Evercore Partners Reports Fourth Quarter 2009 Results; Declares Quarterly Dividend of $0.15 Per Share
NEW YORK, Feb. 2 /PRNewswire-FirstCall/ --
Highlights
- Fourth Quarter Financial Summary:
- Record Net Revenues of $109 million, up 217% (228% for U.S. GAAP) versus the same period in 2008 and 31% versus the third quarter of 2009
- Adjusted Pro Forma Net Income of $16.5 million, or $0.41 per share, is up significantly from the Adjusted Pro Forma Net Loss in the fourth quarter of 2008 and up 50% from the third quarter of 2009
- U.S. GAAP Net Income of $1.6 million or $0.07 per share, in contrast to a Net Loss of ($0.39) per share in the same period last year and Net Income of $0.14 per share in the third quarter of 2009
- Strong revenues and earnings in the Advisory business, including restructuring; maintained #1 M&A Advisory boutique ranking and #6 rank overall in the U.S.
- Completed transactions for Wyeth, Centennial Communications, Hearst, Atlantic Inertial Systems and others
- Continued to advise on the largest restructuring assignments including General Motors, CIT and others
- Named Boutique Bank of the Year by Investment Dealers' Digest
- $4.5 billion of Assets Under Management (AUM) at the quarter end, up 26% versus the third quarter of 2009
- Announced the formation of a U.S. Cash Equities business and broadening of Capital Markets Advisory business
- Declares quarterly dividend of $0.15 per share
Evercore Partners Inc. (NYSE: EVR) today announced that its Adjusted Pro Forma Net Revenues were $109.1 million and $314.4 million for the three and twelve months ended December 31, 2009, respectively, compared to Adjusted Pro Forma Net Revenues of $34.5 million and $193.4 million for the three and twelve months ended December 31, 2008, respectively. Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. was $16.5 million and $32.9 million, or $0.41 and $0.89 per share, for the three and twelve months ended December 31, 2009, respectively, compared to an Adjusted Pro Forma Net Loss of ($8.5) million for the three months ended December 31, 2008 and Adjusted Pro Forma Net Income of $4.0 million for the twelve months ended December 31, 2008, or ($0.25) and $0.12 per share, for the three and twelve months ended December 31, 2008, respectively. The fourth quarter of 2009 was driven by record revenues in the Advisory business, with continued strength from both M&A advisory and restructuring assignments. The Investment Management business reported substantially improved revenues from the same period last year as the businesses launched in late 2008 and early 2009 have both increased assets under management and fee-based revenues.
U.S. GAAP Net Revenues were $109.2 million and $313.1 million for the three and twelve months ended December 31, 2009, respectively, compared to U.S. GAAP Net Revenues of $33.2 million and $194.7 million for the three and twelve months ended December 31, 2008, respectively. U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. was $1.6 million and ($1.6) million, or $0.07 and ($0.10) per share, for the three and twelve months ended December 31, 2009, respectively, compared to U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. of ($5.3) million and ($4.7) million, or ($0.39) and ($0.36) per share, for the three and twelve months ended December 31, 2008, respectively.
The Adjusted Pro Forma compensation ratio for the three months ended December 31, 2009 was 58%; the full year ratios were 64% and 72% for 2009 and 2008, respectively. Adjusted Pro Forma operating margins increased to 28% for the three months ended December 31, 2009; the operating margins for the full year 2009 increased to 19% in comparison to 4% for 2008. The Adjusted Pro Forma compensation ratio for the twelve months ended December 31, 2009 of 64% improved in comparison to the trailing twelve month compensation ratios as of September 30, 2009 and June 30, 2009 of 72% and 77%, respectively. The U.S. GAAP compensation ratio for the trailing twelve months as of December 31, 2009, September 30, 2009 and June 30, 2009 was 67%, 75% and 77%, respectively. The U.S. GAAP operating margins for the three and twelve months ended December 31, 2009 were 17% and 6%, 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.
"Our financial and operating performance during the fourth quarter demonstrated continued progress in meeting our strategic priorities," said Ralph Schlosstein, President and Chief Executive Officer. "Bottom line results continued to improve as Advisory revenues reached record levels for the quarter; our Investment Management businesses continued to add new clients and to increase assets under management and we made steady progress in improving our operating margins and our compensation ratio."
"This past year was a landmark one for Evercore," said Roger Altman, Chairman. "Our core Advisory business was extraordinarily strong in light of the challenging environment. We had our best finish ever in both the M&A and restructuring rankings. We have strong momentum as we move into 2010 in an environment that we expect will gradually improve."
Mr. Schlosstein continued, "We were pleased to announce the expansion of our capital markets advisory services and the launch of our cash equities business during the quarter. Clients have reacted favorably to our expanded capital markets capability and our strategy has been well received by talented research and sales and trading professionals. I am confident that our leadership team of Charles Myers, Jim Birle and Bart McDade will build a strong equity research and sales franchise that expands and compliments our Advisory business."
Throughout the discussion of Evercore's 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 and reflect the conversion of vested and unvested Evercore LP Units into Class A shares. 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 facilitate an understanding of Evercore's operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. 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-2 through A-13 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 Selected Financial Data
Adjusted Pro Forma
---------------------------------------------------
Three Months Ended % Change vs.
------------------------------------- ------------
Sept- Dec-
ember ember
December September December 30, 31,
31, 2009 30, 2009 31, 2008 2009 2008
-------- -------- -------- ---- ----
(dollars in thousands)
Net Revenues $109,140 $83,382 $34,458 31% 217%
-------- ------- -------
Expenses:
Employee Compensation
and Benefits 63,012 50,693 34,585 24% 82%
Non-compensation Costs 15,680 13,513 12,309 16% 27%
Total Expenses 78,692 64,206 46,894 23% 68%
------ ------ ------
Operating Income (Loss) 30,448 19,176 (12,436) 59% NM
Interest Expense on
Long-term Debt 1,910 1,896 1,884 1% 1%
----- ----- -----
Pre-Tax Income (Loss) 28,538 17,280 (14,320) 65% NM
Provision (Benefit) for
Income Taxes 12,623 7,264 (5,831) 74% NM
------ ----- ------
Net Income (Loss) 15,915 10,016 (8,489) 59% NM
Non-controlling Interest (621) (976) - 36% NM
---- ---- ---
Net Income (Loss)
Attributable to
Evercore Partners Inc. $16,536 $10,992 $(8,489) 50% NM
======= ======= =======
Earnings (Loss)
Per Share $0.41 $0.29 $(0.25) 41% NM
===== ===== ======
Compensation Ratio 58% 61% 100%
Operating Margin 28% 23% (36%)
Twelve Months Ended
-------------------------------------
December 31, December 31,
2009 2008 % Change
------------ ------------ --------
(dollars in thousands)
Net Revenues $314,440 $193,386 63%
-------- --------
Expenses:
Employee Compensation and
Benefits 201,418 139,211 45%
Non-compensation Costs 53,216 45,805 16%
Total Expenses 254,634 185,016 38%
------- -------
Operating Income (Loss) 59,806 8,370 615%
Interest Expense on Long-term Debt 7,595 2,554 197%
----- -----
Pre-Tax Income (Loss) 52,211 5,816 798%
Provision (Benefit) for
Income Taxes 22,580 1,768 NM
------ -----
Net Income (Loss) 29,631 4,048 632%
Non-controlling Interest (3,252) - NM
------ ---
Net Income (Loss)
Attributable to Evercore
Partners Inc. $32,883 $4,048 712%
======= ======
Earnings (Loss) Per Share $0.89 $0.12 642%
===== =====
Compensation Ratio 64% 72%
Operating Margin 19% 4%
U.S. GAAP
------------------------------------------------------
Three Months Ended % Change vs.
