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Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-05 · 191 added, 132 removed, 397 unchanged (45% of the section changed)

57 unchanged sentences

We maintain compensation programs, including base salary, cash, deferred cash and equity bonus awards and benefits programs and manage compensation to estimates of competitive levels based on market conditions and performance.

Our level of compensation, including deferred compensation, reflects our plan to maintain competitive compensation levels to retain key personnel, and it reflects the impact of newly-hired senior professionals, including related grants of equity and other awards,

which are generally valued at their grant date and recorded in employee compensation and benefits expense over the requisite service period, subject to acceleration in certain cases.

Our level of compensation, including deferred compensation, reflects our plan to maintain competitive compensation levels to retain key personnel, and it reflects the impact of newly-hired senior professionals upon their start date, including related grants of equity

and other awards, which are generally valued at their grant date and recorded in employee compensation and benefits expense over the requisite service period, subject to acceleration in certain cases.

Increasing the number of high-caliber, experienced senior level employees is critical to our growth efforts.

In our advisory businesses, these hires generally do not begin to generate significant revenue in the year they are hired.

In our advisory businesses, these hires, which begin their service throughout any given year, generally do not begin to generate significant revenue in the year they are hired.

Our annual compensation program includes share-based compensation awards and deferred cash awards as a component of the annual bonus awards for certain employees.

These awards, the amount of which is a function of performance and market conditions, are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each year;

These awards, the amount granted of which is a function of performance and market conditions, are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each year;

accordingly, the expense is generally amortized over the stated vesting period, subject to retirement eligibility.

4 unchanged sentences

A change in estimated forfeitures is recognized through a cumulative adjustment in the period of the change.

In April 2021 and January 2022, our Board of Directors approved the issuance of Class L Interests to certain of our named executive officers, 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 our named executive officers 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, our Board of Directors approved the issuance of Class L Interests to certain of our named executive officers, 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 our named executive officers in respect of their service for 2023.

In April 2021, January 2022 and January 2023, our Board of Directors approved the issuance of Class L Interests to certain of our named executive officers, pursuant to which the named executive officers receive a discretionary distribution of profits from Evercore LP, paid in the first quarters of 2022, 2023 and 2024, respectively.

Distributions pursuant to these interests are made in lieu of any cash incentive compensation payments which may otherwise have been made to our named executive officers in respect of their service for 2021, 2022 and 2023, respectively.

Following the distribution in 2021 and 2022, the Class L Interests were cancelled pursuant to their terms.

We record expense related to these distributions in Employee Compensation and Benefits on the Unaudited Condensed Consolidated Statements of Operations and reflect accrued liabilities in Accrued Compensation and Benefits on the Unaudited Condensed Consolidated Statements of Financial Condition.

Our Long-term Incentive Plan provides for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers, who exceed defined benchmark results over four-year performance periods beginning January 1, 2017 (which ended on December 31, 2020) and January 1, 2021.

Our Long-term Incentive Plans provide for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers, who exceed defined benchmark results over four-year performance periods beginning January 1, 2017 (which ended on December 31, 2020), pursuant to the 2017 Long-term Incentive Plan, and January 1, 2021, pursuant to the 2021 Long-term Incentive Plan.

The vesting period for the 2017 Long-term Incentive Plan ended on March 15, 2023 and in conjunction with this plan we made cash distributions in 2023, 2022 and 2021.

10 unchanged sentences

Other Expenses

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 our operations in Mexico.

Other Expenses relate to Special Charges, Including Business Realignment Costs, which include the following:

• 2023 – Other Expenses for the six months ended June 30, 2023 include expenses related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico

• 2022 – Other Expenses for the three and six months ended June 30, 2022 include expenses related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the wind-down of our operations in Mexico

Income from Equity Method Investments

16 unchanged sentences

Results of Operations

The following is a discussion of our results of operations for the three months ended March 31, 2023 and 2022.

The following is a discussion of our results of operations for the three and six months ended June 30, 2023 and 2022.

For a more detailed discussion of the factors that affected the revenue and operating expenses of our Investment Banking & Equities and Investment Management business segments in these periods, see the discussion in "Business Segments" below.

For the Three Months Ended March 31,

2023 2022 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 Change 2023 2022 Change

(dollars and share amounts in thousands, except per share data)

4 unchanged sentences

Asset Management and Administration Fees 16,575 15,968 4 % 32,533 33,083 (2 %)

Other Revenue, Including Interest and Investments 26,846 (1,779) NM

Other Revenue, Including Interest and Investments 24,221 (23,039) NM 51,067 (24,818) NM

Total Revenues 503,600 635,175 (21 %) 1,079,914 1,362,279 (21 %)

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Common Shareholders $ 0.95 $ 2.33 (59 %) $ 3.02 $ 6.13 (51 %)

As of March 31, 2023 and 2022, we employed approximately 2,135 and 2,000 people, respectively.

Three Months Ended March 31, 2023 versus March 31, 2022

As of June 30, 2023 and 2022, we employed approximately 2,245 and 2,135 people, respectively.

Three Months Ended June 30, 2023 versus June 30, 2022

Net Income Attributable to Evercore Inc.

was $83.4 million for the three months ended March 31, 2023, a decrease of $74.6 million, or 47%, compared to $158.0 million for the three months ended March 31, 2022.

was $37.2 million for the three months ended June 30, 2023, a decrease of $58.4 million, or 61%, compared to $95.6 million for the three months ended June 30, 2022.

The changes in our operating results during these periods are described below.

Net Revenues were $572.1 million for the three months ended March 31, 2023, a decrease of $150.7 million, or 21%, versus Net Revenues of $722.9 million for the three months ended March 31, 2022.

Advisory Fees decreased $162.0 million, or 26%, Underwriting Fees decreased $13.4 million, or 37%, and Commissions and Related Revenue decreased $2.8 million, or 6%, compared to the three months ended March 31, 2022.

Asset Management and Administration Fees decreased $1.2 million, or 7%, compared to the three months ended March 31, 2022.

Net Revenues were $499.4 million for the three months ended June 30, 2023, a decrease of $131.5 million, or 21%, versus Net Revenues of $630.9 million for the three months ended June 30, 2022.

