Evercore Inc. 10-Q

Item 1. Financial Statements Condensed Consolidated Financial Statements (Unaudited) Page Condensed Consolidated Statements of Financial Condition as of September 30, 2023 and December 31, 2022 4 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 5 Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 6 Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2023 and 2022 7 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 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) September 30, 2023 December 31, 2022 Assets Current Assets Cash and Cash Equivalents $ 492,590 $ 663,400 Investment Securities and Certificates of Deposit (includes available-for-sale debt securities with an amortized cost of $ 433,476 and $ 802,652 at September 30, 2023 and December 31, 2022, respectively) 1,137,620 1,432,716 Accounts Receivable (net of allowances of $ 5,154 and $ 4,683 at September 30, 2023 and December 31, 2022, respectively) 332,993 385,131 Receivable from Employees and Related Parties 26,423 21,914 Other Current Assets 141,203 203,570 Total Current Assets 2,130,829 2,706,731 Investments 42,525 43,047 Deferred Tax Assets 264,592 257,166 Operating Lease Right-of-Use Assets 387,426 237,561 Furniture, Equipment and Leasehold Improvements (net of accumulated depreciation and amortization of $ 205,636 and $ 187,077 at September 30, 2023 and December 31, 2022, respectively) 142,500 143,268 Goodwill 123,544 123,285 Other Assets 134,382 109,865 Total Assets $ 3,225,798 $ 3,620,923 Liabilities and Equity Current Liabilities Accrued Compensation and Benefits $ 422,201 $ 918,489 Accounts Payable and Accrued Expenses 28,964 28,807 Payable to Employees and Related Parties 32,127 41,235 Operating Lease Liabilities 34,984 37,968 Taxes Payable 2,859 9,842 Other Current Liabilities 42,226 34,195 Total Current Liabilities 563,361 1,070,536 Operating Lease Liabilities 438,146 278,078 Notes Payable 372,419 371,774 Amounts Due Pursuant to Tax Receivable Agreements 61,279 61,169 Other Long-term Liabilities 136,125 112,948 Total Liabilities 1,571,330 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, 81,987,589 and 79,686,375 issued at September 30, 2023 and December 31, 2022, respectively, and 37,662,786 and 38,347,262 outstanding at September 30, 2023 and December 31, 2022, respectively) 820 797 Class B, par value $ 0.01 per share ( 1,000,000 shares authorized, 45 and 50 issued and outstanding at September 30, 2023 and December 31, 2022, respectively) — — Additional Paid-In Capital 3,088,014 2,861,775 Accumulated Other Comprehensive Income (Loss) ( 27,925 ) ( 27,942 ) Retained Earnings 1,842,910 1,768,098 Treasury Stock at Cost ( 44,324,803 and 41,339,113 shares at September 30, 2023 and December 31, 2022, respectively) ( 3,450,970 ) ( 3,065,917 ) Total Evercore Inc. Stockholders' Equity 1,452,849 1,536,811 Noncontrolling Interest 201,619 189,607 Total Equity 1,654,468 1,726,418 Total Liabilities and Equity $ 3,225,798 $ 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 September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues Investment Banking & Equities: Advisory Fees $ 467,401 $ 488,224 $ 1,304,519 $ 1,689,033 Underwriting Fees 30,814 28,697 91,897 78,519 Commissions and Related Revenue 48,697 49,200 146,810 152,583 Asset Management and Administration Fees 17,304 15,641 49,837 48,724 Other Revenue, Including Interest and Investments 10,188 ( 637 ) 61,255 ( 25,455 ) Total Revenues 574,404 581,125 1,654,318 1,943,404 Interest Expense 4,184 4,188 12,536 12,696 Net Revenues 570,220 576,937 1,641,782 1,930,708 Expenses Employee Compensation and Benefits 391,730 355,794 1,096,976 1,174,500 Occupancy and Equipment Rental 22,094 19,680 63,994 58,465 Professional Fees 28,390 29,294 79,992 81,207 Travel and Related Expenses 13,465 12,862 46,090 35,474 Communications and Information Services 18,435 15,333 52,006 45,745 Depreciation and Amortization 5,848 7,065 18,373 20,772 Execution, Clearing and Custody Fees 3,115 2,378 8,845 7,806 Special Charges, Including Business Realignment Costs — — 2,921 532 Other Operating Expenses 10,317 4,132 31,139 20,262 Total Expenses 493,394 446,538 1,400,336 1,444,763 Income Before Income from Equity Method Investments and Income Taxes 76,826 130,399 241,446 485,945 Income from Equity Method Investments 1,664 2,027 4,674 6,813 Income Before Income Taxes 78,490 132,426 246,120 492,758 Provision for Income Taxes 19,717 40,790 52,945 114,134 Net Income 58,773 91,636 193,175 378,624 Net Income Attributable to Noncontrolling Interest 6,625 9,198 20,444 42,543 Net Income Attributable to Evercore Inc. $ 52,148 $ 82,438 $ 172,731 $ 336,081 Net Income Attributable to Evercore Inc. Common Shareholders $ 52,148 $ 82,438 $ 172,731 $ 336,081 Weighted Average Shares of Class A Common Stock Outstanding Basic 37,823 39,114 38,179 39,375 Diluted 40,000 40,527 39,907 41,104 Net Income Per Share Attributable to Evercore Inc. Common Shareholders: Basic $ 1.38 $ 2.11 $ 4.52 $ 8.54 Diluted $ 1.30 $ 2.03 $ 4.33 $ 8.18 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 September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Net Income $ 58,773 $ 91,636 $ 193,175 $ 378,624 Other Comprehensive Income (Loss), net of tax: Unrealized Gain (Loss) on Securities and Investments, net 21 1,186 ( 3,229 ) 1,493 Foreign Currency Translation Adjustment Gain (Loss), net ( 8,301 ) ( 22,597 ) 3,213 ( 44,136 ) Other Comprehensive Income (Loss) ( 8,280 ) ( 21,411 ) ( 16 ) ( 42,643 ) Comprehensive Income 50,493 70,225 193,159 335,981 Comprehensive Income Attributable to Noncontrolling Interest 5,878 7,210 20,411 38,608 Comprehensive Income Attributable to Evercore Inc. $ 44,615 $ 63,015 $ 172,748 $ 297,373 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 September 30, 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 June 30, 2023 81,914,589 $ 819 $ 3,011,969 $ ( 20,392 ) $ 1,823,412 ( 44,028,278 ) $ ( 3,410,153 ) $ 198,925 $ 1,604,580 Net Income — — — — 52,148 — — 6,625 58,773 Other Comprehensive Income (Loss) — — — ( 7,533 ) — — — ( 747 ) ( 8,280 ) Treasury Stock Purchases — — — — — ( 296,525 ) ( 40,817 ) — ( 40,817 ) Evercore LP Units Exchanged for Class A Common Stock 37,565 1 3,629 — — — — ( 2,354 ) 1,276 Equity-based Compensation Awards 35,435 — 72,416 — — — — 6,538 78,954 Dividends — — — — ( 32,650 ) — — — ( 32,650 ) Noncontrolling Interest (Note 12) — — — — — — — ( 7,368 ) ( 7,368 ) Balance at September 30, 2023 81,987,589 $ 820 $ 3,088,014 $ ( 27,925 ) $ 1,842,910 ( 44,324,803 ) $ ( 3,450,970 ) $ 201,619 $ 1,654,468 For the Nine Months Ended September 30, 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 — — — — 172,731 — — 20,444 193,175 Other Comprehensive Income (Loss) — — — 17 — — — ( 33 ) ( 16 ) Treasury Stock Purchases — — — — — ( 2,985,690 ) ( 385,053 ) — ( 385,053 ) Evercore LP Units Exchanged for Class A Common Stock 82,368 1 7,450 — — — — ( 5,128 ) 2,323 Equity-based Compensation Awards 2,218,846 22 220,633 — — — — 19,173 239,828 Dividends — — — — ( 97,919 ) — — — ( 97,919 ) Noncontrolling Interest (Note 12) — — ( 1,844 ) — — — — ( 22,444 ) ( 24,288 ) Balance at September 30, 2023 81,987,589 $ 820 $ 3,088,014 $ ( 27,925 ) $ 1,842,910 ( 44,324,803 ) $ ( 3,450,970 ) $ 201,619 $ 1,654,468 For the Three Months Ended September 30, 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 June 30, 2022 79,597,763 $ 796 $ 2,746,245 $ ( 31,371 ) $ 1,607,976 ( 40,460,685 ) $ ( 2,973,087 ) $ 170,150 $ 1,520,709 Net Income — — — — 82,438 — — 9,198 91,636 Other Comprehensive Income (Loss) — — — ( 19,423 ) — — — ( 1,988 ) ( 21,411 ) Treasury Stock Purchases — — — — — ( 335,939 ) ( 33,162 ) — ( 33,162 ) Evercore LP Units Exchanged for Class A Common Stock 850 — 47 — — — — ( 47 ) — Equity-based Compensation Awards 33,743 — 63,839 — — — — 5,403 69,242 Dividends — — — — ( 30,935 ) — — — ( 30,935 ) Noncontrolling Interest (Note 12) — — ( 1,598 ) — — — — ( 6,641 ) ( 8,239 ) Balance at September 30, 2022 79,632,356 $ 796 $ 2,808,533 $ ( 50,794 ) $ 1,659,479 ( 40,796,624 ) $ ( 3,006,249 ) $ 176,075 $ 1,587,840 For the Nine Months Ended September 30, 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 — — — — 336,081 — — 42,543 378,624 Other Comprehensive Income (Loss) — — — ( 38,708 ) — — — ( 3,935 ) ( 42,643 ) Treasury Stock Purchases — — — — — ( 3,895,766 ) ( 460,797 ) — ( 460,797 ) Evercore LP Units Exchanged for Class A Common Stock 2,573,455 26 163,736 — — — — ( 159,354 ) 4,408 Equity-based Compensation Awards 2,254,613 22 188,977 — — — — 17,932 206,931 Dividends — — — — ( 94,984 ) — — — ( 94,984 ) Noncontrolling Interest (Note 12) — — ( 2,959 ) — — — — ( 36,021 ) ( 38,980 ) Balance at September 30, 2022 79,632,356 $ 796 $ 2,808,533 $ ( 50,794 ) $ 1,659,479 ( 40,796,624 ) $ ( 3,006,249 ) $ 176,075 $ 1,587,840 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 Nine Months Ended September 30, 2023 2022 Cash Flows From Operating Activities Net Income $ 193,175 $ 378,624 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Net (Gains) Losses on Investments, Investment Securities and Contingent Consideration ( 18,160 ) 27,305 Equity Method Investments, Including Gain on Sale 769 3,291 Equity-Based and Other Deferred Compensation 393,633 357,401 Noncash Lease Expense 31,599 27,096 Depreciation, Amortization and Accretion, net 7,061 21,579 Bad Debt Expense 5,007 4,905 Deferred Taxes ( 4,613 ) ( 11,300 ) Decrease (Increase) in Operating Assets: Investment Securities 8,315 ( 1,541 ) Accounts Receivable 48,680 30,729 Receivable from Employees and Related Parties ( 4,499 ) 1,817 Other Assets 37,931 ( 15,036 ) (Decrease) Increase in Operating Liabilities: Accrued Compensation and Benefits ( 622,834 ) ( 636,901 ) Accounts Payable and Accrued Expenses 2,085 3,475 Payables to Employees and Related Parties ( 11,916 ) 5,826 Taxes Payable ( 6,983 ) ( 12,537 ) Other Liabilities ( 16,926 ) ( 27,560 ) Net Cash Provided by Operating Activities 42,324 157,173 Cash Flows From Investing Activities Investments Purchased ( 37 ) — Proceeds from Sale of Investments — 18,300 Distributions of Private Equity Investments 72 238 Investment Securities: Proceeds from Sales and Maturities of Investment Securities 2,894,653 2,326,799 Purchases of Investment Securities ( 2,624,225 ) ( 1,893,948 ) Maturity of Certificates of Deposit 129,974 217,837 Purchase of Certificates of Deposit ( 91,414 ) ( 231,639 ) Purchase of Furniture, Equipment and Leasehold Improvements ( 18,558 ) ( 19,072 ) Net Cash Provided by Investing Activities 290,465 418,515 Cash Flows From Financing Activities Issuance of Noncontrolling Interests 733 300 Distributions to Noncontrolling Interests ( 23,019 ) ( 38,970 ) Payment of Notes Payable — ( 67,000 ) Issuance of Notes Payable — 67,000 Debt Issuance Costs and Make-Whole Amount — ( 1,826 ) Purchase of Treasury Stock and Noncontrolling Interests ( 389,262 ) ( 491,936 ) Dividends ( 99,056 ) ( 99,082 ) Net Cash Provided by (Used in) Financing Activities ( 510,604 ) ( 631,514 ) Effect of Exchange Rate Changes on Cash 7,144 ( 49,296 ) Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 170,671 ) ( 105,122 ) Cash, Cash Equivalents and Restricted Cash – Beginning of Period 672,123 587,293 Cash, Cash Equivalents and Restricted Cash – End of Period $ 501,452 $ 482,171 SUPPLEMENTAL CASH FLOW DISCLOSURE Payments for Interest $ 9,889 $ 10,954 Payments for Income Taxes $ 69,479 $ 165,021 Accrued Dividends $ 12,717 $ 11,245 Settlement of Sale of Trilantic VI $ — $ 9,188 Settlement of Contingent Consideration $ — $ 1,083 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 partnerships and 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 Statements 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"), Evercore Partners Canada Ltd. ("Evercore Canada") and Evercore Asia Limited ("Evercore Hong Kong") are also VIEs, and the Company is the primary beneficiary of these VIEs. Specifically for Evercore ISI U.K., Evercore Japan, Evercore Beijing, Evercore Canada and Evercore Hong Kong (as of September 30, 2023 for Evercore Hong Kong), 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, Evercore Canada and Evercore Hong Kong assets of $ 374,966 and liabilities of $ 164,010 at September 30, 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 and nine months ended September 30, 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 and nine months ended September 30, 2023 and 2022: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Investment Banking & Equities: Advisory Fees $ 467,401 $ 488,224 $ 1,304,519 $ 1,689,033 Underwriting Fees 30,814 28,697 91,897 78,519 Commissions and Related Revenue 48,697 49,200 146,810 152,583 Total Investment Banking & Equities $ 546,912 $ 566,121 $ 1,543,226 $ 1,920,135 Investment Management: Asset Management and Administration Fees: Wealth Management $ 17,304 $ 15,641 $ 49,837 $ 48,724 Total Investment Management $ 17,304 $ 15,641 $ 49,837 $ 48,724 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 nine months ended September 30, 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 Nine Months Ended September 30, 