Evercore Inc (EVR) 2011 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Evercore Partners third quarter 2011 financial results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be open for questions. (Operator Instructions). This conference call is being recorded today, Thursday, October the 27th, 2011.

I would now like to turn the conference call over to your host, Evercore Partners' Chief Financial Officer, Robert Walsh. Please go ahead, sir.

Thank you and good morning, and thank you all for joining us today for Evercore's third quarter 2011 financial results conference call. I'm Bob Walsh, Evercore's Chief Financial Officer, and joining me on the call today are Ralph Schlosstein, President and Chief Executive Officer, and Roger Altman, our Chairman. After our prepared remarks, we will open up the call for questions.

Earlier this morning, we issued a press release announcing Evercore's third quarter 2011 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 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 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 when 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'll now turn the call over to Ralph.

Thanks very much, Bob, and good morning, everyone. The third quarter was an exceptional quarter for our Investment Banking business and for Evercore overall. Together with the second quarter this year, I believe the last six months begin to demonstrate the potential of the Evercore franchise. Let me review a few highlights.

We reported record revenues, surpassing our previous record revenues achieved in the second quarter of this year, and building solidly on the momentum of the first half of this year. We closed our acquisition of Lexicon Partners in late August and are beginning to realize the benefits of the increased globalization of our business.

Recruiting continued strongly, with significant new hires in Advisory, including the additions of Tim Carlson in Energy, Tim Main in Financial Services and Sean Murphy in Healthcare, and our Institutional Equity business, including Mark Finkelstein covering the Life Insurance industry, Patrick Wang covering the Semiconductor industry, and Rob Cihra, who will be covering the Hardware industry.

We maintained our strong position in Advisory, continuing to advise on the most significant and complex M&A transactions in the market, including the recently announced acquisition of El Paso by Kinder Morgan.

Our Institutional Equities business continued to make progress, as client relationships and coverage expanded and secondary revenues continued to grow materially. And our Private Funds business had closings in three different fund raises.

The only cloud over the quarter was our Investment Management business, which while it continued on the path of achieving sustained profitability, suffered significant AUM decline. Assets under management declined in our Institutional Asset Management business, primarily due to market depreciation, but also due to investor outflows caused particularly by investment under-performance and investor allocations away from active US equity products.

On a positive note, we opened a Wealth Management office in the Midwest and our Wealth Management business continues to add partners, clients and new assets.

Finally, effective the fourth quarter of this year, our board raised our quarterly dividend by $0.11 to $0.20 per quarter.

Let me quickly go through the numbers. Net revenues this quarter were $163.9 million, which is a record for the firm, increasing 16% from the record revenues we achieved in the second quarter of 2011, and 32% from the same period last year.

Investment banking revenues were $138.1 million, a second consecutive quarterly record, and were diversified by client, industry sector, and geography.

Before we get too excited about our performance this quarter in Advisory, let me point out, as I have in the past, that the timing of deal closings in the Advisory business is lumpy. In the past, we have occasionally commented when deal closings were delayed up to a few days after the end of the quarter, negatively affecting revenues and earnings in that quarter.

In this quarter, the opposite happened, as a couple of transactions which we originally had anticipated closing in the fourth quarter, actually closed this quarter. The good news is that even if those revenues closed in the fourth quarter, as we had anticipated, Investment Banking revenues still would have been a record by a substantial margin.

Investment management revenues of $25.3 million were down a little over 10% from last quarter's record, which included a significant gain in our private equity portfolio, but they are up about 8% from the same quarter last year.

Net income for the firm was also a record, $19.7 million, and earnings per share was $0.46.

Our compensation ratio was 62.2% for the quarter, up from last quarter due predominantly to our investments in new talent, including the second half start of several senior managing directors in our Advisory business, the expansion of our Houston office and of our Institutional Equities team.

As a general matter, our compensation ratio will tend to tick up in the last two quarters of each year, as we expense over those two quarters the full year cost of new hires who generally tend to start at the beginning of the third quarter after they've been on (inaudible). Our results this quarter are particularly impressive when one considers that we experienced the added costs of these new hires with virtually no immediate revenue from them and with only one month's revenue from Lexicon.

Our compensation ratio for the trailing 12 months was 60.8%, virtually identical to the trailing 12 months ending last quarter and that ending the third quarter of last year.

Our non-comp expense ratio was 17.8% for the quarter, down from the prior quarter, but up from last year, due in part to our acquisition, in part due to recruiting fees, and in part due to the continued high level of activity in our Advisory business. Bob will talk more about the numbers in his remarks.

