FORM 8-K |
EVERCORE PARTNERS INC. |
(Exact name of registrant as specified in its charter) |
Delaware | 001-32975 | 20-4748747 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
55 East 52 nd Street | ||
New York, New York | 10055 | |
(Address of principal executive offices) | (Zip Code) |
(212) 857-3100 |
(Registrant's telephone number, including area code) |
NOT APPLICABLE |
(Former name or former address, if changed since last report) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
99.1 | Press release of Evercore Partners Inc. dated February 1, 2017. |
EVERCORE PARTNERS INC. | ||||||
Date: February 1, 2017 | /s/ Robert B. Walsh | |||||
By: | Robert B. Walsh | |||||
Title: | Chief Financial Officer |
▪ | Full Year Financial Summary |
• | Record U.S. GAAP Net Revenues of $1.440 billion, up 18% compared to 2015 |
• | Record U.S. GAAP Net Income Attributable to Evercore Partners Inc. of $107.5 million, up 151% compared to 2015, or $2.43 per share, up 148% compared to 2015 |
• | Record Adjusted Net Revenues of $1.431 billion, up 18% compared to 2015; 20% after adjusting for the restructuring of certain Investment Management affiliates |
• | Record Adjusted Net Income Attributable to Evercore Partners Inc. of $223.0 million, up 30% compared to 2015, or $4.32 per share, up 34% compared to 2015 |
▪ | Fourth Quarter Financial Summary |
• | Record U.S. GAAP Net Revenues of $445.4 million, up 9% compared to Q4 2015 |
• | Record U.S. GAAP Net Income Attributable to Evercore Partners Inc. of $43.4 million, up 111% compared to Q4 2015, or $0.98 per share, up 118% compared to Q4 2015 |
• | Record Adjusted Net Revenues of $442.2 million, up 9% compared to Q4 2015; 11% after adjusting for the restructuring of certain Investment Management affiliates |
• | Record Adjusted Net Income Attributable to Evercore Partners Inc. of $74.4 million, up 15% compared to Q4 2015, or $1.43 per share, up 17% compared to Q4 2015 |
▪ | Announced John S. Weinberg joined as Chairman of the Board and Executive Chairman of Evercore |
▪ | Investment Banking |
• | Advising clients on significant transactions globally: |
• | The largest technology transaction in 2016: Qualcomm on its pending $47 billion acquisition of NXP Semiconductors NV |
• | The largest telecom transaction in 2016: CenturyLink on its pending $34 billion acquisition of Level 3 Communications, Inc. |
• | The two largest healthcare transactions announced in 2016: Abbott Laboratories on its $31 billion acquisition of St. Jude Medical, Inc. and Medivation on its $14 billion sale to Pfizer Inc. |
• | The Special Committee of the Board of Directors of Hilton Worldwide Holdings Inc. on HNA Group's $6.5 billion acquisition of a 25% equity interest in Hilton from Blackstone |
• | The largest ever cross-border South Korean M&A transaction: Samsung Electronics on its pending $9 billion acquisition of Harman International Industries, Incorporated |
• | The largest German commercial real estate transaction since 2008: The shareholders of IVG on OfficeFirst Immobilien AG's pending €3.3 billion sale to Blackstone |
• | Bookrunner on the two largest U.S. IPOs in 2016 and independent advisor on the largest U.K. IPO in 2016 |
▪ | Announced the strengthening of our strategic alliance with Luminis Partners in Australia, acquiring an ~20% interest in the business |
▪ | Announced the addition of five Senior Managing Directors in 2016 and four newly promoted Senior Managing Directors in our Advisory business in 2017. In addition, we have already announced the addition of two Advisory Senior Managing Directors in 2017 |
▪ | Returned $225.8 million of capital to shareholders during the year through dividends and repurchases, including repurchases of 3.5 million shares/units at an average price of $48.03. Quarterly dividend of $0.34 per share |
U.S. GAAP | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
Net Revenues | $ | 445,369 | $ | 386,314 | $ | 408,243 | 15 | % | 9 | % | $ | 1,440,052 | $ | 1,223,273 | 18 | % | ||||||||||||
Operating Income | $ | 97,359 | $ | 85,085 | $ | 74,663 | 14 | % | 30 | % | $ | 261,174 | $ | 128,670 | 103 | % | ||||||||||||
Net Income Attributable to Evercore Partners Inc. | $ | 43,428 | $ | 34,695 | $ | 20,602 | 25 | % | 111 | % | $ | 107,528 | $ | 42,863 | 151 | % | ||||||||||||
Diluted Earnings Per Share | $ | 0.98 | $ | 0.79 | $ | 0.45 | 24 | % | 118 | % | $ | 2.43 | $ | 0.98 | 148 | % | ||||||||||||
Compensation Ratio | 60.1 | % | 60.0 | % | 62.3 | % | 62.5 | % | 64.4 | % | ||||||||||||||||||
Operating Margin | 21.9 | % | 22.0 | % | 18.3 | % | 18.1 | % | 10.5 | % |
Adjusted | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
Net Revenues | $ | 442,189 | $ | 383,473 | $ | 404,129 | 15 | % | 9 | % | $ | 1,431,137 | $ | 1,216,421 | 18 | % | ||||||||||||
Operating Income | $ | 127,010 | $ | 106,169 | $ | 109,831 | 20 | % | 16 | % | $ | 378,829 | $ | 292,514 | 30 | % | ||||||||||||
Net Income Attributable to Evercore Partners Inc. | $ | 74,417 | $ | 62,423 | $ | 64,717 | 19 | % | 15 | % | $ | 223,018 | $ | 171,307 | 30 | % | ||||||||||||
Diluted Earnings Per Share | $ | 1.43 | $ | 1.22 | $ | 1.22 | 17 | % | 17 | % | $ | 4.32 | $ | 3.23 | 34 | % | ||||||||||||
Compensation Ratio | 57.2 | % | 56.8 | % | 58.6 | % | 57.3 | % | 57.8 | % | ||||||||||||||||||
Operating Margin | 28.7 | % | 27.7 | % | 27.2 | % | 26.5 | % | 24.0 | % |
U.S. GAAP | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||
Investment Banking Revenue | $ | 427,864 | $ | 368,434 | $ | 384,111 | 16 | % | 11 | % | $ | 1,364,098 | $ | 1,133,860 | 20 | % | ||||||||||||
Other Revenue, net | (509 | ) | 200 | (71 | ) | NM | (617 | %) | (239 | ) | (2,945 | ) | 92 | % | ||||||||||||||
Net Revenues | 427,355 | 368,634 | 384,040 | 16 | % | 11 | % | 1,363,859 | 1,130,915 | 21 | % | |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee Compensation and Benefits | 261,125 | 221,380 | 241,389 | 18 | % | 8 | % | 861,139 | 734,078 | 17 | % | |||||||||||||||||
Non-compensation Costs | 67,674 | 64,708 | 65,283 | 5 | % | 4 | % | 251,360 | 241,811 | 4 | % | |||||||||||||||||
Special Charges | — | — | — | NM | NM | — | 2,151 | NM | ||||||||||||||||||||
Total Expenses | 328,799 | 286,088 | 306,672 | 15 | % | 7 | % | 1,112,499 | 978,040 | 14 | % | |||||||||||||||||
Operating Income | $ | 98,556 | $ | 82,546 | $ | 77,368 | 19 | % | 27 | % | $ | 251,360 | $ | 152,875 | 64 | % | ||||||||||||
Compensation Ratio | 61.1 | % | 60.1 | % | 62.9 | % | 63.1 | % | 64.9 | % | ||||||||||||||||||
