Oct. 28, 2009 (PR Newswire) -- NEW YORK, Oct. 28 /PRNewswire-FirstCall/ --
Highlights
-- Third Quarter Financial Summary:
-- Net Revenues of $83 million, up 49% (46% for U.S. GAAP) versus the
same period in 2008 and 17% versus the second quarter of 2009
-- Adjusted Pro Forma Net Income of $11.0 million, or $0.29 per share,
is nearly four times the Adjusted Pro Forma Net Income in the third
quarter 2008 and more than double the second quarter of 2009
-- U.S. GAAP Net Income of $2.6 million or $0.14 per share, in contrast
to a Net Loss of $0.04 per share in the same period last year and a
Net Loss of $0.43 per share in the second quarter of 2009
-- Strong revenues and earnings in the Advisory business, including
restructuring; maintained #1 M&A Advisory boutique ranking and #5 rank
overall in the U.S.
-- Advised ACS on its announced sale to Xerox and sanofi-aventis on its
acquisition of the 50% interest in Merial that it did not own
-- Advised General Motors, which emerged from Chapter 11 bankruptcy;
continue to advise CIT, LyondellBasell and others
-- Progress in Investment Management driven by growth in Assets Under
Management (AUM): $3.6 billion of AUM at the quarter end, up 25% versus
the second quarter of 2009
-- Declares quarterly dividend of $0.15 per share
Evercore Partners Inc. (NYSE: EVR) today announced that its Adjusted Pro Forma Net Revenues were $83.4 million and $205.3 million for the three and nine months ended September 30, 2009, respectively, compared to Adjusted Pro Forma Net Revenues of $56.0 million and $158.9 million for the three and nine months ended September 30, 2008, respectively. Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. was $11.0 million and $16.3 million, or $0.29 and $0.45 per share, for the three and nine months ended September 30, 2009, respectively, compared to Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. of $2.3 million and $12.5 million, or $0.07 and $0.37 per share, for the three and nine months ended September 30, 2008, respectively.
The quarter was driven by strong results in the Advisory business, with revenue contributions from both M&A advisory and restructuring assignments. The Investment Management business reported substantially improved revenues as assets under management grew, driving an increase in fee-based revenues. Operating margins improved as revenue growth exceeded growth in operating expenses.
U.S. GAAP Net Revenues were $83.2 million and $204.0 million for the three and nine months ended September 30, 2009, respectively, compared to U.S. GAAP Net Revenues of $56.8 million and $161.4 million for the three and nine months ended September 30, 2008, respectively. U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. was $2.6 million and ($3.2) million, or $0.14 and ($0.22) per share, for the three and nine months ended September 30, 2009, respectively, compared to a U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. of ($0.5) million and $0.6 million, or ($0.04) and $0.05 per share, for the three and nine months ended September 30, 2008, respectively.
Evercore's quarterly results may fluctuate significantly due to the timing and amount of Advisory fees earned, as well as gains or losses relating to the Firm's Investment Management business and other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.
"Financial performance in the quarter reflected continued improvements in the financial markets and the return on our investments in top talent. Revenues grew for the fourth straight quarter with all businesses contributing. Our Advisory results were balanced between M&A and restructuring assignments, reflecting the early stages of the recovery of the M&A markets. Our Investment Management business reported its best revenue quarter since our IPO, reporting $10 million of fee-based revenues," said Ralph Schlosstein, President and Chief Executive Officer. "Importantly, we made some progress toward our goal of delivering more of our revenue growth to the bottom line, reducing our compensation ratio to 61% and holding non-compensation costs flat to last quarter, resulting in an increase in operating margin to 23%. We definitely have more work to do here, but we are pleased with the progress that we are making."
"Evercore's Advisory franchise continues to strengthen. Our cadre of advisory partners has never been stronger. Our restructuring advisory performance has been stellar. And, overall M&A activity seems to be picking up, albeit gradually. Major client assignments during the quarter included our continued work for General Motors, LyondellBasell and CIT, transactions for ACS, sanofi-aventis and Iridium and strategic financial advice for the Mexico Secretaria de Hacienda y Credito Publico," said Roger Altman, Chairman. "While results always will vary quarter to quarter, Evercore is quite well positioned going forward."
Mr. Schlosstein continued, "Our Investment Management business is making steady progress toward its goal of achieving a break-even run rate by the end of 2010; growing both assets under management and fee based revenues during the third quarter, while carefully managing costs. This growth reflects both the continued inflow of client assets as well as the improvement in the equity markets."
