Evercore Inc. 10-Q

Item 1. Financial Statements Condensed Consolidated Financial Statements (Unaudited) Page Condensed Consolidated Statements of Financial Condition as of March 31, 202 3 and December 31, 202 2 4 Condensed Consolidated Statements of Operations for the three months ended March 31, 202 3 and 202 2 5 Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 202 3 and 202 2 6 Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 202 3 and 202 2 7 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 202 3 and 202 2 8 Notes to Unaudited Condensed Consolidated Financial Statements 9 3 Table of Contents EVERCORE INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (dollars in thousands, except share data) March 31, 2023 December 31, 2022 Assets Current Assets Cash and Cash Equivalents $ 579,190 $ 663,400 Investment Securities and Certificates of Deposit (includes available-for-sale debt securities with an amortized cost of $ 117,508 and $ 802,652 at March 31, 2023 and December 31, 2022, respectively) 803,142 1,432,716 Accounts Receivable (net of allowances of $ 7,217 and $ 4,683 at March 31, 2023 and December 31, 2022, respectively) 299,157 385,131 Receivable from Employees and Related Parties 20,673 21,914 Other Current Assets 112,775 203,570 Total Current Assets 1,814,937 2,706,731 Investments 43,744 43,047 Deferred Tax Assets 259,830 257,166 Operating Lease Right-of-Use Assets 246,901 237,561 Furniture, Equipment and Leasehold Improvements (net of accumulated depreciation and amortization of $ 194,413 and $ 187,077 at March 31, 2023 and December 31, 2022, respectively) 141,905 143,268 Goodwill 124,116 123,285 Other Assets 119,039 109,865 Total Assets $ 2,750,472 $ 3,620,923 Liabilities and Equity Current Liabilities Accrued Compensation and Benefits $ 196,299 $ 918,489 Accounts Payable and Accrued Expenses 28,582 28,807 Payable to Employees and Related Parties 53,349 41,235 Operating Lease Liabilities 34,490 37,968 Taxes Payable 3,625 9,842 Other Current Liabilities 27,058 34,195 Total Current Liabilities 343,403 1,070,536 Operating Lease Liabilities 289,378 278,078 Notes Payable 372,494 371,774 Amounts Due Pursuant to Tax Receivable Agreements 60,814 61,169 Other Long-term Liabilities 115,172 112,948 Total Liabilities 1,181,261 1,894,505 Commitments and Contingencies (Note 15) Equity Evercore Inc. Stockholders' Equity Common Stock Class A, par value $ 0.01 per share ( 1,000,000,000 shares authorized, 81,836,929 and 79,686,375 issued at March 31, 2023 and December 31, 2022, respectively, and 38,345,235 and 38,347,262 outstanding at March 31, 2023 and December 31, 2022, respectively) 818 797 Class B, par value $ 0.01 per share ( 1,000,000 shares authorized, 51 and 50 issued and outstanding at March 31, 2023 and December 31, 2022, respectively) — — Additional Paid-In-Capital 2,931,682 2,861,775 Accumulated Other Comprehensive Income (Loss) ( 25,683 ) ( 27,942 ) Retained Earnings 1,819,599 1,768,098 Treasury Stock at Cost ( 43,491,694 and 41,339,113 shares at March 31, 2023 and December 31, 2022, respectively) ( 3,350,483 ) ( 3,065,917 ) Total Evercore Inc. Stockholders' Equity 1,375,933 1,536,811 Noncontrolling Interest 193,278 189,607 Total Equity 1,569,211 1,726,418 Total Liabilities and Equity $ 2,750,472 $ 3,620,923 See Notes to Unaudited Condensed Consolidated Financial Statements. 4 Table of Contents EVERCORE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (dollars and share amounts in thousands, except per share data) For the Three Months Ended March 31, 2023 2022 Revenues Investment Banking & Equities: Advisory Fees $ 462,562 $ 624,564 Underwriting Fees 22,883 36,306 Commissions and Related Revenue 48,065 50,898 Asset Management and Administration Fees 15,958 17,115 Other Revenue, Including Interest and Investments 26,846 ( 1,779 ) Total Revenues 576,314 727,104 Interest Expense 4,171 4,250 Net Revenues 572,143 722,854 Expenses Employee Compensation and Benefits 366,872 429,735 Occupancy and Equipment Rental 20,379 19,177 Professional Fees 24,137 24,146 Travel and Related Expenses 15,203 7,826 Communications and Information Services 15,735 16,028 Depreciation and Amortization 6,573 7,110 Execution, Clearing and Custody Fees 2,765 2,797 Special Charges, Including Business Realignment Costs 2,921 — Other Operating Expenses 10,654 6,671 Total Expenses 465,239 513,490 Income Before Income from Equity Method Investments and Income Taxes 106,904 209,364 Income from Equity Method Investments 1,468 2,512 Income Before Income Taxes 108,372 211,876 Provision for Income Taxes 16,131 34,782 Net Income 92,241 177,094 Net Income Attributable to Noncontrolling Interest 8,863 19,078 Net Income Attributable to Evercore Inc. $ 83,378 $ 158,016 Net Income Attributable to Evercore Inc. Common Shareholders $ 83,378 $ 158,016 Weighted Average Shares of Class A Common Stock Outstanding Basic 38,510 39,176 Diluted 40,439 41,708 Net Income Per Share Attributable to Evercore Inc. Common Shareholders: Basic $ 2.17 $ 4.03 Diluted $ 2.06 $ 3.79 See Notes to Unaudited Condensed Consolidated Financial Statements. 5 Table of Contents EVERCORE INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (dollars in thousands) For the Three Months Ended March 31, 2023 2022 Net Income $ 92,241 $ 177,094 Other Comprehensive Income (Loss), net of tax: Unrealized Gain (Loss) on Securities and Investments, net ( 3,246 ) 3 Foreign Currency Translation Adjustment Gain (Loss), net 5,721 ( 3,020 ) Other Comprehensive Income (Loss) 2,475 ( 3,017 ) Comprehensive Income 94,716 174,077 Comprehensive Income Attributable to Noncontrolling Interest 9,079 18,805 Comprehensive Income Attributable to Evercore Inc. $ 85,637 $ 155,272 See Notes to Unaudited Condensed Consolidated Financial Statements. 6 Table of Contents EVERCORE INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (dollars in thousands, except share data) For the Three Months Ended March 31, 2023 Accumulated Additional Other Class A Common Stock Paid-In Comprehensive Retained Treasury Stock Noncontrolling Total Shares Dollars Capital Income (Loss) Earnings Shares Dollars Interest Equity Balance at December 31, 2022 79,686,375 $ 797 $ 2,861,775 $ ( 27,942 ) $ 1,768,098 ( 41,339,113 ) $ ( 3,065,917 ) $ 189,607 $ 1,726,418 Net Income — — — — 83,378 — — 8,863 92,241 Other Comprehensive Income — — — 2,259 — — — 216 2,475 Treasury Stock Purchases — — — — — ( 2,152,581 ) ( 284,566 ) — ( 284,566 ) Evercore LP Units Exchanged for Class A Common Stock 23,500 — 2,414 — — — — ( 1,478 ) 936 Equity-based Compensation Awards 2,127,054 21 67,493 — — — — 6,460 73,974 Dividends — — — — ( 31,877 ) — — — ( 31,877 ) Noncontrolling Interest (Note 12) — — — — — — — ( 10,390 ) ( 10,390 ) Balance at March 31, 2023 81,836,929 $ 818 $ 2,931,682 $ ( 25,683 ) $ 1,819,599 ( 43,491,694 ) $ ( 3,350,483 ) $ 193,278 $ 1,569,211 For the Three Months Ended March 31, 2022 Accumulated Additional Other Class A Common Stock Paid-In Comprehensive Retained Treasury Stock Noncontrolling Total Shares Dollars Capital Income (Loss) Earnings Shares Dollars Interest Equity Balance at December 31, 2021 74,804,288 $ 748 $ 2,458,779 $ ( 12,086 ) $ 1,418,382 ( 36,900,858 ) $ ( 2,545,452 ) $ 314,910 $ 1,635,281 Net Income — — — — 158,016 — — 19,078 177,094 Other Comprehensive Income (Loss) — — — ( 2,744 ) — — — ( 273 ) ( 3,017 ) Treasury Stock Purchases — — — — — ( 1,991,116 ) ( 255,141 ) — ( 255,141 ) Evercore LP Units Exchanged for Class A Common Stock 2,546,405 26 162,034 — — — — ( 157,777 ) 4,283 Equity-based Compensation Awards 2,109,757 21 60,448 — — — — 6,221 66,690 Dividends — — — — ( 31,633 ) — — — ( 31,633 ) Noncontrolling Interest (Note 12) — — ( 1,361 ) — — — — ( 4,527 ) ( 5,888 ) Balance at March 31, 2022 79,460,450 $ 795 $ 2,679,900 $ ( 14,830 ) $ 1,544,765 ( 38,891,974 ) $ ( 2,800,593 ) $ 177,632 $ 1,587,669 See Notes to Unaudited Condensed Consolidated Financial Statements. 7 Table of Contents EVERCORE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in thousands) For the Three Months Ended March 31, 2023 2022 Cash Flows From Operating Activities Net Income $ 92,241 $ 177,094 Adjustments to Reconcile Net Income to Net Cash Provided by (Used In) Operating Activities: Net (Gains) Losses on Investments, Investment Securities and Contingent Consideration ( 9,509 ) 4,456 Equity Method Investments, Including Gain on Sale ( 890 ) ( 786 ) Equity-Based and Other Deferred Compensation 130,242 117,524 Noncash Lease Expense 11,045 10,094 Depreciation, Amortization and Accretion, net 5,287 7,219 Bad Debt Expense 3,734 ( 519 ) Deferred Taxes ( 2,514 ) ( 1,942 ) Decrease (Increase) in Operating Assets: Investment Securities 1,676 ( 21 ) Accounts Receivable 83,422 36,230 Receivable from Employees and Related Parties 1,268 1,460 Other Assets 82,271 ( 14,980 ) (Decrease) Increase in Operating Liabilities: Accrued Compensation and Benefits ( 767,197 ) ( 839,975 ) Accounts Payable and Accrued Expenses ( 1,132 ) 373 Payables to Employees and Related Parties 4,788 28,261 Taxes Payable ( 6,217 ) ( 4,462 ) Other Liabilities ( 13,252 ) ( 6,246 ) Net Cash Provided by (Used in) Operating Activities ( 384,737 ) ( 486,220 ) Cash Flows From Investing Activities Investments Purchased ( 37 ) — Proceeds from Sale of Investments — 18,300 Distributions of Private Equity Investments 72 20 Investment Securities: Proceeds from Sales and Maturities of Investment Securities 1,409,643 1,325,038 Purchases of Investment Securities ( 851,103 ) ( 626,283 ) Maturity of Certificates of Deposit 82,759 67,796 Purchase of Certificates of Deposit ( 5,222 ) ( 85,843 ) Purchase of Furniture, Equipment and Leasehold Improvements ( 4,858 ) ( 5,491 ) Net Cash Provided by Investing Activities 631,254 693,537 Cash Flows From Financing Activities Issuance of Noncontrolling Interests — 300 Distributions to Noncontrolling Interests ( 9,202 ) ( 4,740 ) Purchase of Treasury Stock and Noncontrolling Interests ( 286,592 ) ( 283,126 ) Dividends ( 41,193 ) ( 41,619 ) Net Cash Provided by (Used in) Financing Activities ( 336,987 ) ( 329,185 ) Effect of Exchange Rate Changes on Cash 6,472 ( 1,531 ) Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 83,998 ) ( 123,399 ) Cash, Cash Equivalents and Restricted Cash – Beginning of Period 672,123 587,293 Cash, Cash Equivalents and Restricted Cash – End of Period $ 588,125 $ 463,894 SUPPLEMENTAL CASH FLOW DISCLOSURE Payments for Interest $ 1,790 $ 3,542 Payments for Income Taxes $ 33,255 $ 36,867 Accrued Dividends $ 4,205 $ 4,128 Amounts Due for Purchase of Noncontrolling Interest $ — $ 1,448 Settlement of Sale of Trilantic VI $ — $ 9,188 See Notes to Unaudited Condensed Consolidated Financial Statements. 8 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Note 1 – Organization Evercore Inc., together with its subsidiaries (the "Company"), is an investment banking and investment management firm, incorporated in Delaware and headquartered in New York, New York. The Company is a holding company which owns a controlling interest in, and is the sole general partner of, Evercore LP, a Delaware limited partnership ("Evercore LP"). The Company operates from its offices and through its affiliates in the Americas, Europe, the Middle East and Asia. The Investment Banking & Equities segment includes the investment banking business through which the Company provides advice to clients on significant mergers, acquisitions, divestitures, shareholder activism and other strategic corporate transactions, with a particular focus on advising prominent multinational corporations and substantial private equity firms on large, complex transactions. The Company also provides restructuring advice to companies in financial transition, as well as to creditors, shareholders and potential acquirers. In addition, the Company provides its clients with capital markets advice, underwrites securities offerings, raises funds for financial sponsors and provides advisory services focused on secondary transactions for private funds interests, as well as on primary and secondary transactions for real estate oriented financial sponsors and private equity interests. The Investment Banking & Equities segment also includes the equities business through which the Company offers macroeconomic, policy and fundamental equity research and agency-based equity securities trading for institutional investors. The Investment Management segment includes the wealth management business through which the Company provides investment advisory, wealth management and fiduciary services for high-net-worth individuals and associated entities, and the private equity business, which holds interests in private equity funds which are not managed by the Company. Note 2 – Significant Accounting Policies For a further discussion of the Company's accounting policies, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. As permitted by the rules and regulations of the United States Securities and Exchange Commission, the unaudited condensed consolidated financial statements contain certain condensed financial information and exclude certain footnote disclosures normally included in audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The accompanying condensed consolidated financial statements are unaudited and are prepared in accordance with U.S. GAAP. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring accruals, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2022. The December 31, 2022 Unaudited Condensed Consolidated Statement of Financial Condition data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for interim periods are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. The accompanying unaudited condensed consolidated financial statements of the Company are comprised of the consolidation of Evercore LP and Evercore LP's wholly-owned and majority-owned direct and indirect subsidiaries, including Evercore Group L.L.C. ("EGL"), a registered broker-dealer in the U.S. The Company's policy is to consolidate all subsidiaries in which it has a controlling financial interest, as well as any variable interest entities ("VIEs") where the Company is deemed to be the primary beneficiary, when it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. The Company reviews factors, including the rights of the equity holders and obligations of equity holders to absorb losses or receive expected residual returns, to determine if the investment is a VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly or indirectly by the Company. The consolidation analysis is generally performed qualitatively. This analysis, which requires judgment, is performed at each reporting date. Evercore LP is a VIE and the Company is the primary beneficiary. Specifically, the Company has the majority economic interest in Evercore LP and has decision making authority that significantly affects the economic performance of the entity while the limited partners have no kick-out or substantive participating rights. The assets and liabilities of Evercore LP represent substantially all of the consolidated assets and liabilities of the Company with the exception of U.S. corporate taxes 9 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) and related items, which are presented on the Company's (Parent Company Only) Condensed Statements of Financial Condition in Note 24 to the Company's consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Evercore ISI International Limited ("Evercore ISI U.K."), Evercore Partners International LLP ("Evercore U.K."), Evercore (Japan) Ltd. ("Evercore Japan"), Evercore Consulting (Beijing) Co. Ltd. ("Evercore Beijing") and Evercore Partners Canada Ltd. ("Evercore Canada") are also VIEs, and the Company is the primary beneficiary of these VIEs. Specifically for Evercore ISI U.K., Evercore Japan, Evercore Beijing and Evercore Canada, the Company provides financial support through transfer pricing agreements with these entities, which exposes the Company to losses that are potentially significant to these entities, and has decision making authority that significantly affects the economic performance of these entities. The Company has the majority economic interest in Evercore U.K. and has decision making authority that significantly affects the economic performance of this entity. The Company included in its Unaudited Condensed Consolidated Statements of Financial Condition Evercore ISI U.K., Evercore U.K., Evercore Japan, Evercore Beijing and Evercore Canada assets of $ 291,905 and liabilities of $ 144,272 at March 31, 2023 and assets of $ 584,192 and liabilities of $ 247,884 at December 31, 2022. All intercompany balances and transactions with the Company's subsidiaries have been eliminated upon consolidation. Note 3 – Recent Accounting Pronouncements The Company did not adopt any new accounting standards that had a material impact on the Company's unaudited condensed consolidated financial statements during the three months ended March 31, 2023. The Company continues to monitor recently issued accounting standards to assess the impact on our unaudited condensed consolidated financial statements. Note 4 – Revenue and Accounts Receivable The following table presents revenue recognized by the Company for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Investment Banking & Equities: Advisory Fees $ 462,562 $ 624,564 Underwriting Fees 22,883 36,306 Commissions and Related Revenue 48,065 50,898 Total Investment Banking & Equities $ 533,510 $ 711,768 Investment Management: Asset Management and Administration Fees: Wealth Management $ 15,958 $ 17,115 Total Investment Management $ 15,958 $ 17,115 Contract Balances The change in the Company’s contract assets and liabilities during the following periods primarily reflects timing differences between the Company’s performance and the client’s payment. The Company’s receivables, contract assets and deferred revenue (contract liabilities) for the three months ended March 31, 2023 and 2022 are as follows: 10 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) For the Three Months Ended March 31, 2023 Receivables (Current) (1) Receivables (Long-term) (2) Contract Assets (Current) (3) Contract Assets (Long-term) (2) Deferred Revenue (Current Contract Liabilities) (4) Deferred Revenue (Long-term Contract Liabilities) (5) Balance at January 1, 2023 $ 385,131 $ 64,139 $ 110,468 $ 8,028 $ 5,071 $ — Increase (Decrease) ( 85,974 ) 6,022 ( 96,505 ) 3,869 873 — Balance at March 31, 2023 $ 299,157 $ 70,161 $ 13,963 $ 11,897 $ 5,944 $ — For the Three Months Ended March 31, 2022 Receivables (Current) (1) Receivables (Long-term) (2) Contract Assets (Current) (3) Contract Assets (Long-term) (2) Deferred Revenue (Current Contract Liabilities) (4) Deferred Revenue (Long-term Contract Liabilities) (5) Balance at January 1, 2022 $ 351,668 $ 87,764 $ 14,092 $ 12,945 $ 9,257 $ 147 Increase (Decrease) ( 37,991 ) ( 12,541 ) 30,493 ( 4,411 ) 1,827 — Balance at March 31, 2022 $ 313,677 $ 75,223 $ 44,585 $ 8,534 $ 11,084 $ 147 (1) Included in Accounts Receivable on the Unaudited Condensed Consolidated Statements of Financial Condition. (2) Included in Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition. (3) Included in Other Current Assets on the Unaudited Condensed Consolidated Statements of Financial Condition. (4) Included in Other Current Liabilities on the Unaudited Condensed Consolidated Statements of Financial Condition. (5) Included in Other Long-term Liabilities on the Unaudited Condensed Consolidated Statements of Financial Condition. The Company's contract assets represent arrangements in which an estimate of variable consideration has been included in the transaction price and thereby recognized as revenue that precedes the contractual due date. Under Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers" ("ASC 606"), revenue is recognized when all material conditions for completion have been met and it is probable that a significant revenue reversal will not occur in a future period. The Company recognized revenue of $ 3,547 and $ 4,208 on the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively, that was initially included in deferred revenue within Other Current Liabilities on the Company’s Unaudited Condensed Consolidated Statements of Financial Condition. Generally, performance obligations under client arrangements will be settled within one year ; therefore, the Company has elected to apply the practical expedient in ASC 606-10-50-14. The allowance for credit losses for the three months ended March 31, 2023 and 2022 is as follows: For the Three Months Ended March 31, 2023 2022 Beginning Balance $ 4,683 $ 2,704 Bad debt expense, net of reversals 3,734 ( 519 ) Write-offs, foreign currency translation and other adjustments ( 1,200 ) ( 131 ) Ending Balance $ 7,217 $ 2,054 The change in the balance during the three months ended March 31, 2023 is primarily related an increase in the Company's reserve for credit losses and the write-off of aged receivables. For long-term accounts receivable and long-term contract assets, the Company monitors clients’ creditworthiness based on collection experience and other internal metrics. The following table presents the Company’s long-term accounts receivable and long-term contract assets from the Company's private and secondary fund advisory businesses as of March 31, 2023, by year of origination: 11 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Amortized Carrying Value by Origination Year 2023 2022 2021 2020 2019 Total Long-term Accounts Receivable and Long-Term Contract Assets $ 13,537 $ 40,369 $ 20,781 $ 5,816 $ 1,555 $ 82,058 Note 5 – Related Parties Advisory Fees includes fees earned from clients that have the Company's Senior Managing Directors, certain Senior Advisors and executives as a member of their Board of Directors of $ 1,668 and $ 2,860 for the three months ended March 31, 2023 and 2022, respectively. Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition includes the long-term portion of loans receivable from certain employees of $ 14,354 and $ 16,928 as of March 31, 2023 and December 31, 2022, respectively. See Note 14 for further information. Note 6 – Investment Securities and Certificates of Deposit The Company's Investment Securities and Certificates of Deposit as of March 31, 2023 and December 31, 2022 were as follows: March 31, 2023 December 31, 2022 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Debt Securities $ 117,508 $ 34 $ — $ 117,542 $ 802,652 $ 4,483 $ — $ 807,135 Equity Securities 558 — 60 498 558 — 223 335 Debt Securities Carried by EGL 494,113 1,437 — 495,550 363,824 1,814 — 365,638 Investment Funds 145,784 521 3,701 142,604 144,343 531 8,156 136,718 Total Investment Securities (carried at fair value) $ 757,963 $ 1,992 $ 3,761 $ 756,194 $ 1,311,377 $ 6,828 $ 8,379 $ 1,309,826 Certificates of Deposit (carried at contract value) 46,948 122,890 Total Investment Securities and Certificates of Deposit $ 803,142 $ 1,432,716 Scheduled maturities of the Company's available-for-sale debt securities as of March 31, 2023 and December 31, 2022 were as follows: March 31, 2023 December 31, 2022 Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 116,538 $ 116,565 $ 800,710 $ 805,190 Due after one year through five years 970 977 1,942 1,945 Total $ 117,508 $ 117,542 $ 802,652 $ 807,135 The Company has the ability and intent to hold available-for-sale securities until a recovery of fair value is equal to an amount approximating its amortized cost, which may be at maturity. Further, the securities are all U.S. Treasuries, and the Company has not incurred credit losses on its securities. As such, the Company does not consider these securities to be impaired at March 31, 2023 and has not recorded a credit allowance on these securities. Debt Securities Debt Securities are classified as available-for-sale securities within Investment Securities and Certificates of Deposit on the Unaudited Condensed Consolidated Statements of Financial