Evercore Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 5, 2025
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Operator

Good morning, and welcome to the Evercore Fourth Quarter twenty twenty four and Full Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question and answer session. I will now turn to Katie Haber, Managing Director of Investor Relations and ESG at Evercore. Please go ahead.

Katy Haber
Katy Haber
MD, Head of Investor Relations & ESG at Evercore

Thank you, operator. Good morning and thank you for joining us today for Evercore's fourth quarter and full year twenty twenty four financial results conference call. I'm Katie Haber, Evercore's Head of Investor Relations and ESG. Joining me on the call today is John Wyenberg, our Chairman and CEO and Tim Lalonde, our CFO. After our prepared remarks, we will open the call for questions.

Katy Haber
Katy Haber
MD, Head of Investor Relations & ESG at Evercore

Earlier today, we issued a press release announcing Evercore's fourth quarter and full year twenty twenty four financial results. Our discussion of our results today is complementary to the press release, which is available on our website at evercore.com. This conference call is being webcast live in the For Investors section of our website, and an archive of it will be available for thirty days beginning approximately one hour after the conclusion of this call. During the course of this conference call, we may make a number of forward looking statements. Any forward looking statements that we make are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.

Katy Haber
Katy Haber
MD, Head of Investor Relations & ESG at Evercore

These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10 K, quarterly reports on Form 10 Q and current reports on Form eight K. I want to remind you that the company assumes no duty to update any forward looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non GAAP measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is posted on our website. We continue to believe that it is important to evaluate Evercore's performance on an annual basis.

Katy Haber
Katy Haber
MD, Head of Investor Relations & ESG at Evercore

As we have noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I will now turn the call over to John.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Thank you, Katie, and good morning, everyone. 2024 marked a year of significant improvement across both the macroeconomic landscape and the broader capital markets. We saw strength across all of our businesses. And as a result, 2024 was Evercore's second best year ever for revenue with firm wide adjusted net revenues of just over $3,000,000,000 dollars In the year, we also advised on three of the seven largest global M and A deals and continued to gain market share in terms of advisory fees. We have continued to intensively cover our clients while broadening our coverage across the entire platform.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Over the past several years, we have meaningfully invested in the business and we continue to broaden and deepen our products and capabilities. This has contributed to a significant diversification in our total revenue base. On average, over the past five years and in 2024, more than 40% of our total revenues were from non M and A sources. We are pleased with the progress we've made in the past year. As we enter 2025, we are optimistic.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Market trends continue to improve with increased CEO confidence levels, healthy sponsor dialogue activity, continued financing availability and overall a strong macroeconomic backdrop. Our robust backlogs continue to strengthen positioning us for what we believe will be a healthy environment in our advisory and capital markets businesses. While some geopolitical and macroeconomic uncertainties persist, we anticipate the deal making environment will continue to gradually improve throughout the year building on the momentum of the past twelve months. So far this year, we were lead financial advisor to Calpine on its sale to Constellation Energy for $29,100,000,000 the largest announced deal to date. These activity levels reflect our strong client relationships, ongoing coverage efforts and building client dialogues.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Shifting to talent, 2024 was another successful recruiting year for Evercore, marking our second largest class of investment banking senior managing director new hires. For the year, nine investment banking SMDs and one senior advisor have started or committed to join the firm. Since our last earnings call, one SMD committed to join our healthcare coverage team and will be starting later this year. We have a strong pipeline of external recruits and we are continuing to add and promote high quality senior talent to our firm. We're excited to begin 2025 with 11 newly promoted SMDs in our global investment banking business across sectors and capabilities.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Over the past three years, we've recruited nearly 30 SMDs and senior advisors externally and promoted more than 30 SMDs internally for a total of approximately 60 new senior bankers on our platform. Attracting and developing the highest quality talent has always been a core priority for us, and we believe this remains one of the most vital aspects for future growth and our competitive positioning. Now, let me briefly discuss the key highlights from the quarter and year. Overall, Evercore had its strongest quarter for revenue since the fourth quarter of twenty twenty one and experienced a continuation of the momentum that we've been building throughout the year. In strategic advisory, we continue to observe a strengthening environment and we've advised on a number of notable and complex transactions, including some materials on its sale to Quickrete for $11,500,000,000 Warner Bros.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Discovery on its new corporate structure highlighting extensive collaboration across several teams throughout the firm Vivendi on the partial demergers of Canal plus and Louis Acher and spin off of Avast representing a notable deal for our newly established team in Paris. The European advisory business continued to see momentum build in the fourth quarter and finished the year with a strong backlog for 2025. There are some signs that market trends and sentiment in Europe are improving. However, they lag those in The United States. While industry wide sponsor activity continues to gradually build, our financial sponsors team experienced increasing levels of client dialogues into year end and so far this year.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Whether related to M and A, continuation funds, equity underwriting, liability management or private capital markets, we believe we are well positioned to serve our sponsor clients as activity levels continue to build in 2025. We continue to invest in our financial sponsors team and we're excited for what this expanded group will accomplish over time. Our strategic defense and shareholder advisory business had a strong finish to the year, having advised on some of the largest activist defenses in 2024. Global activist campaigns remain elevated and we expect these heightened activity levels to continue. Liability management and restructuring had an exceptional year with liability management among sponsor clients continuing to be a primary driver of activity.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

