Evercore Inc (EVR) 2008 Q2 法說會逐字稿

Ladies and gentlemen -- good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Evercore Partners second-quarter 2008 financial results conference call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be open for questions. (OPERATOR INSTRUCTIONS)

This conference is being recorded today, July 24. I would now like to turn the conference over to your host, Evercore Partners' Chief Financial Officer, Robert Walsh. Please go ahead, sir.

Good morning, and thank you for joining us today for Evercore's second-quarter 2008 financial results conference call. I am Bob Walsh, Evercore's Chief Financial Officer, and joining me on the call today is Roger Altman, Chairman and Chief Executive Officer. After our prepared remarks, we will open up the call for questions.

Earlier this morning, we issued a press release announcing Evercore's second-quarter 2008 financial results. The Company's presentation today is complementary to that press release, which is available on our website at www.evercore.com.

This conference call is being webcast live on the Investor Relations section of the Evercore website and an archive of it will be available beginning approximately one hour after the conclusion of this call for 30 days.

I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to, those discussed in Evercore's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the Company assumes no duty to update any forward-looking statements.

In our presentation today, unless otherwise indicated, we will be discussing adjusted pro forma, or non-GAAP financial measures, which we believe are meaningful in evaluating the Company's performance. For detailed disclosures on these measures and their GAAP reconciliations, you should refer to the financial data contained within our press release, which, as previously mentioned, is posted on our website.

We will refrain from repeating the information included in the press release and focus instead on the key opportunities, challenges, and changes in our business. We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings, both on the Advisory and Investment Management sides of our business.

I will now turn the call over to Roger for a review of our second-quarter highlights and results.

Good morning, everyone. I am doing this from our London office. Bob and other members of the firm are in New York. And hopefully, this bi-continental approach will be smooth and not otherwise.

You have seen the press release, but just to start, let me just put the numbers right out there. For the three months, the quarter, the firm's revenue was a bit over $60 million, compared to high 65s for the quarter a year ago, a decline of 9%. Adjusted pro forma net income was about $6 million, down from $15.5 million the same quarter a year ago. And adjusted pro forma earnings per share $0.17 against $0.47.

For the six months, $105 million, in round numbers, of revenue, down from $155 million, and $0.3 million of adjusted pro forma net income, down from $32.5 million, and earnings per share $0.30 against $0.99. Those are the key numbers.

Now let me make a few comments about them. From my point of view, the firm had a solid second quarter. Our Advisory revenue for example -- and these days, that is our main business -- actually exceeded this year's first quarter by 42% and last year's comparable quarter by 2%. So our Advisory revenues were actually up year-over-year and sequentially. And under these market conditions, that is a good result.

We advised on two of the 10 largest transactions during the quarter. They were representing Time Warner Cable in the spinoff from Time Warner and representing EDS in its sale to Hewlett-Packard. Our press release contains the full list of noteworthy transactions on which we advised. I might note that one of our best transactions, the sale of De Ruiter Seeds to Monsanto also was handled by one of our newest partners.

We ranked third in M&A among boutiques for the first half of the year, and we ranked first for the past 12 months. You've heard me say this before, but I like to repeat it because I think it is germane. We were also first over the entire 2003-2007 period. And I might say that we ranked third because at the very last moment Anheuser-Busch happened and a couple of other firms, to their credit, were in that deal.

I might also note that for the first half of 2008, speaking globally, Evercore had the same number of fee-paying clients as it had for the same period of 2007, the exact same number. In a difficult environment like this one, I think that is a sign of health.

Furthermore, we are continuing to globalize the firm. We are in the process of expanding our Advisory presence in continental Europe and in Latin America, and we will have more to say on those steps, the specifics of them, before year-end.

I also want to particularly note that our restructuring business is expanding nicely. We are doing more such business right now and higher-quality business than at any time in Evercore's history, and we are handling several of the largest and highest-profile assignments in the market and I am quite optimistic about our outlook in that business.

One more broad point about the long-term dynamics of the whole business. Since 1980, the compound annual growth rate in announced M&A transactions globally has been 25%. If you look at it on a dollar volume basis, it has been 23%. The point is that this Advisory business, or the M&A business, is one with very good long-term growth dynamics. And the question anybody should ask in a softer climate like this one is, well, do we see any scenario whereby the growth rates that we have experienced historically that I just referred to diminish in the future.