Let me now turn it over to Roger, who will comment on our Advisory performance and the M&A environment generally.

Good morning, everybody. As Ralph said, it's the second consecutive all-time record quarter for the firm and for the Investment Banking business of the firm. We had a quarterly record of $138 million, as Ralph said. That's up 23% from last quarter's record and 39% from the third quarter of 2010.

This past quarter's total included 26 separate fees exceeding $1 million per client and those represented fees from 15 separate industry sectors. Five of those fees were non-US. For the nine-month period, the Investment Banking side of the firm generated 65 fees greater than $1 million versus 41 such fees for the comparable period in 2010, 65 versus 41 nine months to nine months.

Total fee-paying clients for the nine months increased to 188. The comparable total for the nine months of 2010 was 143, and even if you take out the Lexicon addition, we had a very substantial increase over last year in the number of fee-paying clients for the nine months.

Productivity increased, as you would expect in such a good quarter. Rolling 12-month revenues per partner, per banking partner, increased to $8.3 million globally and $10.4 million in the US. Those are good numbers and we pay a lot of attention to those numbers.

In terms of the league tables, Evercore is the seventh most active firm in the US M&A markets through late October, through the two today. This includes all firms. It reflects announced mergers and it is Thomson financial data, not ours. The only organizations ahead of us on this basis are the very large platforms of Morgan Stanley, Goldman Sachs, JPMorgan, Citibank America and Credit Suisse. Those are the only firms ahead of us in the United States market. Remember, Evercore is 16 years old.

On a global basis, we rank 11th in M&A using the same metrics that I just used.

The comparison which I myself watch most closely is that among the independent investment banks. That's a word, "independent," you'll hear us use a lot and it refers to firms where investment banking is the main business, instead of one of many businesses on a broad banking and trading platform.

In the United States, Evercore is the most active independent firm, doing approximately 50% more business so far this year than Lazard and approximately 2.5 times more business so far this year than Rothschild, and those are the next two most active independent firms. On a global basis, we are slightly behind Lazard and slightly ahead of Rothschild.

Let me point out here, as I did in the last earnings call, whatever that line is which divides boutiques from larger firms, Evercore crossed that line some time ago. With 68 senior managing directors firm-wide and 835 total employees, we are not a boutique. So all those comparisons that various keepers of the league tables and so forth use comparing us to boutiques are not the way we look at ourselves.

We're particularly proud of our record of advising on the largest transactions in the market. The two largest announced mergers in the world this year -- in the world -- are AT&T-T-Mobile and Kinder Morgan-El Paso. Evercore advised on both of them. We also advised on five of the 10 largest mergers in the United States over the past 12 months. We advised on both the McGraw Hill and Kraft announced spinoffs, which occurred during the past quarter. Those are two of the four largest such spinoffs announced this year. For the past five years, Evercore has announced on five of the 10 largest spinoffs in the world.

I want to particularly note the buildout and success of our Houston-based Energy Banking platform. Two years ago, Evercore did not have a Houston office, nor any meaningful presence in Energy mergers and acquisitions. Today, we have four of the best partners in that business and 22 people in Houston on our way to roughly 30 to 35 over the next year. Rob Pacha, Ray Strong, Shaun Finnie, and Tim Carlson give us superb leadership in this sector, and just simply one of the best teams in the world in Energy banking.

Of all the verticals, and there are many key ones, global energy is the most active, and has consistently been the most active and in our judgment, it will remain so. So this is a very important step in the evolution of Evercore Partners. And this year, we've advised on two of the six largest energy M&A deals in the world, which leads into recruiting.

We continue to recruit aggressively and we have no plans to let up on that, keeping in mind -- and I'm just speaking in terms of my own point of view -- no one has higher recruiting standards than we do and we are not going to compromise them under any circumstances. This past quarter, we added Tim Carlson in Energy in Houston, as Ralph noted, Tim Main to FIG in New York. Tim ran all FIG banking at JPMorgan for years, and Sean Murphy as a senior advisor in healthcare. And we will continue to recruit on the same aggressive basis that you've seen us do in recent years.

Our comp ratio across Investment Banking was 62% in the quarter. That's up slightly from 60% in the second quarter, but you have to parse this. So if you exclude the equity sales, research and underwriting business, which is a new initiative, doing very well, but not yet profitable, the comp ratio would be lower, obviously. And then if you exclude brand new partners, who as Ralph said, tend to arrive midyear and don't begin to close deals until the following year, it's also lower, but you have to think of Evercore's comp ratio in that context.