------------------------------------- --------------
Sept- Dec-
ember ember
December September December 30, 31,
31, 2009 30, 2009 31, 2008 2009 2008
-------- -------- -------- ---- ----
(dollars in thousands)
Net Revenues $109,174 $83,196 $33,236 31% 228%
-------- ------- -------
Expenses:
Employee Compensation
and Benefits 68,001 55,104 34,585 23% 97%
Non-compensation
Costs 18,208 15,806 15,172 15% 20%
Special Charges 3,991 - - NM NM
----- --- ---
Total Expenses 90,200 70,910 49,757 27% 81%
------ ------ ------
Operating Income
(Loss) 18,974 12,286 (16,521) 54% NM
Interest Expense on
Long-term Debt - - - NM NM
--- --- ---
Pre-Tax Income (Loss) 18,974 12,286 (16,521) 54% NM
Provision (Benefit)
for Income Taxes 12,499 4,602 (3,463) 172% NM
------ ----- ------
Net Income (Loss) 6,475 7,684 (13,058) (16%) NM
Non-controlling
Interest 4,826 5,051 (7,722) (4%) NM
----- ----- ------
Net Income (Loss)
Attributable to
Evercore
Partners Inc. $1,649 $2,633 $(5,336) (37%) NM
====== ====== =======
Earnings (Loss)
Per Share $0.07 $0.14 $(0.39) (50%) NM
===== ===== ======
Compensation Ratio 62% 66% 104%
Operating Margin 17% 15% (50%)
Twelve Months Ended
--------------------------------------
December 31, December 31,
2009 2008 % Change
------------ ------------ --------
(dollars in thousands)
Net Revenues $313,139 $194,655 61%
-------- --------
Expenses:
Employee Compensation and
Benefits 210,818 146,663 44%
Non-compensation Costs 62,414 53,244 17%
Special Charges 20,129 4,132 387%
------ -----
Total Expenses 293,361 204,039 44%
------- -------
Operating Income (Loss) 19,778 (9,384) NM
Interest Expense on Long-term Debt - - NM
--- ---
Pre-Tax Income (Loss) 19,778 (9,384) NM
Provision (Benefit) for
Income Taxes 19,532 179 NM
------ ---
Net Income (Loss) 246 (9,563) NM
Non-controlling Interest 1,816 (4,850) NM
----- ------
Net Income (Loss)
Attributable to Evercore
Partners Inc. $(1,570) $(4,713) 67%
======= =======
Earnings (Loss) Per Share $(0.10) $(0.36) 72%
====== ======
Compensation Ratio 67% 75%
Operating Margin 6% (5%)
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. For a reconciliation of the Adjusted Pro Forma segment data to U.S. GAAP results, see pages A-2 to A-13 in Annex I.
Advisory
Evercore's Advisory business produced record results with significant contributions from both M&A advisory and restructuring assignments. In addition to revenue growth, Evercore's continued focus on expense management resulted in improved operating leverage this quarter with pre-tax margins increasing for the fourth consecutive quarter to 36% from 31% last quarter and (8%) in the same period last year.
Adjusted Pro Forma
-----------------------------------------------------------
Three Months Ended Twelve Months Ended
-------------------------------- ----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Net Revenues:
Advisory $99,181 $71,596 $31,085 $287,265 $178,421
Other Revenue,
net 326 1,208 2,440 2,065 5,020
--- ----- ----- ----- -----
Net Revenues 99,507 72,804 33,525 289,330 183,441
------ ------ ------ ------- -------
Expenses:
Employee
Compensation
and Benefits 53,256 41,119 26,030 163,269 116,433
Non-compensation
Costs 10,513 8,812 10,045 35,084 37,477
Special Charges - - - - -
--- --- --- --- ---
Total Expenses 63,769 49,931 36,075 198,353 153,910
------ ------ ------ ------- -------
Operating Income
(Loss) $35,738 $22,873 $(2,550) $90,977 $29,531
======= ======= ======= ======= =======
Compensation
Ratio 54% 56% 78% 56% 63%
Operating Margin 36% 31% (8%) 31% 16%
U.S. GAAP
-----------------------------------------------------------
Three Months Ended Twelve Months Ended
-------------------------------- ----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Net Revenues:
Advisory $100,880 $73,306 $31,738 $293,311 $181,608
Other Revenue,
net (709) 184 2,440 (677) 5,020
---- --- ----- ---- -----
Net Revenues 100,171 73,490 34,178 292,634 186,628
------- ------ ------ ------- -------
Expenses:
Employee
Compensation
and Benefits 57,381 44,904 26,030 171,179 123,885
Non-compensation
Costs 12,682 10,990 11,167 43,006 42,548
Special Charges 3,991 - - 7,942 -
----- --- --- ----- ---
Total Expenses 74,054 55,894 37,197 222,127 166,433
------ ------ ------ ------- -------
Operating
Income $26,117 $17,596 $(3,019) $70,507 $20,195
======= ======= ======= ======= =======
Compensation
Ratio 57% 61% 76% 58% 66%
Operating Margin 26% 24% (9%) 24% 11%
Revenues
Advisory reported record fourth quarter 2009 net revenues of $99.5 million and $289.3 million for the twelve months ended December 31, 2009, an increase of 197% and 58% from the prior year, respectively. The increase reflects continued contribution from prominent restructuring assignments including General Motors, CIT and others and strategic M&A advisory assignments with Wyeth, Centennial Communications, Atlantic Inertial Systems and others. The Company earned Advisory revenues in excess of $1 million from a record 16 clients during the fourth quarter of 2009 including at least one from each of its geographical regions. The number of fee paying clients for 2009 grew to 162 compared to 149 for 2008.
Among boutiques, according to Thomson Reuters, Evercore was ranked number one in the U.S. as measured by the value of announced and completed transactions during 2009 and #6 in the U.S. among all advisors, Evercore's highest ever year-end rank.
Expenses
Compensation costs for the Advisory segment for the three and twelve months ended December 31, 2009, were $53.3 million and $163.3 million, respectively, an increase of 105% and 40% from the prior year, respectively. The year-on-year increase in compensation was due to higher compensation associated with the increase in revenues earned and the impact of new hires. For the three and twelve months ended December 31, 2009, Evercore's Advisory compensation ratio was 54% and 56%, respectively, versus the compensation ratio reported for the three and twelve months ended December 31, 2008 of 78% and 63%, respectively. Excluding stock compensation costs of $7.0 million and $18.9 million for the three and twelve months ended December 31, 2009, respectively, related to new Advisory Senior Managing Directors(1), the ratio would have been 46% and 50%, respectively.
Non-compensation costs for the three months ended December 31, 2009 of $10.5 million increased 5% from the same period last year principally due to increased costs of business development and costs associated with the Capital Markets and Cash Equities businesses. For 2009, non-compensation expenses declined 6% from the prior 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 in the fourth quarter of 2009 for the Investment Management business were down slightly from the third quarter of 2009 but significantly higher than the prior year. Assets under management (AUM) increased to approximately $4.5 billion, up 26% from the third quarter of 2009, reflecting inflows of approximately $0.8 billion. Revenues declined slightly from the third quarter despite increased assets under management, due to delays in the completion of certain consulting assignments for trust clients.
