended December 31, 2015, up 38% compared to $124.3 million for the same period last year. Adjusted Pro Forma earnings per share was $3.23 for the twelve months ended December 31, 2015, up 25% in comparison to the prior year period. Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. was a record $64.7 million for the fourth quarter, up 41% compared to $45.9 million a year ago. Adjusted Pro Forma earnings per share was $1.22 for the quarter, up 36% in comparison to the prior year period.  

The U.S. GAAP trailing twelve-month compensation ratio of 64.4% compares to 60.0% for the same period in 2014. The U.S. GAAP compensation ratio for the three months ended December 31, 2015 was 62.3%, compared to 59.7% for the quarter ended December 31, 2014. The Adjusted Pro Forma compensation ratio for the trailing twelve months was 57.8%, compared to 59.0% for the same period in 2014. The Adjusted Pro Forma compensation ratio for the current quarter was 58.6%, compared to 58.3% for the quarter ended December 31, 2014. 

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.

"Evercore's fourth quarter and full year 2015 results reflect solid performance by our Investment Banking business. We delivered our seventh consecutive year of significant growth in revenues and earnings and returned more than $334 million to our shareholders," said Ralph Schlosstein, President and Chief Executive Officer. "Our advisory business performed strongly in key industry sectors, including Energy, Healthcare, Financial Institutions and TMT, with our European team delivering particularly strong growth. Our equity capital markets business grew revenues by more than 40%, serving as a bookrunner in a number of significant transactions. And our Evercore ISI team successfully executed our integration plan, growing revenues in the second half and sustaining that momentum in the early days of 2016. Our results are a testament to the investments we have made in the firm and our people, and our expanded capabilities to serve our growing client base around the globe."

"This past year was a strong one for M&A volume around the world. And, Evercore advised on a series of the largest and most prominent transactions. Overall, our advisory business enjoyed the strongest results in the Firm's history," said Roger C. Altman, Executive Chairman.

 

Consolidated U.S. GAAP and Adjusted Pro Forma Selected Financial Data (Unaudited)

 

 

 

 

 

Throughout the discussion of Evercore's business segments, information is presented on an Adjusted Pro Forma basis, which is an unaudited non-generally accepted accounting principles ("non-GAAP") measure. Adjusted Pro Forma 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 unvested Evercore LP Units and Interests into Class A shares. Evercore believes that the disclosed Adjusted Pro Forma 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. For more information about the Adjusted Pro Forma basis of reporting used by management to evaluate the performance of Evercore and each line of business, including reconciliations of U.S. GAAP results to an Adjusted Pro Forma basis, see pages A-2 through A-11 included in Annex I. These Adjusted Pro Forma amounts are allocated to the Company's two business segments:  Investment Banking and Investment Management.

Business Line Reporting

Investment Banking

 

 

 

 

 

 

 

 

For the fourth quarter, Evercore's Investment Banking segment reported Net Revenues of $378.0 million, which represents an increase of 29% year-over-year. Operating Income of $102.8 million increased 34% from the fourth quarter of last year. Operating Margins were 27.2% in comparison to 26.1% for the fourth quarter of last year. For the twelve months ended December 31, 2015, Investment Banking reported Net Revenues of $1.115 billion, an increase of 38% from last year. Year-to-date Operating Income of $268.7 million compared to $192.1 million last year, an increase of 40%. Year-to-date Operating Margins were 24.1% compared to 23.8% last year. 

Revenues

 

 

 

 

 

During the quarter, Investment Banking earned advisory fees from 222 client transactions (vs. 201 in Q4 2014) and fees in excess of $1 million from 68 client transactions (vs. 63 in Q4 2014). For the twelve months ended December 31, 2015, Investment Banking earned advisory fees from 484 client transactions (vs. 418 last year) and fees in excess of $1 million from 180 client transactions (vs. 173 last year).

During the fourth quarter of 2015, Commissions and Related Fees of $63.9 million increased 45% from last year, reflecting the inclusion of a full quarter's results from the acquisition of ISI. Underwriting Fees of $8.6 million for the three months ended December 31, 2015 decreased 8% versus the prior year. During the twelve months ended December 31, 2015, Commissions and Related Fees of $228.2 million increased 248% from last year, reflecting the inclusion of a full year's results from the acquisition of ISI. Underwriting Fees of $40.1 million for the twelve months ended December 31, 2015 increased 43% versus the prior year.