Now, I have a simple one-word answer to that, and that is no. They don't. Because the relentless pace of globalization and the related need for scale, the entry of China, India, and other like nations into the global M&A mainstream, which is just beginning, and the return of functioning leveraged finance markets, which will of course occur, all suggest long-term growth in line with the nearly 30-year very strong secular growth which we have all seen.

Now, the advisory environment right now -- you all know this -- is challenging. We added seven new Advisory partners last year. They are all world-class bankers. I would not trade in any of them. And they expand the production capacity of the firm very considerably. Yes, that production takes longer to ramp up in this climate. It simply does. But the benefits of that expansion will manifest themselves, perhaps more slowly, but they will manifest themselves over the medium and longer term; we are very confident on that.

We have already added one new partner this year, whom we announced, Dan Celentano in our Restructuring Group, joined us from Bear Stearns. Our most recent estimate for the full year is that we will have added approximately four new partners, including Dan, by the time the year has ended. One is likely to be a new partner in Evercore Capital Partners, our private equity arm.

Two others are likely to be Advisory partners, likely one in New York and one in Europe. One in the US -- excuse me -- and one in Europe. But none of the latter three have been actually signed up. If they were, we would announce them. And of course, handshakes and tentative agreements can always fall away, but that is our goal.

You might ask, well, why is Evercore adding partners in a year like this? We're doing so because we believe in the potential of our firm and we want to invest in it. As I said before, the medium- and long-term outlook is simply a good one. In addition, this particular market condition affords rare recruiting opportunities and we are able to find people and make the types of economic agreements with them that one doesn't normally see. So we will not be adding at the rate of last year, and we indicated before we wouldn't, but we are not shutting this off either.

Let me turn, then, to a few comments on our investing business. To begin with, we are making commitments to new lines of investing businesses. When Evercore went public, we committed ourselves to better balancing the firm between its advising practice and its investing business, as we used to be. And we are now taking concrete steps toward realizing that goal.

Monday of this week, we announced that Evercore had invested GBP7 million, $14 million, in Pan-Asset Management, headquartered here in London. This is a recently formed asset allocation advisory business with the UK market as its initial focus, and we now own 50% of this firm. We have known the principals of the firm, which has now been renamed Evercore Pan-Asset Management, for a long time.

When we have completed other agreements on new investing businesses, we will announce them, but the point I want to stress here is that you will see others before the end of this year.

On Evercore Capital Partners, as I said, we will add another partner shortly -- or at least that is our expectation. Once that person is on board, we will promptly launch the formal marketing process for ECP III, as we call it. This was, of course, delayed by Austin Beutner's retirement. I will be leading the marketing efforts on that fund, together with the full ECP team. It is conjectural to discuss when ECP might realize its final closing on this third fund, but 2009 is certainly the goal for that.

On the whole, our investing businesses are in transition right now and they are not profitable. But we expect that our expansion will give Evercore a more diversified and a profitable investing platform for 2010 -- 2010. At that time, between Evercore Capital Partners, Evercore Asset Management, Protego Casa de Bolsa in Mexico, Evercore Capital Partners Mexico, Pan-Asset Management, and others will be announcing between now and the end of the year, we will have a very different firm.

Again, this is what we said we would do when we went public. It was a major reason for going public, and that is why we are taking these steps now. They take a while to prepare and to get ready on, but now we are in execution mode.

Third subject I want to raise is simply dissecting our results for the quarter. You've already seen that our revenues for the quarter were down only moderately, $5 million from the year-earlier levels, but our earnings were down 60%. The reason is that compensation expenses rose $13 million year-over-year, and that was only offset, or offset modestly, by a roughly $3 million drop -- $2.8 million to be specific -- in non-comp expenses.

The main reason that comp expenses rose this way is this. We added eight new partners last year, but seven of those eight joined the firm after June 30, 2007. So none of their costs were reflected in our first half of 2007. In contrast, all eight of them are reflected in 2008. So very simple -- we have seven more partners and the related costs in 2008 than we did in 2007. Theoretically, or ideally, your revenues expand right off the bat to reflect that, but in this climate that ramp-up is taking longer.

There is also a secondary reason. The second quarter of 2007, we inaugurated our own part-cash, part-equity system of partner comp to align us with all other Wall Street firms that do the same thing. And the shares issued to partners instead of cash, vest upon a four-year basis, a linear basis four years. And that means that the equity portion of comp is spread over four years, not one year.