Operating Margin | 23.1 | % | 22.4 | % | 20.1 | % | 18.4 | % | 13.5 | % |
U.S. GAAP | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Advisory Fees | $ | 352,976 | $ | 306,993 | $ | 311,622 | 15 | % | 13 | % | $ | 1,096,829 | $ | 865,494 | 27 | % | ||||||||||||
Commissions and Related Fees | 63,097 | 53,512 | 63,866 | 18 | % | (1 | %) | 231,005 | 228,229 | 1 | % | |||||||||||||||||
Underwriting Fees | 11,791 | 7,929 | 8,623 | 49 | % | 37 | % | 36,264 | 40,137 | (10 | %) | |||||||||||||||||
Total Investment Banking Revenue | $ | 427,864 | $ | 368,434 | $ | 384,111 | 16 | % | 11 | % | $ | 1,364,098 | $ | 1,133,860 | 20 | % |
U.S. GAAP | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||
Investment Management Revenue | $ | 17,965 | $ | 17,158 | $ | 24,731 | 5 | % | (27 | %) | $ | 75,807 | $ | 95,129 | (20 | %) | ||||||||||||
Other Revenue, net | 49 | 522 | (528 | ) | (91 | %) | NM | 386 | (2,771 | ) | NM | |||||||||||||||||
Net Revenues | 18,014 | 17,680 | 24,203 | 2 | % | (26 | %) | 76,193 | 92,358 | (18 | %) | |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee Compensation and Benefits | 6,506 | 10,330 | 13,141 | (37 | %) | (50 | %) | 39,451 | 54,097 | (27 | %) | |||||||||||||||||
Non-compensation costs | 4,605 | 4,811 | 6,122 | (4 | %) | (25 | %) | 18,828 | 23,473 | (20 | %) | |||||||||||||||||
Special Charges | 8,100 | — | 7,645 | NM | 6 | % | 8,100 | 38,993 | (79 | %) | ||||||||||||||||||
Total Expenses | 19,211 | 15,141 | 26,908 | 27 | % | (29 | %) | 66,379 | 116,563 | (43 | %) | |||||||||||||||||
Operating Income (Loss) | $ | (1,197 | ) | $ | 2,539 | $ | (2,705 | ) | NM | 56 | % | $ | 9,814 | $ | (24,205 | ) | NM | |||||||||||
Compensation Ratio | 36.1 | % | 58.4 | % | 54.3 | % | 51.8 | % | 58.6 | % | ||||||||||||||||||
Operating Margin | (6.6 | %) | 14.4 | % | (11.2 | %) | 12.9 | % | (26.2 | %) | ||||||||||||||||||
Assets Under Management (in millions) (1) | $ | 7,999 | $ | 8,355 | $ | 8,168 | (4 | %) | (2 | %) | $ | 7,999 | $ | 8,168 | (2 | %) | ||||||||||||
(1) Assets Under Management reflect end of period amounts from our consolidated subsidiaries and therefore exclude AUM of $5,103 million, $5,197 million and $5,297 million from Atalanta Sosnoff at December 31, 2016, September 30, 2016 and December 31, 2015, respectively, following the restructuring of our investment on December 31, 2015, and AUM of $304 million from the Mexican Private Equity Business at September 30, 2016 and December 31, 2016, following the transfer of ownership on September 30, 2016. |
U.S. GAAP | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Investment Advisory and Management Fees: | ||||||||||||||||||||||||||||
Wealth Management | $ | 9,231 | $ | 9,311 | $ | 8,831 | (1 | %) | 5 | % | $ | 36,411 | $ | 34,659 | 5 | % | ||||||||||||
Institutional Asset Management | 6,596 | 6,105 | 12,134 | 8 | % | (46 | %) | 24,286 | 46,100 | (47 | %) | |||||||||||||||||
Private Equity | 217 | 760 | 1,390 | (71 | %) | (84 | %) | 3,674 | 5,603 | (34 | %) | |||||||||||||||||
Total Investment Advisory and Management Fees | 16,044 | 16,176 | 22,355 | (1 | %) | (28 | %) | 64,371 | 86,362 | (25 | %) | |||||||||||||||||
Realized and Unrealized Gains: | ||||||||||||||||||||||||||||
Institutional Asset Management | 607 | 811 | 549 | (25 | %) | 11 | % | 3,820 | 3,681 | 4 | % | |||||||||||||||||
Private Equity | 1,314 | 171 | 1,827 | 668 | % | (28 | %) | 7,616 | 5,086 | 50 | % | |||||||||||||||||
Total Realized and Unrealized Gains | 1,921 | 982 | 2,376 | 96 | % | (19 | %) | 11,436 | 8,767 | 30 | % | |||||||||||||||||
Investment Management Revenue | $ | 17,965 | $ | 17,158 | $ | 24,731 | 5 | % | (27 | %) | $ | 75,807 | $ | 95,129 | (20 | %) |
Adjusted | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||
Investment Banking Revenue | $ | 421,246 | $ | 362,374 | $ | 376,872 | 16 | % | 12 | % | $ | 1,340,976 | $ | 1,112,287 | 21 | % | ||||||||||||
Other Revenue, net | 2,123 | 2,792 | 1,081 | (24 | %) | 96 | % | 9,339 | 3,202 | 192 | % | |||||||||||||||||
Net Revenues | 423,369 | 365,166 | 377,953 | 16 | % | 12 | % | 1,350,315 | 1,115,489 | 21 | % | |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee Compensation and Benefits | 246,635 | 207,521 | 223,839 | 19 | % | 10 | % | 780,293 | 648,868 | 20 | % | |||||||||||||||||
Non-compensation Costs | 57,764 | 55,197 | 51,283 | 5 | % | 13 | % | 215,542 | 197,882 | 9 | % | |||||||||||||||||
Total Expenses | 304,399 | 262,718 | 275,122 | 16 | % | 11 | % | 995,835 | 846,750 | 18 | % | |||||||||||||||||
Operating Income | $ | 118,970 | $ | 102,448 | $ | 102,831 | 16 | % | 16 | % | $ | 354,480 | $ | 268,739 | 32 | % | ||||||||||||
Compensation Ratio | 58.3 | % | 56.8 | % | 59.2 | % | 57.8 | % | 58.2 | % | ||||||||||||||||||
Operating Margin | 28.1 | % | 28.1 | % | 27.2 | % | 26.3 | % | 24.1 | % |
Adjusted | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Advisory Fees (1) | $ | 346,358 | $ | 300,933 | $ | 304,383 | 15 | % | 14 | % | $ | 1,073,707 | $ | 843,921 | 27 | % | ||||||||||||
Commissions and Related Fees | 63,097 | 53,512 | 63,866 | 18 | % | (1 | %) | 231,005 | 228,229 | 1 | % | |||||||||||||||||
Underwriting Fees | 11,791 | 7,929 | 8,623 | 49 | % | 37 | % | 36,264 | 40,137 | (10 | %) | |||||||||||||||||
Total Investment Banking Revenue | $ | 421,246 | $ | 362,374 | $ | 376,872 | 16 | % | 12 | % | $ | 1,340,976 | $ | 1,112,287 | 21 | % | ||||||||||||
(1) Advisory Fees on an Adjusted basis reflect the reduction of revenues for client-related expenses and provisions for uncollected receivables of $8,082, $5,948 and $7,979 for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively, and $24,492 and $22,551 for the twelve months ended December 31, 2016 and 2015, respectively, as well as the reclassification of earnings (losses) related to our equity investment in G5 | Evercore - Advisory of $1,464, ($112) and $740 for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively, and $1,370 and $978 for the twelve months ended December 31, 2016 and 2015, respectively. |
Adjusted | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||
Investment Management Revenue | $ | 18,771 | $ | 18,191 | $ | 26,002 | 3 | % | (28 | %) | $ | 80,172 | $ | 100,127 | (20 | %) | ||||||||||||
Other Revenue, net | 49 | 116 | 174 | (58 | %) | (72 | %) | 650 | 805 | (19 | %) | |||||||||||||||||
Net Revenues | 18,820 | 18,307 | 26,176 | 3 | % | (28 | %) | 80,822 | 100,932 | (20 | %) | |||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee Compensation and Benefits | 6,506 | 10,330 | 13,141 | (37 | %) | (50 | %) | 39,451 | 54,097 | (27 | %) | |||||||||||||||||