We believe our firm's extensive expertise and integrated approach to advising clients will drive continued success. Our industry leading private capital advisory and private funds group both achieved record years. In PCA, we observed strong performance across both GP and LP businesses. Driven by record volumes, we are starting 2025 with a strong pipeline. Additionally, our structured capital solutions business is building in momentum as we head into 2025.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

In PFG, the fundraising environment has improved marginally and we expect similar trends to continue as sponsor and broader M and A activity increases. Activity for this group continues to broaden as we add new clients. The underwriting business had a stronger year as equity issuance activity bounced back in 2024, particularly among follow ons. We continue to elevate our role and increase our share of deal economics. Diversifying our ECM sector exposure beyond healthcare has been one of our primary strategic objectives in recent years.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

In 2024, over 50% of our underwriting revenue came from other sectors with significant contribution from energy, tech and financials. We were a book runner on nearly all of our ECM transactions in the year and we were pleased to be left lead on six of them reflecting continued progress. Notably, we were left lead book runner on Diamondback Energy's two point six billion dollars follow on, which was the largest E and P follow on in history. We and the market anticipate 2025 will be a stronger year for ECM industry wide, particularly the IPO market. Our equities franchise had its best year since 2016 with broad based strength across our research and execution products.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

For the third consecutive year, our research team was recognized as the number one firm on a weighted basis by Extell, formerly known as Institutional Investor. Additionally, we had the most number one ranked analysts on Wall Street for the second year in a row. This is an extraordinary achievement and we are very proud of our team. Lastly, in wealth management, we ended the year with record revenues and assets under management of $13,900,000,000 Our client engagement levels remain strong and we are focused on supporting our clients through all market conditions. Before I turn it over to Tim to discuss the financial results, I want to wrap up with a few points.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Looking ahead, we are optimistic for both the market and our business. We believe we are still in the early stages of recovery and expect it to gradually build throughout 2025 and beyond. We have an exceptionally strong team of senior bankers in the industry with 144 investment banking senior managing directors, which does not include our most recent promotion class and is over 25% more SMDs than in the end of twenty twenty one. We believe we are better positioned today than at any time in our history for what lies ahead. We remain committed to executing our growth strategy with a focus on continuing to improve our expense margins and enhance shareholder value over time.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

With that, let me turn it over to Tim.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Thank you, John. Our fourth quarter and full year financial results reflect the building momentum we experienced in 2024 with net revenues higher each quarter, both sequentially and year over year. As the market environment continues on its path to recovery, we remain committed to strategically investing in our growth and balancing that with responsible expense management and medium to long term value creation for our shareholders. In 2024, we made meaningful progress on our adjusted comp and non comp expense ratios, improving them by 190 basis points and more than 90 basis points, respectively. This has resulted in a two eighty basis point improvement in our adjusted operating margin versus 2023.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