In the discussion below of Evercore and the business segments, information is presented on an adjusted pro forma basis, which is a non-generally accepted accounting principles ("non-GAAP") measure and is unaudited. 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. 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 what management views as ongoing operations. 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-1 through A-11 included in Annex I. These adjusted pro forma amounts are allocated to the Company's two business segments: Advisory and Investment Management.
Consolidated Adjusted Pro Forma and U.S. GAAP Results
Adjusted Pro Forma
--------------------------------------------
Three Months Ended % Change vs.
----------------------------- --------------
June
September 30, September June September
30, 2009 30, 30, 30,
2009 (1) 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues (2) $83,382 $71,312 $56,028 17% 49%
------- ------- -------
Expenses:
Employee Compensation and
Benefits 50,693 51,859 40,311 (2%) 26%
Non-compensation Costs (2) 13,513 13,376 11,018 1% 23%
Total Expenses 64,206 65,235 51,329 (2%) 25%
------ ------ ------
Operating Income 19,176 6,077 4,699 216% 308%
Interest Expense on Long-term
Debt (3) 1,896 1,897 670 0% 183%
----- ----- ---
Pre-Tax Income 17,280 4,180 4,029 313% 329%
Provision for Income Taxes 7,264 1,757 1,759 313% 313%
----- ----- -----
Net Income 10,016 2,423 2,270 313% 341%
Noncontrolling Interest (976) (1,127) - 13% NM
---- ------ ---
Net Income Attributable to
Evercore Partners Inc. $10,992 $3,550 $2,270 210% 384%
======= ====== ======
Earnings Per Share $0.29 $0.10 $0.07 190% 314%
===== ===== =====
Adjusted Pro Forma
--------------------------------
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues (2) $205,300 $158,928 29%
-------- --------
Expenses:
Employee Compensation and
Benefits 138,406 104,626 32%
Non-compensation Costs (2) 37,536 33,496 12%
Total Expenses 175,942 138,122 27%
------- -------
Operating Income 29,358 20,806 41%
Interest Expense on Long-term
Debt (3) 5,685 670 749%
----- ---
Pre-Tax Income 23,673 20,136 18%
Provision for Income Taxes 9,957 7,594 31%
----- -----
Net Income 13,716 12,542 9%
Noncontrolling Interest (2,631) - NM
------ ---
Net Income Attributable to
Evercore Partners Inc. $16,347 $12,542 30%
======= =======
Earnings Per Share $0.45 $0.37 22%
===== =====
U.S. GAAP
---------------------------------------------
Three Months Ended % Change vs.
------------------------------ --------------
June
September 30, September June September
30, 2009 30, 30, 30,
2009 (1) 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues (2) $83,196 $71,043 $56,813 17% 46%
------- ------- -------
Expenses:
Employee Compensation and
Benefits 55,104 51,859 40,311 6% 37%
Non-compensation Costs (2) 15,806 15,983 12,937 (1%) 22%
Special Charges - 16,138 1,695 NM NM
--- ------ -----
Total Expenses 70,910 83,980 54,943 (16%) 29%
------ ------ ------
Operating Income (Loss) 12,286 (12,937) 1,870 NM 557%
Interest Expense on Long-term
Debt (3) - - - NM NM
--- --- ---
Pre-Tax Income (Loss) 12,286 (12,937) 1,870 NM 557%
Provision for Income Taxes 4,602 1,373 1,475 235% 212%
----- ----- -----
Net Income (Loss) 7,684 (14,310) 395 NM NM
Noncontrolling Interest 5,051 (8,267) 863 NM 485%
----- ------ ---
Net Income (Loss)
Attributable to Evercore
Partners Inc. $2,633 $(6,043) $(468) NM NM
====== ======= =====
Earnings (Loss) Per Share $0.14 $(0.43) $(0.04) NM NM
===== ====== ======
U.S. GAAP
--------------------------------
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues (2) $203,965 $161,419 26%
-------- --------
Expenses:
Employee Compensation and
Benefits 142,817 112,078 27%
Non-compensation Costs (2) 44,206 38,072 16%
Special Charges 16,138 4,132 291%
------ -----
Total Expenses 203,161 154,282 32%
------- -------
Operating Income (Loss) 804 7,137 (89%)
Interest Expense on Long-term
Debt (3) - - NM
--- ---
Pre-Tax Income (Loss) 804 7,137 (89%)
Provision for Income Taxes 7,033 3,642 93%
----- -----
Net Income (Loss) (6,229) 3,495 NM
Noncontrolling Interest (3,010) 2,872 NM
------ -----
Net Income (Loss)
Attributable to Evercore
Partners Inc. $(3,219) $623 NM
======= ====
Earnings (Loss) Per Share $(0.22) $0.05 NM
====== =====
(1) The June 30, 2009 Adjusted Pro Forma and U.S. GAAP results
and reconciliation were previously disclosed in the earnings
release furnished to the SEC on July 29, 2009. We have included
the historical Adjusted Pro Forma and U.S. GAAP results in this
press release merely as additional information. A copy of the
related reconciliation from the prior press release is available
on our website.
