Evercore Inc (EVR) 2016 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Evercore First Quarter 2016 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, Wednesday, April 27, 2016.

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

Good morning and thank you for joining us today for Evercore's first quarter 2016 financial results conference call. I'm Bob Walsh, Evercore's Chief Financial Officer, and joining me on the call today is Ralph Schlosstein, our President and Chief Executive Officer, and Roger Altman, our Chairman. After our prepared remarks, we will open up the call for questions.

Earlier today we issued a press release announcing Evercore's First Quarter 2016 Financial Results. The Company's presentation today is complementary to that press release, which is available on our website at 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 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 when evaluating the Company's performance. Of note, when we reference comparative results during the call, we will be evaluating 2015 results as if our investment in Atalanta Sosnoff was reported using the equity method of accounting rather than on a consolidated basis. 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 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.

I'll now turn the call over to Ralph.

Thank you, Bob and good morning everyone. We're generally pleased with our first quarter results. As all of you are aware, the first quarter typically is a seasonally lower than other quarters, but this was the best first quarter in our firm's history with revenues up 11% year-over-year on a comparable basis.

As we mentioned in our fourth quarter conference call, some of the trends that were emerging in late 2015 are in fact carrying over into 2016. We are experiencing an increase in distressed M&A and restructuring activity in select sectors such as energy and other commodity related areas, while at the same time sustaining M&A activity in other sectors including healthcare, tech, media telecom and financial services. We continue to believe that 2016 could be one of those unique years in which we see reasonably strong M&A activity coupled with a pick-up in restructuring activity.

Our equities business benefited from volatile equity markets and increased equity trading activity in the beginning of the quarter, contributing to an 8% year-over-year increase in secondary revenues, which is distinct from many of our larger competitors.

Conversely, ECM activity was weak in the quarter due to the volatility in equity markets in the first two months. However, ECM activity has picked up at the end of the quarter and that momentum carried over into the second quarter as we are into our largest ECM fee to-date in the first three weeks of April.

Recruiting is off to a solid start with the addition of four Senior Managing Directors in Investment Banking, three in Advisory and one in Equity Research. We continue to have discussions with candidates, though at this point in the recruiting cycle we anticipate that our hiring class will be in our historical range of 47 Advisory Senior Managing Directors, but below the record 10 Advisory SMDs that we hired last year.

Based on the announced earnings from our peers this quarter, we anticipate that our market share among all publicly traded investment banking firms of advisory revenues will grow, as will our market share among the publicly traded independent firms.

We have consistently demonstrated our ability to grow market share when M&A markets are strong and when they are a little less strong, as they were in the first quarter of this year. In Investment Management, we continue to focus on our wealth management and trust business and our money management business in Mexico.

In February, we enhanced our capabilities with the opening of Evercore Trust Company in Delaware; we also completed the acquisition of the remaining minority interest in our money management business in Mexico in January and are making progress on our cost reduction programs in that business.

We successfully issued $170 million of fixed rate senior notes at an average interest cost of 5.25% during the quarter through a private placement and used a portion of those proceeds to repay the $120 million variable rate senior notes that we borrowed from Mizuho.

Very importantly, we returned $123.1 million of capital to our shareholders during the quarter, including repurchasing 2.3 million shares at an average price of $46.61, substantially offsetting the dilution from shares were bonus equity awards in 2015.

Let me briefly go over our financial performance. First quarter net revenues were $257.2 million, up 11% versus the same period last year, on a comparable basis, which is pro forma as Bob mentioned or the deconsolidation of Atalanta Sosnoff due to the restructuring of that investment. Net income was $32.8 million for the quarter, with earnings per share of $0.63. These results are up 10% and 13% respectively versus the first quarter of last year. Earnings per share was up by a greater percentage than net income due to our aggressive share repurchase program. Operating margins were 21.3% for the quarter, up marginally from the first quarter of last year.

Our compensation ratio was 57.6% for the quarter, which is reflective of our current full year expectations. Non-compensation costs were $54.4 million, up from the first quarter of last year due to headcount growth, but down in comparison with the fourth quarter of 2015. Non-compensation costs represented 21.1% of our revenues compared to 21.5% in the first quarter last year.

Let me now turn the call over to Roger to comment on our Investment Banking performance and the M&A environment generally.