As I have discussed throughout the past year, we are focused on making further improvement on our margins and we expect this to occur gradually over the near to medium term. With that, I will now discuss our fourth quarter and full year financial results. For the fourth quarter of twenty twenty four, net revenues, operating income and EPS on a GAAP basis were $975,000,000 2 13 million dollars and $3.3 per share respectively. For the full year, net revenues, operating income and EPS on a GAAP basis were $3,000,000,000 5 20 7 million dollars and $9.08 per share respectively. My comments from here will focus on non GAAP metrics, which we believe are useful when evaluating our results.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website. Fourth quarter adjusted net revenues of $981,000,000 increased 24% versus the fourth quarter of twenty twenty three. On a full year basis, adjusted net revenues of $3,000,000,000 increased 23% compared to last year. Fourth quarter adjusted operating income of $218,000,000 increased 76% compared to the fourth quarter of twenty twenty three. Adjusted earnings per share of $3.41 increased 69% versus the fourth quarter last year.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

For the full year, adjusted operating income of $557,000,000 increased 45% and adjusted earnings per share of $9.42 increased 46% versus the full year 2023. Our adjusted operating margin was 22.2% for the fourth quarter, up six fifty basis points versus the fourth quarter of twenty twenty three. And the full year adjusted operating margin was 18.6. And as I mentioned earlier, up two eighty basis points versus the 2023 full year result. Turning to the businesses.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Fourth quarter adjusted advisory fees of $850,000,000 increased 29% year over year, representing our second strongest quarter on record. Adjusted advisory fees were $2,400,000,000 for the full year, up 24% compared to 2023 and our strongest year behind 2021. By our estimates, we increased our market share again this year and further closed the gap between us and the largest investment banks. Our fourth quarter underwriting fees were $26,000,000 up 38% from a year ago. For the full year, underwriting revenues were $157,000,000 up 41% versus last year reflecting improved market conditions and the investments we have made in this business.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Commissions and related revenue of $58,000,000 in the fourth quarter was up 4% year over year. For the full year, commissions and related revenue of $214,000,000 were up 6% compared to 2023, representing our best results since 2016. Fourth quarter and full year adjusted asset management and administration fees of $22,000,000 and $85,000,000 respectively, both increased 16% versus the prior year period. Fourth quarter adjusted other revenue net was approximately $24,000,000 which compares to $37,000,000 a year ago. For the full year, adjusted other revenue net was $105,000,000 compared to $98,000,000 last year.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Approximately 70% of the other revenue in 2024 was interest income and about 30% was a gain on our DCCP hedge. Turning to expenses. The adjusted compensation ratio for the fourth quarter was 65.2%, five sixty basis points below last year's fourth quarter. Our full year adjusted compensation ratio was 65.7%, one hundred and ninety basis points lower than in 2023. We are pleased with the improvement we made in 2024, but not satisfied and we are working hard to make additional progress over the near to medium term.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

However, as we remain focused on investing in the growth of our firm, progress will continue to be gradual. As a reminder, each of the past two years were years of significant investment in building out our SMD ranks with top quality talent. And we are balancing strategic investment in our business with expense management with the objective of providing first rate advice and execution to our clients while maximizing overall value creation for our shareholders. Shifting to non compensation expenses, Fourth quarter and full year expenses were $123,000,000 and $471,000,000 respectively, both up 16% from the relevant prior year period. The increases in our full year non compensation expenses were primarily driven by revenue and activity related costs.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

First, an increase in professional fees related to higher client related expenses and search and placement fees. The combination of revenues up 23% and strong SMD hiring contributed to this. Second, travel and travel related expenses were up 23% year over year and the number of trips up 19%. This is also correlated with stronger business and higher revenue levels. As a reminder, the recovery of client reimbursable expenses is reflected in the revenue line and is not netted against non comp expenses.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