Finally, a couple of comments on the M&A environment globally -- total mergers and acquisitions on an announced basis and globally are well up for 2011 through nine months, 21% globally year-over-year and 44% US respectively. In other words, nine months, 21% higher totals on global announced mergers and 44% higher totals on US announced mergers.

Third quarter was somewhat down relative to the second quarter. That reflected the extraordinary financial market volatility we saw. Particularly in September, it reflected the Europe crisis and overall market instability.

Our own backlog remains strong. It's well above last year. There's no sign of weakness in it at all and going forward, we expect to continue to increase our share of the global fee pool as we have been doing. So in 2008, Evercore's share of the global fee pool -- in other words, global reported advisory fees was 1.1%; 2011 to date is 3.1% and we expect that number to continue to rise.

The question is whether the environment will allow the whole pool to grow nicely. We think that it will, but that depends, of course, on financial market conditions and stability and we don't have any better view on that than anyone else does.

So on that, I'm going to stop and I'm going to hand it back to Ralph and to Bob.

Thank you, Roger. Let me just talk a little bit about our newer business initiatives -- first, the Institutional Equities business. We are pleased with the progress that we are making in this business. We now have research coverage on 200 companies and have substantially completed our research buildout across the targeted industries that we have identified, which are, to remind you again, financial institutions, technology, media and telecom and transportation.

We have been adding new clients and further penetrating existing clients and have been seeing a steady increase in our trading volume, with trading volume up 50% and secondary revenues up 27% versus the second quarter of this year.

Reflecting the high quality of our research product, we have been consistently and, at times, rapidly improving our standing in the broker [boats] of our clients. This quarter, the business generated $4.4 million in revenues, as commissions increased substantially. As you know, the equity capital markets were dormant, so equity capital markets opportunities declined significantly versus last quarter.

Expenses rose to $9.3 million as we have the same phenomenon in this business that we have in Advisory, paying for the full year cost of people added midyear.

We continue to believe that we are on track to achieve our goal for this business, which is to break even on a run rate basis by the end of this year and to begin to contribute to operating profits in the first quarter of next year and to be profitable for all of 2012.

The Private Funds business, as I mentioned earlier, was successful in closing three capital raises during the quarter. This business we expect to be close to breakeven in this year and to contribute to profitability in 2012. So as Roger indicated, both of these businesses are a drag on both our operating margins and our comp ratio in the Investment Banking business.

In Investment Management, operating income for the Investment Management business for the third quarter was $1.6 million on revenues of $25.3 million, the fourth consecutive quarter that the business contributed to earnings. The decrease in revenues this quarter was primarily due to the absence of performance fees associated with private equity investments. Management fee revenues also declined, reflecting lower levels of assets under management at the beginning of the quarter.

Assets under management decreased to $13.6 billion this quarter, driven primarily by market depreciation in asset values, but also by outflows due to weak investment performance and allocations away from active equities. The decline occurred exclusively within our institutional asset management business, as our Wealth Management team continued to add new clients and assets, largely offsetting in their business the negative impact of market decline.

After the end of the quarter, the management team of EAM and we have decided to wind down this business. After six years of hard effort, the team has concluded that it is not possible to achieve the scale necessary to be financially viable in the foreseeable future. We anticipate that this business will be substantially wound down by the end of the year, returning approximately $430 million of assets to our clients. While we are disappointed with this outcome, we are confident that our clients' interests have always been our top priority, and will remain so as we support their transition to other managers.

Within Investment Management, we also continue to evaluate new investment opportunities and are well positioned to act on those investments that make both strategic and financial sense.

Let me now turn it over to Bob for a few final comments on our financial performance.

Thank you, Ralph. Let me just highlight a few of the items that are detailed in the press release. With regard to EAM, our Q3 GAAP results include a charge of $1 million associated with the write-off of intangible assets derived from our investment in EAM. And we anticipate a further charge, which we currently estimate at approximately $1.3 million in Q4, principally related to sublet of real estate, a cancellation of long-term service contracts and severance and other separation costs for our people. These costs are excluded from our adjusted pro forma results.

