Highlights
- Evercore reports Net Revenues of $44.5 million and Adjusted Pro Forma Net Income of $4.5 million, or $0.13 per share; and,
- U.S. GAAP net loss of $1.0 million for the quarter ended March 31, 2008.
- Announces $25 million share repurchase program.
- Declares quarterly dividend of $0.12 per share.
NEW YORK, May 12 /PRNewswire-FirstCall/ -- Evercore Partners Inc.(NYSE: EVR) today announced that for the first quarter ended March 31, 2008its Adjusted Pro Forma Net Income was $4.5 million or $0.13 per share,compared to Adjusted Pro Forma Net Income of $16.0 million or $0.50 per sharefor the prior year first quarter. Adjusted Pro Forma Net Revenues were $44.5million for the quarter ended March 31, 2008 compared to Adjusted Pro FormaNet Revenues of $89.5 million for the quarter ended March 31, 2007.
For the quarter ended March 31, 2008, Evercore's U.S. GAAP Net Loss was$1.0 million or ($0.08) per share compared to Net Income of $4.2 million or$0.64 per share for the quarter ended March 31, 2007.
'Investment banking is lumpy by nature and also characterized by periodicdown cycles,' said Roger C. Altman, Chairman and Chief Executive Officer,Evercore. 'We will have occasional weak quarters, and this was one of them.Indeed, it was our first since going public nearly two years ago.'
'U.S. merger and acquisition volume was down nearly 50 percent for thequarter. Nevertheless, the fundamentals of Evercore's business remainexcellent. Our merger advisory activity levels and backlog are fine,restructuring volume is rising and our non-compensation expenses are comingdown as promised.'
The following table provides an overview of the Company's results:
Three Months Ended March 31, U.S. GAAP Adjusted Pro Forma(1) 2007 2008 % Change 2007 2008 % Change (dollars in thousands, except per share data) Net Revenues: Advisory $83,946 $40,692 (51.5%) $83,946 $40,692 (51.5%) Investment Management 4,603 2,574 (44.1%) 4,603 2,574 (44.1%) Other - Net 947 1,222 29.0% 947 1,222 29.0% Net Revenues $89,496 $44,488 (50.3%) $89,496 $44,488 (50.3%)
Pre-Tax Income (Loss) $24,096 $(2,602) NM $28,351 $6,453 (77.2%) Pre-Tax Margin 26.9% (5.8%) 31.7% 14.5%
Net Income (Loss) $4,220 $(965) NM $16,047 $4,495 (72.0%) EPS $0.64 $(0.08) NM $0.50 $0.13 (74.0%)
(1) See 'Basis of Alternative Financial Statement Presentations' on page 6 and Annex I for a detailed discussion of the differences in the calculation of the Company's results prepared in accordance with U.S. GAAP and on an adjusted pro forma basis. Any financial measure other than U.S. GAAP results should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
Evercore's revenues and net income can fluctuate materially depending onthe number, size and timing of the completed transactions on which it advises,the number and size of Investment Management gains or losses and otherfactors. Accordingly, the revenues and net income in any particular quartermay not be indicative of future results. Evercore believes that annual resultsare the most meaningful.
Revenues
Advisory
Advisory Revenue was $40.7 million and $83.9 million for the quartersended March 31, 2008 and 2007, respectively.
Among the transactions announced during the first quarter of 2008 on whichEvercore is advising are:
-- Bright Horizons Family Solutions on its sale to an affiliate of Bain Capital -- Performance Food Group on its sale to an affiliate of The Blackstone Group and Wellspring Capital Management -- De Ruiter Seeds Group on its sale to Monsanto -- Smithfield Foods on its sale of Smithfield Beef Group to JBS
Transactions which closed during the first quarter of 2008 on whichEvercore advised included:
-- Silver Lake Partners on its sale of a minority interest in the general partnership to CalPERS -- EdgeTrade on its sale to Knight Capital Group -- RGM Advisors on its sale of a minority stake to TA Associates, Inc. -- Quadrangle Capital Partners on its sale of Hudson Valley DataNet to Lightower Fiber -- Gerson Lehrman Group on its sale of an approximate 25% equity stake to Silver Lake Partners and associated debt refinancing
A substantial portion of Evercore's first quarter 2008 Advisory revenueswere derived from clients based in the United States. Nevertheless, Evercoreexpects its international operations will represent a significant portion ofits Advisory revenues in the remainder of 2008.
According to Thomson Financial, among boutiques, Evercore was the numberone ranked firm as measured in U.S. announced transactions and closedtransactions for the past 12 months.
