Bloomberg News

Evercore Profit Rises as Investment-Banking Revenue Climbs

February 02, 2012

(Updates shares in fifth paragraph.)

Feb. 2 (Bloomberg) -- Evercore Partners Inc., the advisory firm founded by former U.S. Deputy Treasury secretary Roger Altman, said fourth-quarter profit increased 29 percent as investment-banking net revenue jumped.

Earnings excluding certain items rose to $14.1 million, or 32 cents a share, from $10.9 million, or 27 cents, in the year earlier, the New York-based company said today in a statement. The average estimate of seven analysts surveyed by Bloomberg was for adjusted earnings of 28 cents. Investment-banking revenue increased 19 percent to $90.3 million.

Altman, 65, said last month that the biggest banks have better financial strength than many believe and mergers and acquisitions may be more robust this year. Evercore ranked 14th on the financial advisory league tables last year, overseeing $101.8 billion in announced transactions, according to data compiled by Bloomberg.

‘In investment banking, we consistently gained market share while maintaining high levels of productivity,” Chief Executive Officer Ralph Schlosstein, 60, said in the statement.

Evercore fell 24 cents, or 0.8 percent, to $29 in New York. The shares have gained 8.9 percent this year.

Chief Financial Officer Robert Walsh said the firm expects to see “upward pressure” on non-compensation costs related to the relocation of U.K. facilities. Total expenses rose 24 percent to $113.8 million in the fourth quarter and increased 44 percent to $488.5 million in 2011.

Biggest Deals

The firm’s biggest deals last year included advising Kinder Morgan Inc. on its $37.6 billion announced takeover of El Paso Corp. and Exelon Corp. on its $10.2 billion agreement to purchase Constellation Energy Group Inc.

It was advising on AT&T Inc.’s agreement to purchase T- Mobile USA Inc. for $39 billion, a deal that collapsed in December. AT&T abandoned the proposed takeover after the Justice Department sued to block the transaction and the Federal Communications Commission moved to oppose it.

“There has been a change in both the U.S. and in Europe on competition policy,” Altman said on a conference call after results were announced, referring to deals that have been blocked by regulators. “There’s been a notable tightening of criteria.”

Income, Revenue Rise

Evercore reported a record full-year pro-forma net income for 2011 of $63.1 million, an increase of 66 percent from the year earlier, according to the statement. Adjusted pro-forma net revenue rose 9.8 percent to $111.6 million in the fourth quarter and jumped 40 percent to $520.4 million for the year.

Evercore earned advisory fees from 127 clients in the fourth quarter, compared with 91 in the year earlier, according to the statement. Advisory fees exceeded $1 million from 26 clients, up from 20 in the fourth quarter of 2010. Full-year pro-forma investment banking net revenue rose to $421.4 million from $296.1 million.

The firm’s restructuring advisory business has been “quite active,” Altman said on the call.

Investment management pro-forma net revenue fell 16 percent to $21.3 million in the three months ended Dec. 31. Full-year net revenue in the segment was $98.9 million, a record for the unit, compared with a $76.9 million in 2010.

The company said in October it would wind down Evercore Asset Management, a 51 percent-owned institutional money manager specializing in small- and mid-cap equities.

Evercore’s compensation expense climbed to $74.9 million, or 56 percent of net revenue, from $67 million, or 61 percent, in the fourth quarter of 2010, according to the statement. The firm expects to have a “strong recruiting year” in 2012, Schlosstein said on the conference call.

The firm repurchased about 1.6 million shares in 2011, including 366,000 in the fourth quarter.

--Editors: William Ahearn, David Scheer

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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