Advisory Fees decreased $201.7 million, or 35%, Underwriting Fees increased $24.7 million, or 183%, and Commissions and Related Revenue decreased $2.4 million, or 5%, compared to the three months ended June 30, 2022.

Asset Management and Administration Fees increased $0.6 million, or 4%,

compared to the three months ended June 30, 2022.

See "Business Segments" and "Liquidity and Capital Resources" below for further information.

Ot her Revenue, Including Interest and Investments, increased $28.6 million compared to the three months ended March 31, 2022, primarily reflecting a shift from losses of $5.2 million in the first quarter of 2022 to gains of $9.4 million in the first quarter of 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

Ot her Revenue, Including Interest and Investments, increased $47.3 million compared to the three months ended June 30, 2022, primarily reflecting a shift from losses of $26.4 million in the second quarter of 2022 to gains of $12.2 million in the second quarter of 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

treasury bills.

The investment funds portfolio is used as an economic hedge against our deferred cash compensation program.

Total Operating Expenses were $441.7 million for the three months ended June 30, 2023, compared to $484.2 million for the three months ended June 30, 2022, a decrease of $42.5 million, or 9%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $338.4 million for the three months ended June 30, 2023, a decrease of $50.6 million, or 13%, versus expense of $389.0 million for the three months ended June 30, 2022.

The decrease in the amount of compensation recognized for the three months ended June 30, 2023 principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries.

Non-compensation expenses, as a component of Operating Expenses, were $103.3 million for the three months ended June 30, 2023, an increase of $8.1 million, or 9%, versus $95.2 million for the three months ended June 30, 2022.

The increase was primarily driven by an increase in communications and information services, reflecting higher license fees and research expenses, as well as an increase in travel and related expenses, which was impacted by both increased activity and pricing, and charitable contributions made to the Evercore Foundation in the second quarter of 2023.

Non-Compensation expenses per employee were approximately $47.2 thousand for the three months ended June 30, 2023, versus $46.2 thousand for the three months ended June 30, 2022.

Total Other Expenses of $0.5 million for the three months ended June 30, 2022 reflected Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the wind-down of our operations in Mexico.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 67.8% for the three months ended June 30, 2023, compared to 61.7% for the three months ended June 30, 2022.

Income from Equity Method Investments was $1.5 million for the three months ended June 30, 2023, compared to $2.3 million for the three months ended June 30, 2022, primarily driven by lower income from Atalanta Sosnoff in the second quarter of 2023.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

The provision for income taxes for the three months ended June 30, 2023 was $17.1 million, which reflected an effective tax rate of 28.9%.

The provision for income taxes for the three months ended June 30, 2022 was $38.6 million, which reflected an effective tax rate of 26.0%.

The provision for income taxes for the three months ended June 30, 2023 and 2022 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $0.1 million and $0.7 million, respectively.

Net Income Attributable to Noncontrolling Interest was $5.0 million for the three months ended June 30, 2023, compared to $14.3 million for the three months ended June 30, 2022.

The decrease in Net Income Attributable to Noncontrolling Interest reflects lower income at Evercore LP during the three months ended June 30, 2023.

See Note 12 to our unaudited condensed consolidated financial statements for further information.

Six Months Ended June 30, 2023 versus June 30, 2022

Net Income Attributable to Evercore Inc.

was $120.6 million for the six months ended June 30, 2023, a decrease of $133.1 million, or 52%, compared to $253.6 million for the six months ended June 30, 2022.

The changes in our operating results during these periods are described below.

Net Revenues were $1.07 billion for the six months ended June 30, 2023, a decrease of $282.2 million, or 21%, versus Net Revenues of $1.35 billion for the six months ended June 30, 2022.

Advisory Fees decreased $363.7 million, or 30%, Underwriting Fees increased $11.3 million, or 23%, and Commissions and Related Revenue decreased $5.3 million, or 5%, compared to the six months ended June 30, 2022.

Asset Management and Administration Fees decreased $0.6 million, or 2%, compared to the six months ended June 30, 2022.

See "Business Segments" and "Liquidity and Capital Resources" below for further information.

Ot her Revenue, Including Interest and Investments, increased $75.9 million compared to the six months ended June 30, 2022, primarily reflecting a shift from losses of $31.5 million in 2022 to gains of $22.3 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

treasury bills.

The increase from 2022 was partially offset by a $1.3 million gain on the sale of a portion of our interests in ABS that occurred during the first quarter of 2022.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

Total Operating Expenses were $462.3 million for the three months ended March 31, 2023, compared to $513.5 million for the three months ended March 31, 2022, a decrease of $51.2 million, or 10%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $366.9 million for the three months ended March 31, 2023, a decrease of $62.8 million, or 15%, versus expense of $429.7 million for the three months ended March 31, 2022.

The decrease in the amount of compensation recognized for the three months ended March 31, 2023 principally reflects a lower accrual for incentive compensation, partially offset by higher base salaries and higher amortization of prior period deferred compensation awards.

Non-compensation expenses, as a component of Operating Expenses, were $95.4 million for the three months ended March 31, 2023, an increase of $11.6 million, or 14%, versus $83.8 million for the three months ended March 31, 2022.

The increase was primarily driven by an increase in travel and related expenses and an increase in bad debt expense.

Non-Compensation expenses per employee were approximately $44.9 thousand for the three months ended March 31, 2023, versus $42.4 thousand for the three months ended March 31, 2022.

Total Other Expenses of $2.9 million for the three months ended March 31, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 64.1% for the three months ended March 31, 2023, compared to 59.4% for the three months ended March 31, 2022.

Income from Equity Method Investments was $1.5 million for the three months ended March 31, 2023, compared to $2.5 million for the three months ended March 31, 2022, reflecting lower contributions from all of our equity method investments in the first quarter of 2023.

Total Operating Expenses were $904.0 million for the six months ended June 30, 2023, compared to $997.7 million for the six months ended June 30, 2022, a decrease of $93.7 million, or 9%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $705.2 million for the six months ended June 30, 2023, a decrease of $113.5 million, or 14%, versus expense of $818.7 million for the six months ended June 30, 2022.