So that served to lower our comp expense in last year's second quarter -- we explained all this at that time -- but we don't have that benefit this year. So if you will, our comp expense for the second quarter of last year was -- got a one-time benefit by inaugurating this part cash/part equity system instead of all cash. But that one-time benefit, of course, is not repeated in 2008.

Finally a word about our comp ratio. It was 61% for the first six months of '08 as compared to 47% for the same period a year earlier. Without the new partners we added, our comp ratio for '08 would have been quite a bit lower.

You will see that we included a new compensation breakdown in our earnings release. It compares compensation expense in our Advisory business to compensation expense for the whole firm. And given the investing results and the fact that that business right now is not profitable, the comp ratio for our main business, Advisory, is lower than it is for all of Evercore.

I want to repeat that our long-term goal for the comp ratio is 50%, but we're going to have to return our investing activities to full health before that will be achieved. I expect that side of the investing business to be where it should be by 2010. So we're not going to achieve 50% over the next 18 months. I think we can do better than we just did, but we're not going to get to 50% in that period.

So that is the end of my observations about the quarter, and let's open it up to questions that any of you, I hope, will have.

(OPERATOR INSTRUCTIONS) Roger Freeman, Lehman Brothers.

This is Eric calling in for Roger. In the restructuring business, it looks like you are definitely making comments of that business starting to pick up. Could you give some color as to how big do you think this business could get in the context of the overall firm? Should we expect it to be the ratio of your SMBs over the full ratio, or the full number of SMBs in the firm, or could this get better as the cycle progresses?

Hi, Eric. It's Roger. It's a good question, but it is really hard to clarify that. I mean, I really couldn't do that very well to my own partners, let alone externally.

So let me try to answer it this way. The restructuring business, as you know, is countercyclical to the M&A business, when M&A volume periodically gets soft, like it did in '02 and '03, or is in '08 here and the second half of '07. The restructuring business picks up because the reasons that caused the softness in M&A are the same reasons that cause the pickup in restructuring, namely, a higher level of distress.

So there's no one answer to your question, because restructuring could account for a quite meaningful share of total revenue in one of these periodic trough periods on M&A. But the average for restructuring as a percentage of the total over the long term would not be the same as that peak in a weak period. Do you see my point?

Yes.

So picking a figure is hard to do. In addition, a lot of people in the firm are involved in our restructuring work, not just the restructuring department itself. Because right now, I'm sure you've noticed, there hasn't been a big upsurge in bankruptcies themselves. We may see that, probably will see that, but haven't yet. We are not at the point we were 5, 6, 7 years ago when you had Enron, WorldCom, and a lot of other great big bankruptcies. As I say, that may happen, but hasn't yet.

So the restructuring that is going on is out-of-court restructuring, companies that are in distress and restructuring themselves, but not all the way to Chapter 11. So lots of people in the firm are involved in this. I am one of them, for example.

So I really can't give you a number as to what percentage I think of total revenue on the Advisory side restructuring should be, but it's certainly possible as we build this business out -- and I wouldn't cite this is a figure for this year or next year -- that at some point, it could be as high as 20% or 25%.

But please don't take that as an expectation for '08 or '09. I am not making that. I am just saying as a long-term, general proposition.

That is, just to be clear, of Advisory or of the full firm?

Of Advisory. I am not -- I don't know how to calculate it for the full firm, because we are going to have a much more broad and robust investing platform looking out about 18 months. And I don't want to get into that discussion. I'd just say Advisory.

But again, that not a short-term forecast, please. I'm not making a comment about '08 or '09. I'm just saying as a long-term matter, it is entirely possible that restructuring would be 20% to 25% of the firm's Advisory revenue.

Okay. Kind of picking up on the comments about building out your investment management business, so in Wealth Management, do you think that this is going to be mostly done through acquisition or do you think that you might actually organically start to grow?

Acquisition and startup. Startup meaning you recruit a team of people, a lift-out so to speak, right? You recruit a team of people from XYZ institution. You back them -- you put them in business. And it is, in effect, a joint venture between you and the team. So it will be a combination of acquisitions and lift-out/startup.

Okay. And then my last question and I will hop back in the queue would be on the buildout of a network of affiliated investment managers. Would you be fully acquiring or taking stakes in these businesses? What does your pipeline look like? How far along are you in this process of building out really this new line of business? Thanks.

Well, first of all, it is a new line of businesses. So I mentioned that today there's Evercore Capital Partners US, Evercore Capital Partners Mexico, Evercore Asset Management, Protego Casa de Bolsa in Mexico, and now Evercore Pan-Asset Management. There will be other announcements this year. I want to leave it at that.

