Evercore(US:EVR)2024-01-31 20:32Financial Data and Key Metrics Changes - For Q4 2023, net revenues were $784 million, operating income was $118 million, and EPS was $2.03 on a GAAP basis. For the full year, net revenues were $2.4 billion, operating income was $359 million, and EPS was $6.37 [42] - Adjusted net revenues for Q4 2023 declined 6% year-over-year to $790 million, while full year adjusted net revenues decreased 12% to $2.4 billion [43] - Adjusted operating income for Q4 2023 was $124 million, down 43% year-over-year, and adjusted EPS was $2.02, a decrease of 42% compared to the previous year [43] Business Line Data and Key Metrics Changes - Adjusted Advisory Fees for Q4 2023 were $660 million, down 6% year-over-year, and for the full year, they were $2 billion, an 18% decline compared to 2022 [17] - Underwriting Fees for Q4 2023 were $19 million, down 57% year-over-year, and for the full year, they totaled $111 million, a 9% decrease [17] - Commissions and related revenue for Q4 2023 were $56 million, up 4% year-over-year, while full year revenues were $203 million, down 2% compared to 2022 [44] Market Data and Key Metrics Changes - Global announced M&A activity based on deal value was down almost 20% in 2023, but Evercore's specific announced global M&A activity was up over 40% compared to the previous year [10] - The firm advised on several large transactions, including Chevron's $60 billion acquisition of Hess and U.S. Steel's sale to Nippon Steel for $14.9 billion [37] Company Strategy and Development Direction - The company has broadened and deepened its capabilities, with over a third of revenues in 2023 coming from non-M&A sources, positioning itself as the fourth largest investment bank globally based on advisory fees [4] - The firm plans to continue investing in and expanding its capabilities and products while enhancing its intellectual capital [14] - The company is focused on improving market share by diversifying across sectors and products and elevating its underwriting position on deals [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current market environment, noting improved internal backlogs and activity levels [8] - The firm anticipates a slow recovery in M&A activity, closely monitoring geopolitical and economic uncertainties [35] - The restructuring business is expected to remain strong, driven by liability management activity among sponsors [51] Other Important Information - The adjusted compensation ratio for Q4 2023 was 70.8%, with a full year ratio of 67.6% [45] - The company returned $523.5 million to shareholders through dividends and share repurchases in the full year [47] Q&A Session Summary Question: Performance of non-M&A Advisory businesses - Management highlighted strong performance in capital advisory businesses, which contributed to discrepancies in revenue calculations compared to Dealogic estimates [23] Question: Headcount and investments - The company is focused on strategic hiring while managing overall headcount responsibly, with a modest increase expected [24][25] Question: Outlook for restructuring business - Management is optimistic about the restructuring business, expecting continued strength due to liability management and balance sheet structuring [68] Question: Impact of rate cuts on transactions - Management believes that while rate cuts may improve market conditions, companies will not delay transactions that are already in process [113] Question: Recovery of sponsor-related activities - Management indicated that a full market recovery will require increased engagement from sponsors, but they are seeing positive signs of warming up [89]