The decrease in the amount of compensation recognized for the six months ended June 30, 2023 principally reflects a lower accrual for incentive compensation, partially offset by higher amortization of prior period deferred compensation awards and higher base salaries.

Non-compensation expenses, as a component of Operating Expenses, were $198.8 million for the six months ended June 30, 2023, an increase of $19.8 million, or 11%, versus $179.0 million for the six months ended June 30, 2022.

The increase was primarily driven by increases in travel and related expenses, which was impacted by both increased activity and pricing, and bad debt expense, as well as charitable contributions made to the Evercore Foundation in 2023.

Non-Compensation expenses per employee were approximately $91.8 thousand for the six months ended June 30, 2023, versus $88.2 thousand for the six months ended June 30, 2022.

Total Other Expenses of $2.9 million for the six months ended June 30, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico.

Total Other Expenses of $0.5 million for the six months ended June 30, 2022 reflected Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the wind-down of our operations in Mexico.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 65.8% for the six months ended June 30, 2023, compared to 60.5% for the six months ended June 30, 2022.

Income from Equity Method Investments was $3.0 million for the six months ended June 30, 2023, compared to $4.8 million for the six months ended June 30, 2022, reflecting lower contributions from all of our equity method investments in 2023.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

The provision for income taxes for the three months ended March 31, 2023 was $16.1 million, which reflected an effective tax rate of 14.9%.

The provision for income taxes for the three months ended March 31, 2022 was $34.8 million, which reflected an effective tax rate of 16.4%.

The provision for income taxes for the three months ended March 31, 2023 and 2022 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $13.7 million and $19.0 million, respectively.

Net Income Attributable to Noncontrolling Interest was $8.9 million for the three months ended March 31, 2023, compared to $19.1 million for the three months ended March 31, 2022.

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income at Evercore LP during the three months ended March 31, 2023.

The provision for income taxes for the six months ended June 30, 2023 was $33.2 million, which reflected an effective tax rate of 19.8%.

The provision for income taxes for the six months ended June 30, 2022 was $73.3 million, which reflected an effective tax rate of 20.4%.

The provision for income taxes for the six months ended June 30, 2023 and 2022 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $13.8 million and $19.8 million, respectively, which resulted in a reduction in the effective tax rate of 8.2 and 5.5 percentage points for the six months ended June 30, 2023 and 2022, respectively.

Net Income Attributable to Noncontrolling Interest was $13.8 million for the six months ended June 30, 2023, compared to $33.3 million for the six months ended June 30, 2022.

The decrease in Net Income Attributable to Noncontrolling Interest reflects lower income at Evercore LP during the six months ended June 30, 2023.

See Note 12 to our unaudited condensed consolidated financial statements for further information.

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The following table summarizes the operating results of the Investment Banking & Equities segment.

For the Three Months Ended March 31,

2023 2022 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 Change 2023 2022 Change

(dollars in thousands)

4 unchanged sentences

Other Revenue, net (1)

21,301 (7,467) NM

19,442 (26,996) NM 40,743 (34,463) NM

Net Revenues 482,246 615,250 (22 %) 1,037,057 1,319,551 (21 %)

6 unchanged sentences

Pre-Tax Income $ 54,045 $ 144,342 (63 %) $ 156,926 $ 348,445 (55 %)

(1) Includes interest expense on Notes Payable and lines of credit of $4.2 million and $4.3 million for the three months ended March 31, 2023 and 2022, respectively.

(1) Includes interest expense on Notes Payable and lines of credit of $4.2 million and $8.4 million for the three and six months ended June 30, 2023, respectively, and $4.3 million and $8.5 million for the three and six months ended June 30, 2022, respectively.

(2) Equity in Luminis and Seneca Evercore is classified within Income from Equity Method Investments.

For the three months ended March 31, 2023, the dollar value of North American announced and completed M&A activity decreased 45% and 39%, respectively, compared to the three months ended March 31, 2022, and the dollar value of Global announced and completed M&A activity decreased 43% and 49%, respectively, compared to the three months ended March 31, 2022.

For the three months ended March 31, 2023, the dollar value of North American and Global completed M&A activity over $100 million decreased 40% and 50%, respectively, compared to the three months ended March 31, 2022.

For the Three Months Ended March 31,

2023 2022 Change

For the three months ended June 30, 2023, the dollar value of North American announced and completed M&A activity decreased 21% and 41%, respectively, compared to the three months ended June 30, 2022, and the dollar value of Global announced and completed M&A activity decreased 29% and 37%, respectively, compared to the three months ended June 30, 2022.

For the three months ended June 30, 2023, the dollar value of North American and Global completed M&A activity over $100 million decreased 43% and 38%, respectively, compared to the three months ended June 30, 2022.

For the six months ended June 30, 2023, the dollar value of North American announced and completed M&A activity decreased 33% and 40%, respectively, compared to the six months ended June 30, 2022, and the dollar value of Global announced and completed M&A activity decreased 36% and 43%, respectively, compared to the six months ended June 30, 2022.

For the six months ended June 30, 2023, the dollar value of North American and Global completed M&A activity over $100 million decreased 41% and 45%, respectively, compared to the six months ended June 30, 2022.

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 Change 2023 2022 Change

Industry Statistics ($ in billions) (1)

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Total Number of Fees From Advisory and Underwriting Client Transactions (2)

236 217 9 % 360 354 2 %

Total Number of Fees of at Least $1 million from Advisory and Underwriting Client Transactions (2)

77 100 (23 %) 155 186 (17 %)

Total Number of Underwriting Transactions (2)

15 7 114 % 29 21 38 %

Total Number of Underwriting Transactions as a Bookrunner (2)

Refinitiv April 10, 2023

14 5 180 % 26 18 44 %

Refinitiv July 11, 2023

(2) Includes Equity and Debt Underwriting Transactions.

Investment Banking & Equities Results of Operations

Three Months Ended March 31, 2023 versus March 31, 2022

Net Revenues were $554.8 million for the three months ended March 31, 2023 , compared to $704.3 million for the three months ended March 31, 2022 , a decrease of $149.5 million, or 21%.

