Evercore Inc.

Good morning and thank you for standing by. Welcome to Everscore's third quarter 2021 financial results conference call. During today's call, all parties will be listen-only mode. Following the presentation, the conference call will open up for question. If you have a question, please press star followed by the number one on your touchtone telephone. Please press star zero for operator assistance at any time. For participants using speaker equipment, it may be necessary to pick up your handset before making your selection. As a reminder, this conference call is being recorded today, Wednesday, October 27, 2021. I would now like to turn the conference over to your host, EveryCourse Head of Investor Relations, Holly Miller. Please go ahead.

Thank you, Reen, and good morning, everyone. Thank you for joining us today for Evercore's third quarter 2021 financial results conference call. I'm Hallie Miller, Evercore's head of investor relations, and joining me today on the call are John Weinberg and Ralph Schlossstein, our co-chairmen and co-CEOs, and Celeste Millay, our CFO. After our prepared remarks, we'll open up the line for questions. Earlier today, we issued a press release announcing Evercore's third quarter 2021 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 30 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. These factors include, but are not limited to, those discussed in EverCorp's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-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 Evercourse performance on an annual basis. As we have noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I'll now turn the call over to John. Thank you, Hallie, and good morning, everyone.

Let me begin by expressing my affection and respect for Ralph. He's been an outstanding leader, partner, and friend. I will have a lot more to say about Ralph at the end of our comments, but first let's talk about the quarter. The positive environment for M&A and capital raising experience during the first half of the year extended into the third quarter. Our results reflect this momentum and the success of our strategic initiatives aimed at broadening and diversifying our platform. The strength and depth of our talented teams coupled with our broad and expanding platform of capabilities provides us with the tools and intellectual capital to advise our clients on their most important strategic capital and financial needs. Dollar volume of announced M&A globally was more than $1.5 trillion in the third quarter, representing a 9% sequential increase. It was also the fifth straight quarter that announced M&A activity surpassed $1 trillion. Strong economic conditions and thematic trends around growth and technological disruption continue to drive activity. The ongoing high level of activity has positively affected our results, and it has sustained our backlogs as well. Our forward-looking indicators, risks and unrisked backlogs, engagement letters, and conflict checks, which are the most forward-looking, are all strong. Activist activity remains high with a 23 percent year-over-year increase in the number of new activist positions in the last 12 months. Activists continue to drive M&A-related activity to seek broad and to seek broad representation. Equity issuance continues to outpace historical levels with a greater total amount raised year-to-date than any year other than 2020 and larger than 2019 and 2018 combined. Levels have stabilized somewhat from earlier in the year when SPAC underwriting activity was substantial. In the private capital advisory space, momentum in capital raising for financial sponsors continues and secondary market activity remains high, particularly activity related to single asset structures. The strong availability of credit and the pace of economic recovery has limited the need for traditional restructuring work though leverage remains elevated. There continue to be opportunities for bespoke financings and assignments with financial sponsors and creditors. In equities, despite the usual third quarter seasonality, we benefited from heightened volatility at the end of the quarter and our expanded offering set for clients. In summary, with the backdrop of a strong economic environment, our business continues to perform exceptionally well. Our teams are busy helping clients, and we are pleased to have the majority of our workforce back in the office in some form. We did not see anything that would indicate an imminent pullback in the momentum, but we continue to monitor inflation, Fed actions, interest rates, the regulatory environment, supply chain disruption, and COVID's impact on the reopening process. Of course, Our results are always affected by the timing of deal closings. With that, let me turn to key business highlights from the quarter. We ranked number one in the Refinitiv's league tables for dollar volume of announced M&A both globally and in the U.S. among independent firms for the latest 12-month period, and we ranked seven among all firms in the U.S. for the same period. Celeste will discuss our financials in more detail later in the call. However, I would like to highlight that we achieved a four-straight quarter of advisory revenues greater than $500 million, and our year-to-date advisory