Adjusted Pro Forma
---------------------------------------------------------
Three Months Ended Twelve Months Ended
-------------------------------- ---------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Net Revenues:
Investment
Management
Revenues $9,104 $9,785 $766 $21,615 $8,804
Other Revenue,
net 529 793 167 3,495 1,141
--- --- --- ----- -----
Net Revenues 9,633 10,578 933 25,110 9,945
----- ------ --- ------ -----
Expenses:
Employee
Compensation
and Benefits 9,756 9,574 8,555 38,149 22,778
Non-compensation
Costs 5,167 4,701 2,264 18,132 8,328
Special Charges - - - - -
--- --- --- --- ---
Total Expenses 14,923 14,275 10,819 56,281 31,106
------ ------ ------ ------ ------
Operating Income
(Loss) $(5,290) $(3,697) $(9,886) $(31,171) $(21,161)
======= ======= ======= ======== ========
Compensation
Ratio 101% 91% 917% 152% 229%
Operating Margin (55%) (35%) NM (124%) (213%)
U.S. GAAP
---------------------------------------------------------
Three Months Ended Twelve Months Ended
------------------------------- ---------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Net Revenues:
Investment
Management
Revenues $9,349 $9,785 $775 $21,863 $9,440
Other Revenue,
net (346) (79) (1,717) (1,358) (1,413)
---- --- ------ ------ ------
Net Revenues 9,003 9,706 (942) 20,505 8,027
----- ----- ---- ------ -----
Expenses:
Employee
Compensation
and Benefits 10,620 10,200 8,555 39,639 22,778
Non-compensation
Costs 5,526 4,816 4,005 19,408 10,696
Special Charges - - - 12,187 4,132
--- --- --- ------ -----
Total Expenses 16,146 15,016 12,560 71,234 37,606
------ ------ ------ ------ ------
Operating Income
(Loss) $(7,143) $(5,310) $(13,502) $(50,729) $(29,579)
======= ======= ======== ======== ========
Compensation
Ratio 118% 105% (908%) 193% 284%
Operating Margin (79%) (55%) NM (247%) (368%)
Revenues
Investment Management Revenue Components
Adjusted Pro Forma
----------------------------------------------------
Three Months Ended Twelve Months Ended
------------------------------ -------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Management Fees
Wealth Management $1,682 $1,144 $22 $3,903 $22
Institutional Asset
Management (1) 4,464 5,851 265 14,631 2,658
Private Equity (2) 3,088 2,970 2,744 10,207 8,902
----- ----- ----- ------ -----
Total Management Fees 9,234 9,965 3,031 28,741 11,582
----- ----- ----- ------ ------
Realized and Unrealized
Gains (Losses)
Institutional Asset
Management 770 625 (648) 713 (3,140)
Private Equity (72) (616) (793) (5,179) 1,664
--- ---- ---- ------ -----
Total Realized and
Unrealized Gains
(Losses) 698 9 (1,441) (4,466) (1,476)
--- --- ------ ------ ------
HighView - - (679) (920) (679)
Equity in EAM Gains
(Losses) - - 63 (334) (252)
Equity in Pan Losses (828) (189) (208) (1,406) (371)
---- ---- ---- ------ ----
Investment Management
Revenues $9,104 $9,785 $766 $21,615 $8,804
====== ====== ==== ======= ======
(1) Excluding the reduction of revenues for reimbursable client-related
expenses, management fees from Institutional Asset Management were
$4.7 million and $14.9 million for the three and twelve months ended
December 31, 2009, respectively.
(2) Excluding the reduction of revenues for reimbursable client-related
expenses, management fees from Private Equity were $2.8 million, $10.2
million and $9.5 million for the three months ended December 31,
2008 and twelve months ended December 31, 2009 and 2008, respectively.
Fees earned from the management of client portfolios and other investment advisory services of $9.2 million and $28.7 million increased significantly for the three and twelve months ended December 31, 2009 compared to the comparable periods in 2008, reflecting the addition of new businesses and increased assets under management. Fee-based revenues in the fourth quarter of 2009 were down from the third quarter of 2009, as fewer consulting assignments for trust clients were completed during the fourth quarter.
The loss related to Evercore Pan-Asset Management reflects Evercore's share of an allowance against a deferred tax asset required under U.S. GAAP.
Expenses
The growth in expenses in the fourth quarter of 2009 relative to the same period last year reflects the addition of new businesses and a further compensation charge associated with the restructuring of the Private Equity business.
Non-controlling Interest
The senior management of our Wealth Management and Institutional Asset Management businesses have direct ownership interest in these businesses, which are accounted for as a Non-controlling Interest. Evercore's Adjusted Pro Forma Investment Management Operating Income (Loss), net of Non-controlling Interest, is as follows:
Adjusted Pro Forma
--------------------------------------------------------
Three Months Ended Twelve Months Ended
-------------------------------- --------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
(dollars in thousands)
Operating Income
(Loss) $(5,290) $(3,697) $(9,886) $(31,171) $(21,161)
Adjusted Pro
Forma Net Income
(Loss) Attributable
to Non-controlling
Interest (621) (976) - (3,252) -
---- ---- --- ------ ---
Operating Income
(Loss) Net of
Non-controlling
Interest $(4,669) $(2,721) $(9,886) $(27,919) $(21,161)
======= ======= ======= ======== ========
Other U.S. GAAP Expenses
Our Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. for the three months ended December 31, 2009 was higher than U.S. GAAP as a result of the exclusion of expenses associated with IPO equity awards, special charges primarily related to the voluntary forfeiture of existing employee shares and the amortization of intangibles (which principally relate to Braveheart and Protego). Our Adjusted Pro Forma results for the twelve months ended December 31, 2009 were driven by similar factors as the three months ended December 31, 2009, and include the restructuring charge incurred in the second quarter of 2009.
In addition, for Adjusted Pro Forma purposes, reimbursable client-related expenses and expenses associated with revenue sharing engagements with third parties have been presented as a reduction from Revenues and the associated Non-compensation costs.
Further details of these expenses, as well as an explanation of similar expenses for the three and twelve months ended December 31, 2008, are included in Annex I, pages A-2 to A-13.
Income Taxes
For the three and twelve months ended December 31, 2009, Evercore's Adjusted Pro Forma effective tax rate was approximately 44% and 43%, respectively, compared to an effective tax rate of approximately 41% and 30% for the three and twelve months ended December 31, 2008, respectively. The Adjusted Pro Forma tax rate was driven principally by the federal statutory tax rate; state and local taxes; and the amount of profit or loss attributed to non-controlling interests. In 2009, losses attributed to non-controlling interests were the primary driver of the increased Adjusted Pro Forma tax rate.
For the three and twelve months ended December 31, 2009, Evercore's U.S. GAAP effective tax rate was approximately 66% and 99%, respectively, compared to an effective tax rate of approximately 21% and (2%) for the three and twelve months ended December 31, 2008, respectively. The effective tax rate for U.S. GAAP purposes was driven by the above factors and also reflected significant adjustments relating to the tax treatment of certain compensation transactions, as well as the non-controlling interest associated with Evercore LP Units.
Balance Sheet
The Company continues to maintain a strong balance sheet, holding cash, cash equivalents and marketable securities of $347.7 million at December 31, 2009. Current assets exceed current liabilities by $275.7 million at December 31, 2009. Amounts due related to the Long-Term Notes Payable were $96.6 million at December 31, 2009.
During the quarter the Company repurchased approximately 10,000 shares of Class A common stock pursuant to the net settlement of stock-based compensation awards.
Dividend
On January 28, 2010 the Board of Directors of Evercore declared a quarterly dividend of $0.15 per share to be paid on March 12, 2010 to common stockholders of record on February 26, 2010.
Conference Call
Evercore will host a conference call to discuss its results for the fourth quarter and full year on Tuesday, February 2, 2010, at 8:00 a.m. Eastern Time with access available via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (866) 831-6247 (toll-free domestic) or (617) 213-8856 (international); passcode: 23013648. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at (888) 286-8010 (toll-free domestic) or (617) 801-6888 (international); passcode: 45844274. A live webcast of the conference call will be available on the Investor Relations section of Evercore's Web site at www.evercore.com. The webcast will be archived on Evercore's Web site for 30 days after the call.