On a per employee basis, our fourth quarter non comp expenses are about 7% higher than the year ago fourth quarter and only about 1% higher than they were in the fourth quarter of twenty nineteen, the pre COVID year. We have improved our non comp ratio consistently each quarter this year, ending with a full year adjusted ratio of 15.7%. This compares favorably to our pre COVID non comp expense ratio levels, consistent with our commentary earlier this year. Our adjusted tax rate for the quarter was 27.3%, down from 28.9% last quarter and up from 25.3% in the fourth quarter of last year. The full year adjusted tax rate was 21.8% versus 23.4% last year, largely due to tax benefits related to the appreciation in the share price upon vesting of RSU grants.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Turning to our balance sheet. As of December 31, our cash and investment securities totaled $2,400,000,000 which is about $350,000,000 higher than last year's levels at year end. In 2024, we returned a total of $591,000,000 to shareholders through dividends and repurchases of 2,300,000.0 shares at an average price of $193.4 Our fourth quarter diluted share count increased a little over 1% from the third quarter to 45,000,000. For the full year, our share count is up 1,300,000.0 shares versus the year prior, primarily due to the impact of our higher share price on unvested awards, which are accounted for under the treasury stock method. We remain committed to repurchasing shares to offset dilution from our RSU year end bonus grants.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

And in fact, in each of the past four years, we have repurchased a number of shares greater than that and we would expect to do so again in 2025. We are pleased with our performance in 2024 and we believe we are well positioned to continue delivering strong results in the coming year and beyond. We expect this to be supported by an improving market environment and investments we have made in our business, which we believe will benefit our clients, our shareholders and our firm. With that, we will now open the line for questions.

Operator

Thank you. We will now conduct the question and answer portion of the conference. Our first question is from Mike Brown with Wells Fargo Securities. Please go ahead.

Michael Brown
Michael Brown
Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo

Okay, great. Good morning. Thanks for taking my question. So Tim, I wanted to maybe start with a question on the comp ratio. So as you noted, you delivered almost 200 basis points of comp ratio improvement in 2024.

Michael Brown
Michael Brown
Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo

You referenced a expectation for gradual improvement in the margins. Wanted to ask, what's as you stand here today, what's your expectation for that improvement in 2025? Would kind of that level, that 200 basis point level be what you would consider gradual improvement? Or if the revenue environment is strong, could it actually be better than that? Thank you.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Yes. Thanks for your question, Mike. Yes. And as you did point out, we last year we were at 67.6%. This year of course is 65.7%, one hundred and ninety basis point improvement.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

I would characterize that as a meaningful improvement. As we mentioned in the past, we've talked about gradual improvement as our business continues to build And we think that was a reflection of kind of the commentary we had provided and the results we were expecting. And I would say for 2025 though we don't give guidance, I would say we're striving hard to achieve meaningful improvement again this year. And as the year progresses, we'll have better visibility on that.

Operator

Thank you.

Michael Brown
Michael Brown
Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo

Thank you, Jim.

Operator

And our next question comes from Brennan Hawken with UBS. Please go ahead.

Brennan Hawken
Brennan Hawken
Senior Analyst - Equity Research at UBS Group

Good morning, John. Good morning, Tim. Thanks for taking my question. So appreciate the color, Tim, on the comp ratio right there in something you're striving to put up a similar level of leverage as you did in 2024. I know that there's all sorts of different factors that come into play and recruiting and retention of talent can be a big one.

Brennan Hawken
Brennan Hawken
Senior Analyst - Equity Research at UBS Group

Can you talk about what your expectations are for recruiting in the coming year? And last quarter, you spoke to the need to step up retention efforts and how that impacted the comp expense. Could you give us a little texture around what kind of impact we saw there and what we should expect into 2025?

