Evercore Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with Evercore Inc.'s unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q. Forward-Looking Statements This report contains, or incorporates by reference, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act, which reflect our current views with respect to, among other things, our operations and financial performance. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "backlog," "believes," "expects," "potential," "probable," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. All statements, other than statements of historical fact, included in this report are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. All statements other than statements of historical fact are forward-looking statements and, based on various underlying assumptions and expectations, are subject to known and unknown risks, uncertainties and assumptions and may include projections of our future financial performance based on our growth strategies and anticipated trends in Evercore's business. We believe these factors include, but are not limited to, those described under "Risk Factors" discussed in the Annual Report on Form 10-K for the year ended December 31, 2023. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included or incorporated by reference in this report. In addition, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise except as required by law. Key Financial Measures Revenue Total revenues reflect revenues from our Investment Banking & Equities and Investment Management business segments that include fees for services, transaction-related client reimbursements and other revenue. Net revenues reflect total revenues less interest expense. Investment Banking & Equities. Our Investment Banking & Equities segment earns fees from its clients for providing advice on mergers, acquisitions, divestitures, capital raising, leveraged buyouts, liability management and restructurings, private funds advisory and private capital markets services, activism and defense and similar corporate finance matters, and from underwriting and private placement activities, as well as commissions, fees and principal revenues from research and sales and trading activities. The amount and timing of the fees paid vary by the type of engagement or services provided. In general, advisory fees are paid at the time we sign an engagement letter, during the course of the engagement or when an engagement is completed. The majority of our revenue consists of advisory fees for which realizations are dependent on the successful completion of client transactions. A transaction can fail to be completed for many reasons which are outside of our control, including failure of parties to agree upon final terms with the counterparty, to secure necessary board or shareholder approvals, to secure necessary financing, to achieve necessary regulatory approvals, or due to adverse market conditions. In the case of bankruptcy engagements, fees may be subject to court approval. Underwriting fees are recognized when the offering has been deemed to be completed and placement fees are generally recognized at the time of the client's acceptance of capital or capital commitments. Commissions and Related Revenue includes commissions, which are recorded on a trade-date basis or, in the case of payments under commission sharing arrangements, on the date earned. Commissions and Related Revenue also includes subscription fees for the sales of research, as well as revenues from trades primarily executed on a riskless principal basis. Cash received before the subscription period ends is initially recorded as deferred revenue (a contract liability) and recognized as revenue over the remaining subscription period. 35 Table of Contents Revenue trends in our advisory business generally are correlated to the volume of merger and acquisitions ("M&A") activity, restructuring activity, which generally tends to be counter-cyclical to M&A, and capital advisory activity. Demand for these capabilities can vary in any given year or quarter for a number of reasons. For example, changes in our market share or the ability of our clients to close certain large transactions can cause our revenue results to diverge from the level of overall M&A, restructuring or capital advisory activity. Revenue trends in our equities business are correlated, in part, to market volumes, which generally decrease in periods of low market volatility or unfavorable market or economic conditions. See "Liquidity and Capital Resources" below for further information. Investment Management. Our Investment Management segment includes operations related to the Wealth Management business and interests in private equity funds which we do not manage. Revenue sources primarily include management fees, fiduciary fees and gains (or losses) on our investments. Management fees for third party clients generally represent a percentage of assets under management ("AUM"). Fiduciary fees, which are generally a function of the size and complexity of each engagement, are individually negotiated. Gains and losses include both realized and unrealized gains and losses on principal investments, including those arising from our equity interest in investment partnerships. Transaction-Related Client Reimbursements . In our Investment Banking & Equities segment, we incur various transaction-related expenditures, such as travel and professional fees, in the course of performing our services. Pursuant to the engagement letters with our advisory clients, these expenditures may be reimbursable. We define these expenses, which are associated with revenue activities earned over time, as transaction-related expenses and record such expenditures as incurred and record revenue when it is determined that clients have an obligation to reimburse us for such transaction-related expenses. Client expense reimbursements are recorded as revenue on the Unaudited Condensed Consolidated Statements of Operations on the later of the date an engagement letter is executed or the date we pay or accrue the expense. Other Revenue and Interest Expense. Other Revenue includes the following: • Interest income, including accretion, and income (losses) on investment securities, including our investment funds (which are used as an economic hedge against our deferred cash compensation program), certificates of deposit, cash and cash equivalents and long-term accounts receivable • A gain on the sale of the remaining portion of our interest in ABS in the third quarter of 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information • A loss related to the release of cumulative foreign exchange losses resulting from the redemption of our interest in Luminis in the third quarter of 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information • Gains (losses) resulting from foreign currency exchange rate fluctuations and foreign currency exchange forward contracts used as an economic hedge • Realized and unrealized gains and losses on interests in private equity funds which we do not manage • Adjustments to amounts due pursuant to our tax receivable agreement, subsequent to its initial establishment, related to changes in enacted tax rates Interest Expense includes interest expense associated with our Notes Payable and lines of credit. Operating Expenses Employee Compensation and Benefits Expense. We include all payments for services rendered by our employees, as well as profits interests in our businesses that have been accounted for as compensation, in employee compensation and benefits expense. We maintain compensation programs, including base salary, cash, deferred cash and equity bonus awards and benefits programs and manage compensation to estimates of competitive levels based on market conditions and performance. Our level of compensation, including deferred compensation, reflects our plan to maintain competitive compensation levels to retain key personnel, and it reflects the impact of newly-hired senior professionals upon their start date, including related grants of equity 36 Table of Contents and other awards, which are generally valued at their grant date and recorded in employee compensation and benefits expense over the requisite service period. Increasing the number of high-caliber, experienced senior level employees is critical to our growth efforts. In our advisory businesses, these hires, which begin their service throughout any given year, generally do not begin to generate significant revenue in the year they are hired. Our annual compensation program includes share-based compensation awards and deferred cash awards as a component of the annual bonus awards for certain employees. These awards, the amount granted of which is a function of performance and market conditions, are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each year; accordingly, the expense is generally amortized over the stated vesting period, subject to retirement eligibility. With respect to annual awards, our retirement eligibility criteria generally stipulates that an employee is eligible for retirement if the employee has at least five years of continuous service, is at least 55 years of age and has a combined age and years of service of at least 65 years, or if an employee has at least 10 years of continuous service and is at least 60 years of age. Retirement eligibility allows for continued vesting of awards after employees depart from the Company, provided they give the minimum advance notice, which is generally six months to one year and comply with certain post-termination obligations. We estimate forfeitures in the aggregate compensation cost to be amortized over the requisite service period of the awards. We periodically monitor our