Condition. These securities are stated at fair value with unrealized gains and losses included in Accumulated Other Comprehensive Income (Loss) on the Unaudited Condensed 12 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Consolidated Statements of Financial Condition and realized gains and losses included in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations. The Company had net realized losses of ($ 151 ) and ($ 34 ) for the three months ended March 31, 2023 and 2022, respectively. Equity Securities Equity Securities are carried at fair value with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations. The Company had net realized and unrealized gains of $ 163 and $ 11 for the three months ended March 31, 2023 and 2022, respectively. Debt Securities Carried by EGL EGL invests in a fixed income portfolio consisting primarily of U.S. Treasury bills. These securities are carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations, as required for broker-dealers in securities. The Company had net realized and unrealized gains of $ 6 and $ 21 for the three months ended March 31, 2023 and 2022, respectively. Investment Funds The Company invests in a portfolio of exchange-traded funds as an economic hedge against its deferred cash compensation program. See Note 14 for further information. These securities are carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations. The Company had net realized and unrealized gains (losses) of $ 9,441 and ($ 5,163 ) for the three months ended March 31, 2023 and 2022, respectively. Certificates of Deposit At March 31, 2023 and December 31, 2022, the Company held certificates of deposit of $ 46,948 and $ 122,890 , respectively, with certain banks with original maturities of four months or less when purchased. Note 7 – Investments The Company's investments reported on the Unaudited Condensed Consolidated Statements of Financial Condition consist of investments in unconsolidated affiliated companies, other investments in private equity partnerships and equity securities in private companies. The Company's investments are relatively high-risk and illiquid assets. The Company's investments in ABS Investment Management Holdings, LP and ABS Investment Management GP LLC (collectively, "ABS"), Atalanta Sosnoff Capital, LLC ("Atalanta Sosnoff"), Luminis Partners ("Luminis") and Seneca Advisors LTDA ("Seneca Evercore") are in voting interest entities. The Company's share of earnings (losses) from these investments is included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. The Company also has investments in private equity partnerships which consist of investment interests in private equity funds which are voting interest entities. Realized and unrealized gains and losses on private equity investments are included within Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations. Equity Method Investments A summary of the Company's investments accounted for under the equity method of accounting as of March 31, 2023 and December 31, 2022 was as follows: March 31, 2023 December 31, 2022 ABS $ 20,047 $ 19,387 Atalanta Sosnoff 10,876 10,717 Luminis 6,098 6,092 Seneca Evercore 601 706 Total $ 37,622 $ 36,902 13 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) ABS The Company has an investment accounted for under the equity method of accounting in ABS. In January 2022, the Company entered into an agreement to sell a portion of its interest in ABS. This transaction closed on March 28, 2022 and resulted in the reduction of the Company's ownership interest from 46 % to 26 %. The Company received cash of $ 18,300 as consideration for its interests sold and recorded a gain of $ 1,294 for the three months ended March 31, 2022, included within Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statement of Operations. At March 31, 2023, the Company's ownership interest in ABS was 26 %. This investment resulted in earnings of $ 1,006 and $ 1,199 for the three months ended March 31, 2023 and 2022, respectively, included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. Atalanta Sosnoff The Company has an investment accounted for under the equity method of accounting in Atalanta Sosnoff. At March 31, 2023, the Company's ownership interest in Atalanta Sosnoff was 49 %. This investment resulted in earnings of $ 391 and $ 939 for the three months ended March 31, 2023 and 2022, respectively, included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. Luminis The Company has an investment accounted for under the equity method of accounting in Luminis. At March 31, 2023, the Company's ownership interest in Luminis was 20 %. This investment resulted in earnings of $ 162 and $ 288 for the three months ended March 31, 2023 and 2022, respectively, included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. This investment is subject to currency translation from the Australian dollar to the U.S. dollar, included in Accumulated Other Comprehensive Income (Loss), on the Unaudited Condensed Consolidated Statements of Financial Condition . Seneca Evercore The Company has an investment accounted for under the equity method of accounting in Seneca Evercore. At March 31, 2023, the Company's ownership interest in Seneca Evercore was 20 %. This investment resulted in earnings (losses) of ($ 91 ) and $ 86 for the three months ended March 31, 2023 and 2022, respectively, included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. This investment is subject to currency translation from the Brazilian real to the U.S. dollar, included in Accumulated Other Comprehensive Income (Loss), on the Unaudited Condensed Consolidated Statements of Financial Condition . Other The Company allocates the purchase price of its equity method investments, in part, to the inherent finite-lived identifiable intangible assets of the investees. The Company's share of the earnings of the investees has been reduced by the amortization of these identifiable intangible assets of $ 79 for each of the three months ended March 31, 2023 and 2022. The Company assesses its equity method investments for impairment annually, or more frequently if circumstances indicate impairment may have occurred. Investments in Private Equity Private Equity Funds The Company's investments related to private equity partnerships and associated entities include investments in Glisco Partners II, L.P. ("Glisco II"), Glisco Partners III, L.P. ("Glisco III"), Glisco Capital Partners IV ("Glisco IV"), Trilantic Capital Partners Associates IV, L.P. ("Trilantic IV"), Trilantic Capital Partners V, L.P. ("Trilantic V") and Trilantic Capital Partners VI (North America), L.P. ("Trilantic VI") (through January 1, 2022). Portfolio holdings of the private equity funds are carried at fair value. Accordingly, the Company reflects its pro rata share of unrealized gains and losses occurring from changes in fair value. Additionally, the Company reflects its pro rata share of realized gains, losses and carried interest associated with any investment realizations. 14 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) A summary of the Company's investments in the private equity funds as of March 31, 2023 and December 31, 2022 was as follows: March 31, 2023 December 31, 2022 Glisco II, Glisco III and Glisco IV $ 3,764 $ 3,602 Trilantic IV and Trilantic V 1,742 1,939 Total Private Equity Funds $ 5,506 $ 5,541 Net realized and unrealized gains (losses) on private equity fund investments were $ 322 and ($ 83 ) for the three months ended March 31, 2023 and 2022, respectively. In the event the funds perform poorly, the Company may be obligated to repay certain carried interest previously distributed. As of March 31, 2023, $ 400 of previously distributed carried interest received from the funds was subject to repayment. On December 14, 2021, the Company entered into an agreement to sell its interests in Trilantic VI for $ 9,188 . Consideration for this transaction was received in December 2021 and was reflected in Cash and Cash Equivalents and Other Current Liabilities on the Unaudited Condensed Consolidated Statement of Financial Condition at December 31, 2021. This transaction closed on January 1, 2022 and as of that date, the Company has no further commitments to invest in Trilantic VI. General Partners of Private Equity Funds which are VIEs The Company has concluded that Glisco Capital Partners II, Glisco Capital Partners III and Glisco Manager Holdings LP are VIEs and that the Company is not the primary beneficiary of these VIEs. The Company's assessment of the primary beneficiary of these entities included assessing which parties have the power to significantly impact the economic performance of these entities and the obligation to absorb losses, which could be potentially significant to the entities, or the right to receive benefits from the entities that could be potentially significant. Neither the Company nor its related parties will have the ability to make decisions that significantly impact the economic performance of these entities. Further, as a limited partner in these entities, the Company does not possess substantive participating rights. The Company had assets of $ 3,297 and $ 3,166 included in its Unaudited Condensed Consolidated Statements of Financial Condition at March 31, 2023 and December 31, 2022, respectively, related to these unconsolidated VIEs, representing the carrying value of the Company's investments in the entities. The Company's exposure to the obligations of these VIEs is generally limited to its investments in these entities. The Company's maximum exposure to loss as of March 31, 2023 and December 31, 2022 was $ 5,480 and $ 5,385 , respectively, which represents the carrying value of the Company's investments in these VIEs, as well as any unfunded commitments to the current and future funds. Other Investments In certain instances, the Company receives equity securities in private companies in exchange for advisory services. These investments, which had a balance of $ 616 and $ 604 as of March 31, 2023 and December 31, 2022, respectively, are accounted for at their cost minus impairment, if any, plus or minus changes resulting from observable price changes. Note 8 – Leases Operating Leases – The Company leases office space under non-cancelable lease agreements, which expire on various dates through 2035. The Company reflects lease expense over the lease terms on a straight-line basis. The lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. Occupancy lease agreements, in addition to base rentals, generally are subject to escalation provisions based on certain costs incurred by the landlord. The Company does not have any leases with variable lease payments. Occupancy and Equipment Rental on the Unaudited Condensed Consolidated Statements of Operations includes operating lease cost for office space of $ 13,428 and $ 12,840 for the three months ended March 31, 2023 and 2022, respectively, and variable lease cost, which principally include costs for real estate taxes, common area maintenance and other operating expenses of $ 1,186 and $ 1,900 for the three months ended March 31, 2023 and 2022, respectively. In December 2022, the Company entered into a lease agreement to take on 38 rentable square feet in New York, New York. The Company took possession of this space in January 2023. The approximate additional annual expense under this lease agreement, net of certain lease incentives, is $ 2,300 and the lease term will end on December 31, 2035. 