Hi, good morning everyone. As you can see, Evercore generated strong Investment Banking results once again in the first quarter of 2016. Our Investment Banking revenues were $237 million, up nearly 11% from the $215 million level of quarter one 2015, year-over-year variance. Operating profit was $49 million, up 4% year-over-year. Operating margin was slightly down, but that reflected the record SMD hiring that Ralph referred to and inherently is temporal. Keep in mind that our SMD hiring, which has been very consistent for many years, always has moved the firm forward from a revenue and earnings point of view, but over the very short term, it has a temporary downward effect on margin, because it takes new partners awhile to get to full productivity.

This first quarter was our best first quarter ever, as Ralph said, and while the first quarter is seasonally soft, this was actually the sixth best overall quarter the firm has ever had in Investment Banking.

Let me break down our revenue. Advisory revenues themselves were $176 million, up 13.5% from the year-over-year level. Commission income was $57.2 million, up 8% year-over-year, underwriting revenue $3.3 million, down from a year ago, largely reflecting the extreme volatility of the beginning of the quarter. We saw 41 fees greater than $1 million during this past quarter, up from 35 year-over-year, the number of fee-paying clients was 173, up from 151 year-over-year and an all-time first quarter record. On the capital raising side, our advisory revenues included $5.3 million per advice related to 14 separate capital raising transactions and then you also have, as I mentioned, a $3.3 million from five underwriting transactions.

Productivity, a metric we watch closely. Average revenue per Senior Managing Director on the traditional trailing 12-month basis was $12.1 million globally, up slightly from the $12 million figure we reported for quarter one 2015. And Evercore continues to perform quite strongly on this metric. As Ralph said, based on other publicly owned firms reported results and now our own, we believe that our market share of the total advisory fee pool rose again to about 5.3%, that's our best estimate and that would be our highest share ever recorded.

On recruiting, I'm not going to repeat what Ralph said word-for-word. We continue to recruit on the same, strong and steady basis which has been our hallmark for quite a few years. We added Bill Anderson and Jim Renwick as new Senior Managing Directors in this past quarter and we concluded the quarter with 80 Senior Managing Directors. And just this past Monday, we also announced that Dan Ward would be joining the firm on the energy side. Bill Anderson, by the way, has become Global Head of Strategic Shareholder Advisory Services and Jim Renwick is heading our new Evercore Capital Markets Advisory Capability in London.

One further word on Bill Anderson. Bill is the leading activist defense advisor in the world and very widely seen as such. And with his joining Evercore, I'm quite sure that the firm is now number one in this key practice. For example, we are currently advising on the four largest and highest-profile publicly disclosed activist challenges in the United States. This is a strategically important development for the firm.

Finally on the M&A market as a whole, the global market was down somewhat in the first quarter, total dollar volume of transactions announced was down 19% from the year-over-year figure. Companion total on the US side, not global but US, is down 36%. Using the other metric, the number of announced deals as compared to the dollar volume of them. The first quarter global total was down 7%. So what you see here is a modest drop-off among larger transaction, because the dollar volumes were down further than the number of deals. Nevertheless, we see the outlook for the rest of the year as essentially healthy.

There was a period as I alluded to earlier, and we all remember it, a financial market volatility, severe volatility in January, which in our view weakened transaction volume for a while and affected these total. But markets have fully recovered from that at least as of now and we don't see any reason why the rest of 2016 shouldn't witness a healthy global M&A market, that is our own expectation.

Back to you Ralph.

Thanks, Roger. Our equities business contributed revenues of $58.3 million in the quarter, up over 5% from the first quarter in 2015, including $1.2 million attributable to underwriting. Secondary revenue, as I mentioned earlier, was up 8% over last year as a result of both the greater volatility and higher volumes in the first quarter. And also our continued improvement in the esteem and accord that we are held by the largest institutional investors around the world.

Overall, the business produced operating margins of 19.7% in the quarter, compared to 15.2% in the first quarter of last year, despite the softness in ECM. This is a function of both the strong secondary revenues and the success of our cost reduction activities. We remain focused in this business on controlling costs, while making measure investments to drive the future growth of our business.

In Investment Management, for the first quarter Investment Management reported net revenues and operating income of $20.2 million and $6 million respectively, and produced an operating margin of 29.8%. These results reflect the contributions from our wealth management and trust businesses, which continued to perform well now and now have in the case of wealth management $6.5 billion of client assets. And in Mexico, assets under management were MXP31.5 billion at the end of the quarter, flat versus the first quarter of 2015.