(2) For Adjusted Pro Forma purposes, reimbursable client related
expenses and expenses associated with revenue sharing arrangements
with third parties have been presented as a reduction from the
associated Non-compensation Costs for all periods. In prior
years, such amounts were included in Net Revenues.
(3) Interest Expense on Long-term Debt represents interest
expense on the Senior Notes and is presented below Operating
Income (Loss) on an Adjusted Pro Forma basis.
Business Line Reporting
A discussion of Adjusted Pro Forma revenues and expenses is presented below for the Advisory and Investment Management segments. Unless otherwise stated, all of the financial measures presented in this discussion are Adjusted Pro Forma measures.
Advisory
Evercore's Advisory business produced solid results that were balanced between M&A advisory and restructuring assignments, with increased revenues from clients headquartered outside the U.S. In addition to revenue growth, our continued focus on expense management resulted in improved operating leverage this quarter with pre-tax margins increasing to 31.4% from 29.6% last quarter and 13.3% in the same period last year.
Three Months Ended % Change vs.
---------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues:
Advisory (1) $71,596 $68,439 $50,372 5% 42%
Other Revenue, net 1,208 (71) 1,071 NM 13%
----- --- -----
Net Revenues 72,804 68,368 51,443 6% 42%
------ ------ ------
Expenses:
Employee Compensation and
Benefits 41,119 39,682 35,172 4% 17%
Non-compensation Costs (1) 8,812 8,468 9,454 4% (7%)
----- ----- -----
Total Expenses 49,931 48,150 44,626 4% 12%
------ ------ ------
Adjusted Pro Forma Operating
Income 22,873 20,218 6,817 13% 236%
Interest Expense on Long-term
Debt (2) 1,024 683 - 50% NM
----- --- ---
Adjusted Pro Forma Pre-Tax
Income $21,849 $19,535 $6,817 12% 221%
======= ======= ======
Nine Months Ended
-------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues:
Advisory (1) $188,084 $147,336 28%
Other Revenue, net 1,739 2,580 (33%)
----- -----
Net Revenues 189,823 149,916 27%
------- -------
Expenses:
Employee Compensation and
Benefits 110,013 90,403 22%
Non-compensation Costs (1) 24,571 27,432 (10%)
------ ------
Total Expenses 134,584 117,835 14%
------- -------
Adjusted Pro Forma Operating
Income 55,239 32,081 72%
Interest Expense on Long-term
Debt (2) 1,707 - NM
----- ---
Adjusted Pro Forma Pre-Tax
Income $53,532 $32,081 67%
======= =======
(1) Reimbursable client related expenses and expenses associated
with revenue sharing arrangements with third parties have been
presented as a reduction from the associated Non-compensation
Costs for all periods. In prior years, such amounts were
included in Net Revenues.
(2) Interest expense related to the Senior Notes is presented in
Interest Expense on Long-term Debt in order to clearly reflect
the operating results of the business.
Revenues
Advisory revenue was $71.6 million and $188.1 million for the three and nine months ended September 30, 2009, respectively, compared to $50.4 million and $147.3 million for the three and nine months ended September 30, 2008, respectively. The increase in revenues reflects continued contribution from prominent restructuring assignments including General Motors and CIT, prominent M&A advisory assignments with sanofi-aventis, Iridium and ACS and a financial advisory assignment for the Mexico Secretaria de Hacienda y Credito Publico.
