Evercore Inc. (NYSE: EVR):

Evercore Inc. (NYSE: EVR) today announced its results for the full year ended December 31, 2021.

LEADERSHIP COMMENTARY

John S. Weinberg, Co-Chairman and Co-Chief Executive Officer, "2021 was an extraordinary year for Evercore, showcasing the depth and diversity of our business. This, combined with the outstanding collaboration and teamwork across our firm and robust market activity, led to our record results for 2021, with Evercore exceeding $2.7 billion in Advisory revenues for the first time in our history and up 57% over last year. Over the past few years, we have invested significantly in our platform, both by attracting highly talented individuals and by adding to our broad and expanding platform of capabilities. We are thrilled to have recruited eight Senior Managing Directors in Advisory in 2021 and remain strongly committed to developing talent for internal promotion, recently announcing our largest promotion class ever. Further, as we continue to grow and invest in the firm, we remain committed to returning all capital not required to support our business to our shareholders."

Ralph Schlosstein, Co-Chairman and Co-Chief Executive Officer, "We are executing on our long-term growth objectives by continuing to invest in building out the depth of our sector coverage, enhancing our capabilities, and widening the geographies we cover, while focusing intensely on clients, including financial sponsors. Our efforts are being recognized in our financial results, and in 2021, we ranked for the fourth consecutive year number four in advisory fees among all publicly traded investment banks.

With my upcoming transition to Chairman Emeritus in late February, I have been reflecting upon my last 13 years at the firm and take immense pride in the extraordinary growth of the firm and our dedication to excellence, our commitment to our people and the exemplary culture we have built. Our business continues to perform exceptionally well, and as we look ahead, the prospects for Evercore’s long term growth are very real and very exciting."

Roger C. Altman, Founder and Senior Chairman, "Client support for Evercore's values of integrity, excellence, discretion and clients first led to another record year for the firm amidst the continuing challenges of COVID. We are grateful to our clients, to all of our employees and, especially to our outgoing CEO, Ralph Schlosstein, for this special year."

Evercore's quarterly results may fluctuate significantly due to the timing and amount of transaction fees earned, as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

Business Segments:

Evercore's business results are categorized into two segments: Investment Banking and Investment Management. Investment Banking includes providing advice to clients on mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private placement services and commissions for agency-based equity trading services and equity research. Investment Management includes Wealth Management and interests in private equity funds which are not managed by the Company, as well as advising third-party investors through affiliates and historically through Institutional Asset Management. See pages A-2 to A-10 for further information and reconciliations of these segment results to our U.S. GAAP consolidated results.

Non-GAAP Measures:

Throughout this release certain information is presented on an adjusted basis, which is a non-GAAP measure. Adjusted results begin with information prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and then those results are adjusted to exclude certain items and reflect the conversion of certain Evercore LP Units into Class A shares. Evercore believes that the disclosed adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore's results across several periods and facilitate an understanding of Evercore's operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

Evercore's Adjusted Net Income Attributable to Evercore Inc. for the three and twelve months ended December 31, 2021 was higher than U.S. GAAP as a result of certain business acquisition-related and disposition-related charges and Special Charges, Including Business Realignment Costs. Acquisition-related charges for 2021 include professional fees incurred. Special Charges, Including Business Realignment Costs, in 2021 relate to the write-down of certain assets associated with a legacy private equity investment relationship which, consistent with the Company's current investment strategy, the Company decided to wind down during the third quarter of 2021.

The gain on the redemption of the G5 debt security in the second quarter of 2021 was excluded from Adjusted Net Revenues.

Evercore's Adjusted Diluted Shares Outstanding for the three and twelve months ended December 31, 2021 were higher than U.S. GAAP, as a result of the inclusion of certain Evercore LP Units and Unvested Restricted Stock Units.

Further details of these adjustments, as well as an explanation of similar amounts for the three and twelve months ended December 31, 2020 are included in pages A-2 to A-10.

Selected Financial Data – U.S. GAAP Results

The following is a discussion of Evercore's consolidated results on a U.S. GAAP basis. See pages A-6 to A-8 for our business segment results.