As we've noted, we closed on our acquisition of Lexicon on August the 19th and as we indicated previously, we are reporting Lexicon's results on an adjusted pro forma basis in the manner comparable to our other investment banking acquisitions. Specifically, all of the unvested share-based awards granted at closing have been included in the adjusted pro forma EPS share count. The compensation expense associated with these shares and intangible amortization has been excluded from adjusted pro forma net income.

In addition, US GAAP required that a number of Lexicon expenses associated with compensation, professional fees and office space be included in our consolidated results because these expenses were contingent on the transaction closing. These expenses have been excluded from our adjusted pro forma results. Finally, we intend to file a Form 8K on November 4 reflecting the results of Lexicon, together with those of Evercore, on a pro forma basis under US GAAP.

A quick update on non-compensation costs, which you have noticed increased from last quarter -- five key items driving that. The results include six weeks of operating costs from Lexicon. Elevated professional fees are driven principally by costs associated with recruiting. We experienced higher levels of T&E costs associated with the growth of our Advisory business and occupancy also increased as a function of that expansion.

And finally, we have higher acquisition-related costs principally associated with Lexicon, but also associated with the buildout of EWM in the Midwest. We continue to expect non-compensation costs to increase in the near term, as we report our first full quarter of Lexicon results in Q4.

And we expect non-comp [from their] share of revenues (inaudible).

Of course, of course, Roger. With regard to our financial position, we continue to maintain a strong balance sheet, holding approximately $307 million of cash, cash equivalents and marketable securities. During the quarter, we repurchased approximately 733,000 shares and as Ralph mentioned, we've increased our dividend by 11%.

With that, let us open the line for questions.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from the line of Patrick Devitt from Bank of America Merrill Lynch. Over to you, please.

Hi, good morning, guys.

Good morning.

You noted being involved in some of the more high-profile breakups that were announced. Can you give us some idea in general how a fee structure of a breakup works relative to a traditional M&A deal? Is it very similar?

It's quite case-specific in terms of the complexity or simplicity of a breakup. If you have situations of a few years ago that Evercore advised on, like [Sundance] or Tyco, where you have four-way breakups or three-way breakups, the complexity means higher fees. If you have a simpler breakup, the fees tend to be lower. A comparison of spinoff fees to M&A fees would probably show that spinoff fees are somewhat or slightly lower, but the real point is that they're case-specific. I've seen them higher; I've seen them lower -- probably in general, a little bit lower, but not a lot.

Okay, great, thanks. And in the past, industry-wide, we've typically seen kind of a surge of completions into the end of the year. It looks like it's been pretty slow in October so far. Do you feel like the calendar is shaping up to see that surge again this year or is it still too early to tell?

Well, I don't think deal activity in general is slow in October.

Announcements were good, but --

We focus on announcements.

Yes, yes, yes.

I mean, announcements are obviously the leading edge of transactions, so when I refer to deal activity, it's announcements. So, A, I don't think the activity is slow, and B, historically over long, long periods of time, corporations have pushed hard to close transactions, either on the buy side or the sell side, by the end of the year for accounting reasons and tax reasons and other reasons. And that's why fourth quarters in general, for us and peer firms, have usually been good. That dynamic has been around since the dawn of time. I don't see any change in it.

Okay.

But I -- at the same time, there's probably a little diminution as the business evolves in seasonality, probably a little diminution just generally.

Right, okay.

If you look at our performance last year, the third quarter was our highest revenue quarter, which is obviously revenues driven by closings.

Um-hum. And finally, in asset management, could you speak to the positive mark in private equity? Was there a large realization that was able to keep that positive, because generally what we've seen across the Street is pretty significant negative marks in private equity portfolios.

The marks there relate to really strong performance in several of the underlying companies, but there was not a realization during the quarter.

Are there any public equities in that portfolio?

No, there aren't.

Okay. All right. Thanks a lot.

And by the way, our exposure there is predominantly in our Mexican private equity business, so -- which (inaudible) quite well.

Okay. Thank you, great. Thanks, guys.

Yes.

Thank you for your question. Our next question is from the line of Joel Jeffrey from KBW. Over to you, please.

Good morning, guys.

Good morning.

Good morning.

Just curious about the decision to increase the dividend. Is this just related to the fact that you see earnings growing substantially and your payout ratio is going to stay the same, or this is any way an outlook for a sort of -- fewer opportunities for acquisitions?