15 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) In conjunction with the lease of office space, the Company has entered into letters of credit in the amount of $ 5,664 and $ 5,637 as of March 31, 2023 and December 31, 2022, respectively, which are secured by cash that is included in Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition. The Company has entered into various operating leases for the use of office equipment (primarily computers, printers, copiers and other information technology related equipment). Occupancy and Equipment Rental on the Unaudited Condensed Consolidated Statements of Operations includes operating lease cost for office equipment of $ 1,450 and $ 1,243 for the three months ended March 31, 2023 and 2022, respectively. The Company uses its secured incremental borrowing rate to determine the present value of its right-of-use assets and lease liabilities. The determination of an appropriate incremental borrowing rate requires significant assumptions and judgment. The Company's incremental borrowing rate was calculated based on the Company's recent debt issuances and current market conditions. The Company scales the rates appropriately depending on the life of the leases. The Company incurred net operating cash outflows of $ 15,561 and $ 14,811 for the three months ended March 31, 2023 and 2022, respectively, related to its operating leases, which was net of cash received from lease incentives of $ 332 for the three months ended March 31, 2022. Other information as it relates to the Company's operating leases is as follows: For the Three Months Ended March 31, 2023 2022 New Right-of-Use Assets obtained in exchange for new operating lease liabilities $ 19,917 $ 5,589 March 31, 2023 March 31, 2022 Weighted-average remaining lease term - operating leases 10.5 years 10.7 years Weighted-average discount rate - operating leases 4.05 % 3.90 % As of March 31, 2023, the maturities of the undiscounted operating lease liabilities for which the Company has commenced use are as follows: 2023 (April 1 through December 31) $ 35,013 2024 44,595 2025 45,684 2026 42,049 2027 29,535 Thereafter 216,108 Total lease payments 412,984 Less: Tenant Improvement Allowances ( 9,457 ) Less: Imputed Interest ( 79,659 ) Present value of lease liabilities 323,868 Less: Current lease liabilities ( 34,490 ) Long-term lease liabilities $ 289,378 In conjunction with the lease agreement to expand its headquarters at 55 East 52nd St., New York, New York, and lease agreements at certain other locations, the Company entered into leases primarily for office space which have not yet commenced and thus are not yet included on the Company's Unaudited Condensed Consolidated Statements of Financial Condition as right-of-use assets and lease liabilities. The Company anticipates that it will take possession of these spaces by the end of 2023. These spaces will have lease terms of 3 to 13 years once the Company has taken possession. The additional future payments under these arrangements are $ 227,387 as of March 31, 2023. 16 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Note 9 – Fair Value Measurements ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820") establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily-available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level 1 include listed equities, listed derivatives and treasury bills and notes. As required by ASC 820, the Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price. Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Periodically, the Company holds investments in corporate bonds, municipal bonds and other debt securities, the estimated fair values of which are based on prices provided by external pricing services. Level 3 – Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. The following table presents the categorization of investments and certain other financial assets measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022: March 31, 2023 Level 1 Level 2 Level 3 Total Debt Securities Carried by EGL $ 495,550 $ — $ — $ 495,550 Other Debt and Equity Securities (1) 126,183 — — 126,183 Investment Funds 142,604 — — 142,604 Other — 205 — 205 Total Assets Measured At Fair Value $ 764,337 $ 205 $ — $ 764,542 December 31, 2022 Level 1 Level 2 Level 3 Total Debt Securities Carried by EGL $ 365,638 $ — $ — $ 365,638 Other Debt and Equity Securities (1) 815,409 — — 815,409 Investment Funds 136,718 — — 136,718 Total Assets Measured At Fair Value $ 1,317,765 $ — $ — $ 1,317,765 (1) Includes $ 8,143 and $ 7,939 of treasury bills classified within Cash and Cash Equivalents on the Unaudited Condensed Consolidated Statements of Financial Condition as of March 31, 2023 and December 31, 2022, respectively. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The carrying amount and estimated fair value of the Company's financial instrument assets and liabilities, which are not measured at fair value on the Unaudited Condensed Consolidated Statements of Financial Condition, are listed in the tables below. 17 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) March 31, 2023 Carrying Estimated Fair Value Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash and Cash Equivalents $ 571,047 $ 571,047 $ — $ — $ 571,047 Certificates of Deposit 46,948 — 46,948 — 46,948 Receivables (1) 369,318 — 366,969 — 366,969 Contract Assets (2) 25,860 — 24,644 — 24,644 Receivable from Employees and Related Parties 20,673 — 20,673 — 20,673 Closely-held Equity Securities 616 — — 616 616 Financial Liabilities: Accounts Payable and Accrued Expenses $ 28,582 $ — $ 28,582 $ — $ 28,582 Payable to Employees and Related Parties 53,349 — 53,349 — 53,349 Notes Payable 372,494 — 355,719 — 355,719 December 31, 2022 Carrying Estimated Fair Value Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash and Cash Equivalents $ 655,461 $ 655,461 $ — $ — $ 655,461 Certificates of Deposit 122,890 — 122,890 — 122,890 Receivables (1) 449,270 — 447,051 — 447,051 Contract Assets (2) 118,496 — 117,701 — 117,701 Receivable from Employees and Related Parties 21,914 — 21,914 — 21,914 Closely-held Equity Securities 604 — — 604 604 Financial Liabilities: Accounts Payable and Accrued Expenses $ 28,807 $ — $ 28,807 $ — $ 28,807 Payable to Employees and Related Parties 41,235 — 41,235 — 41,235 Notes Payable 371,774 — 349,955 — 349,955 (1) Includes Accounts Receivable, as well as long-term receivables, which are included in Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition. (2) Includes current and long-term contract assets included in Other Current Assets and Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition. Note 10 – Notes Payable 2016 Private Placement Notes On March 30, 2016, the Company issued an aggregate of $ 170,000 of senior notes, including: $ 38,000 aggregate principal amount of its 4.88 % Series A senior notes which were due March 30, 2021 (the "Series A Notes"), $ 67,000 aggregate principal amount of its 5.23 % Series B senior notes which were originally due March 30, 2023 ("Series B Notes"), $ 48,000 aggregate principal amount of its 5.48 % Series C senior notes due March 30, 2026 (the "Series C Notes") and $ 17,000 aggregate principal amount of its 5.58 % Series D senior notes due March 30, 2028 (the "Series D Notes" and together with the Series A Notes, the Series B Notes and the Series C Notes, the "2016 Private Placement Notes"), pursuant to a note purchase agreement (the "2016 Note Purchase Agreement") dated as of March 30, 2016, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. Interest on the 2016 Private Placement Notes is payable semi-annually and the 2016 Private Placement Notes are guaranteed by certain of the Company's domestic subsidiaries. The Company may, at its option, prepay all, or from time to time 18 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) any part of, the 2016 Private Placement Notes (without regard to Series), in an amount not less than 5 % of the aggregate principal amount of the 2016 Private Placement Notes then outstanding at 100 % of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2016 Private Placement Notes will have the right to require the Company to prepay the entire unpaid principal amounts held by each holder of the 2016 Private Placement Notes plus accrued and unpaid interest to the prepayment date. The 2016 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio, a minimum tangible net worth and a minimum interest coverage ratio, and customary events of default. As of March 31, 2023, the Company was in compliance with all of these covenants. On June 28, 2022, the Company prepaid the $ 67,000 aggregate principal amount of its Series B Notes plus the applicable make-whole amount. 2019 Private Placement Notes On August 1, 2019, the Company issued $ 175,000 and £ 25,000 of senior unsecured notes through private placement. These notes reflect a weighted average life of 12 years and a weighted average stated interest rate of 4.26 %. These notes include: $ 75,000 aggregate principal amount of its 4.34 % Series E senior notes due August 1, 2029 (the "Series E Notes"), $ 60,000 aggregate principal amount of its 4.44 % Series F senior notes due August 1, 2031 (the "Series F Notes"), $ 40,000 aggregate principal amount of its 4.54 % Series G senior notes due August 1, 2033 (the "Series G Notes") and £ 25,000 aggregate principal amount of its 3.33 % Series H senior notes due August 1, 2033 (the "Series H Notes" and together with the Series E Notes, the Series F Notes and the Series G Notes, the "2019 Private Placement Notes"), each of which were issued pursuant to a note purchase agreement dated as of August 1, 2019 (the "2019 Note Purchase Agreement"), among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. Interest on the 2019 Private Placement Notes is payable semi-annually and the 2019 Private Placement Notes are guaranteed by certain of the Company's domestic subsidiaries. The Company may, at its option, prepay all, or from time to time any part of, the 2019 Private Placement Notes (without regard to Series), in an amount not less than 5 % of the aggregate principal amount of the 2019 Private Placement Notes then outstanding at 100 % of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2019 Private Placement Notes will have the right to require the Company to prepay the entire unpaid principal amounts held by each holder of the 2019 Private Placement Notes plus accrued and unpaid interest to the prepayment date. The 2019 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default. As of March 31, 2023, the Company was in compliance with all of these covenants. 2021 Private Placement Notes On March 29, 2021, the Company issued $ 38,000 aggregate principal amount of its 1.97 % Series I senior notes due August 1, 2025 (the "Series I Notes" or the "2021 Private Placement Notes"), pursuant to a note purchase agreement (the "2021 Note Purchase Agreement") dated as of March 29, 2021, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. Interest on the 2021 Private Placement Notes is payable semi-annually and the 2021 Private Placement Notes are guaranteed by certain of the Company's domestic subsidiaries. The Company may, at its option, prepay all, or from time to time any part of, the 2021 Private Placement Notes, in an amount not less than 5 % of the aggregate principal amount of the 2021 Private Placement Notes then outstanding at 100 % of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2021 Private Placement Notes will have the right to require the Company to prepay the entire unpaid principal amounts held by each holder of the 2021 Private Placement Notes plus accrued and unpaid interest to the prepayment date. The 2021 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default. As of March 31, 2023, the Company was in compliance with all of these covenants. 2022 Private Placement Notes On June 28, 2022, the Company issued $ 67,000 aggregate principal amount of its 4.61 % Series J senior notes due November 15, 2028 (the "Series J Notes" or the "2022 Private Placement Notes"), pursuant to a note purchase agreement (the "2022 Note Purchase Agreement") dated as of June 28, 2022, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. 