Net Revenues

Advisory Fees – Fourth quarter Advisory Fees increased $181.3 million, or 23%, year-over-year, reflecting growth in fee size. Full year Advisory Fees increased $996.7 million, or 57%, year-over-year, reflecting an increase in the number of fees earned and growth in fee size.

Underwriting Fees – Fourth quarter Underwriting Fees decreased $30.0 million, or 32%, year-over-year, reflecting a decrease in the number of transactions we participated in. Full year Underwriting Fees decreased $29.5 million, or 11%, year-over-year, reflecting a decrease in the number of transactions we participated in, as well as a decrease in the relative fee size of our participation in those transactions, as we participated in several of the largest deals in our history in 2020.

Commissions and Related Revenue – Fourth quarter Commissions and Related Revenue increased $2.0 million, or 4%, year-over-year, primarily reflecting higher revenues from research subscriptions and convertible securities. Full year Commissions and Related Revenue decreased $0.9 million year-over-year, reflecting lower volatility and volumes compared to the prior year period.

Asset Management and Administration Fees – Fourth quarter Asset Management and Administration Fees increased $3.0 million, or 21%, year-over-year, driven by an increase in fees from Wealth Management clients as associated AUM increased 20%, primarily from market appreciation. Full year Asset Management and Administration Fees increased $11.4 million, or 21%, year-over-year, driven by an increase in fees from Wealth Management clients as associated AUM increased 20%, primarily from market appreciation.

Other Revenue – Fourth quarter Other Revenue, net, increased $32.1 million year-over-year, primarily driven by a loss of $32.2 million in 2020, resulting from the sale and wind-down of our businesses in Mexico. Full year Other Revenue, net, increased $47.8 million year-over-year, primarily driven by a loss of $30.8 million in 2020, resulting from the sale and wind-down of our businesses in Mexico, as well as higher performance of our investment funds portfolio and a gain on the redemption of the G5 debt security in 2021.

Expenses

Employee Compensation and Benefits – Fourth quarter Employee Compensation and Benefits increased $51.4 million, or 10%, year-over-year. The fourth quarter compensation ratio was 50.1% versus 54.8% for the prior year period. Full year Employee Compensation and Benefits increased $476.4 million, or 35%, year-over-year. The full year compensation ratio was 56.2% versus 60.6% for the prior year period. The increase in the amount of compensation recognized in both the fourth quarter and full year principally reflects a higher accrual for incentive compensation, higher base salaries and higher amortization of prior period deferred compensation awards, as well as increased headcount year over year, each related to growth in the business. The decrease in the compensation ratio for both the fourth quarter and full year reflects leverage achieved on higher revenues. See "Deferred Compensation" for more information.

Non-Compensation Costs – Fourth quarter Non-Compensation Costs increased $14.8 million, or 17%, year-over-year, primarily driven by an increase in other operating expenses related to charitable contributions made to the Evercore Foundation (formed in 2021) and an increase in travel and related expenses, as travel began to resume during the quarter. The fourth quarter Non-Compensation ratio of 9.0% decreased from 9.3% for the prior year period. Full year Non-Compensation Costs increased $11.3 million, or 4%, year-over-year, primarily driven by increases in professional fees and charitable contributions made to the Evercore Foundation, partially offset by decreases in travel and related expenses and bad debt expense. The full year Non-Compensation ratio of 10.0% decreased from 14.1% for the prior year. The decrease in the Non-Compensation ratio for both the fourth quarter and full year principally reflects leverage achieved on higher revenues.

Special Charges, Including Business Realignment Costs – Full year 2021 Special Charges, Including Business Realignment Costs, relate to the write-down of certain assets associated with a legacy private equity investment relationship which, consistent with the Company's current investment strategy, the Company decided to wind down during the third quarter of 2021.

In 2020, the Company completed a review of operations focused on markets, sectors and people which delivered lower levels of productivity in an effort to attain greater flexibility of operations and better position itself for future growth. This review generated reductions of approximately 8% of our headcount.