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) ( 52,138 ) 14,878 ( 67,412 ) ( 622 ) 3,092 — Balance at September 30, 2023 $ 332,993 $ 79,017 $ 43,056 $ 7,406 $ 8,163 $ — For the Nine Months Ended September 30, 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) ( 47,943 ) ( 30,723 ) 15,992 ( 8,963 ) ( 776 ) — Balance at September 30, 2022 $ 303,725 $ 57,041 $ 30,084 $ 3,982 $ 8,481 $ 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 $ 6,284 and $ 14,474 on the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023, respectively, and $ 6,079 and $ 16,584 for the three and nine months ended September 30, 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 and nine months ended September 30, 2023 and 2022 is as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Beginning Balance $ 8,712 $ 1,447 $ 4,683 $ 2,704 Bad debt expense, net of reversals ( 290 ) 3,402 5,007 4,905 Write-offs, foreign currency translation and other adjustments ( 3,268 ) ( 497 ) ( 4,536 ) ( 3,257 ) Ending Balance $ 5,154 $ 4,352 $ 5,154 $ 4,352 The change in the balance during the three months ended September 30, 2023 is primarily related to the write-off of aged receivables. The change in the balance during the nine months ended September 30, 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 September 30, 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 $ 40,249 $ 31,138 $ 11,564 $ 2,904 $ 568 $ 86,423 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 $ 277 and $ 4,217 for the three and nine months ended September 30, 2023, respectively, and $ 1,097 and $ 8,208 for the three and nine months ended September 30, 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 $ 22,113 and $ 16,928 as of September 30, 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 September 30, 2023 and December 31, 2022 were as follows: September 30, 2023 December 31, 2022 Debt Securities $ 433,496 $ 807,135 Equity Securities 272 335 Debt Securities Carried by EGL 471,016 365,638 Investment Funds 148,673 136,718 Total Investment Securities, at fair value $ 1,053,457 $ 1,309,826 Certificates of Deposit, at contract value 84,163 122,890 Total Investment Securities and Certificates of Deposit $ 1,137,620 $ 1,432,716 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 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, on a specific identification basis. Gross unrealized gains included in Accumulated Other Comprehensive Income (Loss) were $ 69 and $ 262 for the three and nine months ended September 30, 2023, respectively, and $ 1,936 and $ 2,284 for the three and nine months ended September 30, 2022, respectively. Gross unrealized losses included in Accumulated Other Comprehensive Income (Loss) were ($ 48 ) and ($ 241 ) for the three and nine months ended September 30, 2023 and ($ 342 ) and ($ 365 ) for the three and nine months ended September 30, 2022, respectively. Gross realized losses included within Other Revenue, Including Interest and Investments, were ($ 261 ) for the nine months ended September 30, 2023, and ($ 34 ) for the nine months ended September 30, 2022. Proceeds from the sales and maturities of available-for-sale securities, including interest, were $ 250,000 and $ 1,493,992 for the three and nine months ended September 30, 2023, respectively, and $ 233,638 and $ 997,349 for the three and nine months ended September 30, 2022, respectively. 12 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Scheduled maturities of the Company's available-for-sale debt securities as of September 30, 2023 and December 31, 2022 were as follows: September 30, 2023 December 31, 2022 Amortized Cost Fair Value Amortized Cost Fair Value Due within one year $ 432,499 $ 432,533 $ 800,710 $ 805,190 Due after one year through five years 977 963 1,942 1,945 Total $ 433,476 $ 433,496 $ 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 September 30, 2023 and has not recorded a credit allowance on these securities. 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 unrealized losses of ($ 286 ) and ($ 63 ) for the three and nine months ended September 30, 2023, respectively, and ($ 131 ) and ($ 579 ) for the three and nine months ended September 30, 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 $ 129 and $ 147 for the three and nine months ended September 30, 2023, respectively, and $ 1,013 and $ 1,541 for the three and nine months ended September 30, 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 ($ 5,541 ) and $ 15,515 for the three and nine months ended September 30, 2023, respectively, (of which ($ 5,541 ) and $ 10,709 , respectively, were net unrealized gains (losses)) and ($ 7,454 ) and ($ 38,970 ) for the three and nine months ended September 30, 2022, respectively, (of which ($ 7,454 ) and ($ 54,670 ), respectively, were net unrealized losses). Certificates of Deposit At September 30, 2023 and December 31, 2022, the Company held certificates of deposit of $ 84,163 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 13 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 September 30, 2023 and December 31, 2022 was as follows: September 30, 2023 December 31, 2022 ABS $ 18,277 $ 19,387 Atalanta Sosnoff 10,664 10,717 Luminis 6,386 6,092 Seneca Evercore 727 706 Total $ 36,054 $ 36,902 ABS The Company has an investment accounted for under the equity method of accounting in ABS. At September 30, 2023, the Company's ownership interest in ABS was 26 %. This investment resulted in earnings of $ 1,066 and $ 3,136 for the three and nine months ended September 30, 2023, respectively, and $ 1,043 and $ 3,413 for the three and nine months ended September 30, 2022, respectively, included within Income from Equity Method Investments on the Unaudited Condensed Consolidated Statements of Operations. 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 nine months ended September 30, 2022, included within Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statement of Operations. Atalanta Sosnoff The Company has an investment accounted for under the equity method of accounting in Atalanta Sosnoff. At September 30, 2023, the Company's ownership interest in Atalanta Sosnoff was 49 %. This investment resulted in earnings of $ 418 and $ 1,144 for the three and nine months ended September 30, 2023, respectively, and $ 533 and $ 2,411 for the three and nine months ended September 30, 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 September 30, 2023, the Company's ownership interest in Luminis was 20 %. This investment resulted in earnings of $ 53 and $ 350 for the three and nine months ended September 30, 2023, respectively, and $ 397 and $ 787 for the three and nine months ended September 30, 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 September 30, 2023, the Company's ownership interest in Seneca Evercore was 20 %. This investment resulted in earnings of $ 127 and $ 44 for the three and nine months ended September 30, 2023, respectively, and $ 54 and $ 202 for the three and nine months ended September 30, 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 . 