19 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Interest on the 2022 Private Placement Notes is payable semi-annually and the 2022 Private Placement Notes are guaranteed by certain of the Company's domestic subsidiaries. The Company may, at its option, prepay all, or from time to time any part of, the 2022 Private Placement Notes, in an amount not less than 5 % of the aggregate principal amount of the 2022 Private Placement Notes then outstanding at 100 % of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2022 Private Placement Notes will have the right to require the Company to prepay the entire unpaid principal amounts held by each holder of the 2022 Private Placement Notes plus accrued and unpaid interest to the prepayment date. The 2022 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default. As of March 31, 2023, the Company was in compliance with all of these covenants. Notes Payable is comprised of the following as of March 31, 2023 and December 31, 2022: Carrying Value (1) Note Maturity Date Effective Annual Interest Rate March 31, 2023 December 31, 2022 Evercore Inc. 5.48 % Series C Senior Notes 3/30/2026 5.64 % $ 47,788 $ 47,772 Evercore Inc. 5.58 % Series D Senior Notes 3/30/2028 5.72 % 16,896 16,891 Evercore Inc. 4.34 % Series E Senior Notes 8/1/2029 4.46 % 74,493 74,470 Evercore Inc. 4.44 % Series F Senior Notes 8/1/2031 4.55 % 59,555 59,545 Evercore Inc. 4.54 % Series G Senior Notes 8/1/2033 4.64 % 39,685 39,679 Evercore Inc. 3.33 % Series H Senior Notes 8/1/2033 3.42 % 30,593 30,003 Evercore Inc. 1.97 % Series I Senior Notes 8/1/2025 2.20 % 37,805 37,785 Evercore Inc. 4.61 % Series J Senior Notes 11/15/2028 5.02 % 65,679 65,629 Total $ 372,494 $ 371,774 (1) Carrying value has been adjusted to reflect the presentation of debt issuance costs as a direct reduction from the related liability. Note 11 – Evercore Inc. Stockholders' Equity Dividends – On April 25, 2023, the Company's Board of Directors declared a quarterly cash dividend of $ 0.76 per share to the holders of record of shares of Class A common stock ("Class A Shares") as of May 26, 2023, which will be paid on June 9, 2023. During the three months ended March 31, 2023, the Company declared and paid dividends of $ 0.72 per share, totaling $ 27,672 , and accrued deferred cash dividends on unvested restricted stock units ("RSUs"), totaling $ 4,205 . During the three months ended March 31, 2023, the Company also paid deferred cash dividends of $ 13,521 . During the three months ended March 31, 2022, the Company declared and paid dividends of $ 0.68 per share, totaling $ 27,505 , and accrued deferred cash dividends on unvested RSUs, totaling $ 4,128 . During the three months ended March 31, 2022, the Company also paid deferred cash dividends of $ 14,114 . Treasury Stock – During the three months ended March 31, 2023, the Company purchased 915 Class A Shares from employees at an average cost per share of $ 131.79 , primarily for the net settlement of stock-based compensation awards, and 1,238 Class A Shares at an average cost per share of $ 132.50 pursuant to the Company's share repurchase program. The aggregate 2,153 Class A Shares were purchased at an average cost per share of $ 132.20 , and the result of these purchases was an increase in Treasury Stock of $ 284,566 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023. LP Units – During the three months ended March 31, 2023, 24 Evercore LP partnership units ("LP Units") were exchanged for Class A Shares, resulting in an increase to Additional Paid-In-Capital of $ 1,478 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023. See Note 12 for further information. Accumulated Other Comprehensive Income (Loss) – As of March 31, 2023, Accumulated Other Comprehensive Income (Loss) on the Company's Unaudited Condensed Consolidated Statement of Financial Condition includes an accumulated Unrealized Gain (Loss) on Securities and Investments, net, and Foreign Currency Translation Adjustment Gain (Loss), net, of ($ 5,413 ) and ($ 20,270 ), respectively. 20 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Note 12 – Noncontrolling Interest Noncontrolling Interest recorded in the unaudited condensed consolidated financial statements of the Company relates to the following approximate interests in certain consolidated subsidiaries, which are not owned by the Company. In circumstances where the governing documents of the entity to which the noncontrolling interest relates require special allocations of profits or losses to the controlling and noncontrolling interest holders, the net income or loss of these entities is allocated based on these special allocations. Noncontrolling ownership interests for the Company's subsidiaries were as follows: As of March 31, 2023 2022 Evercore LP (1) 7 % 6 % Evercore Wealth Management ("EWM") (2) 25 % 25 % (1) On February 24, 2022, 2,545 Class E limited partnership units of Evercore LP ("Class E LP Units") were exchanged for 2,545 Class A Shares, which resulted in a decrease in noncontrolling interest of Evercore LP. For further information see " LP Units Exchanged" below. (2) Noncontrolling Interests represent a blended rate for multiple classes of interests in EWM. The Noncontrolling Interests for Evercore LP and EWM have rights, in certain circumstances, to convert into Class A Shares. The Company has outstanding Class A limited partnership units of Evercore LP ("Class A LP Units"), Class E LP Units, Class I limited partnership units of Evercore LP ("Class I LP Units") and Class K limited partnership units of Evercore LP ("Class K LP Units"), which give the holders the right to receive Class A Shares upon exchange on a one-for-one basis. See Note 13 for further information. During the period January 1, 2023 through December 31, 2023, the Company has the option to purchase, at fair value, a portion of the outstanding EWM Class A Units such that the noncontrolling interest holders would continue to hold no less than 25 % of the outstanding units following the transaction. This transaction may be settled in cash, Evercore LP Units or Class A shares of the Company, at the Company’s discretion. If the Company has not exercised its option prior to the end of the option period, or the noncontrolling interest holders continue to hold greater than 25 % of the outstanding units following the transaction, the noncontrolling interest holders may exchange their interests for Evercore LP Units, at fair value, sufficient to reduce their outstanding interest to 25 %. As of March 31, 2023, the EWM members held 25 % of the outstanding EWM Units. Changes in Noncontrolling Interest for the three months ended March 31, 2023 and 2022 were as follows: 21 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) For the Three Months Ended March 31, 2023 2022 Beginning balance $ 189,607 $ 314,910 Comprehensive Income: Net Income Attributable to Noncontrolling Interest 8,863 19,078 Other Comprehensive Income (Loss) 216 ( 273 ) Total Comprehensive Income 9,079 18,805 Evercore LP Units Exchanged for Class A Shares ( 1,478 ) ( 157,777 ) Amortization and Vesting of LP Units 6,460 6,221 Other Items: Distributions to Noncontrolling Interests ( 10,390 ) ( 4,740 ) Issuance of Noncontrolling Interest — 300 Purchase of Noncontrolling Interest — ( 87 ) Total Other Items ( 10,390 ) ( 4,527 ) Ending balance $ 193,278 $ 177,632 Other Comprehensive Income – Other Comprehensive Income (Loss) Attributed to Noncontrolling Interest includes unrealized gains (losses) on securities and investments, net, of ($ 283 ) for the three months ended March 31, 2023, and foreign currency translation adjustment gains (losses), net, of $ 499 and ($ 273 ) for the three months ended March 31, 2023 and 2022, respectively. LP Units Exchanged – On February 24, 2022, the Company entered into an agreement (the "Exchange Agreement") with ISI Holding, Inc. ("ISI Holding"), the principal stockholder of which is Ed Hyman, an executive officer of the Company. Pursuant to the Exchange Agreement, ISI Holding exercised its existing conversion rights under the terms of the partnership agreement of Evercore LP to exchange (the "Exchange") all 2,545 of the Class E LP Units owned by it for 2,545 Class A Shares. Following the Exchange, ISI Holding liquidated and distributed the Class A Shares received in the Exchange to its stockholders in accordance with their ownership interests in ISI Holding. The parties have relied on the exemption from the registration requirements of the Securities Act of 1933 under Section 4(a)(2) thereof for the Exchange. During the three months ended March 31, 2023, 24 LP Units were exchanged for Class A Shares. This resulted in a decrease to Noncontrolling Interest of $ 1,478 and an increase to Additional-Paid-In-Capital of $ 1,478 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023. See Note 11 for further information. Interests Purchased – During the first quarter of 2022, the Company purchased, at fair value, an additional 0.4 % of the EWM Class A Units for $ 1,448 (which was paid in cash in April 2022 and was included within Other Current Liabilities on the Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022). This purchase resulted in a decrease to Noncontrolling Interest of $ 87 and a decrease to Additional-Paid-In-Capital of $ 1,361 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022. On December 31, 2021, the Company purchased, at fair value, all of the outstanding Class R Interests of Private Capital Advisory L.P. from employees of the RECA business for $ 54,297 . Consideration for this transaction included the payment of $ 6,000 of cash in 2021, $ 27,710 of cash during the three months ended March 31, 2022, and contingent cash consideration which is due to be settled in early 2024. The Company paid $ 715 of this contingent cash consideration during the three months ended March 31, 2023. The fair value of the remaining contingent consideration is $ 5,122 as of March 31, 2023, which is included within Payable to Employees and Related Parties on the Company's Unaudited Condensed Consolidated Statements of Financial Condition, and $ 6,119 as of December 31, 2022, $ 1,083 of which was included within Other Current Liabilities and the remainder of which was included within Other Long-term Liabilities on the Company's Unaudited Condensed Consolidated 22 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Statements of Financial Condition. The amount of contingent consideration to be paid is dependent on the RECA business achieving certain revenue performance targets. Changes in the fair value of contingent consideration are included within Other Operating Expenses on the Unaudited Condensed Consolidated Statements of Operations. The fair value of the contingent consideration reflects the present value of the expected payment due based on the current expectation for the business meeting the revenue performance targets. In conjunction with this transaction, the Company also issued a payment in the first quarter of 2023 and will issue another payment in early 2024, contingent on continued employment with the Company. Accordingly, these payments are treated as compensation expense for accounting purposes in the periods earned. These payments will also be dependent on the RECA business achieving certain revenue performance targets. Note 13 – Net Income Per Share Attributable to Evercore Inc. Common Shareholders The calculations of basic and diluted net income per share attributable to Evercore Inc. common shareholders for the three months ended March 31, 2023 and 2022 are described and presented below. For the Three Months Ended March 31, 2023 2022 Basic Net Income Per Share Attributable to Evercore Inc. Common Shareholders Numerator: Net income attributable to Evercore Inc. common shareholders $ 83,378 $ 158,016 Denominator: Weighted average Class A Shares outstanding, including vested RSUs 38,510 39,176 Basic net income per share attributable to Evercore Inc. common shareholders $ 2.17 $ 4.03 Diluted Net Income Per Share Attributable to Evercore Inc. Common Shareholders Numerator: Net income attributable to Evercore Inc. common shareholders $ 83,378 $ 158,016 