Non-compensation Costs | 4,274 | 4,256 | 6,035 | — | % | (29 | %) | 17,022 | 23,060 | (26 | %) | |||||||||||||||||
Total Expenses | 10,780 | 14,586 | 19,176 | (26 | %) | (44 | %) | 56,473 | 77,157 | (27 | %) | |||||||||||||||||
Operating Income | $ | 8,040 | $ | 3,721 | $ | 7,000 | 116 | % | 15 | % | $ | 24,349 | $ | 23,775 | 2 | % | ||||||||||||
Compensation Ratio | 34.6 | % | 56.4 | % | 50.2 | % | 48.8 | % | 53.6 | % | ||||||||||||||||||
Operating Margin | 42.7 | % | 20.3 | % | 26.7 | % | 30.1 | % | 23.6 | % | ||||||||||||||||||
Assets Under Management (in millions) (1) | $ | 7,999 | $ | 8,355 | $ | 8,168 | (4 | %) | (2 | %) | $ | 7,999 | $ | 8,168 | (2 | %) | ||||||||||||
(1) Assets Under Management reflect end of period amounts from our consolidated subsidiaries and therefore exclude AUM of $5,103 million, $5,197 million and $5,297 million from Atalanta Sosnoff at December 31, 2016, September 30, 2016 and December 31, 2015, respectively, following the restructuring of our investment on December 31, 2015, and AUM of $304 million from the Mexican Private Equity Business at September 30, 2016 and December 31, 2016, following the transfer of ownership on September 30, 2016. |
Adjusted | ||||||||||||||||||||||||||||
Three Months Ended | % Change vs. | Twelve Months Ended | ||||||||||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | % Change | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Investment Advisory and Management Fees: | ||||||||||||||||||||||||||||
Wealth Management | $ | 9,231 | $ | 9,311 | $ | 8,831 | (1 | %) | 5 | % | $ | 36,411 | $ | 34,659 | 5 | % | ||||||||||||
Institutional Asset Management (1) | 6,560 | 5,848 | 12,129 | 12 | % | (46 | %) | 23,586 | 46,026 | (49 | %) | |||||||||||||||||
Private Equity (2) | 11 | 760 | 1,390 | (99 | %) | (99 | %) | 3,468 | 5,603 | (38 | %) | |||||||||||||||||
Total Investment Advisory and Management Fees | 15,802 | 15,919 | 22,350 | (1 | %) | (29 | %) | 63,465 | 86,288 | (26 | %) | |||||||||||||||||
Realized and Unrealized Gains: | ||||||||||||||||||||||||||||
Institutional Asset Management | 607 | 811 | 549 | (25 | %) | 11 | % | 3,820 | 3,681 | 4 | % | |||||||||||||||||
Private Equity | 1,314 | 171 | 1,827 | 668 | % | (28 | %) | 7,616 | 5,086 | 50 | % | |||||||||||||||||
Total Realized and Unrealized Gains | 1,921 | 982 | 2,376 | 96 | % | (19 | %) | 11,436 | 8,767 | 30 | % | |||||||||||||||||
Equity in Earnings of Affiliates (3) | 1,048 | 1,290 | 1,276 | (19 | %) | (18 | %) | 5,271 | 5,072 | 4 | % | |||||||||||||||||
Investment Management Revenue | $ | 18,771 | $ | 18,191 | $ | 26,002 | 3 | % | (28 | %) | $ | 80,172 | $ | 100,127 | (20 | %) | ||||||||||||
(1) Management fees from Institutional Asset Management on an Adjusted basis reflect the reduction of revenues for client-related expenses of $36, $257 and $5 for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively, and $700 and $74 for the twelve months ended December 31, 2016 and 2015, respectively. | ||||||||||||||||||||||||||||
(2) Management fees from Private Equity on an Adjusted basis reflect the reduction of revenues for provisions for uncollected receivables of $206 for the three and twelve months ended December 31, 2016. | ||||||||||||||||||||||||||||
(3) Equity in G5 ǀ Evercore - Wealth Management, ABS and Atalanta Sosnoff (after its deconsolidation on December 31, 2015) on a U.S. GAAP basis are reclassified from Investment Management Revenue to Income from Equity Method Investments. |
Schedule | Page Number |
Unaudited Condensed Consolidated Statements of Operations for the Three and Twelve Months Ended December 31, 2016 and 2015 | 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, 2016 (Unaudited) | A-7 |
U.S. GAAP Segment Reconciliation to Adjusted Results for the Three Months ended September 30, 2016 (Unaudited) | A-8 |
U.S. GAAP Segment Reconciliation to Adjusted Results for the Three and Twelve Months ended December 31, 2015 (Unaudited) | A-9 |
U.S. GAAP Segment Reconciliation to Consolidated Results (Unaudited) | A-10 |
Notes to Unaudited Condensed Consolidated Adjusted Financial Data | A-11 |
EVERCORE PARTNERS INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2016 AND 2015 | |||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||
(UNAUDITED) | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Investment Banking Revenue | $ | 427,864 | $ | 384,111 | $ | 1,364,098 | $ | 1,133,860 | |||||||
Investment Management Revenue | 17,965 | 24,731 | 75,807 | 95,129 | |||||||||||
Other Revenue | 4,235 | 2,603 | 16,885 | 11,259 | |||||||||||
Total Revenues | 450,064 | 411,445 | 1,456,790 | 1,240,248 | |||||||||||
Interest Expense (1) | 4,695 | 3,202 | 16,738 | 16,975 | |||||||||||
Net Revenues | 445,369 | 408,243 | 1,440,052 | 1,223,273 | |||||||||||
Expenses | |||||||||||||||
Employee Compensation and Benefits | 267,631 | 254,530 | 900,590 | 788,175 | |||||||||||
Occupancy and Equipment Rental | 11,321 | 12,072 | 45,304 | 47,703 | |||||||||||
Professional Fees | 17,795 | 14,810 | 57,667 | 50,817 | |||||||||||
Travel and Related Expenses | 15,207 | 16,251 | 57,465 | 55,388 | |||||||||||
Communications and Information Services | 10,333 | 8,777 | 40,277 | 36,372 | |||||||||||
Depreciation and Amortization | 5,885 | 6,815 | 24,800 | 27,927 | |||||||||||
Special Charges | 8,100 | 7,645 | 8,100 | 41,144 | |||||||||||
Acquisition and Transition Costs | 89 | 2,951 | 99 | 4,890 | |||||||||||
Other Operating Expenses | 11,649 | 9,729 | 44,576 | 42,187 | |||||||||||
Total Expenses | 348,010 | 333,580 | 1,178,878 | 1,094,603 | |||||||||||
Income Before Income from Equity Method Investments and Income Taxes | 97,359 | 74,663 | 261,174 | 128,670 | |||||||||||
Income from Equity Method Investments | 2,512 | 2,016 | 6,641 | 6,050 | |||||||||||
Income Before Income Taxes | 99,871 | 76,679 | 267,815 | 134,720 | |||||||||||
Provision for Income Taxes | 39,913 | 46,703 | 119,303 | 77,030 | |||||||||||
Net Income | 59,958 | 29,976 | 148,512 | 57,690 | |||||||||||
Net Income Attributable to Noncontrolling Interest | 16,530 | 9,374 | 40,984 | 14,827 | |||||||||||
Net Income Attributable to Evercore Partners Inc. | $ | 43,428 | $ | 20,602 | $ | 107,528 | $ | 42,863 | |||||||
Net Income Attributable to Evercore Partners Inc. Common Shareholders | $ | 43,428 | $ | 20,602 | $ | 107,528 | $ | 42,863 | |||||||