14 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 September 30, 2023 and 2022 and $ 237 for each of the nine months ended September 30, 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. A summary of the Company's investments in the private equity funds as of September 30, 2023 and December 31, 2022 was as follows: September 30, 2023 December 31, 2022 Glisco II, Glisco III and Glisco IV $ 3,992 $ 3,602 Trilantic IV and Trilantic V 1,870 1,939 Total Private Equity Funds $ 5,862 $ 5,541 Net realized and unrealized gains on private equity fund investments were $ 54 and $ 694 for the three and nine months ended September 30, 2023, respectively, and $ 308 and $ 244 for the three and nine months ended September 30, 2022, respectively. In the event the funds perform poorly, the Company may be obligated to repay certain carried interest previously distributed. As of September 30, 2023, $ 317 of previously distributed carried interest received from the funds was subject to repayment. 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 $ 3,430 and $ 3,166 included in its Unaudited Condensed Consolidated Statements of Financial Condition at September 30, 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 September 30, 2023 and December 31, 2022 was $ 5,613 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 $ 609 and $ 604 as of September 30, 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. 15 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 $ 14,320 and $ 41,817 for the three and nine months ended September 30, 2023, respectively, and $ 13,148 and $ 38,757 for the three and nine months ended September 30, 2022, respectively, and variable lease cost, which principally include costs for real estate taxes, common area maintenance and other operating expenses of $ 1,545 and $ 4,434 for the three and nine months ended September 30, 2023, respectively, and $ 1,781 and $ 5,425 for the three and nine months ended September 30, 2022, respectively. In conjunction with the lease of office space, the Company has entered into letters of credit in the amount of $ 5,725 and $ 5,637 as of September 30, 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 $ 1,416 and $ 4,201 for the three and nine months ended September 30, 2023, respectively, and $ 1,205 and $ 3,706 for the three and nine months ended September 30, 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 $ 37,282 and $ 44,718 for the nine months ended September 30, 2023 and 2022, respectively, related to its operating leases, which was net of cash received from lease incentives of $ 3,056 and $ 867 for the nine months ended September 30, 2023 and 2022, respectively. Other information as it relates to the Company's operating leases is as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 New Right-of-Use Assets obtained in exchange for new operating lease liabilities $ 24,889 $ 4,538 $ 182,504 $ 11,743 September 30, 2023 September 30, 2022 Weighted-average remaining lease term - operating leases 10.9 years 10.6 years Weighted-average discount rate - operating leases 4.54 % 3.91 % In the second and third quarters of 2023, the Company's lease for certain floors at 55 East 52nd St., New York, New York commenced. The lease term will end on December 31, 2035. New Right-of-Use Assets obtained in exchange for new operating lease liabilities above for the three and nine months ended September 30, 2023 includes $ 20,773 and $ 156,375 , respectively, related to this space. In December 2022, the Company entered into a lease agreement to take on 38 rentable square feet in New York, New York. The Company's lease of this space commenced in January 2023 and the lease term will end on December 31, 2035. 16 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) As of September 30, 2023, the maturities of the undiscounted operating lease liabilities for which the Company has commenced use are as follows: 2023 (October 1 through December 31) $ 11,224 2024 46,882 2025 66,150 2026 63,555 2027 50,079 Thereafter 387,056 Total lease payments 624,946 Less: Tenant Improvement Allowances ( 10,311 ) Less: Imputed Interest ( 141,505 ) Present value of lease liabilities 473,130 Less: Current lease liabilities ( 34,984 ) Long-term lease liabilities $ 438,146 The Company has entered into certain lease agreements 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 these leases will commence by the end of 2023 and will have lease terms of 1 to 3 years once they have commenced. The additional future payments under these arrangements are $ 197 as of September 30, 2023. In conjunction with its lease agreements at 55 East 52nd St., New York, New York, the Company has an option, subject to definitive documentation, to take on an additional three floors, which it exercised during October 2023. The Company anticipates that it will take possession of this space by the end of 2024 and the lease term will end on December 31, 2035. 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 September 30, 2023 and December 31, 2022: 17 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) September 30, 2023 Level 1 Level 2 Level 3 Total Debt Securities Carried by EGL $ 471,016 $ — $ — $ 471,016 Other Debt and Equity Securities (1) 437,538 — — 437,538 Investment Funds 148,673 — — 148,673 Total Assets Measured At Fair Value $ 1,057,227 $ — $ — $ 1,057,227 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 $ 3,770 and $ 7,939 of treasury bills classified within Cash and Cash Equivalents on the Unaudited Condensed Consolidated Statements of Financial Condition as of September 30, 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. 