Evercore ISI, our U.S. equities business, reported Net Revenues of $245.5 million, including allocated U.S. underwriting revenues of $18.8 million for the twelve months ended December 31, 2015. Operating margins as contemplated for the performance targets of the Class G and H LP Interests, giving effect to just Commissions and Related Fees, for the twelve months ended December 31, 2015 were consistent with those assumed at the time of the closing of the transactions.

Expenses

Compensation costs were $223.8 million for the fourth quarter, an increase of 30% year-over-year. The trailing twelve-month compensation ratio was 58.2%, down from 59.6% a year ago. Evercore's Investment Banking compensation ratio was 59.2% for the fourth quarter, up versus the compensation ratio reported for the three months ended December 31, 2014 of 58.6%. Year to-date compensation costs were $648.9 million, an increase of 35% from the prior year.

Non-compensation costs for the current quarter were $51.3 million, up 15% from the same period last year. The increase in non-compensation costs versus the same period in the prior year reflects the addition of personnel within most parts of the business, increased new business costs associated with higher levels of global transaction activity and higher professional fees. The ratio of non-compensation costs to net revenue for the current quarter was 13.6%, compared to 15.2% in the same quarter last year. Year-to-date non-compensation costs were $197.9 million, up 48% from the prior year. The ratio of non-compensation costs to revenue for the twelve months ended December 31, 2015 was 17.7%, compared to 16.6% last year, driven primarily by the higher non-compensation costs in the Evercore ISI equities business.

Investment Management

 

 

 

 

 

 

 

 

 

For the fourth quarter, Investment Management reported Net Revenues and Operating Income of $26.2 million and $7.0 million, respectively. Investment Management reported a fourth quarter Operating Margin of 26.7%. For the twelve months ended December 31, 2015, Investment Management reported Net Revenues and Operating Income of $100.9 million and $23.8 million, respectively. The year-to-date Operating Margin was 23.6%, compared to 17.3% last year.

As of December 31, 2015, including Atalanta Sosnoff, Investment Management reported $13.5 billion of AUM, an increase of 1% from September 30, 2015. On December 31, 2015 the Company restructured its investment in Atalanta Sosnoff such that its results will be reflected on the equity method of accounting in 2016. Had this been done at the beginning of 2015, it would have reduced revenues in the Investment Management business by $21.6 million, without a significant effect on operating income. AUM excluding Atalanta Sosnoff was $8.2 billion at December 31, 2015.

Revenues

 

 

 

 

 

Investment Advisory and Management Fees of $22.4 million for the quarter ended December 31, 2015 increased 3% compared to the same period a year ago, driven primarily by higher fees in Wealth Management and Institutional Asset Management, partially offset by lower fees in Private Equity.

Realized and Unrealized Gains of $2.4 million in the quarter decreased relative to the prior year, with the change relative to the prior period driven principally by lower Institutional Asset Management gains.

Equity in Earnings of Affiliates of $1.3 million in the quarter decreased relative to the prior year principally as a result of lower income earned in the fourth quarter of 2015 by ABS and G5 ǀ Evercore.

Expenses

Investment Management's fourth quarter expenses were $19.2 million, down 17% compared to the fourth quarter of 2014. Year-to-date Investment Management expenses were $77.2 million, down 11% from a year ago.

Other U.S. GAAP Adjustments

Evercore's Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. for the three and twelve months ended December 31, 2015 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, Special Charges, certain other business acquisition-related charges and professional fees.

Acquisition-related compensation charges for 2015 include expenses associated with performance-based awards granted in conjunction with the Company's acquisition of ISI. The amount of expense is based on the determination that it is probable that Evercore ISI will achieve certain earnings and margin targets in future periods. 

Special Charges for 2015 include charges resulting from the restructuring of our investment in Atalanta Sosnoff in the fourth quarter, primarily related to the conversion of certain of Atalanta Sosnoff's profits interests held by management to equity interests. Special Charges for 2015 also include a charge for the impairment of goodwill in the Institutional Asset Management reporting unit, charges related to separation benefits and costs associated with the termination of certain contracts within Evercore ISI, as well as a charge related to the finalization of a matter associated with the wind-down of the Company's U.S. Private Equity business.

Acquisition and Transition charges for 2015 include professional fees incurred and costs related to transitioning ISI's infrastructure, including certain regulatory settlements. Acquisition-related charges for 2015 also include adjustments to contingent consideration related to certain acquisitions.

In addition, for Adjusted Pro Forma purposes, client related expenses have been presented as a reduction from Revenues and Non-compensation costs. 