It's not the latter and the reality is with our share count, the impact of this increase is a little over $3 million a year. So it doesn't affect our capacity or propensity to do acquisitions at this point. It's really a reflection of the fact that we do believe in a support of M&A environment that the investments that we've made over the past year or two, both in our new businesses and in the growth of our Advisory business, will generate incremental -- and in obviously the Lexicon as well -- generate incremental revenues and incremental profitability. As Roger said, the one thing we can't predict is the overall environment, but I would say that we're quite confident that our share of whatever activity exists will continue to grow.

Great. And I guess just in terms of thinking about the environment, I mean, with the announcements that are coming out of Europe last night or early this morning, do you think -- what do you think the impact is on M&A just based on that?

Well, you can't make any judgments based on one day's announcement. We all read the details very carefully this morning, but whether markets ultimately judge -- emphasize ultimately -- that this announcement truly addresses, and comprehensively addresses, the challenge, is entirely unclear, and I would say no one on earth knows the answer to that question. So it's not only too early, it's way too early to judge whether this particular step stabilizes global financial markets vis-�-vis the Europe overhang or doesn't -- way too soon.

Great. And then just one sort of last housekeeping question -- can you remind us what's the remaining piece of your authorization for share repurchases?

$85 million.

Great, thanks.

Thank you for your question. Our next question is from the line of Eric Bertrand from Barclays. Over to you, please.

Hey, guys.

Eric.

Maybe not to Evercore's actual pace of announcements, which has been quite good, but the broader industry's deal announcement pace has slowed over the last few months. How much of this divergence versus the prior trend line would you say is actually lost opportunities that won't see the light of day, as opposed to transactions that are just on the back burner that will come surging back when that market does settle down eventually?

That's also really hard to know and let me give you an example. One of the real swing factors in announced volume and where financial market conditions have quick impacts, both positively and negatively, have to do with the activity stemming from financial sponsors. Evercore happens to have a very substantial business in that area.

If you see credit markets back up, retreat, the way they did in September very sharply, and for that matter, the whole third quarter, it depresses transactions originating from financial sponsors very quickly because those transactions are so sensitive to availability of credit in terms of credit.

At the same time, when conditions improve -- and they have been improving in the last two or three weeks quite a bit -- then you see the flow of transactions from that source rise, and it's a pretty quick relationship. So judging whether some transactions that might have occurred three months ago in the sponsor area are deferred or cancelled is pretty much impossible.

In some cases, their assets being sold where that decision ultimately is a decision from the buyer as to whether the buyer brings the deal back. In other cases, other factors apply -- really very hard to say that, to assess.

Okay.

But I think the main point is here we are sitting here on -- in the very end of October. Right this minute, transaction activity is good; credit market conditions are improving. The outlook is pretty good. A week from today, it could be different, but right now, conditions are on the upswing and of course, the Europe announcement for the moment -- I mean, tomorrow could be a different day on that -- but for the moment is a help.

That's definitely pretty clear on our part as well, the level of uncertainty. Sticking with Advisory, are there any particular regions, perhaps Europe even, where you would expect to see a bigger upswing when things stabilize, more -- any industries that you think there's been a backlog, perhaps not energy, given the pretty heavy amount of activity that we've seen recently.

The answer, I think, is no in terms of whether there's one sector that will specially benefit. Most basically, the reasons that the global and US M&A totals weakened in the third quarter, even though they're up nicely for the year, had to do with the financial market volatility we all saw in the third quarter.

If you say to yourself, that's going to go the other way -- and I don't know if it is or it isn't -- but if you say to yourself that it's going to go the other way, well, then transaction volume will be positively affected. It'll rise, but judging which sector it'll rise most in versus other sectors is impossible.

I mean, the big sectors -- look, the big sectors are -- the biggest sectors are energy, financial institutions, healthcare and tech or tech and telecom, although they're just slightly ahead of some others, but those are the big sectors right now. They're very healthy from a transaction point of view.

Okay. Briefly, on your private funds group, how has the fundraising environment [shifted] over the last couple of months? Probably very, very early days yet, but have things paused and people are -- potentially come back and revisit their investment theses and plans to put money into hedge funds and whatnot perhaps early next year?

Yes, I would say that we're seeing a steady -- not rocketship -- but moderate recovery in the fundraising environment. Obviously, the year was in the -- right after the financial crisis for the first year or so when investors were starved for liquidity and not making additional capital commitments. And that is at a moderate pace recovering and we expect that to continue to recover and the situations, the fundraisers that we are working on right now, are meeting with good receptivity on the part of investors.

Great. Thank you for your help there.

Thank you for your question. Our next question is from the line of Hugh Miller from Sidoti. Over to you, please.