18 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) September 30, 2023 Carrying Estimated Fair Value Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash and Cash Equivalents $ 488,820 $ 488,820 $ — $ — $ 488,820 Certificates of Deposit 84,163 — 84,163 — 84,163 Receivables (1) 412,010 — 409,108 — 409,108 Contract Assets (2) 50,462 — 49,896 — 49,896 Closely-held Equity Securities 609 — — 609 609 Financial Liabilities: Accounts Payable and Accrued Expenses $ 28,964 $ — $ 28,964 $ — $ 28,964 Payable to Employees and Related Parties 32,127 — 32,127 — 32,127 Notes Payable 372,419 — 343,179 — 343,179 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 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 (the "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 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 19 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 September 30, 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. In conjunction with the June 2022 prepayment and the acceleration of the remaining debt issuance costs, the Company recorded a loss of $ 456 for the nine months ended September 30, 2022, included within Special Charges, Including Business Realignment Costs, on the Unaudited Condensed Consolidated Statements of Operations. 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 September 30, 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 September 30, 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. 20 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 September 30, 2023, the Company was in compliance with all of these covenants. Notes Payable is comprised of the following as of September 30, 2023 and December 31, 2022: Carrying Value (1) Note Maturity Date Effective Annual Interest Rate September 30, 2023 December 31, 2022 Evercore Inc. 5.48 % Series C Senior Notes 3/30/2026 5.64 % $ 47,821 $ 47,772 Evercore Inc. 5.58 % Series D Senior Notes 3/30/2028 5.72 % 16,905 16,891 Evercore Inc. 4.34 % Series E Senior Notes 8/1/2029 4.46 % 74,528 74,470 Evercore Inc. 4.44 % Series F Senior Notes 8/1/2031 4.55 % 59,577 59,545 Evercore Inc. 4.54 % Series G Senior Notes 8/1/2033 4.64 % 39,697 39,679 Evercore Inc. 3.33 % Series H Senior Notes 8/1/2033 3.42 % 30,263 30,003 Evercore Inc. 1.97 % Series I Senior Notes 8/1/2025 2.20 % 37,846 37,785 Evercore Inc. 4.61 % Series J Senior Notes 11/15/2028 5.02 % 65,782 65,629 Total $ 372,419 $ 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 October 24, 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 November 24, 2023, which will be paid on December 8, 2023. During the three and nine months ended September 30, 2023, the Company declared and paid dividends of $ 0.76 and $ 2.24 per share, respectively, totaling $ 28,592 and $ 85,202 , respectively, and accrued deferred cash dividends on unvested restricted stock units ("RSUs") totaling $ 4,058 and $ 12,717 , respectively. The Company also paid deferred cash dividends of $ 185 and $ 13,854 during the three and nine months ended September 30, 2023, respectively. During the three and nine months ended September 30, 2022, the Company declared and paid dividends of $ 0.72 and $ 2.12 per share, respectively, totaling $ 28,052 and $ 83,739 , respectively, and accrued deferred cash dividends on unvested RSUs totaling $ 2,883 and $ 11,245 , respectively. The Company also paid deferred cash dividends of $ 166 and $ 15,347 during the three and nine months ended September 30, 2022, respectively. Treasury Stock – During the three months ended September 30, 2023, the Company purchased 17 Class A Shares from employees at an average cost per share of $ 135.28 , primarily for the net settlement of stock-based compensation awards, and 280 Class A Shares at an average cost per share of $ 137.79 pursuant to the Company's share repurchase program. The aggregate 297 Class A Shares were purchased at an average cost per share of $ 137.65 and the result of these purchases was an increase in Treasury Stock of $ 40,817 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. During the nine months ended September 30, 2023, the Company purchased 953 Class A Shares from employees at an average cost per share of $ 131.34 , primarily for the net settlement of stock-based compensation awards, and 2,033 Class A Shares at an average cost per share of $ 127.85 pursuant to the Company's share repurchase program. The aggregate 2,986 Class A Shares were purchased at an average cost per share of $ 128.97 and the result of these purchases was an increase in Treasury Stock of $ 385,053 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. 21 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) LP Units – During the three and nine months ended September 30, 2023, 38 and 82 Evercore LP partnership units ("LP Units"), respectively, were exchanged for Class A Shares, resulting in an increase to Class A Common Stock of $ 1 for the three and nine months ended September 30, 2023, and an increase to Additional Paid-In Capital of $ 2,353 and $ 5,127 for the three and nine months ended September 30, 2023, respectively, on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. See Note 12 for further information. Accumulated Other Comprehensive Income (Loss) – As of September 30, 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 ($ 5,398 ) and ($ 22,527 ), respectively. 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 September 30, 2023 2022 Evercore LP (1) 7 % 6 % Evercore Wealth Management ("EWM") (2) 26 % 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 as of September 30, 2022 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 September 30, 2023, the EWM members held 26 % of the outstanding EWM Units. Changes in Noncontrolling Interest for the three and nine months ended September 30, 2023 and 2022 were as follows: 22 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 September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Beginning balance $ 198,925 $ 170,150 $ 189,607 $ 314,910 Comprehensive Income: Net Income Attributable to Noncontrolling Interest 6,625 9,198 20,444 42,543 Other Comprehensive Income (Loss) ( 747 ) ( 1,988 ) ( 33 ) ( 3,935 ) Total Comprehensive Income 5,878 7,210 20,411 38,608 Evercore LP Units Exchanged for Class A Shares ( 2,354 ) ( 47 ) ( 5,128 ) ( 159,354 ) Amortization and Vesting of LP Units 6,538 5,403 19,173 17,932 Other Items: Distributions to Noncontrolling Interests ( 7,368 ) ( 6,533 ) ( 23,019 ) ( 36,126 ) Issuance of Noncontrolling Interest — — 733 300 Purchase of Noncontrolling Interest — ( 108 ) ( 158 ) ( 195 ) Total Other Items ( 7,368 ) ( 6,641 ) ( 22,444 ) ( 36,021 ) Ending balance $ 201,619 $ 176,075 $ 201,619 $ 176,075 Other Comprehensive Income – Other Comprehensive Income (Loss) Attributed to Noncontrolling Interest includes unrealized gains (losses) on securities and investments, net, of $ 2 and ($ 281 ) for the three and nine months ended September 30, 2023, respectively, and $ 109 and $ 137 for the three and nine months ended September 30, 2022, respectively, and foreign currency translation adjustment gains (losses), net, of ($ 749 ) and $ 248 for the three and nine months ended September 30, 2023, respectively, and ($ 2,097 ) and ($ 4,072 ) for the three and nine months ended September 30, 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 and nine months ended September 30, 2023, 38 and 82 LP Units, respectively, were exchanged for Class A Shares. This resulted in a decrease to Noncontrolling Interest of $ 2,354 and $ 5,128 for the three and nine months ended September 30, 2023, respectively, an increase to Additional Paid-In Capital of $ 2,353 and $ 5,127 for the three and nine months ended September 30, 2023, respectively, and an increase to Class A Common Stock of $ 1 for the three and nine months ended September 30, 2023 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. See Note 11 for further information. Interests Purchased – During the second quarter of 2023, the Company purchased, at fair value, an additional 0.7 % of the EWM Class A Units for $ 2,002 . This purchase resulted in a decrease to Noncontrolling Interest of $ 158 and a decrease to Additional Paid-In Capital of $ 1,844 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. During the third quarter of 2022, the Company purchased, at fair value, an additional 0.5 % of the EWM Class A Units for $ 1,706 . This purchase resulted in a decrease to Noncontrolling Interest of $ 108 and a decrease to Additional Paid-In Capital of $ 1,598 on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2022. 23 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 . 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 September 30, 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 nine months ended September 30, 2022, and contingent cash consideration which is due to be settled in early 2024. The Company paid $ 181 and $ 896 of this contingent cash consideration during the three and nine months ended September 30, 2023, respectively. The fair value of the remaining contingent consideration is $ 2,447 as of September 30, 2023, $ 1,980 of which is included within Payable to Employees and Related Parties and the remainder of which is included within Other Current Liabilities 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. The change in the fair value of contingent consideration increased Other Operating Expenses by $ 51 for the three months ended September 30, 2023 and reduced Other Operating Expenses by $ 2,408 for the nine months ended September 30, 2023, and reduced Other Operating Expenses by $ 8,784 and $ 12,062 for the three and nine months ended September 30, 2022, respectively, 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 are also 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 and nine months ended September 30, 2023 and 2022 are described and presented below. 24 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 September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Basic Net Income Per Share Attributable to Evercore Inc. Common Shareholders Numerator: Net income attributable to Evercore Inc. common shareholders $ 52,148 $ 82,438 $ 172,731 $ 336,081 Denominator: Weighted average Class A Shares outstanding, including vested RSUs 37,823 39,114 38,179 39,375 Basic net income per share attributable to Evercore Inc. common shareholders $ 1.38 $ 2.11 $ 4.52 $ 8.54 Diluted Net Income Per Share Attributable to Evercore Inc. Common Shareholders Numerator: Net income attributable to Evercore Inc. common shareholders $ 52,148 $ 82,438 $ 172,731 $ 336,081 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 $ 52,148 $ 82,438 $ 172,731 $ 336,081 Denominator: Weighted average Class A Shares outstanding, including vested RSUs 37,823 39,114 38,179 39,375 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) 2,082 1,279 1,640 1,513 Shares that are contingently issuable (3) 95 134 88 216 Diluted weighted average Class A Shares outstanding 40,000 40,527 39,907 41,104 Diluted net income per share attributable to Evercore Inc. common shareholders $ 1.30 $ 2.03 $ 4.33 $ 8.18 (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 and nine months ended September 30, 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 2,790 and 2,787 for the three and nine months ended September 30, 2023, respectively, and 2,650 and 3,078 for the three and nine months ended September 30, 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 $ 4,422 and $ 14,326 for the three and nine months ended September 30, 2023, respectively, and $ 6,123 and $ 32,853 for the three and nine months ended September 30, 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. 25 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) (2) During the three and nine months ended September 30, 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 3,112 and 2,010 for the three and nine months ended September 30, 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 Evercore 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 nine months ended September 30, 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. The second tranche of these Class K-P Units may convert into a maximum of 173 Class K LP Units, contingent upon the achievement of defined benchmark results and continued service as described above. • 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. These Class K-P Units may convert into a maximum of 800 Class K LP Units, contingent upon the achievement of certain market conditions, defined benchmark results and continued service as described above. • 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 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 26 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 may convert into a maximum of 320 Class K LP Units, contingent upon the achievement of certain market conditions, defined benchmark results and continued service as described above. • In June 2023, the Company awarded 60 Class K-P Units to an employee of the Company. These 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 June 30, 2027. As this award contains market, performance and service conditions, the expense for this award will be recognized over the service period 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 may convert into 60 Class K LP Units contingent upon the achievement of certain market conditions and continued service, while additional units may be received in conversion based on a multiple of certain revenues earned. The Company determined the grant date fair value of these awards probable to vest as of September 30, 2023 to be $ 106,137 , related to 956 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 $ 6,467 and $ 19,001 for the three and nine months ended September 30, 2023, respectively, and $ 5,403 and $ 17,179 for the three and nine months ended September 30, 2022, respectively. Class L Interests – In April 2021, January 2022 and January 2023, 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 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 the named executive officers of the Company in respect of their service for 2021, 2022 and 2023, respectively. Following the distributions in 2021 and 2022, the Class L Interests were cancelled pursuant to their terms. 