Weighted Average Shares of Class A Common Stock Outstanding: | |||||||||||||||
Basic | 39,101 | 38,681 | 39,220 | 37,161 | |||||||||||
Diluted | 44,524 | 45,480 | 44,193 | 43,699 | |||||||||||
Net Income Per Share Attributable to Evercore Partners Inc. Common Shareholders: | |||||||||||||||
Basic | $ | 1.11 | $ | 0.53 | $ | 2.74 | $ | 1.15 | |||||||
Diluted | $ | 0.98 | $ | 0.45 | $ | 2.43 | $ | 0.98 | |||||||
(1) Includes interest expense on long-term debt and interest expense on short-term repurchase agreements. |
2. | Adjustments Associated with Business Combinations. The following charges resulting from business combinations 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: |
a. | Amortization of Intangible Assets and Other Purchase Accounting-related Amortization. Amortization of intangible assets and other purchase accounting-related amortization from the acquisitions of ISI, SFS and certain other acquisitions. |
b. | Compensation Charges. Expenses for deferred consideration issued to the sellers of certain of the Company's acquisitions. |
c. | Acquisition and Transition Costs. Primarily professional fees incurred, as well as the reversal of a provision for certain settlements in 2016 and costs related to transitioning acquisitions or divestitures. |
d. | Fair Value of Contingent Consideration. The expense associated with changes in the fair value of contingent consideration issued to the sellers of certain of the Company's acquisitions is excluded from the Adjusted results. |
3. | Client Related Expenses. Client related expenses and provisions for uncollected receivables have been classified as a reduction of revenue in the Adjusted presentation. The Company's Management believes that this adjustment results in more meaningful key operating ratios, such as compensation to net revenues and operating margin. |
4. | Special Charges. Expenses during 2016 related to a charge for the impairment of our investment in Atalanta Sosnoff during the fourth quarter. Expenses during 2015 primarily related to a charge for the impairment of goodwill in the Institutional Asset Management reporting unit and charges related to the restructuring of our investment in Atalanta Sosnoff during 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 separation benefits and costs associated with the termination of certain contracts within the Company's Evercore ISI business, as well as the finalization of a matter associated with the wind-down of the Company's U.S. Private Equity business. |
5. | Income Taxes. Evercore is organized as a series of Limited Liability Companies, Partnerships, a C-Corporation 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 has adopted a conventional corporate tax structure and is taxed as a C-Corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are made directly to stockholders' equity. This assumption is consistent with the assumption that certain Evercore LP Units and interests 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. In addition, the Adjusted presentation can reflect the netting of changes in the Company's Tax Receivable Agreement against Income Tax Expense. |
EVERCORE PARTNERS INC. | |||||||||||||||||||
U.S. GAAP RECONCILIATION TO ADJUSTED RESULTS | |||||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Net Revenues - U.S. GAAP | $ | 445,369 | $ | 386,314 | $ | 408,243 | $ | 1,440,052 | $ | 1,223,273 | |||||||||
Client Related Expenses (1) | (8,324 | ) | (6,205 | ) | (7,984 | ) | (25,398 | ) | (22,625 | ) | |||||||||
Income from Equity Method Investments (2) | 2,512 | 1,178 | 2,016 | 6,641 | 6,050 | ||||||||||||||
Interest Expense on Debt (3) | 2,632 | 2,592 | 1,854 | 10,248 | 9,617 | ||||||||||||||
Gain on Transfer of Ownership of Mexican Private Equity Business (4) | — | (406 | ) | — | (406 | ) | — | ||||||||||||
Other Purchase Accounting-related Amortization (8a) | — | — | — | — | 106 | ||||||||||||||
Net Revenues - Adjusted | $ | 442,189 | $ | 383,473 | $ | 404,129 | $ | 1,431,137 | $ | 1,216,421 | |||||||||
Compensation Expense - U.S. GAAP | $ | 267,631 | $ | 231,710 | $ | 254,530 | $ | 900,590 | $ | 788,175 | |||||||||
Amortization of LP Units / Interests and Certain Other Awards (5) | (14,490 | ) | (13,859 | ) | (17,550 | ) | (80,846 | ) | (83,673 | ) | |||||||||
Other Acquisition Related Compensation Charges (6) | — | — | — | — | (1,537 | ) | |||||||||||||
Compensation Expense - Adjusted | $ | 253,141 | $ | 217,851 | $ | 236,980 | $ | 819,744 | $ | 702,965 | |||||||||
Operating Income - U.S. GAAP | $ | 97,359 | $ | 85,085 | $ | 74,663 | $ | 261,174 | $ | 128,670 | |||||||||
Income from Equity Method Investments (2) | 2,512 | 1,178 | 2,016 | 6,641 | 6,050 | ||||||||||||||
Pre-Tax Income - U.S. GAAP | 99,871 | 86,263 | 76,679 | 267,815 | 134,720 | ||||||||||||||
Gain on Transfer of Ownership of Mexican Private Equity Business (4) | — | (406 | ) | — | (406 | ) | — | ||||||||||||
Amortization of LP Units / Interests and Certain Other Awards (5) | 14,490 | 13,859 | 17,550 | 80,846 | 83,673 | ||||||||||||||
Other Acquisition Related Compensation Charges (6) | — | — | — | — | 1,537 | ||||||||||||||
Special Charges (7) | 8,100 | — | 7,645 | 8,100 | 41,144 | ||||||||||||||
Intangible Asset Amortization / Other Purchase Accounting-related Amortization (8a) | 2,392 | 2,538 | 3,245 | 11,020 | 14,229 | ||||||||||||||
Acquisition and Transition Costs (8b) | 89 | 339 | 2,951 | 99 | 4,890 | ||||||||||||||
Fair Value of Contingent Consideration (8c) | (564 | ) | 984 | (93 | ) | 1,107 | 2,704 | ||||||||||||
Pre-Tax Income - Adjusted | 124,378 | 103,577 | 107,977 | 368,581 | 282,897 | ||||||||||||||
Interest Expense on Debt (3) | 2,632 | 2,592 | 1,854 | 10,248 | 9,617 | ||||||||||||||
Operating Income - Adjusted | $ | 127,010 | $ | 106,169 | $ | 109,831 | $ | 378,829 | $ | 292,514 | |||||||||
Provision for Income Taxes - U.S. GAAP | $ | 39,913 | $ | 38,980 | $ | 46,703 | $ | 119,303 | $ | 77,030 | |||||||||
Income Taxes (9) | 7,301 | 1,211 | (6,265 | ) | 20,837 | 28,604 | |||||||||||||
Provision for Income Taxes - Adjusted | $ | 47,214 | $ | 40,191 | $ | 40,438 | $ | 140,140 | $ | 105,634 | |||||||||
Net Income Attributable to Evercore Partners Inc. - U.S. GAAP | $ | 43,428 | $ | 34,695 | $ | 20,602 | $ | 107,528 | $ | 42,863 | |||||||||
Gain on Transfer of Ownership of Mexican Private Equity Business (4) | — | (406 | ) | — | (406 | ) | — | ||||||||||||
Amortization of LP Units / Interests and Certain Other Awards (5) | 14,490 | 13,859 | 17,550 | 80,846 | 83,673 | ||||||||||||||