estimated forfeiture rate and adjust our 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. In January 2022, 2023 and 2024, our Board of Directors approved the issuance of Class L Interests to certain of our named executive officers, pursuant to which the named executive officers receive a discretionary distribution of profits from Evercore LP, paid in the first quarters of 2023, 2024 and 2025, respectively. Distributions pursuant to these interests are made in lieu of any cash incentive compensation payments which may otherwise have been made to our named executive officers in respect of their service for 2022, 2023 and 2024, respectively. Following the distributions, the Class L Interests are cancelled pursuant to their terms. We record expense equal to the amount of these distributions in Employee Compensation and Benefits on the Unaudited Condensed Consolidated Statements of Operations and reflect accrued liabilities in Accrued Compensation and Benefits on the Unaudited Condensed Consolidated Statements of Financial Condition. Our Long-term Incentive Plans provide for incentive compensation awards for Advisory Senior Managing Directors, excluding executive officers, who exceed defined benchmark results over four-year performance periods beginning January 1, 2017 (which ended on December 31, 2020), pursuant to the 2017 Long-term Incentive Plan, and January 1, 2021, pursuant to the 2021 Long-term Incentive Plan. The vesting period for the 2017 Long-term Incentive Plan ended on March 15, 2023 and in conjunction with this plan we made cash distributions in 2023, 2022 and 2021. Amounts accrued pursuant to the 2021 Long-term Incentive Plan may be paid, in cash or Class A Shares, at our discretion, in the first quarter of 2025, 2026 and 2027, subject to employment at the time of payment. We periodically assess the probability of the benchmarks being achieved and expense the probable payout over the requisite service period of the award. From time to time, we also grant incentive awards to certain individuals which include both performance and service-based vesting requirements and, in certain awards, market based requirements. These include Class K-P Units issued by Evercore LP and certain RSU awards. See Note 14 to our unaudited condensed consolidated financial statements for further information. We believe that the ratio of Employee Compensation and Benefits Expense to Net Revenues is an important measure to assess the annual cost of compensation relative to performance and provides a meaningful basis for comparison of compensation and benefits expense between present, historical and future years. Non-Compensation Expenses. Our other operating expenses include costs for occupancy and equipment rental, professional fees, travel and related expenses, communications and information technology services, depreciation and amortization, execution, clearing and custody fees and other operating expenses. We refer to all of these expenses as non-compensation expenses. 37 Table of Contents Other Expenses Other Expenses include Special Charges, Including Business Realignment Costs: • 2024 – Expenses for the three and nine months ended September 30, 2024 related to the write-off of the remaining carrying value of our investment in Luminis in connection with the redemption of our interest • 2023 – Expenses for the nine months ended September 30, 2023 related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico Income from Equity Method Investments Our share of the income (loss) from our equity interests in ABS (through July 2024), Atalanta Sosnoff, Luminis (through September 2024) and Seneca Evercore are included within Income from Equity Method Investments, as a component of Income Before Income Taxes, on the Unaudited Condensed Consolidated Statements of Operations. See Note 7 to our unaudited condensed consolidated financial statements for further information. Provision for Income Taxes We account for income taxes in accordance with ASC 740, "Income Taxes" , which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Excess tax benefits and deficiencies associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price are recognized in our Provision for Income Taxes. In addition, net deferred tax assets are impacted by changes to statutory tax rates in the period of enactment. See Note 17 to our unaudited condensed consolidated financial statements for further information. Noncontrolling Interest We record noncontrolling interest relating to the ownership interests of certain of our current and former Senior Managing Directors and other officers and their estate planning vehicles in Evercore LP, as well as the portions of our operating subsidiaries not owned by Evercore. Evercore Inc. is the sole general partner of Evercore LP and has a majority economic interest in Evercore LP. As a result, Evercore Inc. consolidates Evercore LP and records a noncontrolling interest for the economic interest in Evercore LP held by the limited partners. We generally allocate net income or loss to participating noncontrolling interests held at Evercore LP and at the operating entity level, where required, by multiplying the relative ownership interest of the noncontrolling interest holders for the period by the net income or loss of the entity to which the noncontrolling interest relates. 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. See Note 12 to our unaudited condensed consolidated financial statements for further information. 38 Table of Contents Results of Operations The following is a discussion of our results of operations for the three and nine months ended September 30, 2024 and 2023. For a more detailed discussion of the factors that affected the revenue and operating expenses of our Investment Banking & Equities and Investment Management business segments in these periods, see the discussion in "Business Segments" below. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (dollars and share amounts in thousands, except per share data) Revenues Investment Banking & Equities: Advisory Fees $ 592,980 $ 467,401 27 % $ 1,591,049 $ 1,304,519 22 % Underwriting Fees 44,132 30,814 43 % 130,666 91,897 42 % Commissions and Related Revenue 54,559 48,697 12 % 155,996 146,810 6 % Asset Management and Administration Fees 20,555 17,304 19 % 58,454 49,837 17 % Other Revenue, Including Interest and Investments 26,194 10,188 157 % 80,671 61,255 32 % Total Revenues 738,420 574,404 29 % 2,016,836 1,654,318 22 % Interest Expense 4,198 4,184 — % 12,575 12,536 — % Net Revenues 734,222 570,220 29 % 2,004,261 1,641,782 22 % Expenses Operating Expenses 604,924 493,394 23 % 1,682,600 1,397,415 20 % Other Expenses 7,305 — NM 7,305 2,921 150 % Total Expenses 612,229 493,394 24 % 1,689,905 1,400,336 21 % Income Before Income from Equity Method Investments and Income Taxes 121,993 76,826 59 % 314,356 241,446 30 % Income from Equity Method Investments 1,072 1,664 (36 %) 5,254 4,674 12 % Income Before Income Taxes 123,065 78,490 57 % 319,610 246,120 30 % Provision for Income Taxes 34,971 19,717 77 % 56,659 52,945 7 % Net Income 88,094 58,773 50 % 262,951 193,175 36 % Net Income Attributable to Noncontrolling Interest 9,701 6,625 46 % 25,107 20,444 23 % Net Income Attributable to Evercore Inc. $ 78,393 $ 52,148 50 % $ 237,844 $ 172,731 38 % Diluted Weighted Average Shares of Class A Common Stock Outstanding 42,038 40,000 5 % 41,325 39,907 4 % Diluted Net Income Per Share Attributable to Evercore Inc. Common Shareholders $ 1.86 $ 1.30 43 % $ 5.76 $ 4.33 33 % As of September 30, 2024 and 2023, we employed approximately 2,395 and 2,230 people, respectively. Three Months Ended September 30, 2024 versus September 30, 2023 Net Income Attributable to Evercore Inc. was $78.4 million for the three months ended September 30, 2024, an increase of $26.2 million, or 50%, compared to $52.1 million for the three months ended September 30, 2023. The changes in our operating results during these periods are described below. Net Revenues were $734.2 million for the three months ended September 30, 2024, an increase of $164.0 million, or 29%, versus Net Revenues of $570.2 million for the three months ended September 30, 2023. Advisory Fees increased $125.6 million, or 27%, Underwriting Fees increased $13.3 million, or 43%, and Commissions and Related Revenue increased $5.9 million, or 12%, compared to the three months ended September 30, 2023. Asset Management and Administration Fees 39 Table of Contents increased $3.3 million, or 19%, compared to the three months ended September 30, 2023. See "Business Segments" and "Liquidity and Capital Resources" below for further information. Ot her Revenue, Including Interest and Investments, increased $16.0 million, or 157%, compared to the three months ended September 30, 2023, primarily reflecting higher performance of our investment funds portfolio, as well as higher interest income. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program. Total Operating Expenses were $604.9 million for the three months ended September 30, 2024, compared to $493.4 million for the three months ended September 30, 2023, an increase of $111.5 million, or 23%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $488.0 million for the three months ended September 30, 2024, an increase of $96.3 million, or 25%, versus expense of $391.7 million for the three months ended September 30, 2023. The increase in the amount of compensation recognized for the three months ended September 30, 2024 principally reflects a higher accrual for incentive compensation, higher base salaries and higher amortization of prior period deferred compensation awards. Non-compensation expenses, as a component of Operating Expenses, were $116.9 million for the three months ended September 30, 2024, an increase of $15.2 million, or 15%, versus $101.7 million for the three months ended September 30, 2023. The increase was primarily driven by an increase in travel and related expenses, largely due to higher levels of business activity and increased headcount, as well as an increase in professional fees and communications and information services, principally reflecting higher expenses associated with license fees and research services. Non-Compensation expenses per employee were approximately $49.5 thousand for the three months ended September 30, 2024, versus $45.5 thousand for the three months ended September 30, 2023. Other Expenses of $7.3 million for the three months ended September 30, 2024 reflected Special Charges, Including Business Realignment Costs, related to the write-off of the remaining carrying value of our investment in Luminis in connection with the redemption of our interest. See Note 7 to our unaudited condensed consolidated financial statements for further information. As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 66.5% for the three months ended September 30, 2024, compared to 68.7% for the three months ended September 30, 2023. Income from Equity Method Investments was $1.1 million for the three months ended September 30, 2024, compared to $1.7 million for the three months ended September 30, 2023, a decrease of $0.6 million, or 36%, driven by the sale of the remaining portion of our interest in ABS during the third quarter of 2024. This decrease was partially offset by higher earnings from Atalanta Sosnoff during the three months ended September 30, 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information. The provision for income taxes for the three months ended September 30, 2024 was $35.0 million, which reflected an effective tax rate of 28.4%. The provision for income taxes for the three months ended September 30, 2023 was $19.7 million, which reflected an effective tax rate of 25.1%. The provision for income taxes for the three months ended September 30, 2024 reflects an increase in non-deductible expenses, state and local apportionment adjustments and the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $1.0 million. Net Income Attributable to Noncontrolling Interest was $9.7 million for the three months ended September 30, 2024, compared to $6.6 million for the three months ended September 30, 2023. The increase in Net Income Attributable to Noncontrolling Interest primarily reflects higher income at Evercore LP during the three months ended September 30, 2024. See Note 12 to our unaudited condensed consolidated financial statements for further information. Nine Months Ended September 30, 2024 versus September 30, 2023 Net Income Attributable to Evercore Inc. was $237.8 million for the nine months ended September 30, 2024, an increase of $65.1 million, or 38%, compared to $172.7 million for the nine months ended September 30, 2023. The changes in our operating results during these periods are described below. Net Revenues were $2.00 billion for the nine months ended September 30, 2024, an increase of $362.5 million, or 22%, versus Net Revenues of $1.64 billion for the nine months ended September 30, 2023. Advisory Fees increased $286.5 million, or 22%, Underwriting Fees increased $38.8 million, or 42%, and Commissions and Related Revenue increased $9.2 million, or 6%, compared to the nine months ended September 30, 2023. Asset Management and Administration Fees increased $8.6 40 Table of Contents million, or 17%, compared to the nine months ended September 30, 2023. See "Business Segments" and "Liquidity and Capital Resources" below for further information. Ot her Revenue, Including Interest and Investments, increased $19.4 million, or 32%, compared to the nine months ended September 30, 2023, primarily reflecting higher performance of our investment funds portfolio, as well as higher interest income. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program. Total Operating Expenses were $1.68 billion for the nine months ended September 30, 2024, compared to $1.40 billion for the nine months ended September 30, 2023, an increase of $285.2 million, or 20%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $1.33 billion for the nine months ended September 30, 2024, an increase of $237.7 million, or 22%, versus expense of $1.10 billion for the nine months ended September 30, 2023. The increase in the amount of compensation recognized for the nine months ended September 30, 2024 principally reflects a higher accrual for incentive compensation, higher base salaries and higher compensation expense related to senior new hires. Non-compensation expenses, as a component of Operating Expenses, were $348.0 million for the nine months ended September 30, 2024, an increase of $47.6 million, or 16%, versus $300.4 million for the nine months ended September 30, 2023. The increase was primarily driven by an increase in professional fees and travel and related expenses, largely due to higher levels of business activity and increased headcount, as well as an increase in communications and information services, principally reflecting higher expenses associated with license fees and research services in 2024. Non-Compensation expenses per employee were approximately $152.2 thousand for the nine months ended September 30, 2024, versus $137.7 thousand for the nine months ended September 30, 2023. Other Expenses of $7.3 million for the nine months ended September 30, 2024 reflected Special Charges, Including Business Realignment Costs, related to the write-off of the remaining carrying value of our investment in Luminis in connection with the redemption of our interest. See Note 7 to our unaudited condensed consolidated financial statements for further information. Other Expenses of $2.9 million for the nine months ended September 30, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico. As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 66.6% for the nine months ended September 30, 2024, compared to 66.8% for the nine months ended September 30, 2023. Income from Equity Method Investments was $5.3 million for the nine months ended September 30, 2024, compared to $4.7 million for the nine months ended September 30, 2023, an increase of $0.6 million, or 12%, reflecting higher earnings from Atalanta Sosnoff, Luminis and Seneca Evercore in 2024. This increase was partially offset by the sale of the remaining portion of our interest in ABS in 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information. The provision for income taxes for the nine months ended September 30, 2024 was $56.7 million, which reflected an effective tax rate of 17.7%. The provision for income taxes for the nine months ended September 30, 2023 was $52.9 million, which reflected an effective tax rate of 21.5%. The provision for income taxes for the nine months ended September 30, 2024 and 2023 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $32.0 million and $14.1 million, respectively, which resulted in a reduction in the effective tax rate of 10.0 and 5.7 percentage points for the nine months ended September 30, 2024 and 2023, respectively. Net Income Attributable to Noncontrolling Interest was $25.1 million for the nine months ended September 30, 2024, compared to $20.4 million for the nine months ended September 30, 2023. The increase in Net Income Attributable to Noncontrolling Interest primarily reflects higher income at Evercore LP, as well as EWM, during the nine months ended September 30, 2024. See Note 12 to our unaudited condensed consolidated financial statements for further information. 41 Table of Contents Business Segments The following data presents revenue, expenses and contributions from our equity method investments by business segment. Investment Banking & Equities The following table summarizes the operating results of the Investment Banking & Equities segment. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (dollars in thousands) Revenues Investment Banking & Equities: Advisory Fees $ 592,980 $ 467,401 27 % $ 1,591,049 $ 1,304,519 22 % Underwriting Fees 44,132 30,814 43 % 130,666 91,897 42 % Commissions and Related Revenue 54,559 48,697 12 % 155,996 146,810 6 % Other Revenue, net (1)(2) 21,104 5,729 268 % 66,802 46,472 44 % Net Revenues 712,775 552,641 29 % 1,944,513 1,589,698 22 % Expenses Operating Expenses 589,083 479,429 23 % 1,638,289 1,356,853 21 % Other Expenses 7,305 — NM 7,305 2,921 150 % Total Expenses 596,388 479,429 24 % 1,645,594 1,359,774 21 % Operating Income 116,387 73,212 59 % 298,919 229,924 30 % Income from Equity Method Investments (3) 207 180 15 % 1,042 394 164 % Pre-Tax Income $ 116,594 $ 73,392 59 % $ 299,961 $ 230,318 30 % (1) Includes interest expense on Notes Payable and lines of credit of $4.2 million and $12.6 million for the three and nine months ended September 30, 2024, respectively, and $4.2 million and $12.5 million for the three and nine months ended September 30, 2023, respectively. (2) Includes a loss of $0.7 million for the three and nine months ended September 30, 2024, related to the release of cumulative foreign exchange losses resulting from the redemption of our interest in Luminis. (3) Equity in Luminis and Seneca Evercore is classified within Income from Equity Method Investments. For the three months ended September 30, 2024, the dollar value of North American announced and completed M&A activity increased 2% and decreased 18%, respectively, compared to the three months ended September 30, 2023, and the dollar value of Global announced and completed M&A activity increased 18% and decreased 24%, respectively, compared to the three months ended September 30, 2023. For the three months ended September 30, 2024, the dollar value of North American and Global completed M&A activity over $100 million decreased 18% and 25%, respectively, compared to the three months ended September 30, 2023. For the nine months ended September 30, 2024, the dollar value of North American announced and completed M&A activity increased 20% and 7%, respectively, compared to the nine months ended September 30, 2023, and the dollar value of Global announced and completed M&A activity increased 17% and decreased 7%, respectively, compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the dollar value of North American and Global completed M&A activity over $100 million increased 9% and decreased 5%, respectively, compared to the nine months ended September 30, 2023. 