The decrease in revenues for the three months ended March 31, 2023 was primarily driven by a decrease of $162.0 million, or 26%, in Advisory Fees, reflecting a decline in revenue earned from large transactions during the first quarter of 2023, as well as a decrease in the number of Advisory fees earned.

Underwriting Fees decreased $13.4 million, or 37%, compared to the three months ended March 31, 2022, reflecting a decrease in average fee size of the transactions we participated in due to the decline in overall market issuances.

Commissions and Related Revenue decreased $2.8 million, or 6%, compared to the three months ended March 31, 2022 , primarily reflecting lower trading revenues.

Other Revenue, net, increased $28.8 million compared to the three months ended March 31, 2022 , primarily reflecting a shift from losses of $5.2 million in the first quarter of 2022 to gains of $9.4 million in the first quarter of 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

Three Months Ended June 30, 2023 versus June 30, 2022

Net Revenues were $482.2 million for the three months ended June 30, 2023 , compared to $615.3 million for the three months ended June 30, 2022 , a decrease of $133.0 million, or 22%.

The decrease in revenues for the three months ended June 30, 2023 was primarily driven by a decrease of $201.7 million, or 35%, in Advisory Fees, primarily reflecting a decline in revenue earned from large transactions during the second quarter of 2023.

Underwriting Fees increased $24.7 million, or 183%, compared to the three months ended June 30, 2022, reflecting an increase in the number of transactions we participated in due to the increase in overall market issuances.

Commissions and Related Revenue decreased $2.4 million, or 5%, compared to the three months ended June 30, 2022 , primarily reflecting lower trading revenues .

Other Revenue, net, increased $46.4 million compared to the three months ended June 30, 2022 , primarily reflecting a shift from losses of $26.4 million in the second quarter of 2022 to gains of $12.2 million in the second quarter of 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

treasury bills.

The investment funds portfolio is used as an economic hedge against our deferred cash compensation program .

Operating Expenses were $449.1 million for the three months ended March 31, 2023 , compared to $500.6 million for the three months ended March 31, 2022 , a decrease of $51.5 million, or 10%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $357.1 million for the three months ended March 31, 2023 , compared to $419.9 million for the three months ended March 31, 2022 , a decrease of $62.8 million , or 15% .

Non-compensation expenses, as a component of Operating Expenses, were $92.0 million for the three months ended March 31, 2023, compared to $80.7 million for the three months ended March 31, 2022, an increase of $11.3 million , or 14% .

Non-compensation operating expenses increased from the prior year period, primarily driven by an increase in travel and related expenses and an increase in bad debt expense.

Other Expenses of $2.9 million for the three months ended March 31, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico .

Operating Expenses were $428.3 million for the three months ended June 30, 2023 , compared to $470.5 million for the three months ended June 30, 2022 , a decrease of $42.2 million, or 9%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $328.5 million for the three months ended June 30, 2023 , compared to $378.8 million for the three months ended June 30, 2022 , a decrease of $50.3 million , or 13% .

Non-compensation expenses, as a component of Operating Expenses, were $99.8 million for the three months ended June 30, 2023, compared to $91.7 million for the three months ended June 30, 2022, an increase of $8.1 million , or 9% .

Non-compensation operating expenses increased from the prior year period, primarily driven by an increase in communications and information services, reflecting higher license fees and research expenses, as well as an increase in travel and related expenses, which was impacted by both increased activity and pricing, and charitable contributions made to the Evercore Foundation in the second quarter of 2023.

Six Months Ended June 30, 2023 versus June 30, 2022

Net Revenues were $1.04 billion for the six months ended June 30, 2023, compared to $1.32 billion for the six months ended June 30, 2022 , a decrease of $282.5 million, or 21%.

The decrease in revenues for the six months ended June 30, 2023 was primarily driven by a decrease of $363.7 million, or 30%, in Advisory Fees, primarily reflecting a decline in revenue earned from large transactions during 2023.

Underwriting Fees increased $11.3 million, or 23%, compared to the six months ended June 30, 2022, reflecting an increase in the number of transactions we participated in due to the increase in overall market issuances.

Commissions and Related Revenue decreased $5.3 million, or 5%, compared to the six months ended June 30, 2022 , primarily reflecting lower trading revenues .

Other Revenue, net, increased $75.2 million compared to the six months ended June 30, 2022 , primarily reflecting a shift from losses of $31.5 million in 2022 to gains of $22.3 million in 2023 on our investment funds portfolio due to overall market appreciation, as well as higher returns on our fixed income investment portfolios, which primarily consist of U.S.

treasury bills.

Operating Expenses were $877.4 million for the six months ended June 30, 2023 , compared to $971.1 million for the six months ended June 30, 2022 , a decrease of $93.7 million, or 10%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $685.5 million for the six months ended June 30, 2023 , compared to $798.7 million for the six months ended June 30, 2022 , a decrease of $113.2 million , or 14% .

Non-compensation expenses, as a component of Operating Expenses, were $191.9 million for the six months ended June 30, 2023, compared to $172.4 million for the six months ended June 30, 2022, an increase of $19.5 million , or 11% .

Non-compensation operating expenses increased from the prior year period, primarily driven by increases in travel and related expenses, which was impacted by both increased activity and pricing, and bad debt expense, as well as charitable contributions made to the Evercore Foundation in 2023.

Other Expenses of $2.9 million for the six months ended June 30, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico .

Investment Management

The following table summarizes the operating results of the Investment Management segment.

For the Three Months Ended March 31,

2023 2022 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 Change 2023 2022 Change

(dollars in thousands)

2 unchanged sentences

Other Revenue, net (1)

1,374 1,438 (4 %)

598 (301) NM 1,972 1,137 73 %

Net Revenues 17,173 15,667 10 % 34,505 34,220 1 %

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Pre-Tax Income $ 5,213 $ 4,114 27 % $ 10,704 $ 11,887 (10 %)

(1) Includes a gain of $1.3 million for the three months ended March 31, 2022, resulting from the sale of a portion of our interests in ABS.