revenues of $1.78 billion are more than all of 2020, which was a record year for us. Based on current consensus estimates and actual results, we expect to maintain our number four ranking based on advisory fees among all publicly traded investment banking firms over the last 12 months and to grow our market share relative to these same firms. We are working on several of the top 25 announced global M&A transactions this year, including advising GE Capital Aviation on its pending $30 billion sale to AirCap Holdings, advising the Board of Directors of Canadian Pacific on its pending $29 billion acquisition of Kansas City Southern, serving as the lead advisor to Grab on its $40 billion SPAC merger, serving as the sole advisor to Nuance on its pending $19.7 billion sale to Microsoft and advising MGM Growth Properties on its $17.2 billion sale to VC Properties. Our underwriting business had another solid quarter, booking more than $50 million in revenues, and the pipeline for activity remains strong. It's clear that further investment in our ECM business, including building out our sector coverage and enhancing our capabilities with convertibles, is contributing meaningfully to the growth of this business and the firm overall. We continue to achieve increasingly better leadership positions in the ECM transactions in which we participate. We served as active book runner on approximately 60% of the 24 equity deals and equity linked deals we completed during the quarter. We continue to diversify the mix of our revenues. While healthcare still makes up the bulk of our underwriting revenues, we are seeing more variety within the healthcare sector beyond biotech, as well as greater contribution from sectors such as TMT, industrials, and consumer, which in aggregate more than tripled their share of ECM revenues in the third quarter compared to this time last year. A few notable transactions from the quarter include Infarma, active book runner on Ascendus Pharmacy's $460 million follow-on offering. In consumer, passive book runner on Olaplex's $1.8 billion IPO. In TMT, passive book runner on Bumble's $1.1 billion follow-on offering. In consumer, we were financial advisor to Warby Parker for its direct listing. Even with the slowdown in the market for SPAC underwriting, we completed five during the quarter, including three as lead left book runner. We once again ranked in the top 20 for underwriting revenue as estimated by Dealogic for the latest 12-month period for deals listed on the U.S. exchanges, excluding bought deals and ATMs. We remain focused on working our way towards the top 10 for the market share. Our work with financial sponsors in our private capital advisory groups, our secondaries advisory business, and our primary fundraising business continue at a strong pace. These businesses continue to show significant momentum, and their impact on our results continues to grow. Our success here is driven by three things. First, our strong client relationships. Second, our strong track record. And third, our comprehensive coverage approach, which includes sale of assets, LP positions, and GP stakes, and our capability in raising capital. As I commented, our momentum continues to build as many of our clients are repeat clients and our reputation attracts more opportunities. The breadth and interconnectivity of our platforms means that we can work with financial sponsors on the fundraising side, then work with them on the advisory side as they deploy capital, which can then lead to the next fundraise. In restructuring, the strong economic recovery and access to capital is enabling companies to restructure out of court. Our team continues to work through prior assignments, liability management engagements, and credit assignments, and continues to partner with our debt advisory team in private financing activity. In equities, we remain engaged with our clients and focused on producing and delivering high-quality research and service for them. Clients continue to use our excellent research and value the service we provide them through our core product. Independent third-party data indicates that while the market wallet declined in the second quarter both sequentially and year over year, we successfully increased our market share versus both prior periods. In fact, we were the largest share gainer of any firm globally transacting in U.S. cash equities. We are extremely proud that Evercore ISI was once again highly ranked in Institutional Investors All-America Research Survey. Highlights include top-ranked independent research firm for the eighth straight year, number two ranked firm among all firms for analysts, record 43 individual positions and 40 team positions, and Ed Hyman was awarded the number one position in economics for the 41st time. The convertibles business that we added a year ago continues to gain momentum as we build out the team and integrate it with our capabilities in research and sales. Finally, AUM and our wealth management business finished the quarter at $11.3 billion as long-term performance remained solid and new business continues to be positive. Let me now turn the call over to Ralph to discuss some of our priorities going forward, including our initiatives focused on long-term growth and return of capital to shareholders.