42 Table of Contents For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change Industry Statistics ($ in billions) (1) Value of North American M&A Deals Announced $ 386 $ 380 2 % $ 1,193 $ 995 20 % Value of North American M&A Deals Completed $ 271 $ 332 (18 %) $ 956 $ 897 7 % Value of North American M&A Deals Completed Over $100 million $ 258 $ 315 (18 %) $ 913 $ 835 9 % Value of Global M&A Deals Announced $ 820 $ 694 18 % $ 2,305 $ 1,973 17 % Value of Global M&A Deals Completed $ 500 $ 662 (24 %) $ 1,701 $ 1,827 (7 %) Value of Global M&A Deals Completed Over $100 million $ 456 $ 606 (25 %) $ 1,557 $ 1,644 (5 %) Evercore Statistics Total Number of Fees From Advisory and Underwriting Client Transactions (2) 259 225 15 % 544 484 12 % Total Number of Fees of at Least $1 million from Advisory and Underwriting Client Transactions (2) 112 86 30 % 298 241 24 % Total Number of Underwriting Transactions (2) 17 11 55 % 53 40 33 % Total Number of Underwriting Transactions as a Bookrunner (2) 15 10 50 % 45 36 25 % (1) Source: Refinitiv October 7, 2024 (2) Includes Equity and Debt Underwriting Transactions. Investment Banking & Equities Results of Operations Three Months Ended September 30, 2024 versus September 30, 2023 Net Revenues were $712.8 million for the three months ended September 30, 2024 , compared to $552.6 million for the three months ended September 30, 2023 , an increase of $160.1 million, or 29%. The increase in revenues for the three months ended September 30, 2024 was primarily driven by an increase of $125.6 million, or 27%, in Advisory Fees, reflecting an increase in revenue earned from large transactions and an increase in the number of advisory fees earned during the third quarter of 2024. Underwriting Fees increased $13.3 million, or 43%, compared to the three months ended September 30, 2023, reflecting an increase in the number of transactions we participated in during the third quarter of 2024. Commissions and Related Revenue increased $5.9 million, or 12%, compared to the three months ended September 30, 2023 , primarily reflecting higher trading commissions and subscription fees . Other Revenue, net, increased $15.4 million, or 268% , compared to the three months ended September 30, 2023 , primarily reflecting higher performance of our investment funds portfolio, as well as higher interest income. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program. Operating Expenses were $589.1 million for the three months ended September 30, 2024 , compared to $479.4 million for the three months ended September 30, 2023, an increase of $109.7 million , or 23%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $476.0 million for the three months ended September 30, 2024 , compared to $381.1 million for the three months ended September 30, 2023 , an increase of $94.9 million , or 25% . The increase in the amount of compensation recognized for the three months ended September 30, 2024 principally reflects a higher accrual for incentive compensation, higher base salaries and higher amortization of prior period deferred compensation awards. Non-compensation expenses, as a component of Operating Expenses, were $113.1 million for the three months ended September 30, 2024, compared to $98.3 million for the three months ended September 30, 2023, an increase of $14.8 million , or 15% . Non-compensation operating expenses increased from the prior year period, primarily driven by an increase in travel and related expenses, largely due to higher levels of business activity and increased headcount, as well as an increase in professional fees and communications and information services, principally reflecting higher expenses associated with license fees and research services. Other Expenses of $7.3 million for the three months ended September 30, 2024 reflected Special Charges, Including Business Realignment Costs, related to the write-off of the remaining carrying value of our investment in Luminis in 43 Table of Contents connection with the redemption of our interest. See Note 7 to our unaudited condensed consolidated financial statements for further information. Nine Months Ended September 30, 2024 versus September 30, 2023 Net Revenues were $1.94 billion for the nine months ended September 30, 2024, compared to $1.59 billion for the nine months ended September 30, 2023, an increase of $354.8 million, or 22%. The increase in revenues for the nine months ended September 30, 2024 was primarily driven by an increase of $286.5 million, or 22%, in Advisory Fees, reflecting an increase in revenue earned from large transactions and an increase in the number of advisory fees earned during 2024. Underwriting Fees increased $38.8 million, or 42%, compared to the nine months ended September 30, 2023, reflecting an increase in the number of transactions we participated in during 2024. Commissions and Related Revenue increased $9.2 million, or 6%, compared to the nine months ended September 30, 2023, primarily reflecting higher trading commissions and subscription fees. Other Revenue, net, increased $20.3 million, or 44%, compared to the nine months ended September 30, 2023, primarily reflecting higher performance of our investment funds portfolio, as well as higher interest income. The investment funds portfolio is used as an economic hedge against our deferred cash compensation program. Operating Expenses were $1.64 billion for the nine months ended September 30, 2024, compared to $1.36 billion for the nine months ended September 30, 2023, an increase of $281.4 million, or 21%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $1.30 billion for the nine months ended September 30, 2024, compared to $1.07 billion for the nine months ended September 30, 2023, an increase of $234.7 million, or 22% . The increase in the amount of compensation recognized for the nine months ended September 30, 2024 principally reflects a higher accrual for incentive compensation, higher base salaries and higher compensation expense related to senior new hires. Non-compensation expenses, as a component of Operating Expenses, were $336.9 million for the nine months ended September 30, 2024, compared to $290.2 million for the nine months ended September 30, 2023, an increase of $46.7 million, or 16%. Non-compensation operating expenses increased from the prior year period, primarily driven by an increase in professional fees and travel and related expenses, largely due to higher levels of business activity and increased headcount, as well as an increase in communications and information services, principally reflecting higher expenses associated with license fees and research services in 2024. Other Expenses of $7.3 million for the nine months ended September 30, 2024 reflected Special Charges, Including Business Realignment Costs, related to the write-off of the remaining carrying value of our investment in Luminis in connection with the redemption of our interest. See Note 7 to our unaudited condensed consolidated financial statements for further information. Other Expenses of $2.9 million for the nine months ended September 30, 2023 reflected Special Charges, Including Business Realignment Costs, related to the write-off of non-recoverable assets in connection with the wind-down of our operations in Mexico. 44 Table of Contents Investment Management The following table summarizes the operating results of the Investment Management segment. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 Change 2024 2023 Change (dollars in thousands) Revenues Asset Management and Administration Fees: Wealth Management $ 20,555 $ 17,304 19 % $ 58,454 $ 49,837 17 % Other Revenue, net (1) 892 275 224 % 1,294 2,247 (42 %) Net Revenues 21,447 17,579 22 % 59,748 52,084 15 % Expenses Operating Expenses 15,841 13,965 13 % 44,311 40,562 9 % Total Expenses 15,841 13,965 13 % 44,311 40,562 9 % Operating Income 5,606 3,614 55 % 15,437 11,522 34 % Income from Equity Method Investments (2) 865 1,484 (42 %) 4,212 4,280 (2 %) Pre-Tax Income $ 6,471 $ 5,098 27 % $ 19,649 $ 15,802 24 % (1) Includes a gain of $0.6 million for the three and nine months ended September 30, 2024, resulting from the sale of the remaining portion of our interest in ABS. (2) Equity in ABS (through July 2024) and Atalanta Sosnoff is classified as Income from Equity Method Investments. Investment Management Results of Operations Our Investment Management segment includes the following: • Wealth Management – conducted through EWM and ETC. Fee-based revenues from EWM are primarily earned on a percentage of AUM, while ETC primarily earns fees from negotiated trust services. • Private Equity – conducted through our investment interests in private equity funds. We maintain a limited partner's interest in Glisco II, Glisco III and Glisco IV (together the "Glisco Funds"), as well as Glisco Manager Holdings LP and the general partners of the Glisco Funds. We receive our portion of the management fees earned by Glisco Partners Inc. ("Glisco") from Glisco Manager Holdings LP. We are passive investors and do not participate in the management of any