(1) Includes a gain of $1.3 million for the six months ended June 30, 2022, resulting from the sale of a portion of our interests in ABS.

(2) Equity in ABS and Atalanta Sosnoff is classified as Income from Equity Method Investments.

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In the event the private equity funds perform below certain thresholds, we may be obligated to repay certain carried interest previously distributed.

As of March 31, 2023, $0.4 million of previously distributed carried interest received from the funds was subject to repayment.

As of June 30, 2023, $0.4 million of previously distributed carried interest received from the funds was subject to repayment.

• We also hold interests in ABS and Atalanta Sosnoff that are accounted for under the equity method of accounting.

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Assets Under Management

AUM in our Wealth Management business of $11.0 billion at March 31, 2023 increased $0.5 billion, or 5% , compared to $10.5 billion at December 31, 2022.

AUM in our Wealth Management business of $11.5 billion at June 30, 2023 increased $1.0 billion, or 9% , compared to $10.5 billion at December 31, 2022.

The amounts of AUM presented in the table below reflect the fair value of assets which we manage on behalf of Wealth Management clients.

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The inputs into the determination of fair value require significant management judgment or estimation.

Wealth Management maintained 75% and 74% of Level 1 investments, 20% and 21% of Level 2 investments and 5% and 5% of Level 3 investments as of March 31, 2023 and December 31, 2022, respectively.

Wealth Management maintained 75% and 74% of Level 1 investments, 20% and 21% of Level 2 investments and 5% and 5% of Level 3 investments as of June 30, 2023 and December 31, 2022, respectively.

The fees that we receive for providing investment advisory and management services are primarily driven by the level and composition of AUM.

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The fees we earn are also impacted by our investment performance, as the appreciation or depreciation in the value of the assets that we manage directly impacts our fees.

The following table summarizes AUM activity for Wealth Management for the three months ended March 31, 2023:

The following table summarizes AUM activity for Wealth Management for the six months ended June 30, 2023:

(dollars in millions)

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Market Appreciation 1,038

Balance at March 31, 2023 $ 11,017

Unconsolidated Affiliates - Balance at March 31, 2023:

Balance at June 30, 2023 $ 11,488

Unconsolidated Affiliates - Balance at June 30, 2023:

Atalanta Sosnoff $ 7,129

The following table represents the composition of AUM for Wealth Management as of March 31, 2023:

The following table represents the composition of AUM for Wealth Management as of June 30, 2023:

Equities 63 %

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Investment performance in the Wealth Management business is measured against appropriate indices based on the composition of AUM, most frequently the S&P 500 and a composite fixed income index principally reflecting BarCap and MSCI indices.

For the three months ended March 31, 2023, AUM for Wealth Management increased 5% , primarily reflecting an increase due to market appreciation.

Performance for the three months ended March 31, 2023 reflected:

• Wealth Management outperformed the S&P 500 on a 1 and 3-year basis by approximately 10 basis points and 40 basis points, respectively

• Wealth Management lagged the fixed income composite on a 1 and 3-year basis by approximately 1% and 10 basis points, respectively

For the six months ended June 30, 2023, AUM for Wealth Management increased 9% , reflecting a 10% increase due to market appreciation, partially offset by a 1% decrease due to flows .

Performance for the six months ended June 30, 2023 reflected:

• Wealth Management lagged the S&P 500 on a 1 and 3-year basis by approximately 2% and 1%, respectively

• Wealth Management lagged the fixed income composite on a 1-year basis by approximately 20 basis points and outperformed the fixed income composite on 3-year basis by approximately 30 basis points

• The S&P 500 and fixed income composite were each up approximately 17% and 1%, respectively

AUM from our unconsolidated affiliates increased 5% compared to December 31, 2022, reflecting increases in both Atalanta Sosnoff and ABS.

Three Months Ended March 31, 2023 versus March 31, 2022

Net Revenues were $17.3 million for the three months ended March 31, 2023, compared to $18.6 million for the three months ended March 31, 2022, a decrease of $1.2 million, or 7%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios decreased $1.2 million, or 7%, for the three months ended March 31, 2023 as associated AUM decreased 5%, primarily from market depreciation.

Operating Expenses were $13.2 million for the three months ended March 31, 2023, compared to $12.9 million for the three months ended March 31, 2022, an increase of $0.3 million, or 2%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $9.8 million for the three months ended March 31, 2023, flat compared to the three months ended March 31, 2022.

Non-Compensation expenses, as a component of Operating Expenses, were $3.4 million for the three months ended March 31, 2023, compared to $3.1 million for the three months ended March 31, 2022, an increase of $0.3 million, or 10%.

Income from Equity Method Investments decreased 35% from the three months ended March 31, 2022, primarily driven by lower income earned by Atalanta Sosnoff in the first quarter of 2023.

Three Months Ended June 30, 2023 versus June 30, 2022

Net Revenues were $17.2 million for the three months ended June 30, 2023, compared to $15.7 million for the three months ended June 30, 2022, an increase of $1.5 million, or 10%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios increased $0.6 million, or 4%, for the three months ended June 30, 2023 as associated AUM increased 10%, primarily from market appreciation.

Operating Expenses were $13.4 million for the three months ended June 30, 2023, compared to $13.7 million for the three months ended June 30, 2022, a decrease of $0.3 million, or 2%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $9.9 million for the three months ended June 30, 2023, compared to $10.2 million for the three months ended June 30, 2022, a decrease of $0.3 million, or 3%.

Non-Compensation expenses, as a component of Operating Expenses, were $3.5 million for the three months ended June 30, 2023, flat compared to the three months ended June 30, 2022.

Income from Equity Method Investments decreased 34% from the three months ended June 30, 2022, primarily driven by lower income earned by Atalanta Sosnoff in the second quarter of 2023.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

Six Months Ended June 30, 2023 versus June 30, 2022

Net Revenues were $34.5 million for the six months ended June 30, 2023, compared to $34.2 million for the six months ended June 30, 2022, an increase of $0.3 million, or 1%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios decreased $0.6 million, or 2%, for the six months ended June 30, 2023.