About Evercore Partners
Evercore Partners is a leading investment banking boutique and investment management firm. Evercore's Advisory business counsels its clients on mergers, acquisitions, divestitures, restructurings, financings and other strategic transactions. Evercore's Investment Management business comprises wealth management, institutional asset management and private equity investing. Evercore serves a diverse set of clients around the world from its offices in New York, San Francisco, Boston, Washington D.C., Los Angeles, Houston, London, Mexico City and Monterrey, Mexico. More information about Evercore can be found on the Company's Web site at www.evercore.com. EVR-X
Basis of Alternative Financial Statement Presentation
Adjusted pro forma results are a non-GAAP measure. 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 management's view of operating results. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of U.S. GAAP results to adjusted pro forma results is presented in the tables included in Annex I.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, Evercore's operations and financial performance. In some cases, you can identify these forward-looking statements by the use of words such as "outlook", "believes", "expects", "potential", "continues", "may", "will", "should", "seeks", "approximately", "predicts", "intends", "plans", "estimates", "anticipates" or the negative version of these words or other comparable words. All statements other than statements of historical fact included in this presentation are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in Evercore's business. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Evercore believes these factors include, but are not limited to, those described under "Risk Factors" discussed in Evercore's Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent quarterly reports on Form 10-Q. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Evercore to predict all risks and uncertainties, nor can Evercore assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and Evercore does not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Evercore undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
With respect to any securities offered by any private equity fund referenced herein, such securities have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
ANNEX I |
||
Schedule |
Page Number |
|
Unaudited Condensed Consolidated Statements of Operations for the Three and Twelve Months Ended December 31, 2009 and 2008 |
A-1 |
|
Adjusted Pro Forma: |
||
Adjusted Pro Forma Results |
A-2 |
|
Adjusted Pro Forma Reconciliation to U.S. GAAP for the Three Months ended December 31, 2009 |
A-4 |
|
Adjusted Pro Forma Reconciliation to U.S. GAAP for the Three Months ended September 30, 2009 |
A-5 |
|
Adjusted Pro Forma Reconciliation to U.S. GAAP for the Three Months ended December 31, 2008 |
A-6 |
|
Adjusted Pro Forma Reconciliation to U.S. GAAP for the Twelve Months ended December 31, 2009 |
A-7 |
|
Adjusted Pro Forma Reconciliation to U.S. GAAP for the Twelve Months ended December 31, 2008 |
A-8 |
|
Adjusted Pro Forma Segment Reconciliation to U.S. GAAP for the Three and Twelve Months ended December 31, 2009 |
A-9 |
|
Adjusted Pro Forma Segment Reconciliation to U.S. GAAP for the Three Months ended September 30, 2009 |
A-10 |
|
Adjusted Pro Forma Segment Reconciliation to U.S. GAAP for the Three and Twelve Months ended December 31, 2008 |
A-11 |
|
Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Statements of Operations |
A-12 |
|
Historical Unaudited Condensed Consolidated Adjusted Pro Forma and U.S. GAAP Selected Financial Data |
A-14 |
|
EVERCORE PARTNERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(dollars in thousands, except per share data)
(UNAUDITED)
Three Months Twelve Months
Ended December Ended December
31, 31,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
REVENUES
Advisory Revenue $100,880 $31,738 $293,311 $181,608
Investment Management Revenue 9,349 775 21,863 9,440
Other Revenue 4,016 8,992 22,234 33,885
----- ----- ------ ------
TOTAL REVENUES 114,245 41,505 337,408 224,933
Interest Expense (1) 5,071 8,269 24,269 30,278
----- ----- ------ ------
NET REVENUES 109,174 33,236 313,139 194,655
------- ------ ------- -------
EXPENSES
Employee Compensation and Benefits 68,001 34,585 210,818 146,663
Occupancy and Equipment Rental 3,844 3,132 13,916 12,671
Professional Fees 6,319 4,427 20,930 16,173
Travel and Related Expenses 3,203 2,840 9,703 10,139
Communications and
Information Services 1,211 675 3,926 2,984
Depreciation and Amortization 1,164 1,025 4,517 4,189
Special Charges 3,991 - 20,129 4,132
Acquisition and Transition Costs - 1,596 712 1,596
Other Operating Expenses 2,467 1,477 8,710 5,492
----- ----- ----- -----
TOTAL EXPENSES 90,200 49,757 293,361 204,039
------ ------ ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 18,974 (16,521) 19,778 (9,384)
Provision (Benefit) for
Income Taxes 12,499 (3,463) 19,532 179
------ ------ ------ ---
NET INCOME (LOSS) 6,475 (13,058) 246 (9,563)
Net Income (Loss) Attributable to
Non-controlling Interest 4,826 (7,722) 1,816 (4,850)
----- ------ ----- ------
NET INCOME (LOSS) ATTRIBUTABLE TO
EVERCORE PARTNERS INC. $1,649 $(5,336) $(1,570) $(4,713)
====== ======= ======= =======
Net Income (Loss)
Attributable to Evercore
Partners Inc. Common Shareholders $1,649 $(5,336) $(1,570) $(4,713)
Weighted Average Shares of Class A
Common Stock Outstanding:
Basic 18,157 13,547 15,545 13,072
Diluted 22,295 13,547 15,545 13,072
Net Income (Loss) Per Share
Attributable to Evercore Partners
Inc. Common Shareholders:
Basic $0.09 $(0.39) $(0.10) $(0.36)
Diluted $0.07 $(0.39) $(0.10) $(0.36)
(1) Includes interest expense on long-term debt and interest expense on
short-term repurchase agreements.
Adjusted Pro Forma Results
Throughout the discussion of Evercore's 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 and reflect the conversion of vested and unvested Evercore LP Units, and other event-based awards, into Class A shares. 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 facilitate an understanding of Evercore's operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. These adjusted pro forma amounts are allocated to the Company's two business segments: Advisory and Investment Management. The differences between adjusted pro forma and U.S. GAAP results are as follows:
1. Assumed Vesting of Evercore LP Units and Exchange into Class A Shares. The Company incurred expenses in Employee Compensation and Benefits for the three and twelve months ended December 31, 2009, resulting from the modification of Evercore LP Units, which will vest over a five year period, and the vesting of modified equity awards in conjunction with an offering during the third quarter of 2009. The Adjusted Pro Forma results assume these LP Units have vested and have been exchanged for Class A shares. Accordingly, any expense associated with these units is excluded from adjusted pro forma results and the non-controlling interest related to these units is converted to controlling interest. The Company's Management believes that it is useful to provide the per-share effect associated with the assumed conversion of these previously granted but unvested equity, and thus the adjusted pro forma results reflect the vesting of all unvested Evercore LP partnership units and event-based stock-based awards.
2. Expenses Associated with Business Combinations. The following expenses resulting from business combinations have been excluded from adjusted pro forma results because the Company's Management believes that operating performance is more comparable across periods excluding the effects of these acquisition-related charges;
a. Acquisition and Transition Costs. The Company has reflected Acquisition and Transition Costs for expenses incurred in connection with the acquisition of SFS and the formation of ETC. This charge reflects the change in accounting for deal-related costs required by SFAS No. 141(R), Business Combinations, codified under ASC 805, which was effective January 1, 2009.
b. Amortization of Intangible Assets. Amortization of intangible assets related to the Protego acquisition was undertaken in contemplation of the IPO. The Braveheart acquisition occurred on December 19, 2006. Also excluded is amortization of intangible assets associated with the recent acquisitions of SFS and EAM.
c. Deferred Consideration Related to Braveheart Acquisition. The former shareholders of Braveheart were issued $7.5 million of restricted stock in the first quarter of 2008 as additional deferred consideration pursuant to the Sale and Purchase Agreement associated with the Braveheart acquisition. This share issuance was expensed for U.S. GAAP purposes but excluded from the adjusted pro forma results.
3. Special Charges. The Company has reflected charges in conjunction with its decision to suspend capital raising for ECP and other ongoing strategic cost management initiatives, which it has excluded from adjusted pro forma results. These charges relate to the expense required to be recorded under U.S. GAAP for stock-based compensation awards that are voluntarily forfeited by employees who remain with the Company. During 2009 employees voluntarily forfeited 738,000 unvested restricted stock units and 250,000 partnership units. The Company has also reflected charges in 2008 as Special Charges in connection with employee severance, accelerated share-based vesting, facilities costs associated with the closing of the Los Angeles office and the write-off of certain capitalized costs associated with fundraising initiatives for ECP. The Company's Management believes that excluding the effects of these Special Charges improves the comparability of operating performance across periods.
4. Client Expenses. The Company has reflected the reclassification of reimbursable expenses and expenses associated with revenue sharing engagements with third parties as a reduction of revenue. The Company's Management believes that this adjustment results in more meaningful key operating ratios, such as compensation to net revenues and operating margin.
5. Income Taxes. Evercore is organized as a series of Limited Liability Companies, Partnerships, a C-Corporation and a Public Corporation and therefore, not all of the Company's income is subject to corporate level taxes. As a result, adjustments have been made to the adjusted pro forma earnings to assume that the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are made directly to stockholders' equity. This assumption is consistent with the assumption that all Evercore LP Units are vested and exchanged into Class A shares, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.
6. Presentation of Interest Expense. The adjusted pro forma results present interest expense on short-term repurchase agreements, within the Investment Management segment, in Other Revenues, net, as the Company's Management believes it is more meaningful to present the spread on net interest resulting from the matched financial assets and liabilities. In addition, adjusted pro forma Advisory and Investment Management Operating Income is presented before interest expense on long-term debt, which is included in interest expense on a U.S. GAAP basis.