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 the grant of an additional 6,500 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 5,179 as of September 30, 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. 27 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) Equity Grants During the nine months ended September 30, 2023, pursuant to the Second Amended 2016 Plan, the Company granted employees 2,450 RSUs that are Service-based Awards. Service-based Awards granted during the nine months ended September 30, 2023 had grant date fair values of $ 107.89 to $ 142.25 per share, with an average value of $ 135.70 per share, for an aggregate fair value of $ 332,488 , and generally vest ratably over four years . During the nine months ended September 30, 2023, 2,187 Service-based Awards vested and 158 Service-based Awards were forfeited. Compensation expense related to Service-based Awards was $ 70,458 and $ 216,253 for the three and nine months ended September 30, 2023, respectively, and $ 63,385 and $ 191,229 for the three and nine months ended September 30, 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 $ 32,323 and $ 114,990 for the three and nine months ended September 30, 2023, respectively, and $ 30,040 and $ 89,025 for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, the Company expects to pay an aggregate of $ 350,188 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 $ 200,933 . The weighted-average period over which this compensation cost is expected to be recognized is 23 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 $ 2,374 and $ 9,126 for the three and nine months ended September 30, 2023, respectively, and $ 3,139 and $ 12,466 for the three and nine months ended September 30, 2022, respectively. Long-term Incentive Plan The Company's Long-term Incentive Plans provide 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 nine months ended September 30, 2023, $ 3,940 in the nine months ended September 30, 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 accrued pursuant to the 2021 Long-term Incentive Plan of $ 117,790 are included within Other Long-Term Liabilities on the Company's Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023 and may 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 28 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 $ 7,547 and $ 29,803 for the three and nine months ended September 30, 2023, respectively, and $ 16,152 and $ 45,414 for the three and nine months ended September 30, 2022, respectively. As of September 30, 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 $ 113,459 . 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 $ 7,573 and $ 19,313 for the three and nine months ended September 30, 2023, respectively, and $ 8,229 and $ 21,668 for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, the total compensation cost not yet recognized related to these awards was $ 47,823 . 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 nine months ended September 30, 2023 and 2022: For the Nine Months Ended September 30, 2023 2022 Beginning Balance $ 4,997 $ 675 Termination Costs Incurred 4,904 2,680 Cash Benefits Paid ( 7,908 ) ( 3,067 ) Non-Cash Charges — ( 80 ) Ending Balance $ 1,993 $ 208 In addition to the above Termination Costs incurred, the Company also incurred expenses related to the acceleration of the amortization of share-based payments previously granted to affected employees of $ 2,030 and $ 4,288 for the three and nine months ended September 30, 2023, respectively, (related to 39 RSUs) and $ 641 and $ 1,335 for the three and nine months ended September 30, 2022, respectively, (related to 17 RSUs) 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 September 30, 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, as amended on June 29, 2023, in an aggregate principal amount of up to $ 30,000 (the "Existing PNC Facility") 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 September 30, 2023. The interest rate provisions are Daily SOFR 29 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) plus 161 basis points and the maturity date is October 27, 2024. There were no drawings under this facility at September 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 $ 55,000 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 September 30, 2023. The interest rate provisions are 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 September 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 $ 75,000 , 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 September 30, 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 $ 181 and $ 896 of this contingent cash consideration during the three and nine months ended September 30, 2023, respectively. The fair value of the remaining contingent consideration is $ 2,447 as of September 30, 2023, $ 1,980 of which is included within Payable to Employees and Related Parties and the remainder of which is included within Other Current Liabilities 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: September 30, 2023 2022 Cash and Cash Equivalents $ 492,590 $ 473,066 Restricted Cash included in Other Assets 8,862 9,105 Total Cash, Cash Equivalents and Restricted Cash shown in the Statement of Cash Flows $ 501,452 $ 482,171 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 estimated present value of incurred but not reported claims is $ 3,165 as of September 30, 2023, which is included within Accrued Compensation and Benefits on the Unaudited Condensed Consolidated Statement of Financial Condition. 