Operating Expenses were $26.6 million for the six months ended June 30, 2023, flat compared to the six months ended June 30, 2022.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $19.7 million for the six months ended June 30, 2023, compared to $20.0 million for the six months ended June 30, 2022, a decrease of $0.3 million, or 2%.

Non-Compensation expenses, as a component of Operating Expenses, were $6.9 million for the six months ended June 30, 2023, compared to $6.6 million for the six months ended June 30, 2022, an increase of $0.3 million, or 5%.

Income from Equity Method Investments decreased 34% from the six months ended June 30, 2022, primarily driven by lower income earned by Atalanta Sosnoff in 2023.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

Our operating cash flows are primarily influenced by the timing and receipt of fees and the payment of operating expenses, including incentive compensation to our employees and interest expense on our Notes Payable and lines of credit, and the payment of income taxes.

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Likewise, payments to fund investments related to hedging our deferred cash compensation plans are generally funded in the first three months of each calendar year.

Our investing and financing cash flows are primarily influenced by activities to invest our cash in highly liquid securities or bank certificates of deposit, deploy capital to fund investments and acquisitions, raise capital through the issuance of stock or debt, repurchase of outstanding Class A Shares (including for net settlement of RSUs), and/or noncontrolling interest in Evercore LP, as well as our other subsidiaries, payment of dividends and other periodic distributions to our stakeholders.

Our investing and financing cash flows are primarily influenced by activities to invest our cash in highly liquid securities or bank certificates of deposit, deploy capital to fund investments and acquisitions, raise capital through the issuance of stock or debt, repurchase of outstanding Class A Shares (including for the net settlement of RSUs), and/or noncontrolling interest in Evercore LP, as well as our other subsidiaries, payment of dividends and other periodic distributions to our stakeholders.

We generally make dividend payments and other distributions on a quarterly basis.

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A summary of our operating, investing and financing cash flows is as follows:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(dollars in thousands)

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End of Period $ 529,474 $ 453,394

Three Months Ended March 31, 2023.

Cash, Cash Equivalents and Restricted Cash were $588.1 million at March 31, 2023, a decrease of $84.0 million versus Cash, Cash Equivalents and Restricted Cash of $672.1 million at December 31, 2022.

Operating activities resulted in a net outflow of $384.7 million, primarily related to the payment of 2022 bonus awards and deferred cash compensation, which contributed to a decrease to Accrued Compensation and Benefits on our Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023, partially offset by earnings.

Cash of $631.3 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities and certificates of deposit.

Financing activities during the period used cash of $337.0 million, primarily for purchases of treasury stock (including for net settlement of RSUs) and noncontrolling interests, and dividends and distributions to noncontrolling interest holders.

Six Months Ended June 30, 2023.

Cash, Cash Equivalents and Restricted Cash were $529.5 million at June 30, 2023, a decrease of $142.6 million versus Cash, Cash Equivalents and Restricted Cash of $672.1 million at December 31, 2022.

Operating activities resulted in a net outflow of $205.5 million, primarily related to the payment of 2022 bonus awards and deferred cash compensation, which contributed to a decrease to Accrued Compensation and Benefits on our Unaudited Condensed Consolidated Statements of Financial Condition as of June 30, 2023, partially offset by earnings.

Cash of $480.4 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities and certificates of deposit, partially offset by purchases of equipment and leasehold improvements.

Financing activities during the period used cash of $433.5 million, primarily for purchases of treasury stock (including for the net settlement of RSUs) and noncontrolling interests, and dividends and distributions to noncontrolling interest holders.

Cash is also impacted due to the effect of foreign exchange rate fluctuation when translating non-U.S.

currencies to U.S.

Three Months Ended March 31, 2022.

Cash, Cash Equivalents and Restricted Cash were $463.9 million at March 31, 2022, a decrease of $123.4 million versus Cash, Cash Equivalents and Restricted Cash of $587.3 million at December 31, 2021.

Six Months Ended June 30, 2022.

Cash, Cash Equivalents and Restricted Cash were $453.4 million at June 30, 2022, a decrease of $133.9 million versus Cash, Cash Equivalents and Restricted Cash of $587.3 million at December 31, 2021.

Operating activities resulted in a net outflow of $168.6 million, primarily related to the payment of 2021 bonus awards and deferred cash compensation, partially offset by earnings.

Cash of $615.6 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities and proceeds received for the sale of a portion of our interests in ABS, partially offset by net purchases of certificates of deposit and purchases of equipment and leasehold improvements, principally related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $329.2 million, primarily for purchases of treasury stock and noncontrolling interests and dividends and distributions to noncontrolling interest holders.

Financing activities during the period used cash of $561.8 million, primarily for purchases of treasury stock and noncontrolling interests, the payment of our Notes Payable and dividends and distributions to noncontrolling interest holders, partially offset by the issuance of the 2022 Private Placement Notes.

Cash is also impacted due to the effect of foreign exchange rate fluctuation when translating non-U.S.

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From time to time, advances and/or commitments may also be granted to new employees at or near the date they begin employment, or to existing employees for the purpose of incentive or retention.

Cash distributions related to partnership tax allocations are made to the partners of Evercore LP and certain other entities in accordance with our corporate estimated payment calendar;

Cash distributions related to partnership tax allocations are made to the partners of Evercore LP and certain other entities in

accordance with our corporate estimated payment calendar;

these payments are generally made quarterly.

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Likewise, our liquidity may be adversely impacted by our contractual obligations, including lease obligations.

Reduced equity valuations resulting from future adverse economic events and/or market conditions may impact our performance and may result in future net redemptions of AUM from our clients, which would generally result in lower revenues and cash flows.

Reduced equity valuations resulting from future adverse economic events and/or market conditions may impact our performance and may result in future net redemptions of AUM from our Investment Management clients, which would generally result in lower revenues and cash flows.

These adverse conditions could also have an impact on our goodwill impairment assessment, which is done annually, as of November 30th, or more frequently if circumstances indicate impairment may have occurred.

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This program may be suspended or discontinued at any time and does not have a specified expiration date.

During the three months ended March 31, 2023, we repurchased 1,237,384 Class A Shares, at an average cost per share of $132.50, for $164.0 million, pursuant to our repurchase program.