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA RECONCILIATION TO U.S. GAAP
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009
(dollars in thousands)
(UNAUDITED)
For The Three Months Ended
December 31, 2009
------------------------------
Non-GAAP
Adjusted Pro Forma Basis
------------------------------
Investment Total
Advisory Management Segments
-------- ----------- --------
REVENUES
Advisory Revenue $99,181 $- $99,181
Investment Management Revenue - 9,104 9,104
Other Revenue 326 529 855
--- --- ---
TOTAL REVENUES 99,507 9,633 109,140
Interest Expense - - -
--- --- ---
NET REVENUES 99,507 9,633 109,140
------ ----- -------
EXPENSES
Employee Compensation and
Benefits 53,256 9,756 63,012
Non-compensation Costs 10,513 5,167 15,680
Special Charges - - -
--- --- ---
TOTAL EXPENSES 63,769 14,923 78,692
------ ------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes $35,738 $(5,290) 30,448
======= =======
Interest Expense on Long-term Debt 1,910
-----
Income Before Income Taxes 28,538
Provision for Income Taxes 12,623
------
NET INCOME 15,915
Net Income (Loss) Attributable to Non-controlling
Interest (621)
----
NET INCOME ATTRIBUTABLE TO EVERCORE PARTNERS INC. $16,536
=======
Class A Common Shares Outstanding 40,022
------
Diluted Earnings Per Share $0.41
=====
For The Three Months Ended
December 31, 2009
--------------------------
U.S. GAAP
Basis
---------
Condensed/
Consolidated
Adjustments Results
----------- -------------
REVENUES
Advisory Revenue $1,699 (1) $100,880
Investment Management Revenue 245 (1) 9,349
Other Revenue 3,161 (2) 4,016
----- -----
TOTAL REVENUES 5,105 114,245
Interest Expense 5,071 (2) 5,071
----- -----
NET REVENUES 34 109,174
--- -------
EXPENSES
Employee Compensation and
Benefits 4,989 (3) 68,001
Non-compensation Costs 2,528 (4) 18,208
Special Charges 3,991 (5) 3,991
----- -----
TOTAL EXPENSES 11,508 90,200
------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes (11,474) 18,974
Interest Expense on Long-term
Debt (1,910) (2) -
------ ---
Income Before Income Taxes (9,564) 18,974
Provision for Income Taxes (124) (6) 12,499
---- ------
NET INCOME (9,440) 6,475
Net Income (Loss) Attributable
to Non-controlling Interest 5,447 (7) 4,826
----- -----
NET INCOME ATTRIBUTABLE TO
EVERCORE PARTNERS INC. $(14,887) $1,649
======== ======
Class A Common Shares
Outstanding (17,727) (8) 22,295
------- ------
Diluted Earnings Per Share $0.07
=====
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA RECONCILIATION TO U.S. GAAP
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
(dollars in thousands)
(UNAUDITED)
For The Three Months Ended
September 30, 2009
------------------------------
Non-GAAP
Adjusted Pro Forma Basis
------------------------------
Investment Total
Advisory Management Segments
-------- ----------- --------
REVENUES
Advisory Revenue $71,596 $- $71,596
Investment Management Revenue - 9,785 9,785
Other Revenue 1,208 793 2,001
----- --- -----
TOTAL REVENUES 72,804 10,578 83,382
Interest Expense - - -
--- --- ---
NET REVENUES 72,804 10,578 83,382
------ ------ ------
EXPENSES
Employee Compensation and
Benefits 41,119 9,574 50,693
Non-compensation Costs 8,812 4,701 13,513
Special Charges - - -
--- --- ---
TOTAL EXPENSES 49,931 14,275 64,206
------ ------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes $22,873 $(3,697) 19,176
======= =======
Interest Expense on Long-term Debt 1,896
-----
Income Before Income Taxes 17,280
Provision for Income Taxes 7,264
-----
NET INCOME 10,016
Net Income (Loss) Attributable to Non-controlling
Interest (976)
----
NET INCOME ATTRIBUTABLE TO EVERCORE PARTNERS INC. $10,992
=======
Class A Common Shares Outstanding 37,750
------
Diluted Earnings Per Share $0.29
=====
For The Three Months Ended
September 30, 2009
--------------------------
U.S. GAAP
Basis
---------
Condensed/
Consolidated
Adjustments Results
----------- -------------
REVENUES
Advisory Revenue $1,710 (1) $73,306
Investment Management Revenue - 9,785
Other Revenue 2,602 (2) 4,603
----- -----
TOTAL REVENUES 4,312 87,694
Interest Expense 4,498 (2) 4,498
----- -----
NET REVENUES (186) 83,196
---- ------
EXPENSES
Employee Compensation and
Benefits 4,411 (3) 55,104
Non-compensation Costs 2,293 (4) 15,806
Special Charges - -
--- ---
TOTAL EXPENSES 6,704 70,910
----- ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes (6,890) 12,286
Interest Expense on Long-term
Debt (1,896) (2) -
------ ---
Income Before Income Taxes (4,994) 12,286
Provision for Income Taxes (2,662) (6) 4,602
------ -----
NET INCOME (2,332) 7,684
Net Income (Loss) Attributable
to Non-controlling Interest 6,027 (7) 5,051
----- -----
NET INCOME ATTRIBUTABLE TO
EVERCORE PARTNERS INC. $(8,359) $2,633
======= ======
Class A Common Shares
Outstanding (19,397) (8) 18,353
------- ------
Diluted Earnings Per Share $0.14
=====
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA RECONCILIATION TO U.S. GAAP
FOR THE THREE MONTHS ENDED DECEMBER 31, 2008
(dollars in thousands)
(UNAUDITED)
For The Three Months Ended
December 31, 2008
-------------------------------
Non-GAAP
Adjusted Pro Forma Basis
-------------------------------
Investment Total
Advisory Management Segments
-------- ----------- --------
REVENUES
Advisory Revenue $31,085 $- $31,085
Investment Management Revenue - 766 766
Other Revenue 2,440 167 2,607
----- --- -----
TOTAL REVENUES 33,525 933 34,458
Interest Expense - - -
--- --- ---
NET REVENUES 33,525 933 34,458
------ --- ------
EXPENSES
Employee Compensation and
Benefits 26,030 8,555 34,585
Non-compensation Costs 10,045 2,264 12,309
Special Charges - - -
--- --- ---
TOTAL EXPENSES 36,075 10,819 46,894
------ ------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes $(2,550) $(9,886) (12,436)
======= =======
Interest Expense on Long-term Debt 1,884
-----
Income (Loss) Before Income Taxes (14,320)
Provision (Benefit) for Income Taxes (5,831)
------
NET INCOME (LOSS) (8,489)
Net Income (Loss) Attributable to Non-controlling
Interest -
---
NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS
INC. $(8,489)
=======
Class A Common Shares Outstanding 34,346
------
Diluted Earnings (Loss) Per Share $(0.25)
======
For The Three Months Ended
December 31, 2008
--------------------------
U.S. GAAP
Basis
---------
Condensed/
Consolidated
Adjustments Results
----------- -------------
REVENUES
Advisory Revenue $653 (1) $31,738
Investment Management Revenue 9 (1) 775
Other Revenue 6,385 (2) 8,992
----- -----
TOTAL REVENUES 7,047 41,505
Interest Expense 8,269 (2) 8,269
----- -----
NET REVENUES (1,222) 33,236
------ ------
EXPENSES
Employee Compensation and
Benefits - 34,585
Non-compensation Costs 2,863 (4) 15,172
Special Charges - -
--- ---
TOTAL EXPENSES 2,863 49,757
----- ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes (4,085) (16,521)
Interest Expense on Long-term
Debt (1,884) (2) -
------ ---
Income (Loss) Before Income
Taxes (2,201) (16,521)
Provision (Benefit) for Income
Taxes 2,368 (6) (3,463)
----- ------
NET INCOME (LOSS) (4,569) (13,058)
Net Income (Loss) Attributable
to Non-controlling Interest (7,722) (7) (7,722)
------ ------
NET INCOME (LOSS) ATTRIBUTABLE
TO EVERCORE PARTNERS INC. $3,153 $(5,336)
====== =======
Class A Common Shares
Outstanding (20,799) (8) 13,547
------- ------
Diluted Earnings (Loss) Per Share $(0.39)
======
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA RECONCILIATION TO U.S. GAAP
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2009
(dollars in thousands)
(UNAUDITED)
For The Twelve Months Ended
December 31, 2009
------------------------------
Non-GAAP
Adjusted Pro Forma Basis
------------------------------
Investment Total
Advisory Management Segments
-------- ----------- --------
REVENUES
Advisory Revenue $287,265 $- $287,265
Investment Management Revenue - 21,615 21,615
Other Revenue 2,065 3,495 5,560
----- ----- -----
TOTAL REVENUES 289,330 25,110 314,440
Interest Expense - - -
--- --- ---
NET REVENUES 289,330 25,110 314,440
------- ------ -------
EXPENSES
Employee Compensation and
Benefits 163,269 38,149 201,418
Non-compensation Costs 35,084 18,132 53,216
Special Charges - - -
--- --- ---
TOTAL EXPENSES 198,353 56,281 254,634
------- ------ -------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes $90,977 $(31,171) 59,806
======= ========
Interest Expense on Long-term Debt 7,595