30 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 settled during the third quarter of 2023. The Company entered into a new foreign currency exchange forward contract during the third quarter of 2023, upon expiration of the above contract, to buy 30,000 British Pounds sterling for $ 36,675 , which will settle during the first quarter of 2024. The contract is recorded at its fair value. The Company recorded a loss of ($ 34 ) for the three and nine months ended September 30, 2023, which is included within Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statement of Operations. 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 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 September 30, 2023 and December 31, 2022 was $ 383,746 and $ 274,131 , respectively, which exceeded the minimum net capital requirement by $ 383,496 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 September 30, 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 September 30, 2023. Note 17 – Income Taxes The Company's Provision for Income Taxes was $ 19,717 and $ 52,945 for the three and nine months ended September 30, 2023, respectively, and $ 40,790 and $ 114,134 for the three and nine months ended September 30, 2022, respectively. The effective tax rate was 25.1 % and 21.5 % for the three and nine months ended September 30, 2023, respectively, and 30.8 % and 23.2 % for the three and nine months ended September 30, 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 $ 14,071 and $ 19,657 for the nine months ended September 30, 2023 and 2022, respectively, which resulted in a reduction in the effective tax rate of 5.7 and 4.0 percentage points for the nine months ended September 30, 2023 and 2022, respectively. The effective tax rate for 2023 and 2022 also reflects the effect of certain nondeductible expenses, 31 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) 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 and nine months ended September 30, 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 $ 1,016 associated with changes in Unrealized Gain (Loss) on Securities and Investments and a decrease of $ 992 associated with changes in Foreign Currency Translation Adjustment Gain (Loss), in Accumulated Other Comprehensive Income (Loss) for the nine months ended September 30, 2023. The Company recorded a decrease in deferred tax assets of $ 485 associated with changes in Unrealized Gain (Loss) on Securities and Investments and an increase of $ 14,722 associated with changes in Foreign Currency Translation Adjustment Gain (Loss), in Accumulated Other Comprehensive Income (Loss) for the nine months ended September 30, 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 September 30, 2023, there were $ 359 of unrecognized tax benefits that, if recognized, $ 292 would affect the effective tax rate. Related to the unrecognized tax benefits, the Company accrued interest and penalties of $ 17 and $ 1 , respectively, during the three months ended September 30, 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 and nine months ended September 30, 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 32 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) • 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 relate to Special Charges, Including Business Realignment Costs, which include the following: • 2023 – Other Expenses for the nine months ended September 30, 2023 include expenses related to the write-off of non-recoverable assets in connection with the wind-down of the Company's operations in Mexico • 2022 – Other Expenses for the nine months ended September 30, 2022 include expenses related to charges associated with the prepayment of the Company's Series B Notes during the second quarter, as well as certain professional fees related to 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. No client accounted for more than 10% of the Company's Consolidated Net Revenues for the three and nine months ended September 30, 2023 and 2022. The following information presents each segment's contribution. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Investment Banking & Equities Net Revenues (1) $ 552,641 $ 560,518 $ 1,589,698 $ 1,880,069 Operating Expenses 479,429 433,599 1,356,853 1,404,711 Other Expenses — — 2,921 532 Operating Income 73,212 126,919 229,924 474,826 Income from Equity Method Investments 180 451 394 989 Pre-Tax Income $ 73,392 $ 127,370 $ 230,318 $ 475,815 Identifiable Segment Assets $ 3,068,495 $ 2,986,364 $ 3,068,495 $ 2,986,364 Investment Management Net Revenues (1) $ 17,579 $ 16,419 $ 52,084 $ 50,639 Operating Expenses 13,965 12,939 40,562 39,520 Operating Income 3,614 3,480 11,522 11,119 Income from Equity Method Investments 1,484 1,576 4,280 5,824 Pre-Tax Income $ 5,098 $ 5,056 $ 15,802 $ 16,943 Identifiable Segment Assets $ 157,303 $ 164,905 $ 157,303 $ 164,905 Total Net Revenues (1) $ 570,220 $ 576,937 $ 1,641,782 $ 1,930,708 Operating Expenses 493,394 446,538 1,397,415 1,444,231 Other Expenses — — 2,921 532 Operating Income 76,826 130,399 241,446 485,945 Income from Equity Method Investments 1,664 2,027 4,674 6,813 Pre-Tax Income $ 78,490 $ 132,426 $ 246,120 $ 492,758 Identifiable Segment Assets $ 3,225,798 $ 3,151,269 $ 3,225,798 $ 3,151,269 33 Table of Contents EVERCORE INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share amounts, unless otherwise noted) (1) Net Revenues include Other Revenue, net, allocated to the segments as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Investment Banking & Equities (A) $ 5,729 $ ( 5,603 ) $ 46,472 $ ( 40,066 ) Investment Management 275 778 2,247 1,915 Total Other Revenue, net $ 6,004 $ ( 4,825 ) $ 48,719 $ ( 38,151 ) (A) Other Revenue, net, from the Investment Banking & Equities segment includes interest expense on the Notes Payable and lines of credit of $ 4,184 and $ 12,536 for the three and nine months ended September 30, 2023, respectively, and $ 4,188 and $ 12,696 for the three and nine months ended September 30, 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: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Net Revenues: (1) United States $ 417,553 $ 374,571 $ 1,156,979 $ 1,408,491 Europe and Other 145,065 206,893 425,137 553,926 Latin America 1,598 298 10,947 6,442 Total $ 564,216 $ 581,762 $ 1,593,063 $ 1,968,859 (1) Excludes Other Revenue, Including Interest and Investments, and Interest Expense. The Company's total assets are located in the following geographical areas: September 30, 2023 December 31, 2022 Total Assets: United States $ 2,777,971 $ 2,902,153 Europe and Other 447,827 718,770 Total $ 3,225,798 $ 3,620,923 34 Table of Contents