Bob will now provide further comments on some of these actions, our non-compensation costs and other financial matters.

Thank you, Ralph. Let me begin with a bit more detail on two points that were previously mentioned. First, with respect to the acquisition of the 28% minority interest in Evercore Casa de Bolsa that occurred in January and we invested approximately MXP120 million at the time, converting ECB to a wholly-owned entity. Just for context, ECB is our Mexico entity, providing Investment Management services, it is also the subsidiary we used to participate in underwriting transactions in Mexico. As we previously indicated, the investment facilitate cost reduction initiatives, which are currently underway.

Secondly, with respect to the financing that Ralph mentioned, we placed $170 million of fixed rate term debt with six insurance companies and retired the $120 million variable-rate loan with Mizuho. The notes have a weighted average maturity of about 8 years, ranging from 5 years to 12 years and a weighted average interest rate of 5.257%. In conjunction with the placement of the notes, we have a commitment to reduce our line of credit to $30 million. Following the restructuring of the line of credit, we will have debt financing of approximately $200 million, essentially consistent with our position in 2015 before Mizuho exercised the warrants they held.

Turning to our adjusted results, they are presented on the basis that is consistent with prior periods for the quarter and exclude certain costs that are directly related to our equities business and other acquisitions. Most significantly, we have adjusted for costs associated with the vesting of equity granted in conjunction with the ISI acquisition. In the first quarter we expensed approximately $32 million consistent with the continued positive performance of Evercore ISI. As a reminder, our adjusted pro forma presentation includes all of the shares we expect to issue for the equities business and the EPS denominator, our forecasts that drive the number of shares expected to be issued did not change materially in the quarter.

As you know, our primary gauge of non-compensation costs is cost per employee. We continue to make progress on this metric with firm-wide operating cost per employee of $36,400 for the quarter, which is 5% lower than Q4 and 3% lower than Q1 of last year.

Turning to the equities business, the adjusted operating margins which govern the ultimate payout of the G and H units for the equities business was 16.2% with the first quarter up modestly from the fourth quarter of 2015. During the quarter, approximately 371,000 Class G units were exchanged for Class E units as Evercore ISI is satisfied with the performance threshold with these units for 2015.

Focusing on taxes, our adjusted the pro forma tax rate for the first quarter was 37.5%, a slight increase from the first quarter of 2015. As we've previously discussed, our effective tax rate changes principally due to the level of earnings in businesses with minority owners and earnings generated outside of the US. The elimination of minority interest balances for ECB and Atalanta Sosnoff drove an increase in the rate, which was offset by growth in the expected profitability of other non-wholly owned businesses.

Our share count for adjusted pro forma earnings per share was 52 million shares, a decrease of approximately 950,000 shares from Q4 2015, this decrease principally reflects share repurchase transactions, which as Ralph mentioned, we repurchased 2.3 million shares for the quarter. In addition, our Board of Directors has refreshed our share repurchase authorization such that we now have authority to repurchase $450 million in shares or 7.5 million shares.

And finally, our cash position remains strong as we hold $338.4 million of cash and marketable securities at March 31, 2016 with current assets exceeding current liabilities by approximately $327 billion.

With that operator, we can open the line for questions.

(Operator Instructions) Steven Chubak, Nomura.

So, Roger, maybe just a quick question on the M&A environment. I appreciate your comments, noting that the environment remains healthy, but focusing in on the European business specifically, it contributed about 25% of your revenue last year. And just given some of the concerns surrounding for exit, I didn't know if you can give us any insight into what you're hearing from corporates on the European side and whether you think that should cause any delay in completion at least or announcements over the next couple of months?

Well, I can't say of course, whether there is any downward pressure on transaction volume as a result of the June 23rd referendum in the UK. But there is a working -- or there is a widespread assumption in the business and financial communities, we'll see if it's correct that the vote will ultimately be no on exit. And -- so I don't think it's having a big negative effect. Whether it's having any, I can't say and whether that changes as the vote date approaches, I can't say either. That is the sense, however, in the business and financial communities in the US and Europe as I see it and we'll see if it's right.

Okay, thanks, Roger. And Bob, I appreciate your comments talking about the factors that we're driving the gap in adjusted versus US GAAP compensation, I suppose what I'm struggling with is, how do I reconcile the increase in the units vested that's due to strong performance with the -- I suppose, as you noted, a material change in share count which is also directly linked to share -- to the performance of ISI?