-----
Income Before Income Taxes 52,211
Provision for Income Taxes 22,580
------
NET INCOME (LOSS) 29,631
Net Income (Loss) Attributable to Non-controlling
Interest (3,252)
------
NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS
INC. $32,883
=======
Class A Common Shares Outstanding 36,926
------
Diluted Earnings (Loss) Per Share $0.89
=====
For The Twelve Months Ended
December 31, 2009
---------------------------
U.S. GAAP
Basis
---------
Condensed/
Consolidated
Adjustments Results
----------- -------------
REVENUES
Advisory Revenue $6,046 (1) $293,311
Investment Management Revenue 248 (1) 21,863
Other Revenue 16,674 (2) 22,234
------ ------
TOTAL REVENUES 22,968 337,408
Interest Expense 24,269 (2) 24,269
------ ------
NET REVENUES (1,301) 313,139
------ -------
EXPENSES
Employee Compensation and
Benefits 9,400 (3) 210,818
Non-compensation Costs 9,198 (4) 62,414
Special Charges 20,129 (5) 20,129
------ ------
TOTAL EXPENSES 38,727 293,361
------ -------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes (40,028) 19,778
Interest Expense on Long-term
Debt (7,595) (2) -
------ ---
Income Before Income Taxes (32,433) 19,778
Provision for Income Taxes (3,048) (6) 19,532
------ ------
NET INCOME (LOSS) (29,385) 246
Net Income (Loss)
Attributable to Non-
controlling Interest 5,068 (7) 1,816
----- -----
NET INCOME (LOSS)
ATTRIBUTABLE TO EVERCORE
PARTNERS INC. $(34,453) $(1,570)
======== =======
Class A Common Shares
Outstanding (21,381) (8) 15,545
------- ------
Diluted Earnings (Loss) Per Share $(0.10)
======
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA RECONCILIATION TO U.S. GAAP
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2008
(dollars in thousands)
(UNAUDITED)
For The Twelve Months Ended
December 31, 2008
------------------------------
Non-GAAP
Adjusted Pro Forma Basis
------------------------------
Investment Total
Advisory Management Segments
-------- ----------- --------
REVENUES
Advisory Revenue $178,421 $- $178,421
Investment Management Revenue - 8,804 8,804
Other Revenue 5,020 1,141 6,161
----- ----- -----
TOTAL REVENUES 183,441 9,945 193,386
Interest Expense - - -
--- --- ---
NET REVENUES 183,441 9,945 193,386
------- ----- -------
EXPENSES
Employee Compensation and
Benefits 116,433 22,778 139,211
Non-compensation Costs 37,477 8,328 45,805
Special Charges - - -
--- --- ---
TOTAL EXPENSES 153,910 31,106 185,016
------- ------ -------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes $29,531 $(21,161) 8,370
======= ========
Interest Expense on Long-term Debt 2,554
-----
Income (Loss) Before Income Taxes 5,816
Provision for Income Taxes 1,768
-----
NET INCOME (LOSS) 4,048
Net Income (Loss) Attributable to Non-controlling
Interest -
---
NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS
INC. $4,048
======
Class A Common Shares Outstanding 34,136
------
Diluted Earnings (Loss) Per Share $0.12
=====
For The Twelve Months Ended
December 31, 2008
---------------------------
U.S. GAAP
Basis
---------
Condensed/
Consolidated
Adjustments Results
----------- -------------
REVENUES
Advisory Revenue $3,187 (1) $181,608
Investment Management Revenue 636 (1) 9,440
Other Revenue 27,724 (2) 33,885
------ ------
TOTAL REVENUES 31,547 224,933
Interest Expense 30,278 (2) 30,278
------ ------
NET REVENUES 1,269 194,655
----- -------
EXPENSES
Employee Compensation and
Benefits 7,452 (9) 146,663
Non-compensation Costs 7,439 (4) 53,244
Special Charges 4,132 (5) 4,132
----- -----
TOTAL EXPENSES 19,023 204,039
------ -------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes (17,754) (9,384)
Interest Expense on Long-term
Debt (2,554) (2) -
------ ---
Income (Loss) Before Income
Taxes (15,200) (9,384)
Provision for Income Taxes (1,589) (6) 179
------ ---
NET INCOME (LOSS) (13,611) (9,563)
Net Income (Loss)
Attributable to Non-
controlling Interest (4,850) (7) (4,850)
------ ------
NET INCOME (LOSS)
ATTRIBUTABLE TO EVERCORE
PARTNERS INC. $(8,761) $(4,713)
======= =======
Class A Common Shares
Outstanding (21,064) (8) 13,072
------- ------
Diluted Earnings (Loss) Per Share $(0.36)
======
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA SEGMENT RECONCILIATION TO U.S. GAAP
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2009
(dollars in thousands)
(UNAUDITED)
Advisory Segment
-------------------------------------------
Three Months Ended December 31, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------- ----------- ---------
Net Revenues:
Advisory $99,181 $1,699 (1) $100,880
Other Revenue, net 326 (1,035) (2) (709)
--- ------ -------
Net Revenues 99,507 664 100,171
------ --- -------
Expenses:
Employee Compensation and
Benefits 53,256 4,125 (3) 57,381
Non-compensation Costs 10,513 2,169 (4) 12,682
Special Charges - 3,991 (5) 3,991
--- ----- -----
Total Expenses 63,769 10,285 74,054
------ ------ ------
Operating Income $35,738 $(9,621) $26,117
======= ======= =======
Advisory Segment
-------------------------------------------
Twelve Months Ended December 31, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------- ----------- ---------
Net Revenues:
Advisory $287,265 $6,046 (1) $293,311
Other Revenue, net 2,065 (2,742) (2) (677)
----- ------ -------
Net Revenues 289,330 3,304 292,634
------- ----- -------
Expenses:
Employee Compensation and
Benefits 163,269 7,910 (3) 171,179
Non-compensation Costs 35,084 7,922 (4) 43,006
Special Charges - 7,942 (5) 7,942
--- ----- -----
Total Expenses 198,353 23,774 222,127
------- ------ -------
Operating Income $90,977 $(20,470) $70,507
======= ======== =======
Investment Management Segment
-------------------------------------------
Three Months Ended December 31, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------- ----------- ---------
Net Revenues:
Investment
Management Revenue $9,104 $245 (1) $9,349
Other Revenue, net 529 (875) (2) (346)
--- ---- -------
Net Revenues 9,633 (630) 9,003
----- ---- -----
Expenses:
Employee Compensation and
Benefits 9,756 864 (3) 10,620
Non-compensation Costs 5,167 359 (4) 5,526
Special Charges - - -
--- --- ---
Total Expenses 14,923 1,223 16,146
------ ----- ------
Operating Income
(Loss) $(5,290) $(1,853) $(7,143)
======= ======= =======
Investment Management Segment
-------------------------------------------
Twelve Months Ended December 31, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------- ----------- ---------
Net Revenues:
Investment
Management Revenue $21,615 $248 (1) $21,863
Other Revenue, net 3,495 (4,853) (2) (1,358)
----- ------ ---------
Net Revenues 25,110 (4,605) 20,505
------ ------ ------
Expenses:
Employee Compensation and
Benefits 38,149 1,490 (3) 39,639
Non-compensation Costs 18,132 1,276 (4) 19,408
Special Charges - 12,187 (5) 12,187
- ------ ------
Total Expenses 56,281 14,953 71,234
------ ------ ------
Operating Income
(Loss) $(31,171) $(19,558) $(50,729)
======== ======== ========
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA SEGMENT RECONCILIATION TO U.S. GAAP
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
(dollars in thousands)
(UNAUDITED)
Advisory Segment
-------------------------------------------
Three Months Ended September 30, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------ ----------- ---------
Net Revenues:
Advisory $71,596 $1,710 (1) $73,306
Other Revenue, net 1,208 (1,024) (2) 184
----- ------ ------
Net Revenues 72,804 686 73,490
------ --- ------
Expenses:
Employee Compensation
and Benefits 41,119 3,785 (3) 44,904
Non-compensation Costs 8,812 2,178 (4) 10,990
Special Charges - - -
--- --- ---
Total Expenses 49,931 5,963 55,894
------ ----- ------
Operating Income $22,873 $(5,277) $17,596
======= ======= =======
Investment Management Segment
-------------------------------------------
Three Months Ended September 30, 2009
-------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------- ----------- ---------
Net Revenues:
Investment Management
Revenue $9,785 $- $9,785
Other Revenue, net 793 (872) (2) (79)
--- ---- ------
Net Revenues 10,578 (872) 9,706
------ ---- -----
Expenses:
Employee Compensation
and Benefits 9,574 626 (3) 10,200
Non-compensation Costs 4,701 115 (4) 4,816
Special Charges - - -
--- --- ---
Total Expenses 14,275 741 15,016
------ --- ------
Operating Income (Loss) $(3,697) $(1,613) $(5,310)
======= ======= =======
EVERCORE PARTNERS INC.