Investment Management Evercore's Investment Management Revenues were comprised of the following:
Three Months Ended March 31, 2007 2008 % Change (dollars in thousands) Private Equity: Management Fees Including Portfolio Company Fees $3,634 $1,978 (45.6%) Realized and Unrealized Gains (Losses) Including Carried Interest (49) 307 NM 3,585 2,285 (36.3%) Public Securities: Management Fees 134 363 170.9% Realized and Unrealized Gains (Losses) Including Performance Fees 884 (74) NM 1,018 289 (71.6%)
Investment Management Revenue $4,603 $2,574 (44.1%)
Private equity revenues declined compared to those in the first quarter2007 primarily due to the step down in management fees from 2% of committedcapital to 1% of invested capital in accordance with the Evercore CapitalPartners II partnership agreement. Unrealized gains and losses relate torevisions in the valuation of portfolio companies driven by changes in theirunderlying fundamental performance.
Evercore's public securities business continues to make progress. InMexico, despite challenging fixed income markets, the products of EvercoreMexico's Protego Casa de Bolsa ('PCB') continue to grow and perform well. Inthe U.S., difficult equity markets continue to be a challenge for EvercoreAsset Management ('EAM'). As of March 31, 2008, assets under management at EAMand PCB were $302.8 million and $760.3 million, respectively, compared to$454.7 million and $364.5 million, respectively, as of March 31, 2007.
Expenses
Evercore's expenses for the quarter ended March 31, 2008 and 2007 were asfollows:
Three Months Ended March 31, U.S. GAAP Adjusted Pro Forma(1) 2007 2008 % Change 2007 2008 % Change (dollars in thousands) Employee Compensation and Benefits Expense $47,623 $33,255 (30.2%) $47,623 $25,803 (45.8%) % of Net Revenue 53.2% 74.8% 53.2% 58.0% Non-compensation Expenses $17,777 $12,708 (28.5%) $13,522 $12,232 (9.5%) % of Net Revenue 19.9% 28.6% 15.1% 27.5% Special Charges $- $1,127 NM $- $- NM % of Net Revenue - 2.5% - -
(1) See 'Basis of Alternative Financial Statement Presentations' on page 6 and Annex I for a detailed discussion of the differences in the calculation of the Company's results prepared in accordance with U.S. GAAP and on an adjusted pro forma basis. Any financial measure other than U.S. GAAP results should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
Compensation and Benefits
Evercore's compensation expense is generally based upon revenue and canfluctuate materially in any particular quarter depending upon the amount ofrevenue recognized as well as other factors. Accordingly, the amount ofcompensation expense recognized in any particular quarter may not beindicative of compensation expense in a future period.
The Company's Adjusted Pro Forma Employee Compensation and Benefits costsfor the quarter ended March 31, 2008 was $25.8 million. When compared to NetRevenue for the associated period, the ratio of compensation to net revenuewas 58.0%. This ratio compares with 53.2% for the quarter ended March 31,2007. The level of compensation and benefits costs was impacted by severalfactors, including costs associated with new partners and the growth ofEvercore's international businesses. In addition, the accrual fordiscretionary bonuses was adjusted downward but maintained at a level which webelieve is required to retain key personnel. Evercore continues to manageheadcount growth carefully.
As of March 31, 2008, Evercore's total headcount was 294 employees,compared with 257 as of March 31, 2007 and 290 as of December 31, 2007.
As of March 31, 2008 Evercore Evercore Evercore Evercore 2007 U.S. Mexico Europe Total
Headcount: Senior Managing Directors: Advisory 22 17 6 6 29 Investment Management 10 6 1 1 8 Corporate 2 3 - - 3 Other Employees: Other Professionals and Support Staff 223 142 98 14 254 Total 257 168 105 21 294
Non-Compensation Expenses
Non-compensation costs for the quarter ended March 31, 2008 declined inthe aggregate on an adjusted pro forma basis consistent with Evercore's plans.The most significant reductions were a result of decreases in ProfessionalFees. These decreases primarily relate to the completion of projectsassociated with Sarbanes-Oxley compliance and related initiatives.
Other U.S. GAAP Expenses
Included in the first quarter of 2008 U.S. GAAP results are the followingexpenses that have been excluded from the adjusted pro forma results:
-- A $7.5 million expense included in Employee Compensation and Benefits relating to the issuance of shares as additional deferred consideration pursuant to the Sale and Purchase Agreement associated with the Braveheart acquisition.