During the six months ended June 30, 2023, we repurchased 1,752,488 Class A Shares, at an average cost per share of $126.27, for $221.2 million, pursuant to our repurchase program.

In addition, we periodically buy shares into treasury from our employees in order to allow them to satisfy their minimum tax requirements for share deliveries under our share equity plan.

During the three months ended March 31, 2023, we repurchased 915,197 Class A Shares, at an average cost per share of $131.79, for $120.6 million, primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 2,152,581 Class A Shares repurchased during the three months ended March 31, 2023 were acquired for aggregate purchase consideration of $284.6 million, at an average cost per share of $132.20.

During the six months ended June 30, 2023, we repurchased 936,677 Class A Shares, at an average cost per share of $131.27, for $123.0 million, primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 2,689,165 Class A Shares repurchased during the six months ended June 30, 2023 were acquired for aggregate purchase consideration of $344.2 million, at an average cost per share of $128.01.

Noncontrolling Interest Purchases

During the first quarter of 2022, we purchased, at fair value, an additional 0.4% of the EWM Class A Units for $1.4 million, which 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 $0.1 million and a decrease to Additional-Paid-In-Capital of $1.4 million on our Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022.

During the second quarter of 2023, we purchased, at fair value, an additional 0.7% of the EWM Class A Units for $2.0 million.

This purchase resulted in a decrease to Noncontrolling Interest of $0.2 million and a decrease to Additional-Paid-In-Capital of $1.8 million on our Unaudited Condensed Consolidated Statement of Financial Condition as of June 30, 2023.

During the first quarter of 2022, we purchased, at fair value, an additional 0.4% of the EWM Class A Units for $1.4 million, which was settled in cash during the three months ended June 30, 2022.

On December 31, 2021, we purchased, at fair value, all of the outstanding Class R Interests of Private Capital Advisory L.P.

from employees of the RECA business for $54.3 million.

Our consideration for this transaction included the payment of $6.0 million of cash in 2021, $27.7 million of cash during the three months ended March 31, 2022, and contingent cash consideration which is due to be settled in early 2024.

We paid $0.7 million of this contingent cash consideration during the three months ended March 31, 2023.

The fair value of the remaining contingent consideration is $5.1 million as of March 31, 2023, which is included within Payable to Employees and Related Parties on our Unaudited Condensed Consolidated Statements of Financial Condition, and $6.1 million as of December 31, 2022, $1.1 million of which was included within Other Current Liabilities and the remainder of which was included within Other Long-term Liabilities on our Unaudited Condensed Consolidated Statements of Financial Condition.

Our consideration for this transaction included the payment of $6.0 million of cash in 2021, $27.7 million of cash during the six months ended June 30, 2022, and contingent cash consideration which is due to be settled in early 2024.

We paid $0.7 million of this contingent cash consideration during the six months ended June 30, 2023.

The fair value of the remaining contingent consideration is $2.6 million as of June 30, 2023, $2.2 million of which is included within Payable to Employees and Related Parties and the remainder of which is included within Other Current Liabilities on our Unaudited Condensed Consolidated Statements of Financial Condition, and $6.1 million as of December 31, 2022, $1.1 million of which was included within Other Current Liabilities and the remainder of which was included within Other Long-term Liabilities on our 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.

Changes in the fair value of contingent consideration are included within Other Operating Expenses on the Unaudited Condensed Consolidated Statements of Operations.

The decline in the fair value of contingent consideration reduced Other Operating Expenses by $2.5 million for the three and six months ended June 30, 2023, and $2.7 million and $3.3 million for the three and six months ended June 30, 2022, respectively, on the Unaudited Condensed Consolidated Statements of Operations.

The amount of contingent consideration to be paid is dependent on the RECA business achieving certain revenue performance targets.

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, we also issued a payment in the first quarter of 2023 and will issue another payment in early 2024, contingent on continued employment.

In conjunction with this transaction, we also issued a payment in the first quarter of 2023 and

will issue another payment in early 2024, contingent on continued employment.

Accordingly, these payments are treated as compensation expense for accounting purposes in the periods earned.

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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, we were in compliance with all of these covenants.

As of June 30, 2023, we were in compliance with all of these covenants.

On June 28, 2022, we prepaid the $67.0 million aggregate principal amount of our Series B Notes plus the applicable make-whole amount.

In conjunction with the June 2022 prepayment and the acceleration of the remaining debt issuance costs, we recorded a loss of $0.5 million for the three and six months ended June 30, 2022, included within Special Charges, Including Business Realignment Costs, on our Unaudited Condensed Consolidated Statements of Operations.

2019 Private Placement Notes

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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, we were in compliance with all of these covenants.

As of June 30, 2023, we were in compliance with all of these covenants.

2021 Private Placement Notes

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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, we were in compliance with all of these covenants.

As of June 30, 2023, we were in compliance with all of these covenants.

2022 Private Placement Notes

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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, we were in compliance with all of these covenants.

As of June 30, 2023, we were in compliance with all of these covenants.

Lines of Credit

East entered into a loan agreement with PNC for a revolving credit facility in an aggregate principal amount, as amended on October 29, 2021, of up to $30.0 million, to be used for working capital and other corporate activities.

East entered into a loan agreement with PNC for a revolving credit facility, as amended on June 29, 2023, in an aggregate principal amount of up to $30.0 million 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 us from incurring other indebtedness, subject to specified exceptions.

We and our 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 $55.0 million, to be used for working capital and other corporate activities.

In addition, the agreement contains certain reporting covenants, as well as certain debt covenants that prohibit East and us from incurring other indebtedness, subject to specified exceptions.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2023.

The interest rate provisions are Daily SOFR plus 161 basis points and the maturity date is October 27, 2024.

There were no drawings under this facility at June 30, 2023.

East entered into an additional loan agreement with PNC for a revolving credit facility, as amended on June 29, 2023, in an aggregate principal amount of up to $55.0 million 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.

We and our consolidated subsidiaries were in compliance with these covenants as of March 31, 2023.

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.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2023.

