Evercore Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Brown - Wells Fargo Securities - Analyst : Okay, great. Good morning. Thanks for taking my question. So Tim, I wanted to maybe start a question on the comp ratio. So as you noted, you delivered almost 200 basis points of comp ratio improvement in 2024. You referenced an expectation for gradual improvement in the margins. I wanted to ask what's -- as you enter today, what's your expectation for that improvement in 2025 would kind of that level a 200 basis point level be what you would consider a gradual improvement? Or if the revenue environment is strong, could it actually be better than that? Thank you.

Question: Mike Brown - Wells Fargo Securities - Analyst : Thank you, John.

Question: Brennan Hawken - UBS Securities LLC - Analyst : Good morning, John. Good morning, Tim. Thanks for taking my question. So appreciate the color, Tim, on the comp ratio right there and it sounds like 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. 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 in 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 1:00PM, EVR.N - Q4 2024 Evercore Inc Earnings Call

Question: Brennan Hawken - UBS Securities LLC - Analyst : Yeah. And given the activity is going to pick up, I can't imagine it will get easier to recruit. So thanks for taking my question.

Question: Devin Ryan - Citizens JMP - Analyst : Thanks. Good morning, John. Good morning, Tim. A question just on the M&A backdrop and specifically larger deals, obviously, Evercore advised on, I think, three of the top seven transactions in 2024. 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 may be driving that as well? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 1:00PM, EVR.N - Q4 2024 Evercore Inc Earnings Call

Question: Devin Ryan - Citizens JMP - Analyst : Excellent. Thank you.

Question: James Yaro - Goldman Sachs & Company, Inc. - Analyst : Good morning and thanks for taking my question. 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&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 evidenced 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&A that contributed to the results this quarter?

Question: James Yaro - Goldman Sachs & Company, Inc. - Analyst : That's very helpful. Thanks, John.

Question: Brendan O'Brien - Wolfe Research - Analyst : 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 this means that 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 million productivity level in the near to intermediate term?

Question: Brendan O'Brien - Wolfe Research - Analyst : Thank you for taking my questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 05, 2025 / 1:00PM, EVR.N - Q4 2024 Evercore Inc Earnings Call

Question: Aidan Hall - Keefe, Bruyette & Woods, Inc. - Analyst : Great. Thank you. Good morning, John, Tim, Katy, hope everyone's well. Just wanted to ask on the private capital advisory business. Obviously, Evercore is a market leader in the space, seeing 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. Just curious how you think about your competitive advantage in the space and ability to defend that market share?

Question: Aidan Hall - Keefe, Bruyette & Woods, Inc. - Analyst : Appreciate the color. Thanks for taking my question.

Question: Ryan Kenny - Morgan Stanley - Analyst : Hi, good morning. Thanks for taking my question. So I just wanted to dig in on the pace of activity build in '25 in both M&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 development had any impact on the first quarter? Any risks we should keep in mind as we think about that pace of build through 2025.

Question: Devin Ryan - Citizens JMP - Analyst : Great, thanks. Just a question on capital. So you obviously built $350 million of cash year over year. I appreciate still need to pay bonuses and so that will bring cash back down. 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 '24, 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 '24.

Question: Devin Ryan - Citizens JMP - Analyst : Got it. Okay. All right. Thank you.

Question: James Yaro - Goldman Sachs & Company, Inc. - Analyst : Oh thanks for taking the follow-up. Just on restructuring, that appears to have been quite strong across the industry this quarter. I 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?

Question: James Yaro - Goldman Sachs & Company, Inc. - Analyst : Appreciate the color. Thanks, John.