Other Acquisition Related Compensation Charges (6) | — | — | — | — | 1,537 | ||||||||||||||
Special Charges (7) | 8,100 | — | 7,645 | 8,100 | 41,144 | ||||||||||||||
Intangible Asset Amortization / Other Purchase Accounting-related Amortization (8a) | 2,392 | 2,538 | 3,245 | 11,020 | 14,229 | ||||||||||||||
Acquisition and Transition Costs (8b) | 89 | 339 | 2,951 | 99 | 4,890 | ||||||||||||||
Fair Value of Contingent Consideration (8c) | (564 | ) | 984 | (93 | ) | 1,107 | 2,704 | ||||||||||||
Income Taxes (9) | (7,301 | ) | (1,211 | ) | 6,265 | (20,837 | ) | (28,604 | ) | ||||||||||
Noncontrolling Interest (10) | 13,783 | 11,625 | 6,552 | 35,561 | 8,871 | ||||||||||||||
Net Income Attributable to Evercore Partners Inc. - Adjusted | $ | 74,417 | $ | 62,423 | $ | 64,717 | $ | 223,018 | $ | 171,307 | |||||||||
Diluted Shares Outstanding - U.S. GAAP | 44,524 | 43,734 | 45,480 | 44,193 | 43,699 | ||||||||||||||
LP Units (11a) | 7,544 | 7,604 | 7,501 | 7,479 | 9,261 | ||||||||||||||
Unvested Restricted Stock Units - Event Based (11a) | 12 | 12 | 12 | 12 | 12 | ||||||||||||||
Acquisition Related Share Issuance (11b) | — | — | — | — | 51 | ||||||||||||||
Diluted Shares Outstanding - Adjusted | 52,080 | 51,350 | 52,993 | 51,684 | 53,023 | ||||||||||||||
Key Metrics: (a) | |||||||||||||||||||
Diluted Earnings Per Share - U.S. GAAP | $ | 0.98 | $ | 0.79 | $ | 0.45 | $ | 2.43 | $ | 0.98 | |||||||||
Diluted Earnings Per Share - Adjusted | $ | 1.43 | $ | 1.22 | $ | 1.22 | $ | 4.32 | $ | 3.23 | |||||||||
Compensation Ratio - U.S. GAAP | 60.1 | % | 60.0 | % | 62.3 | % | 62.5 | % | 64.4 | % | |||||||||
Compensation Ratio - Adjusted | 57.2 | % | 56.8 | % | 58.6 | % | 57.3 | % | 57.8 | % | |||||||||
Operating Margin - U.S. GAAP | 21.9 | % | 22.0 | % | 18.3 | % | 18.1 | % | 10.5 | % | |||||||||
Operating Margin - Adjusted | 28.7 | % | 27.7 | % | 27.2 | % | 26.5 | % | 24.0 | % | |||||||||
Effective Tax Rate - U.S. GAAP | 40.0 | % | 45.2 | % | 60.9 | % | 44.5 | % | 57.2 | % | |||||||||
Effective Tax Rate - Adjusted | 38.0 | % | 38.8 | % | 37.5 | % | 38.0 | % | 37.3 | % | |||||||||
(a) Reconciliations of the key metrics from U.S. GAAP to Adjusted results are a derivative of the reconciliations of their components above. |
EVERCORE PARTNERS INC. | |||||||||||||||||||||
RECONCILIATION TO RESTRUCTURING OF INVESTMENT MANAGEMENT ADJUSTED RESULTS | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, 2016 | December 31, 2015 | % Change | December 31, 2016 | December 31, 2015 | % Change | ||||||||||||||||
Adjusted Net Revenues (a) | $ | 442,189 | $ | 404,129 | 9 | % | $ | 1,431,137 | $ | 1,216,421 | 18 | % | |||||||||
Atalanta Sosnoff Deconsolidation (12) | — | (4,680 | ) | NM | — | (20,529 | ) | NM | |||||||||||||
Transfer of Ownership of Mexican Private Equity Business (13) | — | (1,083 | ) | NM | (2,707 | ) | (4,364 | ) | 38 | % | |||||||||||
Adjusted Net Revenues - Including Restructuring of Investment Management Adjustments | $ | 442,189 | $ | 398,366 | 11 | % | $ | 1,428,430 | $ | 1,191,528 | 20 | % | |||||||||
Adjusted Investment Management Revenues (a) | $ | 18,771 | $ | 26,002 | (28 | %) | $ | 80,172 | $ | 100,127 | (20 | %) | |||||||||
Atalanta Sosnoff Deconsolidation (12) | — | (4,680 | ) | NM | — | (20,525 | ) | NM | |||||||||||||
Transfer of Ownership of Mexican Private Equity Business (13) | — | (1,083 | ) | NM | (2,707 | ) | (4,364 | ) | 38 | % | |||||||||||
Adjusted Investment Management Revenues - Including Restructuring of Investment Management Adjustments | $ | 18,771 | $ | 20,239 | (7 | %) | $ | 77,465 | $ | 75,238 | 3 | % | |||||||||
Adjusted Investment Management Expenses (a) | $ | 10,780 | $ | 19,176 | (44 | %) | $ | 56,473 | $ | 77,157 | (27 | %) | |||||||||
Atalanta Sosnoff Deconsolidation (12) | — | (4,615 | ) | NM | — | (20,173 | ) | NM | |||||||||||||
Transfer of Ownership of Mexican Private Equity Business (13) | — | (950 | ) | NM | (2,516 | ) | (3,936 | ) | 36 | % | |||||||||||
Adjusted Investment Management Expenses - Including Restructuring of Investment Management Adjustments | $ | 10,780 | $ | 13,611 | (21 | %) | $ | 53,957 | $ | 53,048 | 2 | % | |||||||||
(a) See page A-4 for reconciliations of U.S. GAAP to Adjusted results. |
EVERCORE PARTNERS INC. | |||||||||||
U.S. GAAP RECONCILIATION TO ADJUSTED RESULTS | |||||||||||
TRAILING TWELVE MONTHS | |||||||||||
(dollars in thousands) | |||||||||||
(UNAUDITED) | |||||||||||
Consolidated | |||||||||||
Twelve Months Ended | |||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||
Net Revenues - U.S. GAAP | $ | 1,440,052 | $ | 1,402,926 | $ | 1,223,273 | |||||
Client Related Expenses (1) | (25,398 | ) | (25,058 | ) | (22,625 | ) | |||||
Income from Equity Method Investments (2) | 6,641 | 6,145 | 6,050 | ||||||||
Interest Expense on Debt (3) | 10,248 | 9,470 | 9,617 | ||||||||
Gain on Transfer of Ownership of Mexican Private Equity Business (4) | (406 | ) | (406 | ) | — | ||||||
Other Purchase Accounting-related Amortization (8a) | — | — | 106 | ||||||||
Net Revenues - Adjusted | $ | 1,431,137 | $ | 1,393,077 | $ | 1,216,421 | |||||
Compensation Expense - U.S. GAAP | $ | 900,590 | $ | 887,489 | $ | 788,175 | |||||
Amortization of LP Units / Interests and Certain Other Awards (5) | (80,846 | ) | (83,906 | ) | (83,673 | ) | |||||
Other Acquisition Related Compensation Charges (6) | — | — | (1,537 | ) | |||||||
Compensation Expense - Adjusted | $ | 819,744 | $ | 803,583 | $ | 702,965 | |||||
Compensation Ratio - U.S. GAAP (a) | 62.5 | % | 63.3 | % | 64.4 | % | |||||
Compensation Ratio - Adjusted (a) | 57.3 | % | 57.7 | % | 57.8 | % | |||||
Investment Banking | |||||||||||
Twelve Months Ended | |||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||
Net Revenues - U.S. GAAP | $ | 1,363,859 | $ | 1,320,544 | $ | 1,130,915 | |||||
Client Related Expenses (1) | (24,492 | ) | (24,389 | ) | (22,551 | ) | |||||
Income from Equity Method Investments (2) | 1,370 | 646 | 978 | ||||||||
Interest Expense on Debt (3) | 9,578 | 8,098 | 6,041 | ||||||||
Other Purchase Accounting-related Amortization (8a) | — | — | 106 | ||||||||
Net Revenues - Adjusted | $ | 1,350,315 | $ | 1,304,899 | $ | 1,115,489 | |||||
Compensation Expense - U.S. GAAP | $ | 861,139 | $ | 841,403 | $ | 734,078 | |||||
Amortization of LP Units / Interest and Certain Other Awards (5) | (80,846 | ) | (83,906 | ) | (83,673 | ) | |||||
Other Acquisition Related Compensation Charges (6) | — | — | (1,537 | ) | |||||||