Evercore's Adjusted Pro Forma Diluted Shares Outstanding for the three and twelve months ended December 31, 2015 were higher than U.S. GAAP as a result of the inclusion of Evercore LP partnership units, as well as the assumed vesting of certain acquisition-related shares, LP Units/Interests and unvested restricted stock units granted to Lexicon and ISI employees.

Further details of these adjustments, as well as an explanation of similar amounts for the three and twelve months ended December 31, 2014 and the three months ended September 30, 2015, are included in Annex I, pages A-2 to A-11. 

Non-controlling Interests

Non-controlling Interests in certain operating subsidiaries are owned by the principals and strategic investors in these businesses. Evercore's equity ownership percentages in these operating businesses range from 61% to 72%. For the periods ended December 31, 2015, September 30, 2015 and December 31, 2014 the gain (loss) allocated to non-controlling interests was as follows:

 

 

 

 

Income Taxes

For the three and twelve months ended December 31, 2015, Evercore's Adjusted Pro Forma effective tax rate was 37.5% and 37.3%, respectively, compared to 38.8% and 37.8%, respectively, for the three and twelve months ended December 31, 2014. Changes in the effective tax rate are principally driven by the level of earnings in businesses with minority owners and earnings generated outside of the U.S. 

For the three and twelve months ended December 31, 2015, Evercore's U.S. GAAP effective tax rate was approximately 60.9% and 57.2%, respectively, compared to 43.9% and 39.0%, respectively, for the three and twelve months ended December 31, 2014. The effective tax rate for U.S. GAAP purposes for 2015 reflects significant adjustments relating to the tax treatment of compensation associated with Evercore LP Units/Interests, state, local and foreign taxes, and other adjustments.

Balance Sheet

The Company continues to maintain a strong balance sheet, holding cash, cash equivalents and marketable securities of $492.6 million at December 31, 2015. Current assets exceed current liabilities by $341.0 million at December 31, 2015. Amounts due related to the Long-Term Notes Payable and Subordinated Borrowings were $141.8 million at December 31, 2015.

Capital Transactions

On February 1, 2016, the Board of Directors of Evercore declared a quarterly dividend of $0.31 per share to be paid on March 11, 2016 to common stockholders of record on February 26, 2016.

During the three months ended December 31, 2015 the Company repurchased approximately 2.5 million shares at an average cost per share of $52.60, including 2.4 million shares from our transaction with Mizuho on November 10, 2015, and a total of 5.5 million shares/units in the twelve months ended December 31, 2015 at an average price of $51.66.

Conference Call

Evercore will host a related conference call beginning at 8:00 a.m. Eastern Time, Wednesday, February 3, 2016, 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: 30834334. 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: 30834334. A live webcast of the conference call will be available on the Investor Relations 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

Established in 1995, Evercore is a leading global independent investment banking advisory firm. Evercore advises a diverse set of investment banking clients on a wide range of transactions and issues and provides institutional investors with high quality equity research, sales and trading execution that is free of the conflicts created by proprietary activities. The firm also offers investment management services to high net worth and institutional investors. With 28 offices in North America, Europe, South America and Asia, Evercore has the scale and strength to serve clients globally through a focused and tailored approach designed to meet their unique needs.  More information about Evercore can be found on the Company's website at www.evercore.com.

Investor Contact:      
Robert B. Walsh
Chief Financial Officer, Evercore 
+1.212.857.3100

Media Contact:  
Dana Gorman 
The Abernathy MacGregor Group, for Evercore 
+1.212.371.5999

Basis of Alternative Financial Statement Presentation

Adjusted Pro Forma results are a non-GAAP measure. Evercore believes that the disclosed Adjusted Pro Forma 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 U.S. GAAP results to Adjusted Pro Forma 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," "believes," "expects," "potential," "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 presentation 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, 2014, 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.

 

 

 

 

 

 

 

 

 

 

Adjusted Pro Forma Results

Throughout the discussion of Evercore's business segments, information is presented on an Adjusted Pro Forma basis, which is a non-generally accepted accounting principles ("non-GAAP") measure. Adjusted Pro Forma 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 Evercore LP Units, other IPO related restricted stock unit awards, as well as Acquisition Related Share Issuances and Unvested Restricted Stock Units granted to Lexicon and ISI employees, into Class A shares. Evercore believes that the disclosed Adjusted Pro Forma 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 Pro Forma amounts are allocated to the Company's two business segments: Investment Banking and Investment Management. The differences between Adjusted Pro Forma and U.S. GAAP results are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Financial Data

For further information on these Adjusted Pro Forma adjustments, see page A-2.

 

 

 

 

 

 

 

 

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SOURCE Evercore