Evercore Inc. Q4 FY2024 earnings call

• 2024 was Evercore Inc.'s second-best year ever for revenue with firm-wide adjusted net revenues of just over $3 billion. Advised on three of the seven largest global M&A deals and gained market share in advisory fees. Over 40% of total revenues were from non-M&A sources in the past five years and 2024.
• 2025 market trends continued to improve with increased CEO confidence levels, healthy sponsor dialogue activity, continued financing availability. Robust backlogs position for healthy advisory and capital markets businesses. So far in 2025, was lead financial adviser to Calpine on its sale to Constellation Energy for $29.1 billion.
• 2024 was a successful recruiting year, marking the second-largest class of investment banking senior managing director new hires. Nine investment banking SMDs and one senior adviser started or committed to join, and there's a strong pipeline of external recruits. Eleven newly promoted SMDs in global investment banking in 2025.
• Key highlights from the quarter and year: Strongest quarter for revenue since Q4 2021. Strategic advisory had a strengthening environment with notable transactions. European advisory business had momentum in Q4 2024 and strong backlog for 2025. Financial sponsors team had increasing client dialogues. Strategic defense and shareholder advisory had a strong finish. Liability management and restructuring had an exceptional year. Private capital advisory and private funds group achieved record years. Underwriting business bounced back, with over 50% of underwriting revenue from other sectors in 2024. Equities franchise had best year since 2016. Wealth management ended the year with record revenues and assets under management.

For the fourth quarter of 2024, adjusted net revenues were $981 million, increasing 24% versus the fourth quarter of 2023. For the full year, adjusted net revenues were $3 billion, increasing 23% compared to 2023. Fourth quarter adjusted advisory fees were $850 million, up 29% year over year, with adjusted advisory fees for the full year at $2.4 billion, up 24% compared to 2023. Fourth quarter underwriting fees were $26 million, up 38% from a year ago, with full-year underwriting revenues at $157 million, up 41% versus 2023. Commissions and related revenue in the fourth quarter was $58 million, up 4% year over year, with full-year commissions and related revenue at $204 million, up 6% compared to 2023. Fourth quarter and full-year adjusted asset management and administration fees were $22 million and $85 million, respectively, both increasing 16% versus the prior year period. Fourth quarter adjusted other revenue net was approximately $24 million, compared to $37 million a year ago, and for the full year, adjusted other revenue net was $105 million compared to $98 million last year.

• Market trends continued to improve with increased CEO confidence levels, healthy sponsor dialogue activity, continued financing availability, and a strong macroeconomic backdrop. Anticipate the deal-making environment will continue to gradually improve throughout 2025, building on the momentum of the past twelve months.
• 2025 is expected to be a stronger year for the ECM industry-wide, particularly the IPO market.
• Robust backlogs position for healthy advisory and capital markets businesses in 2025.

Forward-looking statements are subject to various risks and uncertainties, including but not limited to those discussed in the filings with the SEC, such as geopolitical and macroeconomic uncertainties that could cause actual outcomes to differ materially from those indicated in the statements.

Q: Mike Brown with Wells Fargo Securities asked about the comp ratio and expectation for improvement in 2025.

A: Tim LaLonde said the adjusted compensation ratio for the fourth quarter was 65.2%, 560 basis points below last year's fourth quarter, and the full-year adjusted compensation ratio was 65.7%, 190 basis points lower than in 2023. He stated they are striving to achieve meaningful improvement again in 2025 with progress being gradual as they focus on investing in the firm's growth.

Q: Brennan Hawken with UBS asked about expectations for recruiting in 2025 and impact of retention efforts on comp expense.

A: Tim LaLonde said they've been pleased with recruiting results in the past couple of years, are working hard at recruiting in 2025 with a pipeline of candidates, and hiring impacts the compensation line. John Weinberg added their commitment to recruiting remains robust, they're looking for high-quality people, and the recruiting environment is competitive.

Q: Devin Ryan with Citizens JMP asked about the M&A backdrop and larger deals post-election.

A: John Weinberg said they see continuing robust activity at the board level with management teams, backlog continues to strengthen with large deals being a big part, and the environment is likely to trend better though it's too early to predict with certainty.

Q: James Yaro with Goldman Sachs asked about acceleration in M&A and whether there was pull forward in Q4 2024.

A: John Weinberg said there was not a particularly large amount of pull forward, activity level remains very robust across the board in businesses, with activity seen in various sectors.

Q: Brendan O'Brien with Wolfe Research asked about the percentage of ramping SMDs and productivity.

A: John Weinberg said they have a large number of people ramping, are confident the new people will drive productivity, and believe the business is getting more active and of higher quality. Tim LaLonde agreed, stating they're in the relatively earlier stages of market recovery which augurs well for continued improvement in productivity ratio.

Q: Aidan Hall with KBW asked about competitive advantage in private capital advisory business.

A: John Weinberg said they had record years in private capital advisory businesses in 2024, are competing effectively for new business and clients, with business leaders optimistic about building the business. Tim LaLonde reiterated last year was a record year, 2025 is starting strong, and they believe in a secular growth trend in the area.

Q: Ryan Kenny with Morgan Stanley asked about pace of activity build in 2025 and impact of market volatility.

A: John Weinberg said they continue to think there will be an actual build, don't see tariffs impacting activity level significantly, and see activity levels continuing to build in both M&A and equity capital markets.

Q: Devin Ryan with Citizens JMP asked about excess capital position and entering 2025.

A: Tim LaLonde said they've had a healthy build of cash, returned $591 million of capital to shareholders in 2024 through dividends and share repurchases, and expect to repurchase shares again in 2025 which will use some of the cash build-up.

Q: James Yaro with Goldman Sachs asked about outlook for restructuring business.

A: John Weinberg said they had a very strong year in restructuring in 2024, activity level remains very strong with a lot of liability management playing into it, and the business is more relevant and expansive than before with people marketing the service well.