In conjunction with the employment reductions, the Company incurred separation and transition benefits and related costs for certain employees terminated as a result of the Company's review of its operations of $4.1 million and $41.7 million for fourth quarter and full year 2020, respectively, which have been recorded as Special Charges, Including Business Realignment Costs, and are excluded from our Adjusted results.

Fourth quarter and full year 2020 Special Charges, Including Business Realignment Costs, also reflect the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives of $1.3 million and $3.3 million, respectively, and charges related to the impairment of assets resulting from the wind-down of our Mexico business of $1.7 million.

Effective Tax Rate

The fourth quarter effective tax rate was 23.9% versus 23.2% for the prior year period. The full year effective tax rate was 22.2% versus 23.7% for the prior year period. The effective tax rate is principally impacted by the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price. The full year provision for income taxes for 2021 reflects an additional tax benefit of $18.7 million versus an additional tax expense of $0.02 million for the prior year period, due to the net impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price.

Selected Financial Data – Adjusted Results

The following is a discussion of Evercore's consolidated results on an Adjusted basis. See pages 3 and A-2 to A-10 for further information and reconciliations of these metrics to our U.S. GAAP results. See pages A-6 to A-8 for our business segment results.

Adjusted Net Revenues

See page 4 for additional business metrics.

Advisory Fees – Fourth quarter adjusted Advisory Fees increased $181.0 million, or 23%, year-over-year, reflecting growth in fee size. Full year adjusted Advisory Fees increased $996.5 million, or 57%, year-over-year, reflecting an increase in the number of Advisory fees earned and growth in fee size.

Underwriting Fees – Fourth quarter Underwriting Fees decreased $30.0 million, or 32%, year-over-year, reflecting a decrease in the number of transactions we participated in. Full year Underwriting Fees decreased $29.5 million, or 11%, year-over-year, reflecting a decrease in the number of transactions we participated in, as well as a decrease in the relative fee size of our participation in those transactions, as we participated in several of the largest deals in our history in 2020.

Commissions and Related Revenue – Fourth quarter Commissions and Related Revenue increased $2.0 million, or 4%, year-over-year, primarily reflecting higher revenues from research subscriptions and convertible securities. Full year Commissions and Related Revenue decreased $0.9 million year-over-year, reflecting lower volatility and volumes compared to the prior year period.

Asset Management and Administration Fees – Fourth quarter adjusted Asset Management and Administration Fees increased $1.6 million, or 8%, year-over-year, primarily driven by an increase in fees from Wealth Management clients, as associated AUM increased 20%, primarily from market appreciation. This was partially offset by a 27% decrease in equity in earnings of affiliates, driven by lower income earned by ABS and Atalanta Sosnoff during the quarter. Full year adjusted Asset Management and Administration Fees increased $11.4 million, or 17%, year-over-year, primarily driven by an increase in fees from Wealth Management clients, as associated AUM increased 20%, primarily from market appreciation.

Other Revenue – Fourth quarter adjusted Other Revenue, net, decreased $0.4 million, or 3%, year-over-year, primarily driven by lower performance of our private equity investments in 2021, partially offset by higher performance of our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program. Full year adjusted Other Revenue, net, increased $12.1 million, or 59%, year-over-year, primarily driven by higher performance of our investment funds portfolio.

Adjusted Expenses

Employee Compensation and Benefits – Fourth quarter adjusted Employee Compensation and Benefits increased $51.4 million, or 10%, year-over-year. The fourth quarter adjusted compensation ratio was 49.7% versus 52.3% for the prior year period. Full year adjusted Employee Compensation and Benefits increased $477.5 million, or 35%, year-over-year. The full year adjusted compensation ratio was 55.7% versus 58.9% for the prior year period. The increase in the amount of adjusted compensation recognized in both the fourth quarter and full year principally reflects a higher accrual for incentive compensation, higher base salaries and higher amortization of prior period deferred compensation awards, as well as increased headcount year over year, each related to growth in the business. The decrease in the adjusted compensation ratio for both the fourth quarter and full year reflects leverage achieved on higher revenues. See "Deferred Compensation" for more information.

