Bloomberg News

Evercore Climbs as Third-Quarter Profit Beats Estimates

October 27, 2011

(Updates shares in second paragraph.)

Oct. 27 (Bloomberg) -- Evercore Partners Inc., the investment bank founded by Roger Altman, soared the most in almost three years in New York trading after reporting record net revenue and profit that beat estimates.

Evercore rose $5.05, or 21 percent, to $28.75, the most since Nov. 26, 2008. The firm said third-quarter earnings excluding certain items increased 35 percent to 19.7 million, or 46 cents a share. The average estimate of nine analysts surveyed by Bloomberg was 31 cents. Pro-forma net revenue rose to $163.9 million, or 32 percent, from $123.7 million.

Investment banking pro-forma net revenue increased 38 percent to a record $138.4 million in the third quarter from the year earlier. New York-based Evercore, run by Chief Executive Officer Ralph Schlosstein, 60, posted higher revenue even as deals slowed amid investor concerns about the European debt crisis and a possible global recession. Announced global transactions fell to $533.6 billion in the third quarter from $646.8 billion in the second quarter and $620.4 billion in the first, according to data compiled by Bloomberg.

“We delivered record quarterly revenues and earnings for the second consecutive quarter, while continuing to invest in our core business,” Schlosstein said in the statement.

Evercore increased its dividend to 20 cents per share, up from 18 cents, to be paid on Dec. 9 to shareholders of record as of Nov. 25, according to the statement. The dividend rise ni won’t affect the firm’s appetite for growth or acquisitions, Schlosstein said on the call.

Evercore earned advisory fees from 112 clients in the period, compared with 85 last year, according to the statement. Advisory fees exceeded $1 million from 26 clients, up from 15 last year.

Lazard Shares Jump

Lazard Ltd., the biggest non-bank merger advisory firm, rose the most in more than two months in New York trading after reporting a 24 percent increase in revenue from mergers and acquisitions in the third quarter.

Evercore Asset Management, a 51 percent owned institutional money manager specializing in small- and mid-cap equities, will wind down its business, the firm said in the statement. During the next three months, EAM will return all assets to clients, about $430 million at Sept. 30, according to the statement.

Evercore “continues to evaluate new investment opportunities and invest in the growth of its investment management affiliates,” the firm said in the statement.

Evercore’s investment management pro-forma net revenue rose to $25.5 million in the period from $23.7 million last year. Assets under management fell 19 percent to $13.6 billion in the third quarter from the previous period on net outflows of $1.2 billion and $2 billion of market depreciation, according to the statement.

Compensation Expenses

Evercore paid $114.8 million in compensation in the third quarter, 40 percent more than a year earlier. Investment banking compensation costs rose to $85.9 million from $60.8 million, and investment management compensation costs fell to $16 million from $16.5 million.

Evercore ranks 12th on the global mergers and acquisitions league tables for announced deals so far this year. The firm has advised on $133.1 billion in proposed transactions, including AT&T Inc. in its agreement to buy T-Mobile USA Inc. from Deutsche Telekom AG for $39 billion. The deal that could be blocked if an antitrust suit brought by the Justice Department succeeds.

“Our own backlog remains strong,” Altman, a former U.S. deputy Treasury secretary, said today on the call. “It’s well above last year. There is no sign of weakness in it at all.”

Oil, Gas Deals

Evercore has been winning mandates on the year’s biggest oil and gas deals, including working with Kinder Morgan Inc. on a $21 billion agreement to buy El Paso Corp. The firm didn’t have a focused oil and gas advisory effort until 2009, when it hired Robert Pacha from Bank of America Corp. to establish a Houston office. This year, Evercore added Raymond Strong III from Goldman Sachs Group Inc. in New York and three more senior bankers in Houston.

Third-quarter non-compensation expenses rose partly due to costs associated with completing the acquisition of Lexicon Partners Ltd. in August, Chief Financial Officer Robert Walsh said today on a conference call after results were announced. Non-compensation costs will likely continue to increase because of the Lexicon deal and the building of Evercore Wealth Management in the Midwest, Walsh said.

--Editors: William Ahearn, Rick Green To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.


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