Noncontrolling interest related to the assumed exchange of LP Units for Class A Shares (1) — — Associated corporate taxes related to the assumed elimination of Noncontrolling Interest described above (1) — — Diluted net income attributable to Evercore Inc. common shareholders $ 83,378 $ 158,016 Denominator: Weighted average Class A Shares outstanding, including vested RSUs 38,510 39,176 Assumed exchange of LP Units for Class A Shares (1) — — Additional shares of the Company's common stock assumed to be issued pursuant to non-vested RSUs, as calculated using the Treasury Stock Method (2) 1,808 2,117 Shares that are contingently issuable (3) 121 415 Diluted weighted average Class A Shares outstanding 40,439 41,708 Diluted net income per share attributable to Evercore Inc. common shareholders $ 2.06 $ 3.79 (1) The Company has outstanding Class A, E, I and K LP Units, which give the holders the right to receive Class A Shares upon exchange on a one -for-one basis. During the three months ended March 31, 2023 and 2022, these LP Units were antidilutive and consequently the effect of their exchange into Class A Shares has been excluded from the calculation of diluted net income per share attributable to Evercore Inc. common shareholders. The units that would have been included in the denominator of the computation of diluted net income per share attributable to Evercore Inc. common shareholders if the effect would have been dilutive were 2,756 and 3,943 for the three months ended March 31, 2023 and 2022, respectively. The adjustment to the numerator, diluted net income attributable to Class A common shareholders, if the effect would have been dilutive, would have been $ 6,986 and $ 15,066 for the three months ended March 31, 2023 and 23 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 2022, respectively. In computing this adjustment, the Company assumes that all Class A, E, I and K LP Units are converted into Class A Shares, that all earnings attributable to those shares are attributed to Evercore Inc. and that the Company is subject to the statutory tax rates of a C-Corporation under a conventional corporate tax structure in the U.S. at prevailing corporate tax rates. The Company does not anticipate that the Class A, E, I and K LP Units will result in a dilutive computation in future periods. (2) During the three months ended March 31, 2023 and 2022, certain shares of the Company's common stock assumed to be issued pursuant to non-vested RSUs, as calculated using the Treasury Stock Method, were antidilutive and consequently the effect of their exchange into Class A Shares has been excluded from the calculation of diluted net income per share attributable to Evercore Inc. common shareholders. The shares that would have been included in the treasury stock method calculation if the effect would have been dilutive were 2,239 and 2,165 for the three months ended March 31, 2023 and 2022, respectively. (3) The Company previously had outstanding Class I-P units of Evercore LP ("Class I-P Units") which were contingently exchangeable into Class I LP Units, and ultimately Class A Shares, and has outstanding Class K-P units of Evercore LP ("Class K-P Units") which are contingently exchangeable into Class K LP Units, and ultimately Class A Shares, as they are subject to certain performance thresholds being achieved. On March 1, 2022, all of the Class I-P Units converted to Class I LP Units. See Note 14 for further information. For the purposes of calculating diluted net income per share attributable to Evercore Inc. common shareholders, the Company's Class I-P Units and Class K-P Units are included in diluted weighted average Class A Shares outstanding as of the beginning of the period in which all necessary performance conditions have been satisfied. If all necessary performance conditions have not been satisfied by the end of the period, the number of shares that are included in diluted weighted average Class A Shares outstanding is based on the number of shares that would be issuable if the end of the reporting period were the end of the performance period. The shares of Class B common stock have no right to receive dividends or a distribution on liquidation or winding up of the Company. The shares of Class B common stock do not share in the earnings of the Company and no earnings are allocable to such class. Accordingly, basic and diluted net income per share of Class B common stock have not been presented. Note 14 – Share-Based and Other Deferred Compensation LP Units Class I-P Units – In November 2016, the Company awarded 400 Class I-P Units in conjunction with the appointment of the Chief Executive Officer (then Executive Chairman). These Class I-P Units converted into 400 Class I LP Units (which are exchangeable on a one -for-one basis to Class A Shares) upon the achievement of certain market and service conditions on March 1, 2022. Compensation expense related to this award was $ 753 for the three months ended March 31, 2022 . Class K-P Units – The Company has awarded the following Class K-P Units: • In June 2019, the Company awarded 220 Class K-P Units to an employee of the Company. These Class K-P Units convert into a number of Class K LP Units (which are exchangeable on a one -for-one basis to Class A Shares) contingent and based upon the achievement of certain defined benchmark results relating to the employee's business and continued service through February 4, 2023 for the first tranche, which consists of 120 Class K-P Units, and February 4, 2028 for the second tranche, which consists of 100 Class K-P Units. In February 2023, the first tranche of 120 Class K-P Units converted into 193 Class K LP Units upon the achievement of certain performance and service conditions. • In December 2021, the Company awarded 400 Class K-P Units to certain employees of the Company. These Class K-P Units convert into a number of Class K LP Units (which are exchangeable on a one -for-one basis to Class A Shares) contingent and based upon the achievement of certain market conditions, defined benchmark results and continued service through December 31, 2025. As this award contains market, performance and service conditions, the expense for this award will be recognized over the service period of the award and will reflect the fair value of the underlying units as determined at the award's grant date, taking into account the probable outcome of the market condition being achieved, as well as the probable outcome of the performance condition. • In December 2022, the Company awarded 200 Class K-P Units to an employee of the Company. These Class K-P Units are segregated into four tranches of 50 Class K-P Units each. The first three tranches convert into a number of Class K LP Units (which are exchangeable on a one -for-one basis to Class A Shares) contingent and based 24 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) upon the achievement of certain market conditions and continued service through February 28, 2025, 2026 and 2027, respectively, while the final tranche converts into a number of Class K LP Units (which are exchangeable on a one -for-one basis to Class A Shares) contingent and based upon the achievement of certain market conditions, defined benchmark results relating to the employee's business and continued service through February 28, 2028. As this award contains market, performance and service conditions, the expense for this award will be recognized over the service period of the award and will reflect the fair value of the underlying units as determined at the award's grant date, taking into account the probable outcome of the market condition being achieved, as well as the probable outcome of the performance condition. These Class K-P Units in the aggregate may convert into a maximum of 1,293 Class K LP Units, contingent upon the achievement of certain market conditions, defined benchmark results and continued service, as described above. The Company determined the grant date fair value of these awards probable to vest as of March 31, 2023 to be $ 99,519 , related to 896 Class K LP Units which were probable of achievement, and recognizes expense for these units over the respective service periods. Aggregate compensation expense related to the Class K-P Units was $ 6,407 and $ 5,468 for the three months ended March 31, 2023 and 2022, respectively. Class L Interests – In April 2021 and January 2022, the Company's Board of Directors approved the issuance of Class L Interests in Evercore LP ("Class L Interests") to certain of the named executive officers of the Company, pursuant to which the named executive officers received a discretionary distribution of profits from Evercore LP, which was paid in the first quarter of 2022 and 2023, respectively. Distributions pursuant to these interests were made in lieu of any cash incentive compensation payments which may otherwise have been made to the named executive officers of the Company in respect of their service for 2021 and 2022, respectively. Following the distribution, these Class L Interests were cancelled pursuant to their terms. In January 2023, the Company's Board of Directors approved the issuance of Class L Interests to certain of the named executive officers of the Company, pursuant to which the named executive officers may receive a discretionary distribution of profits from Evercore LP, to be paid in the first quarter of 2024. Distributions pursuant to these interests are anticipated to be made in lieu of any cash incentive compensation payments which may otherwise have been made to the named executive officers of the Company in respect of their service for 2023. The Company records expense related to these interests as part of its accrual for incentive compensation within Employee Compensation and Benefits on the Unaudited Condensed Consolidated Statements of Operations. Stock Incentive Plan During 2022, the Company's stockholders approved the Second Amended and Restated 2016 Evercore Inc. Stock Incentive Plan (the "Second Amended 2016 Plan"), which amended the Amended and Restated 2016 Evercore Inc. Stock Incentive Plan. The Second Amended 2016 Plan, among other things, authorizes an additional 6,500 shares of the Company's Class A Shares. The Second Amended 2016 Plan permits the Company to grant to certain employees, directors and consultants incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, RSUs and other awards based on the Company's Class A Shares. The Company intends to use newly-issued Class A Shares to satisfy any awards under the Second Amended 2016 Plan and its predecessor plan. Class A Shares underlying any award granted under the Second Amended 2016 Plan that expire, terminate or are canceled or satisfied for any reason without being settled in stock again become available for awards under the plan. The total shares available to be granted in the future under the Second Amended 2016 Plan was 5,196 as of March 31, 2023. The Company also grants, at its discretion, dividend equivalents, in the form of unvested RSU awards, or deferred cash dividends, concurrently with the payment of dividends to the holders of Class A Shares, on all unvested RSU grants. The dividend equivalents have the same vesting and delivery terms as the underlying RSU award. The Company estimates forfeitures in the aggregate compensation cost to be amortized over the requisite service period of its awards. The Company periodically monitors its estimated forfeiture rate and adjusts its assumptions to the actual occurrence of forfeited awards. A change in estimated forfeitures is recognized through a cumulative adjustment in the period of the change. Equity Grants During the three months ended March 31, 2023, pursuant to the Second Amended 2016 Plan, the Company granted employees 2,393 RSUs that are Service-based Awards. Service-based Awards granted during the three months ended March 31, 25 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 2023 