• Adjusted Net Revenues: $740 million, up 28% year-over-year.
• Adjusted Operating Income: $135 million, increased 63% year-over-year.
• Adjusted Earnings Per Share (EPS): $2.04, up 57% year-over-year.
• Adjusted Operating Margin: 18.2%, an improvement of approximately 385 basis points from the previous year.
• Adjusted Advisory Fees: $593 million, increased 27% year-over-year.
• Underwriting Fees: $44 million, up 43% year-over-year.
• Adjusted Asset Management and Administration Fees: $21 million, increased 14% year-over-year.
• Adjusted Compensation Ratio: 66%, improved by 200 basis points from the previous year.
• Non-Compensation Expenses: $117 million, up 15% year-over-year.
• Cash and Investment Securities: $1.8 billion as of September 30, 2024.
• Capital Returned to Shareholders: $529 million in the first nine months of 2024.
• Adjusted Diluted Share Count: 44.5 million, up from 43.4 million in the prior quarter.

• Warning! GuruFocus has detected 5 Warning Sign with EVR.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Evercore Inc (NYSE:EVR) reported a strong quarter with adjusted net revenues of approximately $740 million, marking a 28% increase compared to the prior year.
• The firm has successfully recruited eight investment banking Senior Managing Directors and one Senior Advisor in 2024, enhancing its talent pool.
• Evercore's equities franchise experienced its strongest third quarter in nearly a decade, highlighting the success of its merger with ISI.
• The underwriting business ended the quarter on a strong note, with Evercore acting as lead-left bookrunner on significant deals, including Diamondback Energy's $2.6 billion follow-on offering.
• Evercore's private capital advisory business continues to perform strongly, supported by longstanding relationships with GPs and LPs and a robust pipeline as the year-end approaches.

Negative Points

• Despite improvements, the European M&A market still lags behind the US, with uncertainty in the region persisting.
• The compensation ratio remains high at 66%, reflecting the intense competition for bankers and the associated costs of hiring and retaining talent.
• Non-compensation expenses increased by 15% year over year, driven by higher travel, professional fees, and technology expenses.
• The upcoming US election and geopolitical tensions contribute to market uncertainty, potentially impacting transaction timing.
• The regulatory environment remains uncertain, which could affect the execution of larger deals in the M&A market.

Q & A Highlights

Q: Can you provide insights on the trajectory of the compensation ratio and the path to achieving a level below 60%? A: Timothy Lalonde, CFO: Improvement in the compensation ratio is gradual, occurring over the near to medium term. Last year's comp ratio was 67.6%, and this quarter's improvement is 160 basis points year-to-date. We're balancing firm growth with comp ratio improvement, considering the intense competition for bankers and associated costs.

Q: Could you give some color on the size of deals in the pipeline and the appetite for large-cap M&A? A: John Weinberg, CEO: Our pipeline includes deals of all sizes, and activity is robust. There will be sizable deals, though some may be impacted by the regulatory environment. We expect high activity levels across all size ranges as the market recovers.

Q: Can you update on the cadence of the advisory recovery and potential election impacts? A: John Weinberg, CEO: The recovery is gradual, but our backlogs are robust, indicating high activity levels. The election may cause short-term hesitancy, but we don't expect it to impact medium-term merger activity significantly. Regulatory environment changes post-election could affect larger deals.

Q: How is the restructuring business performing, and has the start of rate cuts shifted client dialogues? A: John Weinberg, CEO: The restructuring business is very active, focusing on liability management. Rate cuts are not expected to slow down advisory assignments. We anticipate strong performance into 2025.

Q: What is the growth outlook for the private capital advisory business, and is there a need for more talent to drive growth? A: John Weinberg, CEO: The business is performing well and growing, with strong backlogs and activity levels. We are leveraging synergies across advisory services for sponsors, providing comprehensive advisory approaches, and expect continued growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.