ADJUSTED PRO FORMA SEGMENT RECONCILIATION TO U.S. GAAP
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2008
(dollars in thousands)
(UNAUDITED)
Advisory Segment
------------------------------------------
Three Months Ended December 31, 2008
------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------ ----------- ---------
Net Revenues:
Advisory $31,085 $653 (1) $31,738
Other Revenue, net 2,440 - 2,440
----- --- -----
Net Revenues 33,525 653 34,178
------ --- ------
Expenses:
Employee Compensation and
Benefits 26,030 - 26,030
Non-compensation Costs 10,045 1,122 (4) 11,167
Special Charges - - -
--- --- ---
Total Expenses 36,075 1,122 37,197
------ ----- ------
Operating Income
(Loss) $(2,550) $(469) $(3,019)
======= ===== =======
Advisory Segment
------------------------------------------
Twelve Months Ended December 31, 2008
------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------ ----------- ---------
Net Revenues:
Advisory $178,421 $3,187 (1) $181,608
Other Revenue, net 5,020 - 5,020
----- --- -----
Net Revenues 183,441 3,187 186,628
------- ----- -------
Expenses:
Employee Compensation and
Benefits 116,433 7,452 (9) 123,885
Non-compensation Costs 37,477 5,071 (4) 42,548
Special Charges - - -
--- --- ---
Total Expenses 153,910 12,523 166,433
------- ------ -------
Operating Income
(Loss) $29,531 $(9,336) $20,195
======= ======= =======
Investment Management Segment
------------------------------------------
Three Months Ended December 31, 2008
------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------ ----------- ---------
Net Revenues:
Investment
Management Revenue $766 $9 (1) $775
Other Revenue, net 167 (1,884) (2) (1,717)
--- ------ ---------
Net Revenues 933 (1,875) (942)
--- ------ ----
Expenses:
Employee Compensation and
Benefits 8,555 - 8,555
Non-compensation Costs 2,264 1,741 (4) 4,005
Special Charges - - -
--- --- ---
Total Expenses 10,819 1,741 12,560
------ ----- ------
Operating Income
(Loss) $(9,886) $(3,616) $(13,502)
======= ======= ========
Investment Management Segment
------------------------------------------
Twelve Months Ended December 31, 2008
------------------------------------------
Non-GAAP
Adjusted Pro U.S. GAAP
Forma Basis Adjustments Basis
------------ ----------- ---------
Net Revenues:
Investment
Management Revenue $8,804 $636 (1) $9,440
Other Revenue, net 1,141 (2,554) (2) (1,413)
----- ------ ---------
Net Revenues 9,945 (1,918) 8,027
----- ------ -----
Expenses:
Employee Compensation and
Benefits 22,778 - 22,778
Non-compensation Costs 8,328 2,368 (4) 10,696
Special Charges - 4,132 (5) 4,132
--- ----- -----
Total Expenses 31,106 6,500 37,606
------ ----- ------
Operating Income
(Loss) $(21,161) $(8,418) $(29,579)
======== ======= ========
Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Financial Data
(1) The Company has reflected the reclassification of reimbursable expenses and expenses associated with revenue sharing engagements with third parties as a reduction of revenue.
(2) Adjusted Pro Forma segment information classifies interest expense on short-term repurchase agreements within the Investment Management segment as Other Revenue, net, whereas U.S. GAAP results reflect this in Interest Expense. Interest Expense on Long-term Debt is excluded from the Advisory and Investment Management segment results and is included in Interest Expense on a U.S. GAAP Basis.
(3) The Company incurred expenses for the three and twelve months ended December 31, 2009 from the modification of Evercore LP Units, which will vest over a five-year period, and the vesting of modified equity awards in conjunction with an offering during the third quarter of 2009.
(4) Non-compensation Costs on an Adjusted Pro Forma basis reflect the following adjustments:
Three Months Ended December 31,
------------------------------------------
2009
------------------------------------------
Adjusted
Pro Forma Adjustments U.S. GAAP
--------- ----------- ---------
Occupancy and Equipment
Rental $3,844 $- $3,844
Professional Fees 5,023 1,296 (1) 6,319
Travel and Related
Expenses 2,651 552 (1) 3,203
Communications and
Information Services 1,163 48 (1) 1,211
Depreciation and
Amortization 580 584 (4a) 1,164
Acquisition and
Transition Costs - - -
Other Operating Expenses 2,419 48 (1) 2,467
----- --- --------
Total Non-compensation
Costs $15,680 $2,528 $18,208
======= ====== =======
Three Months Ended December 31,
------------------------------------------
2008
------------------------------------------
Adjusted
Pro Forma Adjustments U.S. GAAP
--------- ----------- ---------
Occupancy and Equipment
Rental $3,132 $- $3,132
Professional Fees 4,209 218 (1) 4,427
Travel and Related
Expenses 2,460 380 (1) 2,840
Communications and
Information Services 663 12 (1) 675
Depreciation and
Amortization 556 469 (4a) 1,025
Acquisition and
Transition Costs - 1,596 (4b) 1,596
Other Operating Expenses 1,289 188 (1) 1,477
----- --- --------
Total Non-compensation
Costs $12,309 $2,863 $15,172
======= ====== =======
Three Months Ended September 30,
------------------------------------------
2009
------------------------------------------
Adjusted
Pro Forma Adjustments U.S. GAAP
--------- ----------- ---------
Occupancy and Equipment
Rental $3,434 $- $3,434
Professional Fees 4,928 745 (1) 5,673
Travel and Related
Expenses 1,589 856 (1) 2,445
Communications and
Information Services 1,004 22 (1) 1,026
Depreciation and
Amortization 572 583 (4a) 1,155
Acquisition and
Transition Costs - - -
Other Operating Expenses 1,986 87 (1) 2,073
----- --- --------
Total Non-compensation
Costs $13,513 $2,293 $15,806
======= ====== =======
Twelve Months Ended December 31,
------------------------------------------
2009
------------------------------------------
Adjusted
Pro Forma Adjustments U.S. GAAP
--------- ----------- ---------
Occupancy and Equipment
Rental $13,916 $- $13,916
Professional Fees 17,677 3,253 (1) 20,930
Travel and Related
Expenses 7,072 2,631 (1) 9,703
Communications and
Information Services 3,818 108 (1) 3,926
Depreciation and
Amortization 2,325 2,192 (4a) 4,517
Acquisition and
Transition Costs - 712 (4b) 712
Other Operating Expenses 8,408 302 (1) 8,710
----- --- --------
Total Non-compensation
Costs $53,216 $9,198 $62,414
======= ====== =======
Twelve Months Ended December 31,
------------------------------------------
2008
------------------------------------------
Adjusted
Pro Forma Adjustments U.S. GAAP
--------- ----------- ---------
Occupancy and Equipment
Rental $12,671 $- $12,671
Professional Fees 13,916 2,257 (1) 16,173
Travel and Related
Expenses 8,864 1,275 (1) 10,139
Communications and
Information Services 2,928 56 (1) 2,984
Depreciation and
Amortization 2,305 1,884 (4a) 4,189
Acquisition and
Transition Costs - 1,596 (4b) 1,596
Other Operating Expenses 5,121 371 (1) 5,492
----- --- --------
Total Non-compensation
Costs $45,805 $7,439 $53,244
======= ====== =======
(4a) Reflects expenses associated with amortization of intangible assets acquired in the Protego, Braveheart, SFS and EAM acquisitions.