had grant date fair values of $ 129.08 to $ 136.02 per share, with an average value of $ 136.02 per share, for an aggregate fair value of $ 325,447 , and generally vest ratably over four years . During the three months ended March 31, 2023, 2,061 Service-based Awards vested and 34 Service-based Awards were forfeited. Compensation expense related to Service-based Awards was $ 66,488 and $ 60,247 for the three months ended March 31, 2023 and 2022, respectively. Deferred Cash Deferred Cash Compensation Program – The Company's deferred cash compensation program provides participants the ability to elect to receive a portion of their deferred compensation in cash, which is indexed to notional investment portfolios selected by the participant and generally vests ratably over four years and requires payment upon vesting. The Company granted $ 162,748 of deferred cash awards pursuant to the deferred cash compensation program during the first quarter of 2023. Compensation expense related to the Company's deferred cash compensation program was $ 39,762 and $ 30,537 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company expects to pay an aggregate of $ 352,179 related to the Company's deferred cash compensation program at various dates through 2027 and total compensation expense not yet recognized related to these awards was $ 278,795 . The weighted-average period over which this compensation cost is expected to be recognized is 29 months. Amounts due pursuant to this program are expensed over the service period of the award and are reflected in Accrued Compensation and Benefits on the Unaudited Condensed Consolidated Statement of Financial Condition. Other Deferred Cash Awards – In November 2016, the Company granted a restricted cash award in conjunction with the appointment of the Chief Executive Officer (then Executive Chairman) with a payment amount of $ 35,000 , of which $ 11,000 vested on March 1, 2019 and $ 6,000 vested on each of March 1, 2020, 2021, 2022 and 2023, upon the achievement of service conditions. In 2017, the Company granted deferred cash awards of $ 29,500 to certain employees. These awards vested in five equal installments over the period ending June 30, 2022, subject to continued employment. The Company recognized expense for these awards ratably over the vesting period. During the first quarter of 2022, the Company granted $ 19,861 of deferred cash awards to certain employees. These awards vest ratably over one to two years . In addition, the Company periodically grants other deferred cash awards to certain employees. The Company recognizes expense for these awards ratably over the vesting period. Compensation expense related to other deferred cash awards was $ 4,328 and $ 4,820 for the three months ended March 31, 2023 and 2022, respectively. Long-term Incentive Plan The Company's Long-term Incentive Plan provides for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers of the Company, who exceed defined benchmark results over four-year performance periods beginning January 1, 2017 (the "2017 Long-term Incentive Plan", which ended on December 31, 2020) and January 1, 2021 (the "2021 Long-term Incentive Plan", which was approved by the Company's Board of Directors in April 2021 and modified in July 2021). The vesting period for the 2017 Long-term Incentive Plan ended on March 15, 2023 and in conjunction with this plan, the Company distributed cash payments of $ 48,331 in the three months ended March 31, 2023, $ 3,940 in the three months ended March 31, 2022 and $ 92,938 in the year ended December 31, 2021 (including the first cash distribution made in March 2021 of $ 48,461 , and an additional cash distribution made in December 2021 of $ 44,477 , related to the acceleration of certain amounts due in the first quarter of 2022). Amounts due pursuant to the 2021 Long-term Incentive Plan of $ 100,855 are included within Other Long-Term Liabilities on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023 and are due to be paid in cash or Class A Shares, at the Company's discretion, in the first quarter of 2025, 2026 and 2027, subject to employment at the time of payment. The Company periodically assesses the probability of the benchmarks being achieved and expenses the probable payout over the requisite service period of the award. The Company recorded compensation expense related to the 2017 Long-term Incentive Plan and 2021 Long-term Incentive Plan of $ 12,640 and $ 15,285 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the total remaining expense to be recognized for the 2021 Long-term Incentive Plan over the future vesting period ending March 15, 2027, based on the current anticipated probable payout for the plan, is $ 149,280 . 26 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Employee Loans Receivable Periodically, the Company provides new and existing employees with cash payments in the form of loans and/or other cash awards which are subject to ratable vesting terms with service requirements ranging from one to five years and in certain circumstances, subject to the achievement of performance requirements. Generally, these awards, based on the terms, include a requirement of either full or partial repayment by the employee if the service or other requirements of the agreements with the Company are not achieved. In circumstances where the employee meets the Company's minimum credit standards, the Company amortizes these awards to compensation expense over the relevant service period, which is generally the period they are subject to forfeiture. Compensation expense related to these awards was $ 4,646 and $ 5,452 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the total compensation cost not yet recognized related to these awards was $ 34,274 . Separation and Transition Benefits The following table presents the change in the Company's liability related to separation benefits, stay arrangements and accelerated deferred cash compensation (together, the "Termination Costs") for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Beginning Balance $ 4,997 $ 675 Termination Costs Incurred 1,474 219 Cash Benefits Paid ( 5,332 ) ( 564 ) Non-Cash Charges — ( 115 ) Ending Balance $ 1,139 $ 215 In addition to the above Termination Costs incurred, for the three months ended March 31, 2023 and 2022, the Company also incurred expenses related to the acceleration of the amortization of share-based payments previously granted to affected employees of $ 564 and $ 414 , respectively, (related to 6 and 7 RSUs, respectively) recorded in Employee Compensation and Benefits, within the Investment Banking & Equities segment, on the Company's Unaudited Condensed Consolidated Statements of Operations. Note 15 – Commitments and Contingencies For a further discussion of the Company's commitments, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Private Equity – As of March 31, 2023, the Company had unfunded commitments for capital contributions of $ 2,592 to private equity funds. These commitments will be funded as required through the end of each private equity fund's investment period, subject to certain conditions. Such commitments are satisfied in cash and are generally required to be made as investment opportunities are consummated by the private equity funds. Lines of Credit – Evercore Partners Services East L.L.C. ("East") entered into a loan agreement with PNC Bank, National Association ("PNC") for a revolving credit facility in an aggregate principal amount, as amended on October 29, 2021, (the "Existing PNC Facility"), of up to $ 30,000 , to be used for working capital and other corporate activities. This facility is secured by East's accounts receivable and the proceeds therefrom, as well as certain assets of EGL, including certain of EGL's accounts receivable. In addition, the agreement contains certain reporting covenants, as well as certain debt covenants that prohibit East and the Company from incurring other indebtedness, subject to specified exceptions. The Company and its consolidated subsidiaries were in compliance with these covenants as of March 31, 2023. The interest rate provisions are LIBOR (or an applicable benchmark replacement) plus 150 basis points and the maturity date is October 28, 2023. There were no drawings under this facility at March 31, 2023. East entered into an additional loan agreement with PNC for a revolving credit facility in an aggregate principal amount, as amended on October 29, 2021, of up to $ 55,000 , to be used for working capital and other corporate activities. This facility is unsecured. In addition, the agreement contains certain reporting requirements and debt covenants consistent with the Existing PNC Facility. The Company and its consolidated subsidiaries were in compliance with these covenants as of March 31, 2023. 27 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Drawings under this facility bear interest at LIBOR (or an applicable benchmark replacement) plus 180 basis points and the maturity date is October 28, 2023. East is only permitted to borrow under this facility if there is no undrawn availability under the Existing PNC Facility and must repay indebtedness under this facility prior to repaying indebtedness under the Existing PNC Facility. There were no drawings under this facility at March 31, 2023. EGL entered into a subordinated revolving credit facility with PNC in an aggregate principal amount, as amended on October 31, 2022, of up to $ 75,000 , to be used as needed in support of capital requirements from time to time of EGL. This facility is unsecured and is guaranteed by Evercore LP and other affiliates, pursuant to a guaranty agreement, which provides for certain reporting requirements and debt covenants consistent with the Existing PNC Facility. The interest rate provisions are Daily SOFR plus 191 basis points and the maturity date is October 27, 2024. There were no drawings under this facility at March 31, 2023. In addition, EGL's clearing broker provides temporary funding for the settlement of securities transactions. Other Commitments – The Company has a commitment for contingent consideration related to the purchase of the outstanding Class R Interests of Private Capital Advisory L.P. from employees of the RECA business in 2021. The Company’s consideration for this transaction included contingent cash consideration which is due to be settled in 2024. The Company paid $ 715 of this contingent cash consideration during the three months ended March 31, 2023. The fair value of the remaining contingent consideration is $ 5,122 as of March 31, 2023, which is included within Payable to Employees and Related Parties on the Company's Unaudited Condensed Consolidated Statements of Financial Condition, and $ 6,119 as of December 31, 2022, $ 1,083 of which was included within Other Current Liabilities and the remainder of which was included within Other Long-term Liabilities on the Company's Unaudited Condensed Consolidated Statements of Financial Condition. The amount of contingent consideration to be paid is dependent on the RECA business achieving certain revenue performance targets. See Note 12 for further information. Restricted Cash – The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Unaudited Condensed Consolidated Statements of Financial Condition that sum to the total of amounts shown in the Unaudited Condensed Consolidated Statements of Cash Flows: March 31, 2023 2022 Cash and Cash Equivalents $ 579,190 $ 454,768 Restricted Cash included in Other Assets 8,935 9,126 Total Cash, Cash Equivalents and Restricted Cash shown in the Statement of Cash Flows $ 588,125 $ 463,894 Restricted Cash included in Other Assets on the Unaudited Condensed Consolidated Statements of Financial Condition primarily represents letters of credit which are secured by cash as collateral for the lease of office space and security deposits for certain equipment. The restrictions will lapse when the leases