Non-Compensation Costs – Fourth quarter adjusted Non-Compensation Costs increased $14.8 million, or 17%, year-over-year, primarily driven by an increase in other operating expenses related to charitable contributions made to the Evercore Foundation (formed in 2021) and an increase in travel and related expenses, as travel began to resume during the quarter. The fourth quarter adjusted Non-Compensation ratio of 8.9% increased from 8.8% for the prior year period. Full year adjusted Non-Compensation Costs increased $13.0 million, or 4%, year-over-year, primarily driven by increases in professional fees and charitable contributions made to the Evercore Foundation, partially offset by decreases in travel and related expenses and bad debt expense. The full year adjusted Non-Compensation ratio of 9.9% decreased from 13.6% for the prior year. The decrease in the adjusted Non-Compensation ratio for the full year principally reflects leverage achieved on higher revenues.

Adjusted Effective Tax Rate

The fourth quarter adjusted effective tax rate was 25.2% versus 25.0% for the prior year period. The full year adjusted effective tax rate was 23.8% versus 25.4% for the prior year period. The adjusted effective tax rate is principally impacted by the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price. The full year adjusted provision for income taxes for 2021 reflects an additional tax benefit of $19.5 million versus an additional tax expense of $0.02 million for the prior year period, due to the net impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price.

Liquidity

The Company continues to maintain a strong balance sheet. As of December 31, 2021, cash and cash equivalents were $575.3 million, investment securities and certificates of deposit were $1.8 billion and current assets exceeded current liabilities by $1.5 billion. Amounts due related to the Notes Payable were $376.2 million at December 31, 2021.

Headcount

As of December 31, 2021 and 2020, the Company employed approximately 1,950 and 1,800 people, respectively, worldwide.

As of December 31, 2021 and 2020, the Company employed 154⁽¹⁾ and 147⁽²⁾ total Senior Managing Directors, respectively, in its Investment Banking business, of which 114⁽¹⁾ and 107⁽²⁾, respectively, were Advisory Senior Managing Directors.

⁽¹⁾ Senior Managing Director headcount as of December 31, 2021, adjusted to include two additional Advisory Senior Managing Directors committed to join in 2022.

⁽²⁾ Senior Managing Director headcount as of December 31, 2020, adjusted for known departures related to the Company's realignment in 2020.

Deferred Compensation

During 2021, the Company granted to certain employees approximately 2.2 million unvested restricted stock units ("RSUs") (including 1.9 million granted in conjunction with the 2020 bonus awards) with a grant date fair value of approximately $259.6 million.

In addition, during the first quarter of 2021, as part of the 2020 bonus awards, the Company granted approximately $97 million of deferred cash awards to certain employees, related to our deferred cash compensation program.

The Company recognized compensation expense related to RSUs and our deferred cash compensation program of $82.4 million and $344.5 million for the three and twelve months ended December 31, 2021, respectively, and $71.9 million and $304.3 million for the three and twelve months ended December 31, 2020, respectively.

As of December 31, 2021, the Company has approximately 5.2 million unvested RSUs with an aggregate grant date fair value of $511.7 million. RSUs are expensed over the service period of the award, subject to retirement eligibility, and generally vest over four years.

As of December 31, 2021, the Company expects to pay an aggregate of $339.2 million related to our deferred cash compensation program at various dates through 2025, subject to certain vesting events. Amounts due pursuant to this program are expensed over the service period of the award, subject to retirement eligibility, and are reflected in Accrued Compensation and Benefits, a component of current liabilities.

Capital Return Transactions

On February 1, 2022, the Board of Directors of Evercore declared a quarterly dividend of $0.68 per share to be paid on March 11, 2022 to common stockholders of record on February 25, 2022.