Compensation Expense - Adjusted | $ | 780,293 | $ | 757,497 | $ | 648,868 | |||||
Compensation Ratio - U.S. GAAP (a) | 63.1 | % | 63.7 | % | 64.9 | % | |||||
Compensation Ratio - Adjusted (a) | 57.8 | % | 58.1 | % | 58.2 | % | |||||
(a) Reconciliations of the key metrics from U.S. GAAP to Adjusted results are a derivative of the reconciliations of their components above. |
EVERCORE PARTNERS INC. | |||||||||||||||||||||||
U.S. GAAP SEGMENT RECONCILIATION TO ADJUSTED RESULTS | |||||||||||||||||||||||
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2016 | |||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||
Investment Banking Segment | |||||||||||||||||||||||
Three Months Ended December 31, 2016 | Twelve Months Ended December 31, 2016 | ||||||||||||||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | ||||||||||||||||||
Net Revenues: | |||||||||||||||||||||||
Investment Banking Revenue | $ | 427,864 | $ | (6,618 | ) | (1)(2) | $ | 421,246 | $ | 1,364,098 | $ | (23,122 | ) | (1)(2) | $ | 1,340,976 | |||||||
Other Revenue, net | (509 | ) | 2,632 | (3) | 2,123 | (239 | ) | 9,578 | (3) | 9,339 | |||||||||||||
Net Revenues | 427,355 | (3,986 | ) | 423,369 | 1,363,859 | (13,544 | ) | 1,350,315 | |||||||||||||||
Expenses: | |||||||||||||||||||||||
Employee Compensation and Benefits | 261,125 | (14,490 | ) | (5) | 246,635 | 861,139 | (80,846 | ) | (5) | 780,293 | |||||||||||||
Non-compensation Costs | 67,674 | (9,910 | ) | (8) | 57,764 | 251,360 | (35,818 | ) | (8) | 215,542 | |||||||||||||
Total Expenses | 328,799 | (24,400 | ) | 304,399 | 1,112,499 | (116,664 | ) | 995,835 | |||||||||||||||
Operating Income (a) | $ | 98,556 | $ | 20,414 | $ | 118,970 | $ | 251,360 | $ | 103,120 | $ | 354,480 | |||||||||||
Compensation Ratio (b) | 61.1 | % | 58.3 | % | 63.1 | % | 57.8 | % | |||||||||||||||
Operating Margin (b) | 23.1 | % | 28.1 | % | 18.4 | % | 26.3 | % | |||||||||||||||
Investment Management Segment | |||||||||||||||||||||||
Three Months Ended December 31, 2016 | Twelve Months Ended December 31, 2016 | ||||||||||||||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | ||||||||||||||||||
Net Revenues: | |||||||||||||||||||||||
Investment Management Revenue | $ | 17,965 | $ | 806 | (1)(2) | $ | 18,771 | $ | 75,807 | $ | 4,365 | (1)(2) | $ | 80,172 | |||||||||
Other Revenue, net | 49 | — | 49 | 386 | 264 | (3)(4) | 650 | ||||||||||||||||
Net Revenues | 18,014 | 806 | 18,820 | 76,193 | 4,629 | 80,822 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Employee Compensation and Benefits | 6,506 | — | 6,506 | 39,451 | — | 39,451 | |||||||||||||||||
Non-compensation Costs | 4,605 | (331 | ) | (8) | 4,274 | 18,828 | (1,806 | ) | (8) | 17,022 | |||||||||||||
Special Charges | 8,100 | (8,100 | ) | (7) | — | 8,100 | (8,100 | ) | (7) | — | |||||||||||||
Total Expenses | 19,211 | (8,431 | ) | 10,780 | 66,379 | (9,906 | ) | 56,473 | |||||||||||||||
Operating Income (Loss) (a) | $ | (1,197 | ) | $ | 9,237 | $ | 8,040 | $ | 9,814 | $ | 14,535 | $ | 24,349 | ||||||||||
Compensation Ratio (b) | 36.1 | % | 34.6 | % | 51.8 | % | 48.8 | % | |||||||||||||||
Operating Margin (b) | (6.6 | %) | 42.7 | % | 12.9 | % | 30.1 | % | |||||||||||||||
(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 PARTNERS INC. | |||||||||||
U.S. GAAP SEGMENT RECONCILIATION TO ADJUSTED RESULTS | |||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 | |||||||||||
(dollars in thousands) | |||||||||||
(UNAUDITED) | |||||||||||
Investment Banking Segment | |||||||||||
Three Months Ended September 30, 2016 | |||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | |||||||||
Net Revenues: | |||||||||||
Investment Banking Revenue | $ | 368,434 | $ | (6,060 | ) | (1)(2) | $ | 362,374 | |||
Other Revenue, net | 200 | 2,592 | (3) | 2,792 | |||||||
Net Revenues | 368,634 | (3,468 | ) | 365,166 | |||||||
Expenses: | |||||||||||
Employee Compensation and Benefits | 221,380 | (13,859 | ) | (5) | 207,521 | ||||||
Non-compensation Costs | 64,708 | (9,511 | ) | (8) | 55,197 | ||||||
Total Expenses | 286,088 | (23,370 | ) | 262,718 | |||||||
Operating Income (a) | $ | 82,546 | $ | 19,902 | $ | 102,448 | |||||
Compensation Ratio (b) | 60.1 | % | 56.8 | % | |||||||
Operating Margin (b) | 22.4 | % | 28.1 | % | |||||||
Investment Management Segment | |||||||||||
Three Months Ended September 30, 2016 | |||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | |||||||||
Net Revenues: | |||||||||||
Investment Management Revenue | $ | 17,158 | $ | 1,033 | (1)(2) | $ | 18,191 | ||||
Other Revenue, net | 522 | (406 | ) | (4) | 116 | ||||||
Net Revenues | 17,680 | 627 | 18,307 | ||||||||
Expenses: | |||||||||||
Employee Compensation and Benefits | 10,330 | — | 10,330 | ||||||||
Non-compensation Costs | 4,811 | (555 | ) | (8) | 4,256 | ||||||
Total Expenses | 15,141 | (555 | ) | 14,586 | |||||||
Operating Income (a) | $ | 2,539 | $ | 1,182 | $ | 3,721 | |||||
Compensation Ratio (b) | 58.4 | % | 56.4 | % | |||||||
Operating Margin (b) | 14.4 | % | 20.3 | % | |||||||
(a) Operating Income for U.S. GAAP excludes Income (Loss) from Equity Method Investments. | |||||||||||
(b) Reconciliations of the key metrics from U.S. GAAP to Adjusted results are a derivative of the reconciliations of their components above. |
EVERCORE PARTNERS INC. | |||||||||||||||||||||||
U.S. GAAP SEGMENT RECONCILIATION TO ADJUSTED RESULTS | |||||||||||||||||||||||
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2015 | |||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||
Investment Banking Segment | |||||||||||||||||||||||
Three Months Ended December 31, 2015 | Twelve Months Ended December 31, 2015 | ||||||||||||||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | ||||||||||||||||||
Net Revenues: | |||||||||||||||||||||||
Investment Banking Revenue | $ | 384,111 | $ | (7,239 | ) | (1)(2) | $ | 376,872 | $ | 1,133,860 | $ | (21,573 | ) | (1)(2) | $ | 1,112,287 | |||||||
Other Revenue, net | (71 | ) | 1,152 | (3) | 1,081 | (2,945 | ) | 6,147 | (3)(8a) | 3,202 | |||||||||||||
Net Revenues | 384,040 | (6,087 | ) | 377,953 | 1,130,915 | (15,426 | ) | 1,115,489 | |||||||||||||||
Expenses: | |||||||||||||||||||||||
Employee Compensation and Benefits | 241,389 | (17,550 | ) | (5) | 223,839 | 734,078 | (85,210 | ) | (5)(6) | 648,868 | |||||||||||||
Non-compensation Costs | 65,283 | (14,000 | ) | (8) | 51,283 | 241,811 | (43,929 | ) | (8) | 197,882 | |||||||||||||
Special Charges | — | — | — | 2,151 | (2,151 | ) | (7) | — | |||||||||||||||