Drawings under this facility bear interest at Daily SOFR plus 191 basis points and the maturity date is October 27, 2024.

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 $75.0 million, to be used as needed in support of capital requirements from time to time of EGL.

There were no drawings under this facility at June 30, 2023.

EGL entered into a subordinated revolving credit facility with PNC, as amended on October 31, 2022, in an aggregate principal amount of up to $75.0 million, 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.

There were no drawings under this facility at June 30, 2023.

In addition, EGL's clearing broker provides temporary funding for the settlement of securities transactions.

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For further information see " Noncontrolling Interest Purchases" above and Notes 12 and 15 to our unaudited condensed consolidated financial statements.

We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition) relating to future capital contributions to private equity funds of $2.6 million and $2.4 million as of March 31, 2023 and December 31, 2022, respectively.

We expect to fund these commitments with cash flows from operations.

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We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our unaudited condensed consolidated financial statements.

As of March 31, 2023, our current and former Senior Managing Directors owned an aggregate of approximately 1.7 million vested Class A LP Units, 0.4 million vested Class E LP Units, 0.4 million vested Class I LP Units and 0.3 million vested Class K LP Units.

In addition, 0.7 million unvested Class K-P Units, which convert into a number of Class K LP Units based on the achievement of certain market and service conditions and defined benchmark results, were outstanding as of

March 31, 2023.

As of June 30, 2023, our current and former Senior Managing Directors owned an aggregate of approximately 1.7 million vested Class A LP Units, 0.4 million vested Class E LP Units, 0.4 million vested Class I LP Units and 0.3 million vested Class K LP Units.

In addition, 0.8 million unvested Class K-P Units, which convert into a number of Class K LP Units based on the achievement of certain market and service conditions and defined benchmark results, were outstanding as of June 30, 2023.

We have an obligation to exchange vested Class A, E, I and K LP Units to Class A Common Stock upon the request of the holder.

Our Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2023 included $579.2 million of Cash and Cash Equivalents and $803.1 million of Investment Securities and Certificates of Deposit, which are generally comprised of highly-liquid investments.

Our Unaudited Condensed Consolidated Statement of Financial Condition as of June 30, 2023 included $520.6 million of Cash and Cash Equivalents and $962.1 million of Investment Securities and Certificates of Deposit, which are generally comprised of highly-liquid investments.

For further information regarding other cash commitments and the timing of payments, refer to "General" above.

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We hold equity securities and invest in exchange-traded funds principally as an economic hedge against our deferred compensation program.

As of March 31, 2023, the fair value of our investments with these products, based on closing prices, was $143.1 million.

We had net realized and unrealized gains of $9.4 million for the three months ended March 31, 2023, from our exchange-traded funds portfolio.

As of June 30, 2023, the fair value of our investments with these products, based on closing prices, was $154.2 million.

We had net realized and unrealized gains of $11.6 million and $21.1 million for the three and six months ended June 30, 2023, respectively, from our exchange-traded funds portfolio.

See Note 6 to our unaudited condensed consolidated financial statements for further information.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $14.3 million, $28.6 million and $42.9 million, respectively, for the three months ended March 31, 2023.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $15.4 million, $30.8 million and $46.3 million, respectively, for the three months ended June 30, 2023.

Private Equity Funds

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See Note 7 to our unaudited condensed consolidated financial statements for further information.

We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $0.5 million for the three months ended March 31, 2023.

We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $0.6 million for the three months ended June 30, 2023.

Exchange Rate Risk

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Historically, the value of these foreign currencies has fluctuated relative to the U.S.

For the three months ended March 31, 2023, the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was a gain of $5.7 million, net of tax.

For the six months ended June 30, 2023, the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was a gain of $11.5 million, net of tax.

It is generally not our intention to hedge our foreign currency exposure in these subsidiaries, and we will reevaluate this policy from time to time.

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We entered into a foreign currency exchange forward contract during the first quarter of 2023 to buy 30.0 million British Pounds sterling for $36.9 million, which will settle during the third quarter of 2023.

The contract is recorded at its fair value of $0.2 million as of March 31, 2023, and is included within Other Current Assets on our Unaudited Condensed Consolidated Statement of Financial Condition.

The contract is recorded at its fair value of $1.2 million as of June 30, 2023, and is included within Other Current Assets on our Unaudited Condensed Consolidated Statement of Financial Condition.

We maintain cash and cash equivalents, as well as certificates of deposit, with financial institutions with high credit ratings.

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The collection period for restructuring transaction receivables may exceed 90 days.

We recorded bad debt expense of approximately $3.7 million for the three months ended March 31, 2023 and reversed bad debt expense of approximately $0.5 million for the three months ended March 31, 2022.

As of March 31, 2023 and December 31, 2022, total receivables recorded in Accounts Receivable amounted to $299.2 million and $385.1 million, respectively, net of an allowance for credit losses, and total receivables recorded in Other Assets amounted to $70.2 million and $64.1 million, respectively.

We recorded bad debt expense of approximately $5.3 million and $1.5 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, total receivables recorded in Accounts Receivable amounted to $322.8 million and $385.1 million, respectively, net of an allowance for credit losses, and total receivables recorded in Other Assets amounted to $63.8 million and $64.1 million, respectively.

Other Current Assets and Other Assets include 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 (contract assets).

As of March 31, 2023, total contract assets recorded in Other Current Assets and Other Assets amounted to $14.0 million and $11.9 million, respectively.

As of June 30, 2023, total contract assets recorded in Other Current Assets and Other Assets amounted to $53.0 million and $17.9 million, respectively.

As of December 31, 2022, total contract assets recorded in Other Current Assets and Other Assets amounted to $110.5 million and $8.0 million, respectively.

With respect to our Investment Securities portfolio, which is comprised primarily of treasury bills and notes, exchange-traded funds and securities investments, we manage our credit risk exposure by limiting concentration risk and maintaining investment grade credit quality.

As of March 31, 2023, we had Investment Securities of $756.2 million, of which 81% were treasury bills and notes.

As of June 30, 2023, we had Investment Securities of $907.7 million, of which 83% were treasury bills and notes.

Critical Accounting Policies and Estimates

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis