Key Highlights

  • Consensus EPS of 2.52 sits between second-quarter GAAP diluted EPS of 2.32 and adjusted diluted EPS of 2.91.
  • Consensus revenue of USD 878.33 million compares with second-quarter net revenues of USD 990.2 million, against USD 833.8 million.
  • Advisory fees were USD 776 million, up 11%, and underwriting fees were USD 97 million, up 201%.
  • Adjusted operating margin was 19.0% against 18.7%, and the adjusted compensation ratio was 63.5% in the quarter.

Evercore (NYSE:EVR) reports third-quarter results on Wednesday, Oct. 28, before the market opens. Consensus stands at EPS of 2.52 on revenue of USD 878.33 million, and the company has a market capitalization of USD 9.90 billion.

Evercore is an investment banking advisory firm with equities, underwriting and wealth management businesses. Second-quarter net revenues were USD 990.2 million against USD 833.8 million, an increase of 19%.

Estimates Against the Last Reported Quarter

The EPS estimate of 2.52 is above the GAAP diluted EPS of 2.32 and below the adjusted diluted EPS of 2.91 reported for the second quarter, which compared with 2.36 on a GAAP basis a year earlier. The estimates table does not state its EPS basis. The revenue estimate of USD 878.33 million is below the USD 990.2 million of net revenues.

Net income attributable to the company was USD 95,277 thousand against USD 97,201 thousand, and income before income taxes was USD 147,594 thousand against USD 151,204 thousand.

What Management Guided and What It Left Open

Management said it expects continued activity in the latter part of this year and into next, and that full-year growth in non-compensation costs would be modestly higher than in the last couple of years. It said the non-compensation ratio of 17.5% was not a level it was happy with, and that some episodic costs may be lower in coming quarters.

Management cautioned that the timing of backlog conversion into revenue can vary from quarter to quarter and gave no revenue figure. It also noted that the third and fourth quarters of last year were both record quarters for comparison.

Fee Lines and Margins

Advisory fees increased USD 77.8 million, or 11%, to USD 776 million, and underwriting fees increased USD 64.9 million, or 201%, to USD 97 million. Commissions and related revenue rose USD 5.3 million, or 9%, to USD 64 million, and asset management and administration fees were USD 25 million, up 15%.

Adjusted operating income was USD 190 million, up 21%, and the adjusted operating margin was 19.0% against 18.7%. The adjusted compensation ratio fell 190 basis points to 63.5%, while the adjusted non-compensation ratio rose to 17.5% from 15.9%.

Capital Return, Talent and Balance Sheet

First-half adjusted net revenues were USD 2.4 billion, up 56%, and first-half adjusted diluted EPS was 10.48, up 77%. Total capital return in the first half was USD 823 million, including USD 734 million of repurchases of 2.3 million shares. A quarterly dividend of 0.89 per share was declared.

The investment banking practice had 188 senior managing directors, with 19 added year to date. Cash and investment securities were USD 2.4 billion, operating expenses were USD 843,623 thousand against USD 683,441 thousand and interest expense was USD 8,298 thousand. The estimates table lists a market capitalization of USD 9.90 billion.

Markers for the Release

Adjusted EPS against 2.52 and net revenues against USD 878.33 million are the headline comparisons. Other markers are advisory and underwriting fees, the compensation ratio and the non-compensation ratio.