Evercore(US:EVR)2024-08-02 20:06markdown Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Evercore Inc.'s unaudited condensed consolidated financial statements for Q2 and H1 2024, including financial condition, operations, and cash flows Condensed Consolidated Statements of Operations (Unaudited) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | **$689.2M** | **$499.4M** | **$1.27B** | **$1.07B** | | Total Expenses | $581.0M | $441.7M | $1.08B | $906.9M | | Income Before Income Taxes | $110.1M | $59.3M | $196.5M | $167.6M | | Net Income | $81.7M | $42.2M | $174.9M | $134.4M | | **Net Income Attributable to Evercore Inc.** | **$73.8M** | **$37.2M** | **$159.5M** | **$120.6M** | | Diluted EPS | $1.81 | $0.95 | $3.89 | $3.02 | Condensed Consolidated Statements of Financial Condition (Unaudited) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$3.32B** | **$3.70B** | | Cash and Cash Equivalents | $631.6M | $596.9M | | Investment Securities and Certificates of Deposit | $1.06B | $1.44B | | **Total Liabilities** | **$1.59B** | **$1.92B** | | Accrued Compensation and Benefits | $430.0M | $763.2M | | Notes Payable | $373.9M | $373.9M | | **Total Equity** | **$1.73B** | **$1.78B** | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $67.3M | ($205.5M) | | Net Cash Provided by Investing Activities | $383.8M | $480.4M | | Net Cash Provided by (Used in) Financing Activities | ($411.0M) | ($433.5M) | | **Net Increase (Decrease) in Cash** | **$35.0M** | **($142.6M)** | [Note 1 – Organization](index=11&type=section&id=Note%201%20%E2%80%93%20Organization) Evercore Inc. operates globally through Investment Banking & Equities and Investment Management segments, offering advisory, capital markets, and wealth management services - The company operates through two primary segments: Investment Banking & Equities and Investment Management[20](index=20&type=chunk)[21](index=21&type=chunk) - The Investment Banking & Equities segment focuses on M&A advisory, restructuring, capital markets advice, and equity research and trading for institutional investors[20](index=20&type=chunk) - The Investment Management segment provides wealth management services and holds interests in private equity funds not managed by the company[21](index=21&type=chunk) [Note 4 – Revenue and Accounts Receivable](index=12&type=section&id=Note%204%20%E2%80%93%20Revenue%20and%20Accounts%20Receivable) Details H1 2024 revenue by segment, contract balances, and credit loss allowance, with Investment Banking & Equities as the primary revenue driver Revenue by Segment | Segment | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Investment Banking & Equities** | | | | Advisory Fees | $998.1M | $837.1M | | Underwriting Fees | $86.5M | $61.1M | | Commissions and Related Revenue | $101.4M | $98.1M | | **Total Investment Banking & Equities** | **$1.19B** | **$996.3M** | | **Investment Management** | | | | Wealth Management | $37.9M | $32.5M | | **Total Investment Management** | **$37.9M** | **$32.5M** | - The allowance for credit losses was **$4.99 million** as of June 30, 2024, down from **$8.71 million** as of June 30, 2023. Bad debt expense for H1 2024 was **$0.97 million**, a significant decrease from **$5.30 million** in H1 2023[34](index=34&type=chunk) [Note 11 – Evercore Inc. Stockholders' Equity](index=22&type=section&id=Note%2011%20%E2%80%93%20Evercore%20Inc.%20Stockholders%27%20Equity) Outlines changes in stockholders' equity, including H1 2024 dividends of $1.56 per share and the repurchase of 1.78 million Class A shares for $317.5 million - On July 23, 2024, the Board declared a quarterly dividend of **$0.80 per share**, payable on September 13, 2024[79](index=79&type=chunk) - During the six months ended June 30, 2024, the company purchased **1.78 million Class A shares** for **$317.5 million**, comprising **0.82 million shares** under its repurchase program and **0.96 million shares** for net settlement of stock awards[82](index=82&type=chunk) [Note 14 – Share-Based and Other Deferred Compensation](index=27&type=section&id=Note%2014%20%E2%80%93%20Share-Based%20and%20Other%20Deferred%20Compensation) Details various compensation plans, including H1 2024 compensation expense for Service-based RSUs of $154.7 million and $148.4 million accrued under the 2021 Long-term Incentive Plan - In June 2024, the company awarded **328 Class K-P Units**, which convert to Class K LP Units based on market, performance, and service conditions through April 2029[102](index=102&type=chunk) - The company granted **1.67 million RSUs** with an aggregate fair value of **$304.2 million** in H1 2024, which generally vest ratably over four years[108](index=108&type=chunk) - As of June 30, 2024, the company has accrued **$148.4 million** under the 2021 Long-term Incentive Plan, with payments due in cash or shares in Q1 of 2025, 2026, and 2027[114](index=114&type=chunk) [Note 17 – Income Taxes](index=32&type=section&id=Note%2017%20%E2%80%93%20Income%20Taxes) The company's effective tax rate was 11.0% for H1 2024, down from 19.8% in H1 2023, primarily due to a larger $30.9 million excess tax benefit Effective Tax Rate Analysis | Period | Effective Tax Rate | Excess Tax Benefit | Impact of Benefit on Rate | | :--- | :--- | :--- | :--- | | **H1 2024** | **11.0%** | $30.9M | **-15.7 pts** | | **H1 2023** | **19.8%** | $13.8M | **-8.2 pts** | - The company is evaluating the impact of the OECD's Pillar Two tax framework and does not expect it to materially impact its effective tax rate[131](index=131&type=chunk)[132](index=132&type=chunk) [Note 18 – Segment Operating Results](index=33&type=section&id=Note%2018%20%E2%80%93%20Segment%20Operating%20Results) Details H1 2024 segment operating results, with Investment Banking & Equities reporting $183.4 million pre-tax income