Glisco sponsored funds. We are also passive investors in Trilantic IV and Trilantic V. In the event the private equity funds perform below certain thresholds, we may be obligated to repay certain carried interest previously distributed. As of September 30, 2024, there was no previously distributed carried interest received from the funds subject to repayment. • We also hold interests in ABS (through July 2024) and Atalanta Sosnoff that are accounted for under the equity method of accounting. The results of these investments are included within Income from Equity Method Investments. During the third quarter of 2024, we sold the remaining portion of our interest in ABS. See Note 7 to our unaudited condensed consolidated financial statements for further information. Assets Under Management AUM in our Wealth Management business of $13.9 billion at September 30, 2024 increased $1.6 billion, or 13% , compared to $12.3 billion at December 31, 2023. The amounts of AUM presented in the table below reflect the fair value of assets which we manage on behalf of Wealth Management clients. As defined in ASC 820, valuations performed for Level 1 investments are based on quoted prices obtained from active markets generated by third parties and Level 2 investments are valued through the use of models based on either direct or indirect observable inputs or other valuation methodologies performed by third parties to determine fair value. For both the Level 1 and Level 2 investments, we obtain both active quotes from nationally recognized exchanges and third-party pricing services to determine market or fair value quotes, respectively. For Level 3 investments, 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. Wealth Management maintained 77% and 76% of Level 1 investments, 19% and 20% of Level 2 investments and 4% and 4% of Level 3 investments as of September 30, 2024 and December 31, 2023, respectively. 45 Table of Contents The fees that we receive for providing investment advisory and management services are primarily driven by the level and composition of AUM. Accordingly, client flows, market movements, and changes in our product mix will impact the level of management fees we receive from our Wealth Management business. Fees vary with the type of assets managed and the channel in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products. Clients will increase or reduce the aggregate amount of AUM that we manage for a number of reasons, including changes in the level of assets that they have available for investment purposes, their overall asset allocation strategy, our relative performance versus competitors offering similar investment products and the quality of our service. The fees we earn are also impacted by our investment performance, as the appreciation or depreciation in the value of the assets that we manage directly impacts our fees. The following table summarizes AUM activity for Wealth Management for the nine months ended September 30, 2024: (dollars in millions) Balance at December 31, 2023 $ 12,272 Inflows 965 Outflows (794) Market Appreciation 1,444 Balance at September 30, 2024 $ 13,887 Unconsolidated Affiliates - Balance at September 30, 2024: Atalanta Sosnoff $ 8,363 The following table represents the composition of AUM for Wealth Management as of September 30, 2024: Equities 67 % Fixed Income 19 % Liquidity (1) 10 % Alternatives 4 % Total 100 % (1) Includes cash, cash equivalents and U.S. Treasury securities. Our Wealth Management business serves individuals, families and related institutions delivering customized investment management, financial planning, and trust and custody services. Investment portfolios are tailored to meet the investment objectives of individual clients and reflect a blend of equity, fixed income and other products. Fees charged to clients reflect the composition of the assets managed and the services provided. Investment performance in the Wealth Management business is measured against appropriate indices based on the composition of AUM, most frequently the S&P 500 and a composite fixed income index principally reflecting BarCap and MSCI indices. For the nine months ended September 30, 2024, AUM for Wealth Management increased 13% , reflecting a 12% increase due to market appreciation and a 1% increase due to flows . Performance for the nine months ended September 30, 2024 reflected: • Wealth Management lagged the S&P 500 on a 1 and 3-year basis by approximately 7% and 3%, respectively • Wealth Management lagged the fixed income composite on a 1-year basis by approximately 0.3% and outperformed the fixed income composite on a 3-year basis by approximately 0.3% • The S&P 500 and fixed income composite were each up approximately 22% and 1%, respectively AUM from our unconsolidated affiliates decreased 41% compared to December 31, 2023, primarily reflecting a decrease in ABS following the sale of our remaining interest during the third quarter of 2024. This decrease was partially offset by an increase in Atalanta Sosnoff, which increased 12% compared to December 31, 2023. 46 Table of Contents Three Months Ended September 30, 2024 versus September 30, 2023 Net Revenues were $21.4 million for the three months ended September 30, 2024, compared to $17.6 million for the three months ended September 30, 2023, an increase of $3.9 million, or 22%. Asset Management and Administration Fees earned from the management of Wealth Management client portfolios increased $3.3 million, or 19%, for the three months ended September 30, 2024, as associated AUM increased 23%, primarily from market appreciation. Operating Expenses were $15.8 million for the three months ended September 30, 2024, compared to $14.0 million for the three months ended September 30, 2023, an increase of $1.9 million, or 13%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $12.0 million for the three months ended September 30, 2024, compared to $10.6 million for the three months ended September 30, 2023, an increase of $1.4 million, or 13%. Non-Compensation expenses, as a component of Operating Expenses, were $3.8 million for the three months ended September 30, 2024, compared to $3.4 million for the three months ended September 30, 2023, an increase of $0.4 million, or 12%. Income from Equity Method Investments decreased $0.6 million, or 42%, from the three months ended September 30, 2023, driven by the sale of the remaining portion of our interest in ABS during the third quarter of 2024. This decrease was partially offset by higher earnings from Atalanta Sosnoff during the three months ended September 30, 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information. Nine Months Ended September 30, 2024 versus September 30, 2023 Net Revenues were $59.7 million for the nine months ended September 30, 2024, compared to $52.1 million for the nine months ended September 30, 2023, an increase of $7.7 million, or 15%. Asset Management and Administration Fees earned from the management of Wealth Management client portfolios increased $8.6 million, or 17%, for the nine months ended September 30, 2024, as associated AUM increased 23%, primarily from market appreciation. Operating Expenses were $44.3 million for the nine months ended September 30, 2024, compared to $40.6 million for the nine months ended September 30, 2023, an increase of $3.7 million, or 9%. Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $33.3 million for the nine months ended September 30, 2024, compared to $30.3 million for the nine months ended September 30, 2023, an increase of $3.0 million, or 10%. Non-Compensation expenses, as a component of Operating Expenses, were $11.0 million for the nine months ended September 30, 2024, compared to $10.3 million for the nine months ended September 30, 2023, an increase of $0.7 million, or 7%. Income from Equity Method Investments decreased $0.1 million, or 2%, from the nine months ended September 30, 2023, driven by the sale of the remaining portion of our interest in ABS during 2024. This decrease was partially offset by higher earnings from Atalanta Sosnoff during the nine months ended September 30, 2024. See Note 7 to our unaudited condensed consolidated financial statements for further information. Cash Flows Our operating cash flows are primarily influenced by the timing and receipt of fees and the payment of operating expenses, including incentive compensation to our employees and interest expense on our Notes Payable and lines of credit, and the payment of income taxes. Advisory and Underwriting fees are generally collected within 90 days of invoice. Placement fees are generally collected within 180 days of invoice and a portion of certain fees primarily related to private funds capital raising and the private capital businesses may be collected in a period exceeding one year. Commissions earned from our agency trading activities are generally received from our clearing broker within 11 days. Fees from our Wealth Management business are generally invoiced and collected within 90 days. We traditionally pay a substantial portion of incentive compensation during the first three months of each calendar year with respect to the prior year's results and prior years' deferred compensation. Likewise, payments to fund investments related to hedging our deferred cash compensation plans are generally funded in the first three months of each calendar year. Our investing and financing cash flows are primarily influenced by activities to invest our cash in highly liquid securities or bank certificates of deposit, deploy capital to fund investments and acquisitions, raise capital through the issuance of stock or debt, repurchase of outstanding Class A Shares (including for the net settlement of RSUs), and/or noncontrolling interest in Evercore