And at the time we finish, it will be a considerably broader and more diversified platform of investing businesses than we have now. I think that's the best way to put it.

Okay, thanks.

Ken Worthington, JPMorgan.

Good morning. I wanted to flesh out the Wealth Management. Wealth Management, it's a very broad term. I would love to get a better sense of what your vision is. And I know you spent some time on it, but I am still a little lost. What is the vision there? Is it about manufacturing? Is it about distribution? Is it about both? If you could just give me a little help.

Well, the vision is a very high-end, typical Evercore, (inaudible) classic wealth management business. So the focus of Pan-Asset, Evercore Pan-Asset, is endowments and charities in the UK, at least right now. And the focus of one of the things we are going to be doing in the US is what I would call -- it's just my term -- classic very high net worth Wealth Management.

So I don't think any particular example of another institution is an ideal one, but there's a whole series, as you know, of Wealth Management boutiques that have sprung up in the past 8, 10, or 12 years. And they manage family money and individual money; some institutional money, but it is mostly individuals and families. And that is a business we are entering. As I say, we will have a specific announcement to make, but we are entering that business.

Now, is there --? Because you are in the very high-end M&A business as well, are there synergies there? Is it once you have such relationships on the Advisory side, is there --?

The short answer is yes. When we open up a firm like -- or we [act in] a firm like Pan-Asset or we, probably more relevant in this question, open up in the US, which we will be doing between now and the end of the year, all members of the firm are going to be assisting in the marketing of that to the relationships the firm has.

So we will communicate, probably initially in writing, to every one of the firm's relationships about the new business and why we've gone into it and what our goals are and what our qualifications are. And then we will do the maximum amount of cross-selling and cross-marketing we can do. So the answer is yes.

Okay, fair enough. Moving on to EAM. There are some performance issues. Are there strategic changes that need to be made there, or is it just it's been some bad investments in a tough market, and you've got the right team in place and it will recover?

You, know, it's very simple. EAM has a deep value, small and mid-cap focus. The EAM team is really good at that. I have complete confidence in them. But that sector -- and there's various indices you could look at -- has gotten, as it often does in a market like this -- has outperformed the market on the downside. And Greg Sawyers, if he were on this phone call, who is the head of it, would tell you that that happens in markets like this.

So actually, I don't think EAM has made any bad investments per se. It is just that the sector -- I wish I could quote you the index that they have mostly followed -- but if I'm not mistaken, there is a Russell Small Cap, which is the one that is the benchmark. But if you look at it, it is down quite a bit more than the S&P 500 or the Dow Jones Index, quite a bit more.

So I don't think they've made bad investments. It's just that the type of investing that they do tends to be streaky -- that's my own word -- meaning that there are periods of time when that sector outperforms the market very strongly, on the upside. And there are periods of time when it outperforms the market on the downside, and this is one of the latter periods.

So it is a good team. It has had a very good long-term record. We have confidence in them. The sector will rebound and they will do well. Right now, it is -- as I say, like the Russell Small Cap index, it is outperforming on the down side.

Okay, thank you. And lastly, for Bob, you've been focusing on better managing the non-compensation expenses, and they did come down this quarter sequentially. How did the initiatives that you put in place over the last, I think it's probably two or three quarters at this point, how is that going to impact the second half of the year? I assume there is still benefit to come. Is that still correct? And any help on more specifics and where we should see some of the other and professional fees kind of head towards in the second half?

I think on an absolute basis, we are seeing the costs kind of settling into a run rate going forward. Of course, on a relative basis, you will see the benefits of savings because we had such high costs in the second half of last year. But on an absolute basis, I think you are seeing the costs settling in.

We did include a brief additional disclosure to give you some insight into costs associated with serving our clients, our transaction costs, because that is a more variable component of our cost base. And of course we don't necessarily seek to minimize those costs, but rather to serve clients and make sure we recover them. So I think you are seeing the numbers about where they will be, subject to client transaction costs.

Perfect.

The only (multiple speakers) point to make is -- and please don't take this literally -- but you will see that our non-comp expenses are falling at a rate of about $12 million a year. And I am not going to use that number for the full year, but I would simply say that we are very much on track with what we have said we would do, and Bob is doing a great job on this, on reducing those very sharply year-over-year. And they will be reduced very sharply.

Great, thank you.

William Tanona, Goldman Sachs.

