Evercore Inc.

Good morning and welcome to the Evercore third quarter 2023 earnings conference call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question and answer session. In order to ask a question, please press the star key followed by the number one on your touchtone phone at any time. I will now turn the call over to Katie Haber, Managing Director of Investor Relations and ESG. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining us today for Evercore's third quarter 2023 financial results conference call. I'm Katie Haber, Evercore's Head of Investor Relations in ESG. Joining me on the call today is John Weinberg, our Chairman and CEO, and Tim Lalonde, our CFO. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's third quarter 2023 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 Foreign Buster 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 EverCorp's 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.

Thank you, Katie, and good morning, everyone. I want to start this morning by addressing the crisis in the Middle East and to acknowledge the profound sadness we are all feeling for the innocent victims. At Evercore, we live by our values, and I want to emphasize that terrorism and acts of hate must be condemned. Over the past quarter, we've seen a continuation of the improved market conditions that began over the summer. Internally, we see client activity level tracking at an elevated pace and moderately increasing confidence levels across management teams and in boardrooms, greater financing accessibility, albeit at higher costs, and a slow return to equity capital markets activity. The normalization of market activity takes time, but we believe these positive indicators are a first step towards an improving backdrop, which should provide a broad-based benefit to many of our markets. Clearly, market uncertainty remains, driven by increased geopolitical tensions as well as higher rates. We do not expect the positive shift in activity levels and market sentiment seen over the past quarter to translate into meaningfully improved results in the near term. That said, barring an unexpected significant shift in the macro environment, we expect activity levels to continue to build in 2024. While it is still early days, we are seeing this reflected in stronger backlogs similar to our last quarter. As discussed last quarter, the current environment has presented one of the strongest hiring opportunities seen in our firm's history, and we have capitalized on it. We've made significant investments in talent this year, our largest SMD hiring year ever. When paired with an improving market backdrop, we believe these investments, as well as our ramping SMD hires and promotes from the last two years, all in more than 40 ramping SMDs, will drive significant productive capacity and help us build a stronger foundation for growth over the medium and long term. Nine of our 11 new SMD hires year-to-date have started and are working at Evercore. These new SMD hires have joined areas which we have identified as strategically significant, including TMT, both in the U.S. and Europe, sponsor coverage, business services, industrials, real estate, and capital advisory. We will continue to engage in discussions with other strong candidates, but we believe our 2023 new hire plans have largely been completed. As we build our recruiting pipeline for 2024, we remain steadfast in the execution of our strategic initiatives, which I've outlined on past calls. Now I will briefly discuss the quarter. Our third quarter results, while up sequentially, reflect the muted market backdrop as merger activity has remained challenged, and the recent improvement in market sentiment has yet to have a substantial impact on announcement and completion activity. In our global advisory business, we've advised on several transformative transactions, including notably this week, Chevron's $60 billion acquisition of Hess, and in the quarter, Westrock on its $20 billion merger with Smurfit Kappa, Danaher on its spinoff of Rolto, as well as Bristol Myers Squibb's $4.8 billion acquisition of Marazzi. Our European advisory group experienced strong activity levels, including in-debt advisory. Additionally, we continue to make strong progress with our sponsor coverage efforts. We're excited for what this expanded group will accomplish over time, especially as the collaboration with our private capital advisory and fundraising businesses will continue to drive synergies. we see momentum building across our sponsor-related businesses. The private capital advisory and fundraising businesses were resilient in the quarter, highlighting the strength of our market-leading franchises. Continuation fund activity has persisted at an elevated pace, and new business activity is strong. While the broader fundraising environment remained muted, our private funds business had a better quarter relative to a year ago. Our strategic defense and shareholder advisory business had another busy quarter as activist campaigns continued at elevated levels. Restructuring remained strong, similar to what we saw in the second quarter, with activity levels driven by liability management and distressed financing advisory assignments. In our underwriting practice, corporates continued with regular wave follow-ons, particularly in biotech and traditional clean tech energy. The third quarter saw an opening of the IPO market. In the quarter, we served as an active book runner on the second largest biotech IPO year-to-date for Ray's Bio. We also were an active book runner on the largest biotech overnight follow-on offering this year for Madrigal Pharmaceuticals. Our overall ECM market share continued to rise, a testament to the strength and growth of our business. In our equities franchise, we are pleased to have been awarded for the second year in a row a number one ranking on the weighted basis in Institutional Investors All-America Equity Research Survey. We also had the most number one ranked analyst on Wall Street for the first time ever. Lastly, in wealth management, our assets under management declined modestly in the quarter. Both performance and client retention rates continue to be strong. Before I turn it over to Tim, I want to wrap up with a few thoughts. 2023 has undoubtedly been a challenging year for our industry. Despite the operating backdrop, we've remained focused on purposefully executing on our strategic plans by continuing to invest in our franchise, pushing to strengthen and broaden our coverage and geographic reach, building out our product and execution capabilities, and continuing to enhance our intellectual capital. We are hopeful that 2024 will be a better year for the market and, in turn, Evercore. Our client contact remains active and robust across our businesses. We're excited for the opportunities an improving environment will present for us. With that, let me turn it over to Tim.