LP, as well as our other subsidiaries, payment of dividends and other periodic distributions to our stakeholders. We generally make dividend payments and other distributions on a quarterly basis. If required, we may periodically draw down on our lines of credit to balance the timing of our operating, investing and financing cash flow needs. A summary of our operating, investing and financing cash flows is as follows: 47 Table of Contents For the Nine Months Ended September 30, 2024 2023 (dollars in thousands) Cash Provided By (Used In) Operating activities: Net income $ 262,951 $ 193,175 Non-cash charges 442,806 415,296 Other operating activities (403,990) (566,147) Operating activities 301,767 42,324 Investing activities 179,131 290,465 Financing activities (550,651) (510,604) Effect of exchange rate changes 6,298 7,144 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash (63,455) (170,671) Cash, Cash Equivalents and Restricted Cash Beginning of Period 605,484 672,123 End of Period $ 542,029 $ 501,452 Nine Months Ended September 30, 2024. Cash, Cash Equivalents and Restricted Cash were $542.0 million at September 30, 2024, a decrease of $63.5 million versus Cash, Cash Equivalents and Restricted Cash of $605.5 million at December 31, 2023. Operating activities resulted in a net inflow of $301.8 million, primarily related to earnings, partially offset by the payment of 2023 bonus awards and deferred cash compensation, which contributed to a decrease to Accrued Compensation and Benefits on our Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2024. Cash of $179.1 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities, as well as proceeds received from the sale of the remaining portion of our interest in ABS during the third quarter of 2024, partially offset by net purchases of certificates of deposit and purchases of equipment and leasehold improvements. Financing activities during the period used cash of $550.7 million, primarily for purchases of treasury stock (including for the net settlement of RSUs) and noncontrolling interests, the payment of dividends and distributions made to noncontrolling interest holders. Cash is also impacted due to the effect of foreign exchange rate fluctuation when translating non-U.S. currencies to U.S. Dollars. Nine Months Ended September 30, 2023. Cash, Cash Equivalents and Restricted Cash were $501.5 million at September 30, 2023, a decrease of $170.7 million versus Cash, Cash Equivalents and Restricted Cash of $672.1 million at December 31, 2022. Operating activities resulted in a net inflow of $42.3 million, primarily related to earnings, partially offset by the payment of 2022 bonus awards and deferred cash compensation, which contributed to a decrease to Accrued Compensation and Benefits on our Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. Cash of $290.5 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities and certificates of deposit, partially offset by purchases of equipment and leasehold improvements. Financing activities during the period used cash of $510.6 million, primarily for purchases of treasury stock (including for the net settlement of RSUs) and noncontrolling interests, and dividends and distributions to noncontrolling interest holders. Cash is also impacted due to the effect of foreign exchange rate fluctuation when translating non-U.S. currencies to U.S. Dollars. Liquidity and Capital Resources General Our current assets principally include Cash and Cash Equivalents, Investment Securities and Certificates of Deposit, Accounts Receivable and contract assets, included in Other Current Assets, relating to revenues from our Investment Banking & Equities and Investment Management segments. Our current liabilities principally include accrued expenses, accrued liabilities, accrued employee compensation and short-term borrowings. We traditionally have made payments for employee bonus awards and year-end distributions to partners in the first quarter of the year with respect to the prior year's results. In addition, payments in respect of deferred cash compensation arrangements and related investments are also made in the first quarter. From time to time, advances and/or commitments may also be granted to new employees at or near the date they begin employment, or to existing employees for the purpose of incentive or retention. Cash distributions related to partnership tax 48 Table of Contents allocations are made to the partners of Evercore LP and certain other entities in accordance with our corporate estimated payment calendar; these payments are generally made quarterly. In addition, dividends on Class A Shares, and related distributions to partners of Evercore LP, are paid when and if declared by the Board of Directors, which is generally quarterly. We regularly monitor our liquidity position, including cash, other significant working capital, current assets and liabilities, long-term liabilities, lease commitments and related fixed assets, principal investment commitments related to our Investment Management business, dividends on Class A Shares, partnership distributions and other capital transactions, as well as other matters relating to liquidity and compliance with capital requirements and restrictions of our regulated legal entities. Our liquidity is highly dependent on our revenue stream from our operations, principally from our Investment Banking & Equities segment, which is primarily a function of closing client transactions and earning success fees, the timing and realization of which is irregular and dependent upon factors that are not subject to our control. Our revenue stream funds the payment of our expenses, including annual bonus payments, a portion of which are guaranteed, deferred compensation arrangements, interest expense on our Notes Payable, lines of credit and other financing arrangements, as well as payments for income taxes. Payments made for income taxes may be reduced by deductions taken for the increase in tax basis of our investment in Evercore LP. Certain of these tax deductions, when realized, require payment under our long-term liability, Amounts Due Pursuant to Tax Receivable Agreements. We intend to fund these payments from cash and cash equivalents on hand, principally derived from cash flows from operations. These tax deductions, when realized, will result in cash otherwise required to satisfy tax obligations becoming available for other purposes. Our Management Committee meets regularly to monitor our liquidity and cash positions against our short and long-term obligations, as well as our capital requirements and commitments, including deferred compensation arrangements. The result of this review contributes to management's recommendation to the Board of Directors as to the level of quarterly dividend payments, if any. As a financial services firm, our businesses are materially affected by conditions in the global financial markets and economic conditions throughout the world. Revenue generated by our advisory activities is related to the number and value of the transactions in which we are involved. In addition, revenue related to our equities business is driven by market volumes and institutional investor trends, such as the trend to passive investment strategies. During periods of unfavorable market or economic conditions - which may result from the current or anticipated impact of inflation, changes in the level of interest rates, changes in the availability of financing, supply chain disruptions, an evolving regulatory environment, climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, including escalating international tensions, terrorism or other geopolitical events - the number and value of M&A transactions, as well as market volumes in equities, generally decrease, and they generally increase during periods of favorable market or economic conditions. Restructuring activity generally is counter-cyclical to M&A activity. In addition, during periods of unfavorable market conditions our Investment Management business may be impacted by reduced equity valuations and generate relatively lower revenue because fees we receive, either directly or through our affiliates, typically are in part based on the market value of underlying publicly-traded securities. Our profitability may also be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame, and in an amount sufficient, to match any decreases in revenue relating to changes in market and economic conditions. Likewise, our liquidity may be adversely impacted by our contractual obligations, including lease obligations. Reduced equity valuations resulting from future adverse economic events and/or market conditions may impact our performance and may result in future net redemptions of AUM from our Investment Management clients, which would generally result in lower revenues and cash flows. These adverse conditions could also have an impact on our goodwill impairment assessment, which is done annually, as of November 30 th , or more frequently if circumstances indicate impairment may have occurred. Elevated interest rates and heightened geopolitical tensions, including escalating military tensions and evolving regulatory and banking environments, have contributed to an elongation of the timing of transaction closings. We will continue to assess the potential ongoing impacts of these factors, including the regular monitoring of our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations. See "Results of Operations" above for further information. We assess each of our equity method investments for impairment annually, or more frequently if circumstances indicate impairment may have occurred. These circumstances could include unfavorable market conditions or the loss of key personnel of the investee. For a further discussion of risks related to our business, refer to Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023. 