Total Expenses | 306,672 | (31,550 | ) | 275,122 | 978,040 | (131,290 | ) | 846,750 | |||||||||||||||
Operating Income (a) | $ | 77,368 | $ | 25,463 | $ | 102,831 | $ | 152,875 | $ | 115,864 | $ | 268,739 | |||||||||||
Compensation Ratio (b) | 62.9 | % | 59.2 | % | 64.9 | % | 58.2 | % | |||||||||||||||
Operating Margin (b) | 20.1 | % | 27.2 | % | 13.5 | % | 24.1 | % | |||||||||||||||
Investment Management Segment | |||||||||||||||||||||||
Three Months Ended December 31, 2015 | Twelve Months Ended December 31, 2015 | ||||||||||||||||||||||
U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | U.S. GAAP Basis | Adjustments | Non-GAAP Adjusted Basis | ||||||||||||||||||
Net Revenues: | |||||||||||||||||||||||
Investment Management Revenue | $ | 24,731 | $ | 1,271 | (1)(2) | $ | 26,002 | $ | 95,129 | $ | 4,998 | (1)(2) | $ | 100,127 | |||||||||
Other Revenue, net | (528 | ) | 702 | (3) | 174 | (2,771 | ) | 3,576 | (3) | 805 | |||||||||||||
Net Revenues | 24,203 | 1,973 | 26,176 | 92,358 | 8,574 | 100,932 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Employee Compensation and Benefits | 13,141 | — | 13,141 | 54,097 | — | 54,097 | |||||||||||||||||
Non-compensation Costs | 6,122 | (87 | ) | (8) | 6,035 | 23,473 | (413 | ) | (8) | 23,060 | |||||||||||||
Special Charges | 7,645 | (7,645 | ) | (7) | — | 38,993 | (38,993 | ) | (7) | — | |||||||||||||
Total Expenses | 26,908 | (7,732 | ) | 19,176 | 116,563 | (39,406 | ) | 77,157 | |||||||||||||||
Operating Income (Loss) (a) | $ | (2,705 | ) | $ | 9,705 | $ | 7,000 | $ | (24,205 | ) | $ | 47,980 | $ | 23,775 | |||||||||
Compensation Ratio (b) | 54.3 | % | 50.2 | % | 58.6 | % | 53.6 | % | |||||||||||||||
Operating Margin (b) | (11.2 | %) | 26.7 | % | (26.2 | %) | 23.6 | % | |||||||||||||||
(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 PARTNERS INC. | |||||||||||||||||||
U.S. GAAP SEGMENT RECONCILIATION TO CONSOLIDATED RESULTS | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
U.S. GAAP | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Investment Banking | |||||||||||||||||||
Net Revenues: | |||||||||||||||||||
Investment Banking Revenue | $ | 427,864 | $ | 368,434 | $ | 384,111 | $ | 1,364,098 | $ | 1,133,860 | |||||||||
Other Revenue, net | (509 | ) | 200 | (71 | ) | (239 | ) | (2,945 | ) | ||||||||||
Net Revenues | 427,355 | 368,634 | 384,040 | 1,363,859 | 1,130,915 | ||||||||||||||
Expenses: | |||||||||||||||||||
Employee Compensation and Benefits | 261,125 | 221,380 | 241,389 | 861,139 | 734,078 | ||||||||||||||
Non-compensation Costs | 67,674 | 64,708 | 65,283 | 251,360 | 241,811 | ||||||||||||||
Special Charges | — | — | — | — | 2,151 | ||||||||||||||
Total Expenses | 328,799 | 286,088 | 306,672 | 1,112,499 | 978,040 | ||||||||||||||
Operating Income (a) | $ | 98,556 | $ | 82,546 | $ | 77,368 | $ | 251,360 | $ | 152,875 | |||||||||
Investment Management | |||||||||||||||||||
Net Revenues: | |||||||||||||||||||
Investment Management Revenue | $ | 17,965 | $ | 17,158 | $ | 24,731 | $ | 75,807 | $ | 95,129 | |||||||||
Other Revenue, net | 49 | 522 | (528 | ) | 386 | (2,771 | ) | ||||||||||||
Net Revenues | 18,014 | 17,680 | 24,203 | 76,193 | 92,358 | ||||||||||||||
Expenses: | |||||||||||||||||||
Employee Compensation and Benefits | 6,506 | 10,330 | 13,141 | 39,451 | 54,097 | ||||||||||||||
Non-compensation Costs | 4,605 | 4,811 | 6,122 | 18,828 | 23,473 | ||||||||||||||
Special Charges | 8,100 | — | 7,645 | 8,100 | 38,993 | ||||||||||||||
Total Expenses | 19,211 | 15,141 | 26,908 | 66,379 | 116,563 | ||||||||||||||
Operating Income (Loss) (a) | $ | (1,197 | ) | $ | 2,539 | $ | (2,705 | ) | $ | 9,814 | $ | (24,205 | ) | ||||||
Total | |||||||||||||||||||
Net Revenues: | |||||||||||||||||||
Investment Banking Revenue | $ | 427,864 | $ | 368,434 | $ | 384,111 | $ | 1,364,098 | $ | 1,133,860 | |||||||||
Investment Management Revenue | 17,965 | 17,158 | 24,731 | 75,807 | 95,129 | ||||||||||||||
Other Revenue, net | (460 | ) | 722 | (599 | ) | 147 | (5,716 | ) | |||||||||||
Net Revenues | 445,369 | 386,314 | 408,243 | 1,440,052 | 1,223,273 | ||||||||||||||
Expenses: | |||||||||||||||||||
Employee Compensation and Benefits | 267,631 | 231,710 | 254,530 | 900,590 | 788,175 | ||||||||||||||
Non-compensation Costs | 72,279 | 69,519 | 71,405 | 270,188 | 265,284 | ||||||||||||||
Special Charges | 8,100 | — | 7,645 | 8,100 | 41,144 | ||||||||||||||
Total Expenses | 348,010 | 301,229 | 333,580 | 1,178,878 | 1,094,603 | ||||||||||||||
Operating Income (a) | $ | 97,359 | $ | 85,085 | $ | 74,663 | $ | 261,174 | $ | 128,670 | |||||||||
(a) Operating Income (Loss) excludes Income (Loss) from Equity Method Investments. |
(1) | Client related expenses and provisions for uncollected receivables have been reclassified as a reduction of Revenue in the Adjusted presentation. |
(2) | Income (Loss) from Equity Method Investments has been reclassified to Revenue in the Adjusted presentation. |
(3) | Interest Expense on Debt is excluded from the Adjusted Investment Banking and Investment Management segment results and is included in Interest Expense in the segment results on a U.S. GAAP basis. |
(5) | Expenses incurred from the assumed vesting of Class E LP Units and Class G and H LP Interests issued in conjunction with the acquisition of ISI are excluded from the Adjusted presentation. |
(6) | Expenses for deferred consideration issued to the sellers of certain of the Company's acquisitions are excluded from the Adjusted presentation. |
(7) | Expenses during 2016 related to a charge for the impairment of our investment in Atalanta Sosnoff during the fourth quarter. Expenses during 2015 primarily related to a $28.5 million charge for the impairment of goodwill in the Institutional Asset Management reporting unit and charges of $7.1 million related to the restructuring of our investment in Atalanta Sosnoff during the fourth quarter, primarily related to the conversion of certain of Atalanta Sosnoff's profits interests held by management to equity interests. Expenses during 2015 also include charges of $2.2 million related to separation benefits and costs associated with the termination of certain contracts within the Company's Evercore ISI business, as well as $3.3 million related to the finalization of a matter associated with the wind-down of the Company's U.S. Private Equity business. |
(8) | Non-compensation Costs on an Adjusted basis reflect the following adjustments: |
Three Months Ended December 31, 2016 | |||||||||||