Hi, Roger. Just can we focus a little bit more on the Pan-Asset acquisition again? I know it is obviously a small part of the business, but I think it is important in terms of people understanding the asset management strategy going forward for Evercore.

I guess first, what did you guys pay for Pan-Asset? Was that in cash and stock? I guess second, in terms of helping us understand the strategic rationale of the deal, it seems like those guys deal -- well, I guess, one, they are fairly new, so what do they have in assets under management?

Two, they seem to be very focused in ETFs, and I think people who follow the asset management industry understand that the ETF business is a very, very scalable business. So trying to understand what it is that you guys bring to them and what it is that would be attractive for you guys to get into that business.

Well, you know, I'm going to answer part of that, and I'm going to give a star turn, if I can, to my partner and Evercore's Vice Chairman, Bernard Taylor, who is sitting next to me here in London, who runs Evercore Europe, and who really did this.

So let me answer just a narrow question and then turn over to Bernard. We invested GBP7 million in cash, and we obtained for that a 50% interest in the business. The business has only been started up in the past 12 to 15 months. And Bernard has had a long relationship with the principals of the business. So let me ask him, who happens to be here -- and it is just fortuitous -- I'm in his office here in London -- to just comment a moment or two about the real rationale here, what we bring to it and so forth.

Thank you, Roger. For us, Pan is quite exciting because in the UK investment management market, unlike the US market, it is impossible, for instance, to get asset allocation advice on a completely independent basis. So trustees here really don't have the benefits of that; and there is quite a demand for it.

And Pan, in their first few months of operation have seen that, from independent trustees running midsized charities -- things like Oxford, Cambridge Colleges, that sort of size of fund, through to large private investors. And so they have a product which is giving advice, effectively, on asset allocation, and that gets them into trustees, giving them advice which they need to defend themselves. And then following through with a strategy which allows the trustees, if they take that advice on asset allocation and pay for it, that they subsequently can use Pan to manage money using Exchange Tracker Funds to bring about the asset allocation philosophy that they have for the trustees.

So for a model of the market, it is very attractive. The people are very experienced. John Redwood, who is Chairman of it, is a rather senior politician. He started life as an asset manager and is regarded as being one of the bright commentators on asset management generally. And Robert Brown is very experienced. He started life at one of our stockbrokers called (inaudible), which was acquired by UBS. He ran the UBS charities business. Went into Cantrade and developed that business. Left from that to start this up. So he is long experienced and we are very optimistic.

Most of the money, as Roger said, that was invested, we spent a small amount buying our 50% stake. Most of it goes in in the form of development capital for the business to allow it to grow. And so from the point of view of the investments, I think it is a very sensible way to spend our money, not taking other people out, but developing the business.

Okay, that's helpful. Then I guess moving on to the Financial Advisory business, what is the dialogs now that you are having with corporate executives in this environment, and how does that kind of compare to what was going on six months ago? I guess I'm just trying to understand in terms of the backlog. I'm sure there's a lot of dialogs going on. But are you sensing that people are a little bit more skittish now, given everything that's going on with the economy than they were maybe six months ago?

You know, Bill, it is really interesting. By the way, I'm really happy that Bernard had a chance to speak on this call because he is one of Evercore's greatest resources. He has done a brilliant job building Evercore Europe so far. As you can tell, he was born and raised in Brooklyn and just moved to London a few weeks ago.

(Multiple speakers). But it is interesting. Here is how I would answer that. The corporate sector as it relates to M&A, where your client is a corporation, remains in general healthy. Now, within the corporate sector, firms whose businesses are relatively good, I would say are quite active. Firms whose businesses are weak, especially quite weak, in some cases, of course, naturally, are less active; in some cases inactive. But as a whole, the corporate sector is really pretty good.

And as a general comment, I don't know what the future is going to bring here, and all of us have our own opinions about whether the cycle -- about where we are in the cycle. I have no better judgment on that than any of you or maybe worse judgment. But business conditions, while down, are not nearly as bad as we have all seen in the past. For example '02 and '03 were worse by some margin than right now.

Now, are we going to go up from here or down from here? You can guess and I can guess and we will find out. But my answer essentially is that the corporate sector is pretty healthy as it relates to M&A. The cross-border sector is quite active; a lot of currency factors driving that. And of course, what has changed from a year ago today, for example, is the leveraged finance market, the role of financial sponsors and all the activity they drove. Evercore participated more in that on the corporate side, the sell side, so to speak, but nevertheless, it was a big driver of activity. And that is absent or largely absent.