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Yes, sure. And thanks for the question, Brent. Look, I think what by the way, again, I'd like to start with a little historical context which is, I think we've been pleased with the results of our recruiting effort over these last couple of of years particularly in a competitive environment for talent. I think that we're working just as hard at it this year that we're still on plan and on pace to try to continue to work hard to build the business. We have a pipeline of candidates, but not unlike M and A transactions until you actually get it across the line.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

They're simply prospects, but we are in a number of discussions and working hard at it. And I think it does of course impact the compensation line. And what we're trying to do and I've kind of said this in the past is not trying to we're being careful not to suboptimize which is we're not focused on any single ratio, but instead on value creation. And I think you could probably run the numbers about what the market is for hiring talent. You've seen what our results have been over the past two or three years.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

And then from there you can extrapolate what the math is, but it does have an impact. But we're trying to balance the hiring and the costs associated with that hiring with the benefit of building our business and achieving improved growth. Go ahead.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Brennan, what I would want to communicate is that our commitment to recruiting remains very robust. And we are going to continue to look for the highest quality people and continue to aggressively recruit them. I think that the recruiting environment remains very competitive. And I think that what we will continue to do is continue to add those high quality people with the intention of really continuing to drive our growth. As you may know, I think we said this, but we've been ramping quite a bit.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

We have 30 senior managing directors ramping right now. We've brought in 60 new people and also promotes over the last three years. And so we have quite a bit of people coming in and really getting up to speed. But I would say that that's going to continue. The big difference I think is that I think the environment is very competitive.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And I can't really give you a good sense as to how that will play out in terms of numbers. But I think you can anticipate we're going to be performing at about the same level.

Brennan Hawken
Brennan Hawken
Senior Analyst - Equity Research at UBS Group

Okay. Yes. And given activity is going to pick up, I can't imagine it will get easier to recruit. So thanks for taking my questions.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Yes.

Operator

Thank you. And we will take our next question from Devin Ryan with Citizens JMP. Please go ahead.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

Thanks. Good morning, Jeff. Good morning, Tim. A question just on the M and A backdrop and specifically larger deals. Obviously, Evercore advised on, I think, three of the top seven transactions in 2024.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

So I'm just curious if you're seeing any shift in the market around the largest deals post election relative to maybe smaller deals just given the changes at the FTC and expected changes in regulation and just how that's kind of evolving within Evercore's pipeline specifically or whether there's other factors that are maybe driving that as well? Thanks.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Sure, Devin. We see continuing robust activity at the Board level and with management teams. I think that what we've said is that our backlog continues to strengthen. And I think that the large deals are a big part of the backlog. So I would I really believe that the environment is probably going to trend toward getting better.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

But clearly we're all watching. It's too early to really predict. But I think most people would say and I think we would agree with that there will be a loosening up of some of the regulatory overlay and that there'll be more of of a possibility. And I think that the clients that we're dealing with would really say the same thing. My own personal experience is that management teams are very much looking at doing things and that really across the board whether it's big strategic or whether it's sponsors, leadership teams are really looking at building the activity level.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

So I think we remain very optimistic and believe there could be very much a build through the balance of the year.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

Excellent. Thank you.

Operator

Thank you. And we will take our next question from James Yaro with Goldman Sachs. Please

James Yaro
James Yaro
Vice President Equity Research at Goldman Sachs

I have a high level one and then a related more nuanced question. John, maybe you could just speak to how much of an acceleration you're seeing in M and A today relative to the start of 2024 and perhaps which areas you're seeing activity improve most? And then zooming in, advisory results in the quarter evidence the momentum you spoke about in your prepared remarks. I just wanted to confirm whether there might be any or not any meaningful pull forward in M and A that contributed to the results this quarter?

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Sure. In terms of pull forward, not a particularly large amount. I mean, we don't usually comment on pull forward. But generally speaking, this was really not on not out of the ordinary. In fact, I'd say it was on the smaller side.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

But let me just get to the acceleration. What we found is that really across the board our businesses are really very active. And whereas I didn't I would say that January didn't have a high volume of announcements coming out really on any side whether it was the equity side or the merger side. We the activity level remains very robust for us. And I don't think it's really slowing down.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And I don't think that would change our view that we've articulated which is that we see a continued build throughout the balance of this year. And it's really and for our businesses it's across the board. I think that virtually every one of our businesses is doing quite well now. And so I don't really I wouldn't really say that there is a specific business which is doing better. In terms of sectors, there is just a lot of activity throughout the sectors whether it's on the technology side or the healthcare side or whether it's in general industrials.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

We're seeing activity across the board. So I don't think I'd make a distinction at this point.