(4b) The Company has reflected Acquisition and Transition Costs for costs incurred in connection with the acquisition of SFS and the formation of ETC. This charge reflects the change in accounting for deal-related costs required by SFAS No. 141(R), Business Combinations, codified under ASC 805, which was effective January 1, 2009.
(5) The Company has reflected charges in conjunction with Evercore's decision to suspend capital raising for ECP and other ongoing strategic cost management initiatives. The charges relate to the expense required to be recorded under U.S. GAAP for stock-based compensation awards that are voluntarily forfeited by employees who remain with the Company. During 2009 employees voluntarily forfeited 738,000 unvested restricted stock units and 250,000 Evercore LP partnership units. The Company has also reflected charges in 2008, as Special Charges in connection with the write-off of certain capitalized costs associated with ECP capital raising initiatives, employee severance, accelerated share-based vesting and facilities costs associated with the closing of the Los Angeles office.
(6) Evercore is organized as a series of Limited Liability Companies, Partnerships, a C-Corporation and a Public Corporation and therefore, not all of the Company's income is subject to corporate level taxes. As a result, adjustments have been made to increase Evercore's effective tax rate to approximately 44% and 43% for the three and twelve months ended December 31, 2009, respectively. These adjustments assume that the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to the ultimate tax deductions for equity-based compensation awards are made directly to stockholders' equity. The decrease in the effective tax rate for the twelve months ended December 31, 2008 resulted from a discrete net tax benefit that was realized during the fourth quarter.
(7) Reflects adjustment to eliminate non-controlling interest related to all Evercore LP partnership units which are assumed to be converted to Class A common stock.
(8) Assumes the vesting of all Evercore LP partnership units and restricted stock unit event-based awards and reflects on a weighted average basis, the dilution of unvested service-based awards. In the computation of outstanding common stock equivalents for U.S. GAAP net income per share, the unvested Evercore LP partnership units are anti-dilutive and the event-based restricted stock units are excluded from the calculation. A reconciliation from Adjusted Pro Forma to U.S. GAAP Diluted Shares Outstanding is as follows:
Three Months Ended Twelve Months Ended
-------------------------------- ---------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- -------- --------
Adjusted Pro Forma
Diluted Shares
Outstanding 40,022 37,750 34,346 36,926 34,136
Basic and Diluted
Weighted Average
Shares of Class
A Common Stock
Outstanding - - - - (85)
Vested Partnership
Units (12,396) (14,061) (15,146) (14,172) (15,188)
Unvested
Partnership
Units (4,603) (4,603) (4,853) (4,603) (4,853)
Vested Restricted
Stock Units -
Event Based - 10 - - 2
Unvested Restricted
Stock Units -
Event Based (728) (743) (800) (728) (801)
Unvested
Restricted Stock
Units -
Service Based - - - (1,798) (36)
Unvested Restricted
Stock - Service
Based - - - (80) (103)
--- --- --- --- ----
U.S. GAAP
Diluted Shares
Outstanding 22,295 18,353 13,547 15,545 13,072
====== ====== ====== ====== ======
(9) Reflects an adjustment for a reduction of compensation expense associated with the issuance of restricted stock to the former shareholders of Braveheart in the first quarter of 2008 as additional deferred consideration pursuant to the Sale and Purchase Agreement associated with the Braveheart acquisition.
Historical Unaudited Condensed Consolidated Adjusted Pro Forma and U.S. GAAP Selected Financial Data
The below table reflects summarized historical quarterly Adjusted Pro Forma and U.S. GAAP information for 2009 and 2008. We have included the historical results in this press release merely as additional information. Historical U.S. GAAP information and a reconciliation from Adjusted Pro Forma for the three months ended September 30, 2009 and 2008, June 30, 2009 and 2008 and March 31, 2009 and 2008, can be found in our Q3 2009, Q2 2009 and Q1 2009 earnings releases furnished to the SEC on October 28, 2009, July 29, 2009 and April 30, 2009, respectively. Revenues and Non-compensation costs for the fourth quarter of 2008 have been recast to exclude reimbursable client-related expenses and expenses associated with third-party revenue sharing arrangements.
Adjusted Pro Forma
-------------------------------------------
Three Months Ended
-------------------------------------------
December September June March
31, 2009 30, 2009 30, 2009 31, 2009
--------- ---------- -------- --------
Net Revenues $109,140 $83,382 $71,312 $50,606
Employee Compensation
and Benefits 63,012 50,693 51,859 35,854
Non-compensation Costs 15,680 13,513 13,376 10,647
------ ------ ------ ------
TOTAL EXPENSES 78,692 64,206 65,235 46,501
Operating Income (Loss) $30,448 $19,176 $6,077 $4,105
Net Income (Loss)
Attributable to
Evercore Partners Inc. $16,536 $10,992 $3,550 $1,805
Diluted Earnings (Loss)
Per Share $0.41 $0.29 $0.10 $0.05
Compensation Ratio 58% 61% 73% 71%
Operating Margin 28% 23% 9% 8%
Adjusted Pro Forma
-------------------------------------------
Three Months Ended
-------------------------------------------
December September June March
31, 2008 30, 2008 30, 2008 31, 2008
--------- ---------- -------- --------
Net Revenues $34,458 $56,028 $58,865 $44,035
Employee Compensation
and Benefits 34,585 40,311 38,512 25,803
Non-compensation Costs 12,309 11,018 10,699 11,779
------ ------ ------ ------
TOTAL EXPENSES 46,894 51,329 49,211 37,582
Operating Income (Loss) $(12,436) $4,699 $9,654 $6,453
Net Income (Loss)
Attributable to
Evercore Partners Inc. $(8,489) $2,270 $5,777 $4,495
Diluted Earnings (Loss)
Per Share $(0.25) $0.07 $0.17 $0.13
Compensation Ratio 100% 72% 65% 59%
Operating Margin (36%) 8% 16% 15%
U.S. GAAP
-------------------------------------------
Three Months Ended
-------------------------------------------
December September June March
31, 2009 30, 2009 30, 2009 31, 2009
--------- ---------- -------- --------
Net Revenues $109,174 $83,196 $71,043 $49,726
Employee Compensation
and Benefits 68,001 55,104 51,859 35,854
Non-compensation Costs 18,208 15,806 15,983 12,417
Special Charges 3,991 - 16,138 -
----- --- ------ ---
TOTAL EXPENSES 90,200 70,910 83,980 48,271
Operating Income (Loss) $18,974 $12,286 $(12,937) $1,455
Net Income (Loss)
Attributable to
Evercore Partners Inc. $1,649 $2,633 $(6,043) $191
Diluted Earnings (Loss)
Per Share $0.07 $0.14 $(0.43) $0.01
Compensation Ratio 62% 66% 73% 72%
Operating Margin 17% 15% (18%) 3%
U.S. GAAP
-------------------------------------------
Three Months Ended
-------------------------------------------
December September June March
31, 2008 30, 2008 30, 2008 31, 2008
--------- ---------- -------- --------
Net Revenues $33,236 $56,813 $60,118 $44,488
Employee Compensation
and Benefits 34,585 40,311 38,512 33,255
Non-compensation Costs 15,172 12,937 12,427 12,708
Special Charges - 1,695 1,310 1,127
--- ----- ----- -----
TOTAL EXPENSES 49,757 54,943 52,249 47,090
Operating Income (Loss) $(16,521) $1,870 $7,869 $(2,602)
Net Income (Loss)
Attributable to
Evercore Partners Inc. $(5,336) $(468) $2,056 $(965)
Diluted Earnings (Loss)
Per Share $(0.39) $(0.04) $0.16 $(0.08)
Compensation Ratio 104% 71% 64% 75%
Operating Margin (50%) 3% 13% (6%)
SOURCE Evercore Partners Inc.
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