And so when I say to you that we had the same number of fee-paying clients for the first half that we did for '07, exactly the same number, there's two ways to think about that, just being very honest. One is well, you had more people, so you should have had more clients. And theoretically, that is a fair comment. But in a climate like this, to have the same number of clients paying you fees as you did a year ago, that is pretty good.

But what's going on is the average level of fees by definition is down, which means that there are fewer large deals out there so far in '08 than there were, of course, in '07, and the big difference is there are no First Datas and deals like that. That was the last one we advised on before the cycle turned, and it was, from memory, $28 billion or something like that, and KKR did that deal, and we advised the company. And those deals, of course, are not happening. I hope that's a helpful answer.

No, it is. Just trying to get a gauge as to kind of what's going on in the minds of CEOs today, given everything that's going on in the markets and just general economy. So it is helpful.

I guess as just a last question, probably more for Bob there. In terms of the comp-to-net-revenue ratio, obviously I know you guys don't necessarily like to forecast, but it is our job to kind of forecast what the revenues are. Can you give us some sense as to what we should expect for a comp-to-net-revenue ratio or an absolute level of comp for the back half of this year? Is kind of the run rate that we saw in the first half more applicable, or should we be thinking about that somehow differently? Because there was definitely some volatility in that comp-to-net-revenue ratio in the first half of the year.

Bill, I think I can make it easy, but Bob can follow me. We're not going to give that kind of guidance, for two reasons. One, we don't give guidance. Two, the degree to which that is knowable is limited. So I just want to leave it that our comp-to-revenue ratio is going to be higher than we would like over the short- to medium-term for the reasons I discussed. Our long-term goal remains 50%, but I don't see us doing that for the next 18 months.

And I don't think it's useful for us to try to calibrate it any further, because it is not our policy, and also, we will be trying to make something more perfect from a predictability point of view than indeed it is. Anything you want to add to that, Bob, please do.

Bill, the only additional point that I would add is, as Roger, said we, at this stage, are hopeful of adding three additional partners in the second half of the year. And as we have discussed many times, the ramp-up effect of those guys is to add a bit of cost before they add revenues.

Sure, and I guess the rebuttal for me and I guess investors on that front would be, you have to -- as you think about your budgeting process, and we're getting closer to year-end, you're obviously thinking about how much you have to pay your people in order to keep them around. You know the guarantees you have, so you know the fixed costs that you have, and then there's some level of activity base.

I guess it just kind is a little odd for us, as investors and analysts, to look at this and say, they can't give us a range, even if it's a wide range, in terms of, hey, it's going to be somewhat between 55% and 60% in the back half of the year. Because you do have some sense as to what you need to pay your people this far into the year, given the activity levels and the pipeline that you see.

Yes, but this is where it's a slippery slope for us. And we may not agree with -- you may not agree with us, but we don't want, as a matter of policy, Bill, to give that kind of guidance. The next step is, well, what is your backlog? Please dissect it for us. And pretty soon, you are doing what a lot of big companies do, which is you are giving guidance on everything from CapEx to you name it.

By the way, as an adviser to companies, I think they make a mistake when they do that. And whenever we are asked for our point of view and people give guidance that is on everything including whether they have got fluorescent bulbs or regular bulbs in their men's rooms, I think it is just ridiculous.

So anyway, it is not that we can't do it. We could make an educated guess. It's that we don't believe that it's the right thing for us to do as an Investor Relations approach. I'm sorry, that is just where we are. Our policy is we don't give guidance.

Okay, thank you.

(OPERATOR INSTRUCTIONS) Roger Freeman, Lehman Brothers.

It's Eric again. I just had a quick follow-up. On the buyback, are you guys still sticking to the use of your buyback program as offsetting dilution, or do you expect to be proactively repurchasing your shares? We did see the (inaudible) share count come down just a touch this past quarter.

Eric, (multiple speakers) the long-term goal -- or the goal remains the same, no change. But like many people, we are going to be optimistic on the use of this tool. That's all I would really say about it. Anything you want to add, Bob?

No. As you said, Roger, there is no change in the position we announced last quarter.

Okay, thanks.

There appear to be no further questions at this time. I would now like to turn the floor back to Roger Altman for any closing comments.

Well, I simply hope we answered the questions you had in a respectful and helpful way. And I appreciate all of you participating and we look forward to talking to you next time.

This concludes today's Evercore Partners second-quarter 2008 financial results conference call. You may now disconnect.