49 Table of Contents Treasury Purchases We periodically repurchase Class A Shares and/or LP Units into Treasury (including through the net settlement of equity awards) in order to offset the dilutive effect of equity awards granted as compensation (see Note 14 to our unaudited condensed consolidated financial statements for further information), or amounts in excess of that if management's review, discussed above, determines adequate cash is available. The amount of cash required for these share repurchases is a function of the mix of equity and deferred cash compensation awarded for the annual bonus awards (see further discussion on deferred compensation under Other Commitments below). In addition, we may, from time to time, purchase noncontrolling interests in subsidiaries. On February 22, 2022, our Board of Directors authorized (in addition to the net settlement of equity awards) the repurchase of Class A Shares and/or LP Units so that from that date forward, we are able to repurchase an aggregate of the lesser of $1.4 billion worth of Class A Shares and/or LP Units and 10.0 million Class A Shares and/or LP Units. Under this share repurchase program, shares may be repurchased from time to time in open market transactions, in privately-negotiated transactions or otherwise. The timing and the actual amount of shares repurchased will depend on a variety of factors, including our liquidity position, legal requirements, price, economic and market conditions and the objective to reduce the dilutive effect of equity awards granted as compensation to employees. This program may be suspended or discontinued at any time and does not have a specified expiration date. During the nine months ended September 30, 2024, we repurchased 1,218,540 Class A Shares, at an average cost per share of $199.11, for $242.6 million, pursuant to our repurchase program. In addition, we periodically buy shares into treasury from our employees in order to allow them to satisfy their minimum tax requirements for share deliveries under our share equity plan. During the nine months ended September 30, 2024, we repurchased 984,484 Class A Shares, at an average cost per share of $178.02, for $175.3 million, primarily related to minimum tax withholding requirements of share deliveries. The aggregate 2,203,024 Class A Shares repurchased during the nine months ended September 30, 2024 were acquired for aggregate purchase consideration of $417.9 million, at an average cost per share of $189.69. Noncontrolling Interest Purchases During the second quarter of 2024, we purchased, at fair value, an additional 0.3% of the EWM Class A Units for $1.0 million. This purchase resulted in a decrease to Noncontrolling Interest of $0.1 million and a decrease to Additional Paid-In Capital of $1.0 million on our Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2024. During the second quarter of 2023, we purchased, at fair value, an additional 0.7% of the EWM Class A Units for $2.0 million. This purchase resulted in a decrease to Noncontrolling Interest of $0.2 million and a decrease to Additional Paid-In Capital of $1.8 million on our Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2023. On December 31, 2021, we purchased, at fair value, all of the outstanding Class R Interests of Private Capital Advisory L.P. from employees of the RECA business. See Note 12 to our unaudited condensed consolidated financial statements for further information. Private Placement Notes On March 30, 2016, we issued an aggregate $170.0 million of senior notes, including: $38.0 million aggregate principal amount of our 4.88% Series A Notes which were due March 30, 2021, $67.0 million aggregate principal amount of our 5.23% Series B Notes which were originally due March 30, 2023, $48.0 million aggregate principal amount of our 5.48% Series C Notes and $17.0 million aggregate principal amount of our 5.58% Series D Notes, pursuant to the 2016 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. On August 1, 2019, we issued $175.0 million and £25.0 million 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: $75.0 million aggregate principal amount of our 4.34% Series E Notes, $60.0 million aggregate principal amount of our 4.44% Series F Notes, $40.0 million aggregate principal amount of our 4.54% Series G Notes and £25.0 million aggregate principal amount of our 3.33% Series H Notes, each of which were issued pursuant to 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. 50 Table of Contents On March 29, 2021, we issued $38.0 million aggregate principal amount of our 1.97% Series I Notes, pursuant to the 2021 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933. On June 28, 2022, we issued $67.0 million aggregate principal amount of our 4.61% Series J Notes, pursuant to the 2022 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 above issuances is payable semi-annually and the notes are guaranteed by certain of our domestic subsidiaries. We may, at our option, prepay all, or from time to time any part of, the notes (without regard to Series), in an amount not less than 5% of the aggregate principal amount of each of the individual issuances 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 notes will have the right to require us to prepay the entire unpaid principal amounts held by each holder of the notes plus accrued and unpaid interest to the prepayment date. The respective Note Purchase Agreements contain customary covenants, including financial covenants requiring compliance with a maximum leverage ratio, a minimum tangible net worth and a minimum interest coverage ratio (for the 2016 Private Placement Notes only), and customary events of default. As of September 30, 2024, we were in compliance with all of these covenants. Lines of Credit East entered into a revolving credit facility with PNC, as amended on June 29, 2023, in an aggregate principal amount of up to $30.0 million to be used for working capital and other corporate activities, which matured on October 27, 2024. This facility was 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 contained certain reporting covenants, as well as certain debt covenants that prohibited East and us from incurring other indebtedness, subject to specified exceptions. We and our consolidated subsidiaries were in compliance with these covenants as of September 30, 2024. The interest rate provisions were Daily SOFR plus 161 basis points. There were no drawings under this facility at September 30, 2024. East entered into an additional revolving credit facility with PNC, as amended on June 29, 2023, in an aggregate principal amount of up to $55.0 million to be used for working capital and other corporate activities, which matured on October 27, 2024. This facility was unsecured. In addition, the agreement contained certain reporting requirements and debt covenants consistent with the Existing PNC Facility. We and our consolidated subsidiaries were in compliance with these covenants as of September 30, 2024. The interest rate provisions were Daily SOFR plus 191 basis points. East was only permitted to borrow under this facility if there was 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, 2024. On October 28, 2024, upon maturity of our $30.0 million secured and $55.0 million unsecured credit facilities with PNC, we established a new revolving credit facility with PNC in an aggregate principal amount of up to $85.0 million to be used for working capital and other corporate activities. The facility is unsecured. In addition, the agreement contains certain reporting covenants, as well as certain debt covenants that prohibit East and us from incurring other indebtedness, subject to specified exceptions. Drawings under this facility bear interest at Daily SOFR plus 145 basis points and the maturity date is October 27, 2025. EGL entered into a subordinated revolving credit facility with PNC, as amended on October 25, 2024, in an aggregate principal amount of up to $75.0 million, to be used as needed in support of capital requirements from time to time of EGL. This facility is unsecured and is guaranteed by Evercore LP and other affiliates, pursuant to a guaranty agreement, which provides for certain reporting requirements and debt covenants consistent with the Existing PNC Facility. The interest rate provisions are Daily SOFR plus 145 basis points and the maturity date is October 28, 2026. There were no drawings under this facility at September 30, 2024. In addition, EGL's clearing broker provides temporary funding for the settlement of securities transactions. Other Commitments We have long-term obligations for operating lease commitments, principally related to office space, which expire on various dates through 2035. See Note 8 to our unaudited condensed consolidated financial statements for anticipated current and future payments under these arrangements. 