Evercore(EVR) - 2024 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents Evercore's unaudited condensed consolidated financial statements for Q1 2024, detailing total assets of $3.01 billion, total revenues of $585.0 million, and net income of $85.7 million Condensed Consolidated Statements of Financial Condition Evercore's total assets decreased to $3.01 billion from $3.70 billion as of March 31, 2024, with corresponding decreases in total liabilities and equity Condensed Consolidated Statements of Financial Condition (Unaudited) | (dollars in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,922,924 | $2,605,217 | | Total Assets | $3,005,988 | $3,703,298 | | Total Current Liabilities | $392,939 | $910,059 | | Total Liabilities | $1,357,716 | $1,920,808 | | Total Equity | $1,648,272 | $1,782,490 | | Total Liabilities and Equity | $3,005,988 | $3,703,298 | - The decrease in total assets was largely driven by a significant reduction in Investment Securities and Certificates of Deposit, which fell from $1.44 billion to $865.3 million[12] - The decrease in total liabilities was primarily due to a substantial drop in Accrued Compensation and Benefits from $763.2 million to $228.4 million, reflecting bonus payments made in the first quarter[12] Condensed Consolidated Statements of Operations Evercore's Q1 2024 total revenues increased to $585.0 million, driven by higher Underwriting Fees, resulting in net income of $85.7 million or $2.09 per diluted share Condensed Consolidated Statements of Operations (Unaudited) | (dollars in thousands, except per share data) | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $585,003 | $576,314 | | Net Revenues | $580,815 | $572,143 | | Total Expenses | $496,695 | $465,239 | | Income Before Income Taxes | $86,445 | $108,372 | | Net Income | $93,124 | $92,241 | | Net Income Attributable to Evercore Inc. | $85,693 | $83,378 | | Diluted Net Income Per Share | $2.09 | $2.06 | - Advisory Fees, the largest revenue component, decreased to $429.8 million from $462.6 million year-over-year, offset by Underwriting Fees which more than doubled to $55.5 million from $22.9 million[14] - Employee Compensation and Benefits increased to $387.7 million from $366.9 million in the prior-year quarter[14] Condensed Consolidated Statements of Cash Flows Q1 2024 saw a net cash outflow of $281.2 million from operations, offset by $576.5 million from investing, leading to a net cash decrease of $27.1 million Condensed Consolidated Statements of Cash Flows (Unaudited) | (dollars in thousands) | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($281,221) | ($384,737) | | Net Cash Provided by Investing Activities | $576,503 | $631,254 | | Net Cash Used in Financing Activities | ($318,603) | ($336,987) | | Net (Decrease) in Cash | ($27,088) | ($83,998) | | Cash, Cash Equivalents and Restricted Cash – End of Period | $578,396 | $588,125 | - The significant cash outflow from operations was driven by a $628.4 million decrease in Accrued Compensation and Benefits, reflecting annual bonus payments[23] - Financing activities included $265.3 million for the purchase of treasury stock and noncontrolling interests, and $43.2 million for dividends[23] Notes to Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies and segment reporting, showing Q1 2024 net revenues of $561.7 million for Investment Banking & Equities and $19.1 million for Investment Management - The company's business is divided into two main segments: Investment Banking & Equities and Investment Management[25][26] - The company consolidates several Variable Interest Entities (VIEs), including Evercore LP, where it is the primary beneficiary[29][30][33] - The effective tax rate for Q1 2024 was (7.7%), significantly impacted by a $29.5 million excess tax benefit from share-based awards, which reduced the rate by 34.1 percentage points[160] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial results, noting a 2% net revenue increase to $580.8 million driven by Underwriting Fees, a 7% rise in expenses, and strong liquidity amidst market uncertainty Results of Operations Q1 2024 Net Revenues increased 2% to $580.8 million, driven by a 143% surge in Underwriting Fees, while total expenses rose 7%, leading to a 3% increase in Net Income Attributable to Evercore Inc Q1 2024 vs Q1 2023 Performance | (dollars in thousands) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $580,815 | $572,143 | 2% | | Advisory Fees | $429,838 | $462,562 | (7%) | | Underwriting Fees | $55,535 | $22,883 | 143% | | Total Expenses | $496,695 | $465,239 | 7% | | Income Before Income Taxes | $86,445 | $108,372 | (20%) | | Net Income Attributable to Evercore Inc. | $85,693 | $83,378 | 3% | - The increase in total operating expenses was primarily driven by a 6% rise in Employee Compensation and Benefits and a 14% increase in non-compensation expenses[210] - The effective tax rate was (7.7%) in Q1 2024 compared to 14.9% in Q1 2023, mainly due to a larger tax benefit from the vesting of employee share-based awards[213] Business Segments Investment Banking & Equities net revenues rose 1% to $561.7 million, while Investment Management revenues grew 10% to $19.1 million, with Wealth Management AUM reaching $13.0 billion Segment Pre-Tax Income (Q1 2024 vs Q1 2023) | (dollars in thousands) | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Investment Banking & Equities | $79,578 | $102,881 | (23%) | | Investment Management | $6,867 | $5,491 | 25% | - In the Investment Banking & Equities segment, the number of advisory and underwriting client transactions generating fees of at least $1 million increased by 17% year-over-year, from 78 to 91[222] - Wealth Management AUM increased by $0.7 billion in Q1 2024, reaching $13.0 billion, primarily due to market appreciation of $676 million[228][231] Liquidity and Capital Resources The company maintains robust liquidity with $569.8 million in cash and $865.3 million in investment securities, repurchasing 1.49 million shares for $263.3 million in Q1 2024 - As of March 31, 2024, the company held $569.8 million in Cash and Cash Equivalents and $865.3 million in Investment Securities and Certificates of Deposit[265] - During Q1 2024, the company repurchased 1,487,189 Class A shares for an aggregate of $263.3 million, including 553,588 shares under the public repurchase program and 933,601 shares for employee tax withholding[245][246][247] - The company has three revolving credit facilities with a total capacity of $160 million ($30M, $55M, and $75M), with no amounts drawn as of March 31, 2024[254][255][256] - Management notes that macroeconomic uncertainty, elevated interest rates, and geopolitical tensions have contributed to an elongation of the timing of transaction closings[242] Quantitative and Qualitative Disclosures About Market Risk This section refers to the 'Market Risk and Credit Risk' discussion in Item 2, stating the company does not believe it faces material market risks beyond what is disclosed - The company's disclosures about market risk are contained within the Management's Discussion and Analysis section[281] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[282] - There were no changes during the first quarter of 2024 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[283] Part II. Other Information Legal Proceedings The company is involved in various judicial and regulatory proceedings in the normal course of business but believes no current pending matters will have a material financial effect - In the normal course of business, the company is involved in various legal and regulatory matters[286] - The company believes that the resolution of current pending proceedings, individually or in aggregate, will not have a material effect on its financial condition[286] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's Q1 2024 equity security repurchases, totaling 1,487,189 shares at an average price of $177.04 per share, including those under its public repurchase program Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Shares Purchased (shares) | Average Price Paid Per Share ($) | Shares Purchased as Part of Publicly Announced Plan (shares) | | :--- | :--- | :--- | :--- | | Jan 2024 | 9,470 | $165.25 | — | | Feb 2024 | 1,473,367 | $177.09 | 553,588 | | Mar 2024 | 4,352 | $187.12 | — | | Total Q1 | 1,487,189 | $177.04 | 553,588 | - The majority of repurchases (933,601 shares) were related to net settlement of equity awards to satisfy employee minimum tax obligations[287] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files for the financial statements - Exhibits filed include certifications from the Chief Executive Officer and Chief Financial Officer[288] - The filing includes financial statements and notes formatted in Inline XBRL[288]