According to Thomson Reuters, industry-wide M&A volumes are down from 2008 levels, with the dollar value of global completed M&A transactions down 47% year-to-date and U.S. completed M&A transactions down 30% year-to-date. Restructuring activity, however, continues to remain high.
According to Thomson Reuters, among boutiques, Evercore was ranked number one in the U.S. as measured by the value of announced transactions during the first nine months of 2009 and #5 in the U.S. among all advisors. The Company earned Advisory revenues in excess of $1 million from 11 clients during the third quarter of 2009, down from the number of clients in the third quarter of 2008 but up from 10 clients in the second quarter of 2009. The number of fee paying clients for the first nine months of 2009 grew to 126 compared to 122 in the first nine months of 2008.
Expenses
Compensation costs for the Advisory segment for the three and nine months ended September 30, 2009, were $41.1 million and $110.0 million, respectively, up from $35.2 million and $90.4 million for the three and nine months ended September 30, 2008, respectively. The year-on-year increase in compensation is due to higher compensation accrued associated with revenues earned and the impact of new hires. For the three and nine months ended September 30, 2009, Evercore's Advisory compensation ratio was 56.5% and 58.0%, respectively, versus the compensation ratio reported for the three and nine months ended September 30, 2008 of 68.4% and 60.3%, respectively. Excluding stock compensation costs of $4.5 million and $12.0 million for the three and nine months ended September 30, 2009, respectively, related to new Advisory Senior Managing Directors(1), the ratio would have been 50.3% and 51.6%, respectively.
Non-compensation costs for the three months ended September 30, 2009 of $8.8 million decreased 7% from the same period last year. Through the first nine months of the year, non-compensation expenses declined 10% from the same period last year, reflecting our ongoing focus on cost control.
(1) Stock compensation costs for Senior Managing Directors hired in the past twenty-four months
Investment Management
The revenues for the Investment Management business improved from last quarter and the prior year as our existing and new businesses generated higher levels of assets under management (AUM) and fee-based revenues. AUM grew 25% to approximately $3.6 billion from $2.9 billion at June 30, 2009, reflecting growth in both net flows and market appreciation. New businesses drove the growth in revenues and expenses for both the three and nine month periods.
Three Months Ended % Change vs.
---------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues:
Private Equity (2) $2,354 $(1,812) $3,184 NM (26%)
Institutional Asset
Management 6,476 3,450 900 88% 620%
Wealth Management 955 522 (163) 83% NM
--- --- ----
Investment Management
Revenues 9,785 2,160 3,921 353% 150%
Other Revenue, net (3) 793 784 664 1% 19%
--- --- ---
Net Revenues 10,578 2,944 4,585 259% 131%
------ ----- -----
Expenses:
Employee Compensation
and Benefits 9,574 12,177 5,139 (21%) 86%
Non-compensation Costs (2) 4,701 4,908 1,564 (4%) 201%
----- ----- -----
Total Expenses 14,275 17,085 6,703 (16%) 113%
------ ------ -----
Adjusted Pro Forma
Operating Income (Loss) (3,697) (14,141) (2,118) 74% (75%)
Interest Expense on
Long-term Debt (3) 872 1,214 670 (28%) 30%
--- ----- ---
Adjusted Pro Forma
Pre-Tax Income (Loss) $(4,569) $(15,355) $(2,788) 70% (64%)
======= ======== =======
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues:
Private Equity (2) $2,012 $8,615 (77%)
Institutional Asset Management 8,856 (414) NM
Wealth Management 1,643 (163) NM
----- ----
Investment Management Revenues 12,511 8,038 56%
Other Revenue, net (3) 2,966 974 205%
----- ---
Net Revenues 15,477 9,012 72%
------ -----
Expenses:
Employee Compensation and Benefits 28,393 14,223 100%
Non-compensation Costs (2) 12,965 6,064 114%
------ -----
Total Expenses 41,358 20,287 104%
------ ------
Adjusted Pro Forma Operating
Income (Loss) (25,881) (11,275) (130%)
Interest Expense on Long-term Debt (3) 3,978 670 494%
----- ---
Adjusted Pro Forma Pre-Tax Income
(Loss) $(29,859) $(11,945) (150%)
======== ========
(2) Reimbursable client related expenses have been presented as a
reduction from the associated Non-compensation Costs for all periods.
In prior years, such amounts were included in Net Revenues.
(3) Other Revenue, net includes interest income and expense on short-term
reverse repurchase and repurchase agreements.
