Evercore Inc. 2026 Q3 Earnings Call

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Good morning, and thank you for joining us today for Evercore's third quarter 2026 financial results conference call. I'm Katy Haber, Evercore's Head of Investor Relations. 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 2026 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 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 Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings. I will now turn the call over to John.

Thank you, Katie, and good morning, everyone. Evercore delivered record third quarter adjusted net revenues and earnings per share, reflecting the strength, diversification, and further globalization of our business and the continued execution of our strategic priorities. Adjusted net revenues of nearly $1.2 billion marked our sixth consecutive quarterly revenue record. This is a 13% increase from the record third quarter we delivered last year. Adjusted diluted earnings per share were $4.28, also a record for the third quarter. Through the first nine months, we generated adjusted net revenues of $3.6 billion, which is up 38% versus the same time period a year ago. Importantly, our performance continues to be broad-based, with all of our businesses operating at healthy levels and contributing to the strength of the firm. At the core of our performance is our focus on providing clients with the highest quality service, advice, and execution.

We remain encouraged by the outlook of our business, supported by the breadth of activity across our platform, strength of our client relationships, and the significant investments we have made to expand our capabilities. As it relates to the market environment, industry-wide announced M&A activity continues to operate at healthy levels year to date, despite some quarter-to-quarter variability. Looking longer term, global announced M&A activity relative to total market cap has improved, yet still remains below historical averages. Large cap strategic M&A has been a primary driver of activity in recent quarters, and we continue to see strong trends in this part of the market. Financial sponsor and middle market activity continues to run below historical levels, though we have seen gradual improvement. Further broadening of activity in these areas over time would provide an additional source of growth both for the broader market and for Evercore.

While the market backdrop remains complex, including interest rates uncertainty, continued geopolitical tensions, and evolving implications of AI, we believe the underlying environment for investment banking activity remains constructive. As it relates to Evercore, we continue to see high levels of activity across a broad range of sectors, products, and geographies. Client engagement is strong, and our backlog, which is at record levels, continues to replenish at a healthy rate. Turning to talent. As announced last week, the board appointed Nigel Dawn and Naveen Nataraj to become co-presidents of Evercore effective January 1, 2027. As we mentioned, this new leadership structure will enable the firm to continue to build on our strategy for growth. Since our last earnings call, six senior managing directors have joined our investment banking practice.

Five additions in the U.S., including two in aerospace and defense, one in healthcare, chemicals, and equity capital markets, as well as one in our Frankfurt office. Further, an additional SMD has committed to join our restructuring group and will be based in France. That brings the total number of SMDs added this year to 14, and the total number of SMDs in our global investment banking practice to 191. Now, let me turn to the businesses. In North American Strategic Advisory, the business remained active across nearly all sectors, consistent with trends throughout the year, contributing to a record third quarter for the business. Our engagement with financial sponsors continues to strengthen, reflected in higher year-to-date pitch activity, coupled with a continuously improving win rate, resulting in increased revenues compared to last year.

Our EMEA Strategic Advisory business delivered another strong quarter with our expanded presence in the region, resulting in record year-to-date revenues. Our strategic Defense and Shareholder Advisory Group continues to see strong activity supported by elevated levels of shareholder activism. Globally, in the third quarter and into October, we advised on a number of significant transactions, including PTC on its $24 billion sale to Schneider Electric, GE Aerospace on its $11.75 billion acquisition of Consolidated Precision Products, easyJet on its £5.6 billion sale to Apollo, SEGRO on its all-share combination with Prologis, Nexus Data Centers on the $15.6 billion construction financing of its inaugural data center and power development project, Broadcom on a transaction enabling the deployment of $63 billion of AI compute capacity to Anthropic, which announced earlier this week.

Consistent with trends in the first half, our liability management and restructuring business maintained strong activity levels as companies continue to address upcoming debt maturities, particularly in a higher interest rate environment. Our private capital markets and debt advisory business is seeing growing levels of activity in innovative financing solutions supporting the expansion of digital infra over the last year, as highlighted by several of the deals I just mentioned. Our market-leading Private Capital Advisory and fundraising businesses respectively saw positive trends in the quarter consistent with earlier in the year. Our Equity Capital Markets business had a strong quarter, supported by a more constructive IPO market earlier in the quarter, and our Equities business generated solid revenues. Evercore ISI achieved the number one ranking on a weighted basis in Extel All-America Research Analyst Survey for the fifth consecutive year.

Finally, our wealth management business ended the quarter with AUM of $16.2 billion and maintains a strong long-term performance. Before I turn it over to Tim, I want to take a moment to reiterate a few important points about Evercore's position and the opportunity ahead. Over the past decade, we've expanded and diversified our platform across products, sectors, geographies, and client segments, broadening the opportunities to serve clients while maintaining our strong focus on culture. While advising on many of the world's largest and most transformative M&A transactions is core to our strategy, our franchise extends across the full spectrum of the market with respect to both size and transaction type. Specifically, we've made significant investments in expanding our financial sponsor coverage over the last several years.

Today, across our financial sponsors coverage and private capital-related businesses, we have over 60 senior bankers specifically covering this important client segment, working closely with our sector bankers. As we continue to build out the firm, we have similarly expanded our middle market coverage by investing in high quality bankers across sectors where we see significant opportunity, including recently in our aerospace and defense, logistics, healthcare, and services sectors. We believe we are now well-positioned to take advantage of this part of the market. We also remain focused on hiring additional product specialists, which is something we've been executing on over the last several years. At the same time, we've continued to diversify our revenue base beyond M&A, building successful businesses across a range of other areas.

Even with significant growth in M&A, non-M&A businesses have contributed more than 40% of firm-wide adjusted net revenues over the last four quarters, providing greater diversification and resilience across market cycles. This growth has been supported by significant investment in our people. Our investment banking SMD base has grown nearly 70% since 2021, while productivity remains at market leading levels. It is important to note that we have more than 50 SMDs still ramping, representing meaningful opportunity for future growth, and we continue to have a robust recruiting pipeline. Together, these investments have meaningfully expanded our addressable market, strengthened our competitive position, and contributed to significant market share gains. Our results this quarter reflect the collective strength of our platform, our people, and the strong momentum across our businesses.