51 Table of Contents We have a long-term liability, Amounts Due Pursuant to Tax Receivable Agreements, which requires payments to certain current and former Senior Managing Directors. Pursuant to deferred compensation and deferred consideration arrangements, we expect to make cash payments in future periods, including related to our Long-term Incentive Plans, Deferred Cash Compensation Program and other deferred compensation arrangements. Further, we make investments to hedge the economic risk of amounts due under our Deferred Cash Compensation Program. For further information, including timing of payments, see Notes 6 and 14 to our unaudited condensed consolidated financial statements. Certain of our subsidiaries are regulated entities and are subject to capital requirements. For further information see Note 16 to our unaudited condensed consolidated financial statements. We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition) relating to future capital contributions to private equity funds of $2.6 million as of September 30, 2024 and December 31, 2023. We may be required to fund these commitments at any time through June 2028, depending on the timing and level of investments by our private equity funds. We expect to fund these commitments with cash flows from operations. See Note 15 to our unaudited condensed consolidated financial statements for further information. We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our unaudited condensed consolidated financial statements. As of September 30, 2024, our current and former Senior Managing Directors owned an aggregate of approximately 1.5 million vested Class A LP Units, 0.3 million vested Class E LP Units, 0.4 million vested Class I LP Units and 0.2 million vested Class K LP Units. In addition, 1.1 million unvested Class K-P Units, which convert into a number of Class K LP Units based on the achievement of certain market and service conditions and defined benchmark results, were outstanding as of September 30, 2024. We have an obligation to exchange vested Class A, E, I and K LP Units to Class A Common Stock upon the request of the holder. Our Unaudited Condensed Consolidated Statement of Financial Condition as of September 30, 2024 included $533.1 million of Cash and Cash Equivalents and $1.29 billion of Investment Securities and Certificates of Deposit, which are generally comprised of highly-liquid investments. For further information regarding other cash commitments and the timing of payments, refer to "General" above. Market Risk and Credit Risk We, in general, are not a capital-intensive organization and as such, are not subject to significant market or credit risks. Nevertheless, we have established procedures to assess both the market and credit risk, as well as specific investment risk, exchange rate risk and credit risk related to receivables. Market and Investment Risk We hold equity securities and invest in exchange-traded funds principally as an economic hedge against our deferred compensation program. As of September 30, 2024, the fair value of our investments with these products, based on closing prices, was $173.8 million. We had net realized and unrealized gains of $9.1 million and $30.2 million for the three and nine months ended September 30, 2024, respectively, from our exchange-traded funds portfolio. See Note 6 to our unaudited condensed consolidated financial statements for further information. We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $17.4 million, $34.8 million and $52.1 million, respectively, for the three months ended September 30, 2024. Private Equity Funds Through our principal investments in private equity funds and our ability to earn carried interest from these funds, we face exposure to changes in the estimated fair value of the companies in which these funds invest. Valuations and analysis regarding our investments in Trilantic and Glisco are performed by their respective professionals, and thus we are not involved in determining the fair value for the portfolio companies of such funds. See Note 7 to our unaudited condensed consolidated financial statements for further information. 52 Table of Contents We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $0.6 million for the three months ended September 30, 2024. Exchange Rate Risk We have foreign operations, through our subsidiaries and affiliates, primarily in Europe and Asia, as well as provide services to clients in other jurisdictions, which creates foreign exchange rate risk. We have not entered into any transactions to hedge our exposure to foreign exchange fluctuations in these subsidiaries through the use of derivative instruments or otherwise. An appreciation or depreciation of any of these currencies relative to the U.S. dollar would result in an adverse or beneficial impact to our financial results. A significant portion of our non-U.S. revenues and expenses have been, and will continue to be, derived from contracts denominated in foreign currencies (i.e. British Pounds sterling, Euros, Singapore dollars, among others). Historically, the value of these foreign currencies has fluctuated relative to the U.S. dollar. For the nine months ended September 30, 2024, the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was a gain of $6.8 million, net of tax. Foreign Currency Translation Adjustment Gain (Loss), net, within the Unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2024 also included the reclassification of $0.7 million of cumulative foreign currency translation losses to Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024. It is generally not our intention to hedge our foreign currency exposure in these subsidiaries, and we will reevaluate this policy from time to time. Periodically, we enter into foreign currency exchange forward contracts as an economic hedge against exchange rate risk for foreign currency denominated accounts receivable or other commitments. We entered into a foreign currency exchange forward contract during the first quarter of 2023 to buy 30.0 million British Pounds sterling for $36.9 million, which settled during the third quarter of 2023, and resulted in a loss of $0.3 million. Upon settlement, we entered into a new foreign currency exchange forward contract to buy 30.0 million British Pounds sterling for $36.7 million, which settled during the first quarter of 2024, and resulted in a loss of $0.3 million for the nine months ended September 30, 2024. The contract was recorded at its fair value of $1.6 million as of December 31, 2023, and was included within Other Current Assets on our Unaudited Condensed Consolidated Statement of Financial Condition. Credit Risks We maintain cash and cash equivalents, as well as certificates of deposit, with financial institutions with high credit ratings. At times, we may maintain deposits in federally insured financial institutions in excess of federally insured ("FDIC") limits or enter into sweep arrangements where banks will periodically transfer a portion of our excess cash position to a money market fund. However, we believe that we are not exposed to significant credit risk due to the financial position of the depository institutions or investment vehicles in which those deposits are held. Accounts Receivable consists primarily of advisory fees and expense reimbursements billed to our clients. Other Assets includes long-term receivables primarily from fees related to private funds capital raising and certain fees related to the private capital businesses. Receivables are reported net of any allowance for credit losses. We maintain an allowance for credit losses to provide coverage for probable losses from our customer receivables and determine the adequacy of the allowance by estimating the probability of loss based on our analysis of historical credit loss experience of our client receivables, and taking into consideration current market conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Our receivables collection periods generally are within 90 days of invoice, with the exception of placement fees, which are generally collected within 180 days of invoice, and certain fees related to private funds capital raising and the private capital businesses, a portion of which may be collected in a period exceeding one year. The collection period for restructuring transaction receivables may exceed 90 days. We recorded bad debt expense of $2.1 million and $5.0 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, total receivables recorded in Accounts Receivable amounted to $415.5 million and $371.6 million, respectively, net of an allowance for credit losses, and total receivables recorded in Other Assets amounted to $97.6 million and $93.7 million, respectively. Other Current Assets and Other Assets include arrangements in which an estimate of variable consideration has been included in the transaction price and thereby recognized as revenue that precedes the contractual due date (contract assets). As of September 30, 2024, total contract assets recorded in Other Current Assets and Other Assets amounted to $110.5 million and 53 Table of Contents $2.7 million, respectively. As of December 31, 2023, total contract assets recorded in Other Current Assets and Other Assets amounted to $85.4 million and $5.8 million, respectively. With respect to our Investment Securities portfolio, which is comprised primarily of treasury bills and notes, exchange-traded funds and securities investments, we manage our credit risk exposure by limiting concentration risk and maintaining investment grade credit quality. As of September 30, 2024, we had Investment Securities of $1.19 billion, of which 85% were treasury bills and notes. Critical Accounting Policies and Estimates The unaudited condensed consolidated financial statements included in this report are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions regarding future events that affect the amounts reported in our consolidated financial statements and their notes, including reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base these estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates. For a discussion of our critical accounting policies and estimates, refer to our Annual Report on Form 10-K for the year ended December 31, 2023. Recently Issued Accounting Standards For a discussion of other recently issued accounting standards and their impact or potential impact on our consolidated financial statements, see Note 3 to our unaudited condensed consolidated financial statements.