Evercore Inc.

Good morning, and thank you for standing by. Welcome to Evercore's first quarter 2022 financial results conference call. During today's call, parties will be in listen-only mode. Following the presentation, the conference call will be open for questions. If you have a question, please press the star followed by the 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 shins. As a reminder, this conference call is being recorded today, Wednesday, April 26, 2022. I would now like to turn the conference call over to your host, Evercore's Head of Investor Relations, SG, Katie Haber. Please go ahead.

Thank you so much. Good morning, and thank you for joining us today for Evercore's first quarter 2022 financial results conference call. I'm Katie Haber, Evercore's new head of investor relations in ESG. Joining me on the call today is John Weinberg, our chairman and CEO, and Celeste Millay, our CFO. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's first quarter 2022 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 our 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 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 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 will now turn the call over to John.

Good morning, everyone, and thank you, Katie. We are very fortunate to have Katie here to take on this important role as head of investor relations in ESG, and I know you will all join me in welcoming her to our team. It was a solid first quarter for Evercore with $728 million in adjusted net revenues, $625 million in adjusted advisory revenues, and $3.80 in adjusted earnings per share, all records for a first quarter. Having said that, I want to acknowledge the challenging geopolitical backdrop that underlies the start of 2022. the war in Ukraine has increased uncertainty on a global basis, resulting in capital markets volatility and wide-ranging strategic questions for corporate leaders. However, even with this recent uncertainty, the fundamental themes that drive M&A activity in the intermediate to long term are still in place. Rates are still low from a historical perspective, markets are accessible, and CEO confidence remains high. On the corporate side, in addition to the search for growth by corporates, we continue to see innovation and new disruptive business models that we expect will drive multi-year M&A decision making. We also anticipate increased activity with respect to the evolving energy transition landscape, ESG-related drivers, and increased private equity activity as sponsors invest record levels of accumulated capital. Notably, Private equity dry powder now exceeds $3.4 trillion and sponsors continue to focus on numerous ways to put this money to work. Further, we see increased activist activity with M&A often catalyzed by certain activist campaigns. With these drivers, our backlogs remain strong, although we would note that the war, inflationary pressure, supply chain constraints, and rising interest rate led to some slowing of the pace of announcements in the latter part of the quarter and an elongation of the timing of transaction closings. Looking at the overall M&A market this quarter, global and U.S. M&A announced dollar volume decreased 21% and 19% respectively compared to the first quarter of 2021. Also, the number of announced deals decreased 17% globally and 20% in the U.S. versus the first quarter of 2021. For the largest deals, those above $5 billion, global activity cooled. Dollar volume declined 10%, and the number of announced deals fell sharply, down over 30% as compared to the first quarter of last year. Looking at transactions in the $1 to $5 billion range, dollar volumes declined 40%, while the number of transactions fell 36% versus the first quarter of 2021. That said, our teams remain active across a broad spectrum of sectors and capabilities. These high activity levels helped contribute to another strong quarter for Evercore. We remain confident that our firm is better equipped than at any point in our history to thrive in varied market environments. a testament to our broad and deep capabilities built over a decade of significant investment. Our firm today is watchful and prepared, and importantly, we continue to be deeply engaged with our clients, advising them on pressing strategic priorities. We are optimistic about our future and continue to invest in our growth by adding talent to our team across all levels and businesses. We're pleased to have had a successful start to our external recruiting efforts in 2022. as human capital continues to be the most important investment we make in our business. In advisering, two senior managing directors joined us in the first quarter, and we have two additional SMDs committed to joining the firm later this year, both focused on our technology franchise. We are in active discussions with additional talented candidates in several areas of strategic significance. Further, our new record class of 17 senior managing director promotes is off to a solid start this year. We look forward to their continued growth and further contributions as they ramp. Turning to the quarter, as I mentioned, our business diversity enabled us to achieve the best first quarter in the firm's history in terms of adjusted net revenues, adjusted EPS, advisory revenues, indicative of the revenue-generating power of our franchise. In advisory, we saw strength in some of the largest sectors, including technology, media and telecom, healthcare, and industrials, driven both by our corporate and sponsor clients. In capital advisory, we see sustained strength in our GP-led transactions, fundraising, secondary investments, continuation fund opportunities, and real estate capital advisory. In terms of restructuring, While classic Chapter 11 restructuring work remains slow given the health of corporate balance sheets, historically low default rates, and relaxed covenants, we continue to be active in liability management engagements, out-of-court restructurings, and in-debt advisory and placements, a capability that we are actively growing. Turning to underwriting, activity was broadly impacted by the significant spikes in volatility and macro headwinds that weighed on issuers and kept them on the sidelines. In the first quarter, we executed 14 underwriting transactions and acted as a book runner on 13 of these. While our activity this quarter was strongest in healthcare, our ECM momentum continues and our pipeline is broad in terms of sector and product reach. We are seeing the benefits of investments in this business, which should become clearer when markets reopened more broadly. Looking at the overall ECM market in the U.S., equity issuance declined over 80% year over year, and IPO issuance declined over 90% versus last year. Since bottoming in February, however, market activity has picked up with issuance in March nearly doubling from February levels, in step with the decline in the VIX. When markets stabilize, we expect activity to rebound as many IPO issuers who had previously targeted first quarter execution windows are now looking to the second or third quarter timelines. In our equity business, we remain connected and engaged with our clients, providing research insights, particularly around Ukraine developments and the Fed and inflation implications. Our research combined with solid sales and trading execution led to record levels of client interactions and in turn strong and improving broker votes. Further, we are seeing the positive impact of our most recent investments with options and converts activity, posting their best quarterly revenue contributions to date. In wealth management, long-term performance remains strong. we were pleased that the Evercore Equity Fund was named among the best diversified mutual funds of 2022 by Investors Business Daily. This award recognizes funds that have beaten their S&P 500 benchmark for the past 1, 3, 5, and 10 years. Before I turn the call over to Celeste to review our gap results and other financial matters, I want to discuss our capital return strategy. we remain committed to our goal of returning excess cash not invested in the business to our shareholders in the form of dividends and share repurchases. Even in this less certain environment, we were able to raise our dividend, a testament to the power of our diverse business model. Our buyback activity was also very strong to start the year, despite a pause following the Russian invasion of Ukraine. We returned $298 million to shareholders during the quarter, through dividends and the repurchase of 2 million shares. Our board declared a dividend of 72 cents per share, an increase of 6% from the prior dividend declared. We intend to return all other excess cash not reinvested in the business or set aside to fund future compensation obligations in the form of share repurchases. As previously announced during the quarter, our board also approved our share repurchase authorization of the lesser of 1.4 billion or 10 million shares and or LP units, reflecting our continued commitment to our capital return objectives. Looking ahead, we remain excited about the opportunities in front of us and have a clear vision for the firm going forward. As they laid out on our fourth quarter call, our consistent roadmap for growth, including investment in talent and in broadening and deepening our capabilities, will allow us to continue to serve our clients and address their needs in almost any environment. Let me now turn the call over to Celeste.