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Evercore Reports Second Quarter 2013 Results Quarterly Dividend Of $0.22 Per Share

Evercore’s quarterly results may fluctuate significantly due to the timing and amount of transaction fees earned, as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

“Our quarterly results reflect the continuing market share gains by our firm, as our independent advisory model is increasingly embraced by corporate leaders, private equity firms, Boards of Directors and large institutional investors. Our net revenues exceeded $200 million for the second time in our history, and this was the second strongest quarter in our history by most important measures,” said Ralph Schlosstein, President and Chief Executive Officer. “Each of our businesses performed well in the second quarter. Completed M&A assignments and capital markets advisory assignments contributed to our strong second quarter Investment Banking results, reflecting both the large number of assignments completed and the return of transactions generating larger fees. Investment Management benefited significantly from the closing of a $201 million private equity fund in Mexico and investment performance continued to be solid at each of our key platforms. We delivered strong shareholder performance as operating margins were 24.7%, and we returned more than $65.5 million to shareholders, repurchasing more than 1.5 million shares and units and paying dividends of $8.3 million in the quarter.”

“Evercore delivered strong Investment Banking results in this quarter. Our revenues of $180 million represent the second best quarterly results in our history, earning fees of $1 million or more from 38 clients and completing 18 underwriting transactions. We are consistently adding new talent to the firm, and did so again this quarter. We launched a Private Capital Advisory business, to be led by Nigel Dawn, and announced the addition of Scott Kamran to our Technology team and Keith Magnus, who will join us to open an office in Singapore, serving clients in Singapore and Southern Asia. Finally, overall, we expect Evercore’s investment banking market share to increase again,” said Roger Altman, Executive Chairman.

                                             
 

Consolidated U.S. GAAP and Adjusted Pro Forma Selected Financial Data (Unaudited)

 
 
U.S. GAAP
Three Months Ended % Change vs. Six Months Ended

June 30, 2013

March 31, 2013

June 30, 2012

March 31, 2013

June 30, 2012

June 30, 2013

June 30, 2012

% Change  
(dollars in thousands)
Net Revenues $ 207,446 $ 151,422 $ 172,497 37 % 20 % $ 358,868 $ 275,295 30 %
Operating Income $ 38,062 $ 14,944 $ 21,195 155 % 80 % $ 53,006 $ 9,052 486 %
Net Income Attributable to Evercore Partners Inc. $ 16,426 $ 5,969 $ 7,934 175 % 107 % $ 22,395 $ 4,566 390 %
Diluted Earnings Per Share $ 0.44 $ 0.16 $ 0.25 175 % 76 % $ 0.59 $ 0.14 321 %
Compensation Ratio 63.5 % 67.4 % 66.3 % 65.2 % 70.8 %
Operating Margin 18.3 % 9.9 % 12.3 % 14.8 % 3.3 %
 
Adjusted Pro Forma
Three Months Ended % Change vs. Six Months Ended

June 30, 2013

March 31, 2013

June 30, 2012

March 31, 2013

June 30, 2012

June 30, 2013

June 30, 2012

% Change  
(dollars in thousands)
Net Revenues $ 206,761 $ 153,354 $ 172,115 35 % 20 % $ 360,115 $ 277,636 30 %
Operating Income $ 51,148 $ 29,995 $ 36,452 71 % 40 % $ 81,143 $ 45,383 79 %
Net Income Attributable to Evercore Partners Inc. $ 29,511 $ 16,846 $ 21,185 75 % 39 % $ 46,357 $ 25,502 82 %
Diluted Earnings Per Share $ 0.65 $ 0.37 $ 0.49 76 % 33 % $ 1.01 $ 0.58 74 %
Compensation Ratio 58.9 % 59.7 % 59.7 % 59.3 % 61.0 %
Operating Margin 24.7 % 19.6 % 21.2 % 22.5 % 16.3 %
 
 

Throughout the discussion of Evercore’s business segments, information is presented on an Adjusted Pro Forma basis, which is an unaudited non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and then those results are 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-11 included in Annex I. These Adjusted Pro Forma amounts are allocated to the Company’s two business segments: Investment Banking and Investment Management.

Business Line Reporting

A discussion of Adjusted Pro Forma revenues and expenses is presented below for the Investment Banking 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-11 in Annex I.

                           
 

Investment Banking

 
U.S. GAAP
Three Months Ended Six Months Ended

June 30, 2013

March 31, 2013

June 30, 2012

June 30, 2013

June 30, 2012

(dollars in thousands)
Net Revenues:
Investment Banking Revenues $ 183,454 $ 131,383 $ 154,426 $ 314,837 $ 238,921
Other Revenue, net   (849 )   213     (1,262 )   (636 )   (1,972 )
Net Revenues   182,605     131,596     153,164     314,201     236,949  
 
Expenses:
Employee Compensation and Benefits 117,451 87,869 100,754 205,320 168,983
Non-compensation Costs 30,394 27,052 29,165 57,446 56,019
Special Charges   -     -     662     -     662  
Total Expenses   147,845     114,921     130,581     262,766     225,664  
 
Operating Income $ 34,760   $ 16,675   $ 22,583   $ 51,435   $ 11,285  
 
Compensation Ratio 64.3 % 66.8 % 65.8 % 65.3 % 71.3 %
Operating Margin 19.0 % 12.7 % 14.7 % 16.4 % 4.8 %
 
   
Adjusted Pro Forma
Three Months Ended       Six Months Ended

June 30, 2013

     

March 31, 2013

     

June 30, 2012

June 30, 2013

     

June 30, 2012

(dollars in thousands)
Net Revenues:
Investment Banking Revenues $ 180,033 $ 129,081 $ 151,397 $ 309,114 $ 236,017
Other Revenue, net   246     1,301     (187 )   1,547     173  
Net Revenues   180,279     130,382     151,210     310,661     236,190  
 
Expenses:
Employee Compensation and Benefits 107,995 78,014 89,829 186,009 144,291
Non-compensation Costs   26,683     24,580     25,858     51,263     48,869  
Total Expenses   134,678     102,594     115,687     237,272     193,160  
 
Operating Income $ 45,601   $ 27,788   $ 35,523   $ 73,389   $ 43,030  
 
Compensation Ratio 59.9 % 59.8 % 59.4 % 59.9 % 61.1 %
Operating Margin 25.3 % 21.3 % 23.5 % 23.6 % 18.2 %
 
 

For the second quarter, Evercore’s Investment Banking segment reported Net Revenues of $180.3 million, which represents an increase of 19% year-over-year and 38% sequentially. Operating Income of $45.6 million increased by 28% from the second quarter of last year and 64% sequentially. Operating Margins were 25.3% in comparison to 23.5% for the second quarter last year. For the six months ended June 30, 2013, Investment Banking reported Net Revenues of $310.7 million, an increase of 32% from last year. Year-to-date Operating Income was $73.4 million compared to $43.0 million last year. Year-to-date Operating Margins were 23.6%, compared to 18.2% last year. The Company had 62 Investment Banking Senior Managing Directors as of June 30, 2013 as compared to 58 as of June 30, 2012.

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