During the fourth quarter, the Company repurchased approximately 40 thousand shares from employees for the net settlement of stock-based compensation awards at an average price per share of $146.27, and approximately 1.3 million shares at an average price per share of $140.66 in open market transactions pursuant to the Company's share repurchase program. The aggregate approximately 1.4 million shares were acquired at an average price per share of $140.82. During 2021, the Company repurchased approximately 1.0 million shares from employees for the net settlement of stock-based compensation awards at an average price per share of $118.62, and approximately 4.5 million shares at an average price per share of $135.11 in open market transactions pursuant to the Company's share repurchase program. The aggregate approximately 5.5 million shares were acquired at an average price per share of $132.10.

Conference Call

Evercore will host a related conference call beginning at 8:00 a.m. Eastern Time, Wednesday, February 2, 2022, accessible via telephone and the Internet. Investors and analysts may participate in the live conference call by dialing (877) 359-9508 (toll-free domestic) or (224) 357-2393 (international); passcode: 4392518. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at (855) 859-2056 (toll-free domestic) or (404) 537-3406 (international); passcode: 4392518. A live audio webcast of the conference call will be available on the For Investors section of Evercore’s website at www.evercore.com. The webcast will be archived on Evercore’s website for 30 days after the call.

About Evercore

Evercore (NYSE: EVR) is a premier global independent investment banking advisory firm. We are dedicated to helping our clients achieve superior results through trusted independent and innovative advice on matters of strategic significance to boards of directors, management teams and shareholders, including mergers and acquisitions, strategic shareholder advisory, restructurings, and capital structure. Evercore also assists clients in raising public and private capital and delivers equity research and equity sales and agency trading execution, in addition to providing wealth and investment management services to high net worth and institutional investors. Founded in 1995, the Firm is headquartered in New York and maintains offices and affiliate offices in major financial centers in the Americas, Europe, the Middle East and Asia. For more information, please visit www.evercore.com.

Basis of Alternative Financial Statement Presentation

Our Adjusted results are a non-GAAP measure. As discussed further under "Non-GAAP Measures", Evercore believes that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore's results across several periods and better reflects how management views its operating results. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of our U.S. GAAP results to Adjusted results is presented in the tables included in the following pages.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, Evercore's operations and financial performance. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "backlog," "believes," "expects," "potential," "probable," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. All statements, other than statements of historical fact, included in this release are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in Evercore's business. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Evercore believes these factors include, but are not limited to, those described under "Risk Factors" discussed in Evercore's Annual Report on Form 10-K for the year ended December 31, 2020, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and Registration Statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Evercore to predict all risks and uncertainties, nor can Evercore assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and Evercore does not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Evercore undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Adjusted Results

Throughout the discussion of Evercore's business and elsewhere in this release, information is presented on an Adjusted basis, which is a non-generally accepted accounting principles ("non-GAAP") measure. Adjusted results begin with information prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), adjusted to exclude certain items and reflect the conversion of certain Evercore LP Units, as well as Unvested Restricted Stock Units, into Class A shares. Evercore believes that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore's results across several periods and facilitate an understanding of Evercore's operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. These Adjusted amounts are allocated to the Company's two business segments: Investment Banking and Investment Management. The differences between the Adjusted and U.S. GAAP results are as follows:

Reclassifications:

Certain balances in the prior period were reclassified to conform to their current presentation in this release. "Commissions and Related Fees" has been renamed to "Commissions and Related Revenue" and principal trading gains and losses from our institutional equities business have been reclassified from "Other Revenue, Including Interest and Investments" to "Commissions and Related Revenue." For the three and twelve months ended December 31, 2020, this resulted in a reclassification of $375 thousand and $925 thousand, respectively, from "Other Revenue, Including Interest and Investments" to "Commissions and Related Revenue." There was no impact on U.S. GAAP or Adjusted Net Revenues, Operating Income, Net Income or Earnings Per Share.

The prior period reclassifications from "Other Revenue, Including Interest and Investments" to "Commissions and Related Revenue" are as follows: Q1 2020: $185 thousand; Q2 2020: $215 thousand; Q3 2020: $150 thousand; Q4 2020: $375 thousand; Q1 2019: ($2) thousand; Q2 2019: $25 thousand; Q3 2019: $320 thousand; Q4 2019: $249 thousand.