and Investment Management $13.2 million Segment Pre-Tax Income (H1 2024 vs H1 2023) | Segment | H1 2024 Pre-Tax Income | H1 2023 Pre-Tax Income | | :--- | :--- | :--- | | Investment Banking & Equities | $183.4M | $156.9M | | Investment Management | $13.2M | $10.7M | | **Total** | **$196.5M** | **$167.6M** | Net Revenues by Geography (H1 2024) | Region | Net Revenues (excluding Other Revenue) | | :--- | :--- | | United States | $989.7M | | Europe and Other | $233.7M | | Latin America | $0.5M | | **Total** | **$1.22B** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses Q2 and H1 2024 financial performance, highlighting Q2 net revenue growth of 38% to $689.2 million and H1 growth of 19% to $1.27 billion - Q2 2024 Net Income Attributable to Evercore Inc. was **$73.8 million**, a **98% increase** from Q2 2023[170](index=170&type=chunk) - H1 2024 Net Income Attributable to Evercore Inc. was **$159.5 million**, a **32% increase** from H1 2023[175](index=175&type=chunk) - The employee compensation and benefits expense ratio was **66.6%** of net revenues for Q2 2024 and **66.7%** for H1 2024[173](index=173&type=chunk)[179](index=179&type=chunk) [Results of Operations](index=40&type=section&id=MD%26A%20-%20Results%20of%20Operations) Evercore's Q2 2024 net revenues rose 38% to $689.2 million, with net income nearly doubling to $73.8 million, reflecting strong H1 growth Key Performance Indicators (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $689.2M | $499.4M | +38% | | Advisory Fees | $568.2M | $374.6M | +52% | | Net Income Attributable to Evercore Inc. | $73.8M | $37.2M | +98% | | Diluted EPS | $1.81 | $0.95 | +91% | Key Performance Indicators (H1 2024 vs H1 2023) | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $1.27B | $1.07B | +19% | | Advisory Fees | $998.1M | $837.1M | +19% | | Underwriting Fees | $86.5M | $61.1M | +42% | | Net Income Attributable to Evercore Inc. | $159.5M | $120.6M | +32% | | Diluted EPS | $3.89 | $3.02 | +29% | [Business Segments](index=43&type=section&id=MD%26A%20-%20Business%20Segments) Investment Banking & Equities saw a 39% Q2 2024 revenue increase, while Investment Management revenues grew 12% due to AUM increase, reaching $13.2 billion - Investment Banking & Equities pre-tax income rose **92%** in Q2 2024 to **$103.8 million**, reflecting an increase in revenue from large transactions and a higher number of advisory fees[184](index=184&type=chunk)[188](index=188&type=chunk) - Investment Management pre-tax income increased **21%** in Q2 2024 to **$6.3 million**, driven by higher AUM and improved earnings from equity method investments[194](index=194&type=chunk) Wealth Management AUM Roll-Forward | Period | Amount | | :--- | :--- | | Balance at Dec 31, 2023 | $12.27B | | Inflows | $705.0M | | Outflows | ($583.0M) | | Market Appreciation | $766.0M | | **Balance at June 30, 2024** | **$13.16B** | [Liquidity and Capital Resources](index=50&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) As of June 30, 2024, Evercore held $640.5 million in cash, with H1 2024 cash used for $317.5 million in share repurchases, and maintains $160 million in undrawn credit facilities - The company's Board authorized a share repurchase program for the lesser of **$1.4 billion** or **10.0 million shares/units**. In H1 2024, **$148.6 million** in shares were repurchased under this program[216](index=216&type=chunk) - The company has three revolving credit facilities with PNC totaling **$160 million** (**$30 million** secured, **$55 million** unsecured, **$75 million** subordinated for EGL), with no amounts drawn as of June 30, 2024[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - As of June 30, 2024, the company had unfunded commitments for capital contributions of **$2.6 million** to private equity funds[226](index=226&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states it does not face material interest rate, foreign currency, equity price, or other market risks beyond those disclosed in the MD&A - The company refers to the 'Market Risk and Credit Risk' section within the MD&A for its disclosures on market risk, stating it does not believe it faces other material risks[242](index=242&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting identified - The CEO and CFO concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective[244](index=244&type=chunk) - No changes were made during Q2 2024 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[245](index=245&type=chunk) Part II. Other Information [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal and regulatory proceedings in the normal course of business, none of which are expected to have a material effect - The company is involved in legal and regulatory matters arising from the normal course of business[247](index=247&type=chunk) - Management does not believe any current proceedings, individually or in aggregate, will have a material effect on the company[247](index=247&type=chunk) [Issuer Purchases of Equity Securities](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details Q2 2024 equity repurchases, totaling 290,343 shares at an average price of $186.63 per share, including 268,200 under the repurchase program Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased in Program | | :--- | :--- | :--- | :--- | | April 2024 | 137,713 | $183.99 | 135,910 | | May 2024 | 147,667 | $188.63 | 132,290 | | June 2024 | 4,963 | $200.71 | — | | **Total Q2** | **290,343** | **$186.63** | **268,200** | - As of June 30, 2024, the maximum number of shares that may yet be purchased under the current program is **4,753,381**[248](index=248&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Filed exhibits include CEO/CFO certifications and financial statements formatted in Inline XBRL[250](index=250&type=chunk)