James Yaro
James Yaro
Vice President Equity Research at Goldman Sachs

That's very helpful. Thanks, John.

Operator

Thank you. And we will take our next question from Brendon O'Brien with Wolfe Research. Please go ahead.

Brendan O'Brien
Senior Vice President at Wolfe Research

Good morning and thanks for taking my question. I appreciate the point you made earlier on the 60 SMDs that you've added in the past three years. And that feels like to me that at least that this means there's a higher percentage of your current SMD base ramping today than at any point in your recent history, which would suggest significant embedded growth potential within the firm. However, despite that, your productivity is actually not that far off your long term average. So I just was hoping you could give some context around how the percentage of your ramping SMDs today compares to your long term average and whether with this level of new joiners you still think you can get back to or up to around a $20,000,000 productivity level in the near to intermediate

Brendan O'Brien
Senior Vice President at Wolfe Research

term?

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Well, I would just say that first to start with, we do have a large number of people ramping. So much of that the ramp has to do with the market and the opportunity that the market affords us. I'm very pleased with the new people we've added. In fact, there are some really interesting and exciting transactions in house that have been generated by that group.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And so I'm quite confident that that group is going to really start to drive productivity. And I think that really on all measures the business is just getting more and more active and higher quality. The productivity is really a function as much of the level of revenue because really the more active the market becomes the more our people can generate. At this point, we're in the high teens now. And through the cycle, we've been able to get up to into the 20s.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And I don't really see that that's there's that I would veer from that. I believe that that's where we could go. And I think that we actually have people in place that as the market recovers and announcements start to come in that we're going to be driving more revenue.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Yes. I would agree with that. I think that that if you think about this market recovery and we've talked about the gradual build, but we think we're still in the relatively earlier stages of that build. And I think that that would auger well for what we hope will be continued improvement in the productivity ratio.

Brendan O'Brien
Senior Vice President at Wolfe Research

Thank you for taking my questions.

Operator

Thank you. And we will take our next question from Aden Hall with KBW. Please go ahead.

Aidan Hall
Vice President at Keefe, Bruyette & Woods (KBW)

Great. Thank you. Good morning, John, Tim, Katie. Hope everyone's well. Just wanted to ask on the Private Capital Advisory business.

Aidan Hall
Vice President at Keefe, Bruyette & Woods (KBW)

Obviously, Evercore is a market leader in the space, seen really strong results both in PCA and PFG. But there's increasing competition from the success of the secondaries market and broader industry volumes. There's been some announcements of larger banks moving in with more targeted efforts in this area of advisory. So curious how you think about your competitive advantage in the space and ability to defend that market share?

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Well, last year we had record years in private both of our private capital advisory businesses. And I think we are very optimistic really about each one of those businesses going forward. In terms of market position, we are competing very effectively for new business and clients. And I think each of the business leaders in those business units really have a great deal of optimism in terms of how they're going to continue to build the business. As you may have seen that in terms of the continuation fund activity level, it's quite high right now.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And I think that we're adding continue to add new products in the PCA area whether that's Structured Capital Solutions or whether it's collateralized fund obligations. And then in PFG, what you're really seeing is that the Aperture is opening and we're getting we're bringing in more business to actually raise money for different funds. And so our activity level in the private funds group is building. So I would say, yes, it's getting very it's getting more competitive. It's very competitive.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

But right now we're competing very well and our business leaders feel really good about our market position.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Right. Now I would just say that reiterate that last year was a record year for us. This year is starting strong and we're pleased with what we see in the pipeline and that we believe we're in the midst of a secular growth trend in this area. And so notwithstanding the increased levels of competition, we still feel pretty good about the outlook.

Aidan Hall
Vice President at Keefe, Bruyette & Woods (KBW)

Appreciate the color. Thanks for taking my question.

Operator

Thank you. And we will take our next question from Ryan Kenny with Morgan Stanley. Please go ahead.

Ryan Kenny
Ryan Kenny
Executive Director - Equity Research at Morgan Stanley

Hi, good morning. Thanks for taking my question. So just wanted to dig in on the pace of activity build in 2025 in both M and A and equity capital markets. You mentioned January announcements were a bit weaker for the industry and you used the word gradual. So really want to understand whether recent market volatility around tariffs and AI developments had any impact on the first quarter?