end. Self-Funded Medical Insurance Program – Effective January 1, 2023, the Company changed its medical insurance plan in the U.S. from a fully insured to a self-funded plan. The Company is liable for the funding of claims under the self-funded plan. The Company also maintains stop-loss insurance for its medical plan to provide coverage for claims over a defined financial threshold. The Company recorded a liability of $ 3,530 during the quarter ended March 31, 2023 related to the estimated present value of incurred but not reported claims, which is included within Accrued Compensation and Benefits on the Unaudited Condensed Consolidated Statement of Financial Condition. Foreign Exchange – Periodically, the Company enters into foreign currency exchange forward contracts as an economic hedge against exchange rate risk for foreign currency denominated accounts receivable or other commitments. The Company entered into a foreign currency exchange forward contract during the first quarter of 2023 to buy 30,000 British Pounds sterling for $ 36,903 , which will settle during the third quarter of 2023. The contract is recorded at its fair value of $ 205 as of March 31, 2023, and is included within Other Current Assets on the Unaudited Condensed Consolidated Statement of Financial Condition. Contingencies In the normal course of business, from time to time, the Company and its affiliates are involved in judicial or regulatory proceedings, arbitration or mediation concerning matters arising in connection with the conduct of its businesses, including 28 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) contractual and employment matters. In addition, United Kingdom, German, Hong Kong, Singapore, Canadian, Dubai and United States government agencies and self-regulatory organizations, as well as state securities commissions in the United States, conduct periodic examinations and initiate administrative proceedings regarding the Company's business, including, among other matters, accounting and operational matters, that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, investment advisor, or its directors, officers or employees. In view of the inherent difficulty of determining whether any loss in connection with such matters is probable and whether the amount of such loss can be reasonably estimated, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, the Company cannot estimate the amount of such loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that it is not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company. Provisions for losses are established in accordance with ASC 450, "Contingencies" ("ASC 450") when warranted. Once established, such provisions are adjusted when there is more information available or when an event occurs requiring a change. Note 16 – Regulatory Authorities EGL is a U.S. registered broker-dealer and is subject to the net capital requirements of Rule 15c3-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under the Alternative Net Capital Requirement, EGL's minimum net capital requirement is $ 250 . EGL's regulatory net capital as of March 31, 2023 and December 31, 2022 was $ 465,198 and $ 274,131 , respectively, which exceeded the minimum net capital requirement by $ 464,948 and $ 273,881 , respectively. Certain other non-U.S. subsidiaries are subject to various securities and banking regulations and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. These subsidiaries are in excess of their local capital adequacy requirements at March 31, 2023. Evercore Trust Company, N.A. ("ETC"), which is limited to fiduciary activities, is regulated by the Office of the Comptroller of the Currency ("OCC") and is a member bank of the Federal Reserve System. The Company, Evercore LP and ETC are subject to written agreements with the OCC that, among other things, require the Company and Evercore LP to maintain at least $ 5,000 in Tier 1 capital in ETC (or such other amount as the OCC may require) and maintain liquid assets in ETC in an amount at least equal to the greater of $ 3,500 or 180 days coverage of ETC's operating expenses. The Company was in compliance with the aforementioned agreements as of March 31, 2023. Note 17 – Income Taxes The Company's Provision for Income Taxes was $ 16,131 and $ 34,782 for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate was 14.9 % and 16.4 % for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate reflects the recognition of net excess tax benefits associated with appreciation in the Company's share price upon vesting of employee share-based awards above the original grant price of $ 13,731 and $ 19,036 for the three months ended March 31, 2023 and 2022, respectively, which resulted in a reduction in the effective tax rate of 12.7 and 9.0 percentage points for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate for the three months ended March 31, 2023 and 2022 also reflects the effect of certain nondeductible expenses, including expenses related to Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments. Additionally, the Company is subject to the income tax effects associated with the global intangible low-taxed income ("GILTI") provisions in the period incurred. For the three months ended March 31, 2023 and 2022, no additional income tax expense associated with the GILTI provisions has been recognized and it is not expected to be material to the Company's effective tax rate for the year. The Company recorded an increase in deferred tax assets of $ 1,022 associated with changes in Unrealized Gain (Loss) on Securities and Investments and a decrease of $ 1,809 associated with changes in Foreign Currency Translation Adjustment Gain (Loss), in Accumulated Other Comprehensive Income (Loss) for the three months ended March 31, 2023. The Company recorded a decrease in deferred tax assets of $ 1 associated with changes in Unrealized Gain (Loss) on Securities and Investments and an increase of $ 965 associated with changes in Foreign Currency Translation Adjustment Gain (Loss), in Accumulated Other Comprehensive Income (Loss) for the three months ended March 31, 2022. The Company classifies interest relating to tax matters and tax penalties as a component of income tax expense in its Unaudited Condensed Consolidated Statements of Operations. As of March 31, 2023, there were $ 359 of unrecognized tax 29 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) benefits that, if recognized, $ 292 would affect the effective tax rate. Related to the unrecognized tax benefits, the Company accrued interest and penalties of $ 15 and $ 1 , respectively, during the three months ended March 31, 2023. Note 18 – Segment Operating Results Business Segments – The Company's business results are categorized into the following two segments: Investment Banking & Equities and Investment Management. The Investment Banking & Equities segment includes providing advice to clients on significant 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. The Investment Management segment includes Wealth Management and interests in private equity funds which are not managed by the Company. The Company's segment information for the three months ended March 31, 2023 and 2022 is prepared using the following methodology: • Revenue, expenses and income (loss) from equity method investments directly associated with each segment are included in determining pre-tax income. • Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other performance and time-based factors. • Segment assets are based on those directly associated with each segment, or for certain assets shared across segments, those assets are allocated based on the most relevant measures applicable, including headcount and other factors. • Investment gains and losses, interest income and interest expense are allocated between the segments based on the segment in which the underlying asset or liability is held. Other Revenue, net, included in each segment's Net Revenues includes the following: • Interest income, including accretion, and income (losses) on investment securities, including the Company's investment funds which are used as an economic hedge against the Company's deferred cash compensation program, certificates of deposit, cash and cash equivalents and long-term accounts receivable • A gain on the sale of a portion of the Company's interests in ABS in the first quarter of 2022. See Note 7 for further information • Gains (losses) resulting from foreign currency exchange rate fluctuations and foreign currency exchange forward contracts • Realized and unrealized gains and losses on interests in private equity funds which are not managed by the Company • Interest expense associated with the Company’s Notes Payable and lines of credit • Adjustments to amounts due pursuant to the Company’s tax receivable agreement, subsequent to its initial establishment, related to changes in enacted tax rates Each segment's Operating Expenses include: a) employee compensation and benefits expenses that are incurred directly in support of the segment and b) non-compensation expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, execution, clearing and custody fees, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, legal, technology, human capital, facilities management and senior management activities. Other Expenses includes Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of the Company's operations in Mexico. The Company evaluates segment results based on net revenues and pre-tax income, both including and excluding the impact of the Other Expenses. 30 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) No client accounted for more than 10% of the Company's Consolidated Net Revenues for the three months ended March 31, 2023 and 2022. The following information presents each segment's contribution. For the Three Months Ended March 31, 2023 2022 Investment Banking & Equities Net Revenues (1) $ 554,811 $ 704,301 Operating Expenses 449,080 500,572 Other Expenses 2,921 — Operating Income 102,810 203,729 Income from Equity Method Investments 71 374 Pre-Tax Income $ 102,881 $ 204,103 Identifiable Segment Assets $ 2,608,350 $ 2,787,619 Investment Management Net Revenues (1) $ 17,332 $ 18,553 Operating Expenses 13,238 12,918 Operating Income 4,094 5,635 Income from Equity Method Investments 1,397 2,138 Pre-Tax Income $ 5,491 $ 7,773 Identifiable Segment Assets $ 142,122 $ 150,745 Total Net Revenues (1) $ 572,143 $ 722,854 Operating Expenses 462,318 513,490 Other Expenses 2,921 — Operating Income 106,904 209,364 Income from Equity Method Investments 1,468 2,512 Pre-Tax Income $ 108,372 $ 211,876 Identifiable Segment Assets $ 2,750,472 $ 2,938,364 (1) Net Revenues include Other Revenue, net, allocated to the segments as follows: For the Three Months Ended March 31, 2023 2022 Investment Banking & Equities (A) $ 21,301 $ ( 7,467 ) Investment Management 1,374 1,438 Total Other Revenue, net $ 22,675 $ ( 6,029 ) (A) Other Revenue, net, from the Investment Banking & Equities segment includes interest expense on the Notes Payable and lines of credit of $ 4,171 and $ 4,250 for the three months ended March 31, 2023 and 2022, respectively. Geographic Information – The Company manages its business based on the profitability of the enterprise as a whole. The Company's revenues were derived from clients located and managed in the following geographical areas: 31 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) For the Three Months Ended March 31, 2023 2022 Net Revenues: (1) United States $ 395,188 $ 610,731 Europe and Other 152,527 112,065 Latin America 1,753 6,087 Total $ 549,468 $ 728,883 (1) Excludes Other Revenue, Including Interest and Investments, and Interest Expense. The Company's total assets are located in the following geographical areas: March 31, 2023 December 31, 2022 Total Assets: United States $ 2,195,361 $ 2,902,153 Europe and Other 555,111 718,770 Total $ 2,750,472 $ 3,620,923 32 Table of Contents