Hi, there -- a couple of questions. First, I think you guys mentioned for commissions from research totaling a little over $4 million in the quarter, and given the challenges we've seen in the fixed base, the contraction values there and kind of the lack of interest in flows there, are you seeing a disparity between growth in TMT commissions versus FIG?

No, we're not.

Okay.

And by the way, that's not the easiest thing in the world to say either because while we -- sometimes what might happen is we provide a particularly good research idea in TMT and we get paid for that in FIG or in another sector, which we don't even have research. So not all of our equity activity is in these sectors that we cover from a research point of view.

I understand that, certainly. And did you mention the expenses in the quarter from that particular area?

Yes, I did. That's $9.3 million.

Got you. Okay. Thank you. And obviously, you've talked a bit about the under-performance in the asset management segment relative to the indexes and so forth. Is it your expectation that if we see kind of a rebound eventually in equity flows that your participation in that will probably lag the industry, given the performance, or what are your expectations there?

I think we should anticipate that somewhat, yes, because the historical performance is probably the best predictor of future relative flows and we have in one of our managers some under-performance.

Okay, yes, certainly. And just with regards to the recruiting side, I know you guys mentioned that you're not going to let off the lever there and that you're not going to also lower your expectations on hiring top talent, but have you seen any change in momentum of interest, people looking to come to Evercore just given some of the malaise we're seeing at some of the larger firms out there? Any kind of change in interest level or has that been kind of similar?

Evercore has had a very strong recruiting hand, so to speak, for some time, never stronger than right now, and as you can see, we're taking advantage of it because there is a long-term out-migration of talent -- long-term meaning secular and continuing -- from many of the large platforms to independent firms. And we've talked about that many times on these calls, but we're in a very strong position. We're the leading independent firm in the United States, second-leading in the world, growing the fastest, have the most momentum. So people want to work here, especially because -- and very fortunately so -- Evercore's reputation is as a great place to work.

So we're in the middle of our analyst and associate recruiting now. We made -- Tim can correct me here -- 15 offers to analysts -- excuse me -- the summer analysts joined the firm on a permanent basis, as in our analyst program, all 15 accepted. The last time we made our associate offers -- obviously, those are to MBAs -- we made 17 offers and 16 accepted. Now, why is that the case because we offer the same amount of money as everybody else, no more, no less. And the reason is the younger people check around and they learn that Evercore is seen and that those who work here now consider it a great place to work. So we have a lot of recruiting momentum and we want to do our best to capitalize on it.

Okay. And as you've --

(Inaudible) 15 summer analysts, they all accepted after hanging around with us for three months.

That surprised us.

And as you look out on the senior managing director recruiting, obviously, I understand that some of it's always going to be opportunistic in finding the right talent, but as you look for opportunities to kind of expand your current offering, are there areas that you're kind of focused on?

Well, we've said before that in the US, we have less in the consumer sector, less in the general industrial sector. If the perfect person became available, or team became available in the Midwest in Chicago or in the far West in LA or San Francisco, we would be interested in that. And in Europe, we're obviously -- with the Lexicon transaction, we added three industry verticals, FIG, energy and utilities and infrastructure.

In other words, those are the three primary concentrations of Lexicon and banking.

And I think you would expect over time that we would build verticals there, particularly in global industries that complement what we have in this country.

Okay. And the last question, just more of a housekeeping -- obviously, you mentioned about booking some revenue in the third quarter that you were anticipating would close in 4Q and that exclusive of that, you would still have reported record results, but have you talked about or mentioned -- I didn't catch it on the revenue impact that was booked in 3Q.

No, we have not given you specific numbers. We're just saying that sometimes -- I mean, we -- you've heard us say many times over the years that you really should not asses Evercore on a quarter by quarter basis. We have no control over the closing dates of advisory transactions, so sometimes they take a little longer than you think; sometimes, they're a little quicker than you think. Most of the time, they tend to slip. In this case, they actually were a little quicker, so you had a little more revenue in the third quarter than we were expecting even a month ago, and that obviously borrows from the fourth quarter. The outlook is still good. That's the point; that's all we have to say.

Okay. Thank you very much.

Thank you for your question. There appear to be no questions at this time. I would now like to turn the floor to Ralph Schlosstein for any closing remarks.

Okay. Thank you very much for your time and attention and we'll talk to you in three months.

This concludes today's Evercore and Partners third quarter 2011 financial results conference call. You may now disconnect.