Ryan Kenny
Ryan Kenny
Executive Director - Equity Research at Morgan Stanley

Any risks we should keep in mind as we think about that pace of build through 2025?

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Recognizing that January has been a little bit slower, we continue to think there's going to be a gradual build. And I don't think we're really coming off that. We don't at this point see that tariffs are impacting the activity level of dialogues and really preparing for doing things. We see it both in the strategic as well as financial sponsors. So we see activity levels continuing to build.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And the dialogue on deals is very relevant right now. In the equity capital market space, the same thing. We see a build. And we see that as the balance of the year goes forward, we think it's going to continue to improve that market is going to continue to improve. So I think generally we don't think there's any disruption at this point.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And we think it's really going to continue on the pace that we've anticipated.

Operator

Thank you. And we will take a follow-up question from Devin Ryan with Citizens JMP. Please go ahead.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

Great. Thanks. Just a question on capital. So, obviously, you built $350,000,000 of cash year over year. Appreciate you still need to pay bonuses and so that will bring cash back down.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

But if we make some assumptions there, it would still seem like there was some excess capital build over the course of the year. So I'm just kind of curious whether there would be any reason why you'd want to hold kind of a higher proportion of cash as you grow or does that reflect maybe some of the uncertainty from 2024? Maybe it's just timing. So just love to get a sense on kind of how you're thinking about the excess capital position and kind of where you're entering 2025 because it would seem like it's up over 2024? Thanks.

Tim LaLonde
Tim LaLonde
Senior Managing Director & Chief Financial Officer at Evercore

Yes, sure, sure, Devin. Look, we do think there's been a healthy build of cash. I'd kind of point out last year, we've turned $591,000,000 of capital to our shareholders through $147,000,000 of or $144,000,000 of dividends and $447,000,000 in the form of share repurchases in over the last four years. We've repurchased a number of shares in each case greater than the number of RSUs granted during the comp period. And we certainly would expect that that will be the case again this year and that we would expect to repurchase a number of shares greater than which would of course be a use of some of that cash build up.

Devin Ryan
Director of Financial Technology Research at Citizen JMP

Got it. Okay. All right. Thank you.

Operator

Thank you. And we will take our next question from James Yara with Goldman Sachs. Please go ahead.

James Yaro
James Yaro
Vice President Equity Research at Goldman Sachs

Thanks for taking the follow-up. Just on

James Yaro
James Yaro
Vice President Equity Research at Goldman Sachs

restructuring, that appears to be quite strong across the industry this quarter. Would love to get your perspective on whether that was the case for you. But then as you think about the outlook for restructuring, how do you think about the ability for that business to stay at these elevated levels or even potentially grow from here?

John Weinberg
John Weinberg
Chairman & CEO at Evercore

Well, our last year we had a very strong year in restructuring. I think it was our second best year ever. And we continue to see activity level in that space to be very strong. And frankly the business has changed a little bit and that's not really just bankruptcies and restructuring companies. There's a lot of liability management that plays into it.

John Weinberg
John Weinberg
Chairman & CEO at Evercore

And we've really structured ourselves so that we're talking to more clients about more critical aspects of their capital structure than ever before. So we see that the activity levels can stay up for quite some time. I can't guarantee that it's always going to be at these levels which are very healthy. But there's no question that I think what we're able to do, the service we're able to provide is more relevant and more expansive than it's been before and our people are really marketing it that way.

James Yaro
James Yaro
Vice President Equity Research at Goldman Sachs

Appreciate the color. Thanks Don.

Operator

Thank you. And this concludes today's Evercore fourth quarter twenty twenty four and full year earnings conference call. You may now disconnect.

Executives
    • Katy Haber
      Katy Haber
      MD, Head of Investor Relations & ESG
    • John Weinberg
      John Weinberg
      Chairman & CEO
    • Tim LaLonde
      Tim LaLonde
      Senior Managing Director & Chief Financial Officer
Analysts
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