U.S. GAAP | Adjustments | Adjusted | |||||||||
(dollars in thousands) | |||||||||||
Occupancy and Equipment Rental | $ | 11,321 | $ | — | $ | 11,321 | |||||
Professional Fees | 17,795 | (4,813 | ) | (1) | 12,982 | ||||||
Travel and Related Expenses | 15,207 | (2,999 | ) | (1) | 12,208 | ||||||
Communications and Information Services | 10,333 | (28 | ) | (1) | 10,305 | ||||||
Depreciation and Amortization | 5,885 | (2,392 | ) | (8a) | 3,493 | ||||||
Acquisition and Transition Costs | 89 | (89 | ) | (8b) | — | ||||||
Other Operating Expenses | 11,649 | 80 | (1)(8c) | 11,729 | |||||||
Total Non-compensation Costs | $ | 72,279 | $ | (10,241 | ) | $ | 62,038 | ||||
Three Months Ended September 30, 2016 | |||||||||||
U.S. GAAP | Adjustments | Adjusted | |||||||||
(dollars in thousands) | |||||||||||
Occupancy and Equipment Rental | $ | 12,627 | $ | — | $ | 12,627 | |||||
Professional Fees | 15,419 | (2,922 | ) | (1) | 12,497 | ||||||
Travel and Related Expenses | 12,440 | (1,989 | ) | (1) | 10,451 | ||||||
Communications and Information Services | 10,155 | (20 | ) | (1) | 10,135 | ||||||
Depreciation and Amortization | 5,907 | (2,538 | ) | (8a) | 3,369 | ||||||
Acquisition and Transition Costs | 339 | (339 | ) | (8b) | — | ||||||
Other Operating Expenses | 12,632 | (2,258 | ) | (1)(8c) | 10,374 | ||||||
Total Non-compensation Costs | $ | 69,519 | $ | (10,066 | ) | $ | 59,453 | ||||
Three Months Ended December 31, 2015 | |||||||||||
U.S. GAAP | Adjustments | Adjusted | |||||||||
(dollars in thousands) | |||||||||||
Occupancy and Equipment Rental | $ | 12,072 | $ | — | $ | 12,072 | |||||
Professional Fees | 14,810 | (3,523 | ) | (1) | 11,287 | ||||||
Travel and Related Expenses | 16,251 | (4,211 | ) | (1) | 12,040 | ||||||
Communications and Information Services | 8,777 | (25 | ) | (1) | 8,752 | ||||||
Depreciation and Amortization | 6,815 | (3,245 | ) | (8a) | 3,570 | ||||||
Acquisition and Transition Costs | 2,951 | (2,951 | ) | (8b) | — | ||||||
Other Operating Expenses | 9,729 | (132 | ) | (1)(8c) | 9,597 | ||||||
Total Non-compensation Costs | $ | 71,405 | $ | (14,087 | ) | $ | 57,318 | ||||
Twelve Months Ended December 31, 2016 | |||||||||||
U.S. GAAP | Adjustments | Adjusted | |||||||||
(dollars in thousands) | |||||||||||
Occupancy and Equipment Rental | $ | 45,304 | $ | — | $ | 45,304 | |||||
Professional Fees | 57,667 | (12,105 | ) | (1) | 45,562 | ||||||
Travel and Related Expenses | 57,465 | (10,606 | ) | (1) | 46,859 | ||||||
Communications and Information Services | 40,277 | (87 | ) | (1) | 40,190 | ||||||
Depreciation and Amortization | 24,800 | (11,020 | ) | (8a) | 13,780 | ||||||
Acquisition and Transition Costs | 99 | (99 | ) | (8b) | — | ||||||
Other Operating Expenses | 44,576 | (3,707 | ) | (1)(8c) | 40,869 | ||||||
Total Non-compensation Costs | $ | 270,188 | $ | (37,624 | ) | $ | 232,564 | ||||
Twelve Months Ended December 31, 2015 | |||||||||||
U.S. GAAP | Adjustments | Adjusted | |||||||||
(dollars in thousands) | |||||||||||
Occupancy and Equipment Rental | $ | 47,703 | $ | — | $ | 47,703 | |||||
Professional Fees | 50,817 | (7,929 | ) | (1) | 42,888 | ||||||
Travel and Related Expenses | 55,388 | (13,030 | ) | (1) | 42,358 | ||||||
Communications and Information Services | 36,372 | (60 | ) | (1) | 36,312 | ||||||
Depreciation and Amortization | 27,927 | (14,123 | ) | (8a) | 13,804 | ||||||
Acquisition and Transition Costs | 4,890 | (4,890 | ) | (8b) | — | ||||||
Other Operating Expenses | 42,187 | (4,310 | ) | (1)(8c) | 37,877 | ||||||
Total Non-compensation Costs | $ | 265,284 | $ | (44,342 | ) | $ | 220,942 |
(8a) | The exclusion from the Adjusted presentation of expenses associated with amortization of intangible assets and other purchase accounting-related amortization from the acquisitions of ISI, SFS and certain other acquisitions. |
(8b) | Primarily professional fees incurred, as well as the reversal of a provision for certain settlements in 2016 and costs related to transitioning acquisitions or divestitures. |
(8c) | The expense associated with changes in the fair value of contingent consideration issued to the sellers of certain of the Company's acquisitions is excluded from the Adjusted results. |
(9) | Evercore is organized as a series of Limited Liability Companies, Partnerships, a C-Corporation 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 Evercore's effective tax rate assuming that the Company has adopted a conventional corporate tax structure and is taxed as a C-Corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that, historically, adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are made directly to stockholders' equity. In addition, the Adjusted presentation can reflect the netting of changes in the Company's Tax Receivable Agreement against Income Tax Expense. |
(10) | Reflects 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. |
(11a) | Assumes the vesting, and exchange into Class A shares, of certain Evercore LP partnership units and interests 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 partnership units are anti-dilutive. |
(11b) | Assumes the vesting of all Acquisition Related Share Issuances and Unvested Restricted Stock Units granted to Lexicon employees in the Adjusted presentation. In the computation of outstanding common stock equivalents for U.S. GAAP, these Shares and Restricted Stock Units are reflected using the Treasury Stock Method. |
(12) | Assumes the restructuring of Atalanta Sosnoff had occurred as of the beginning of the prior period presented and reflects adjustments to eliminate the revenue and expenses that were previously consolidated from Atalanta Sosnoff and the addition of income from Atalanta Sosnoff if its results had been reflected on the equity method of accounting. Management believes this adjustment is useful to investors to compare Evercore's results across periods. |
(13) | Assumes the transfer of ownership of the Mexican Private Equity business had occurred as of the beginning of the prior period presented and reflects adjustments to eliminate the management fees and expenses that were previously recorded from the Mexican Private Equity business and the addition of income from the Mexican Private Equity business if its results were based on the percentage of the management fees that the Company is currently entitled to. Management believes this adjustment is useful to investors to compare Evercore's results across periods. |