Well, Steven, as you know, on an adjusted basis, we have put in all of the shares into the share count that we expect to issue and we are taking out the compensation expense. So, as we have said consistently, our view was that the business should be in a position on the basis of our cost reduction strategies to realize the G units. They achieved the 2015 tranche, Ralph has consistently called those the bread crumbs on the ground, and sort of showed them the past to running a successful business. And as you saw, the results for the first quarter of 2016 are also consistent with -- are well above the level needed to earn those units. So, the question remains, how will the business perform over the 5-year term? We built 5-year forecasts to estimate how many of the Hs would come into -- would ultimately turn into shares that were issued and the business is performing pretty much on that plan.

And maybe just one follow-up and just switching gears for a moment. There was some mentioning of the seasonality in the advisory business, I mean, your seasonality typically is more pronounced in 1Q. So, I mean you could remind us of what some of the factors are which results in that magnified seasonality, if you will, relative to maybe some of your competitors?

This is Roger. I don't think your premise is accurate. I've been in this business a very long time and it's always been a back-end loaded business year-over-year, because people rush to complete transaction for year-end, and there are tax factors and so many other factors. So, ever since I'm in it, the business has always been back-end loaded in terms of the first quarter versus the end of the year. And I don't think our business is any different than anybody else's, I've never noticed that it is and don't believe that it is.

And Steven, I mean, my observation would be for those that have reported, actually our year-over-year revenue results in advisory are -- were comparable or better?

Well, I mean, let's speak direct, I mean we've obviously looked at the other results that have been reported and you can look at them too and the results speak for themselves. Evercore has -- did better than the peer firms who're reporting.

Understood. I figured because of the secondary advisory business that might result in more magnified or pronounced seasonality, if you will, but I do appreciate the color.

Just a question, what do you mean by the secondary advisory?

Like private equity.

Well, Steve, our private capital, our private funds business, those are inherently more back-loaded, but if you look at the independent, virtually all of them have that business today.

Jim Mitchell, Buckingham Research.

Just a couple questions on the timing, maybe the buyback -- percentage of share count, it's pretty sizable. Is that over -- what kind of timeframe can we expect that to be executed?

We framed it over a two-year to three-year horizon, which is the same framing that we used in the prior authorization, which was 7 million shares. So we've pumped it to 7.5 million shares.

So, if you think [bite] a little historical context. So last year we issued 2.6 million shares as part of bonus compensation, we issued, what, another 350,000 or 400,000 as part of new hires. So, roughly 3 million shares were issued for purposes of bonus compensation and new hires. If you look back over the last three years, our share repurchases have always exceeded both the amount that we have issued for bonus and for new hires and also when we did the ISI acquisition, we said it was our hope over the 5-year period and obviously we can only say hope because it depends on the performance of the business our cash flow, share price, et cetera, et cetera, that we would over the 5-year period repurchased roughly half of the shares that were issued during -- or as a result of that transaction. So, that creates a desire need on our part to buy somewhere on the order of 3.5 million shares plus or minus, a year and so when you put it in that context, $450 million refresh, it doesn't seem like a huge amount in my view.

Yes, for the time horizon, it will work.

Yes.

And maybe just a bigger picture on the equity -- I'm sorry, on the energy sector opportunity, you guys have highlighted that, can you talk about the different fronts whether it's recapitalization through equity underwriting, M&A or restructuring, how you feel you're positioned to capture that and how -- if you can at least maybe help us think about the size of that opportunity?

Well, first of all, as all of you know, we have an extremely strong Investment Banking practice in the energy sector. It's been one of our largest contributors in terms of the sector to our revenues every year. We have at the moment seven Senior Managing Directors in Houston and a team of about 50 people there, we have an additional SMD in London and a team of about 17 or 18 people there and as Roger indicated, we just announced the hiring of Dan Ward who ran energy, metals, materials, mining and natural resources, et cetera at Deutsche Bank and he'll be our eighth partner in that sector. So I think the fact that we're continuing to add to the practice tells you quite a bit about what we think our relative position is and the opportunities in that sector.

The second thing I would say is, if you look over the next two to three years, I think it's reasonable to prognosticate that we're going through now, a period of restructuring activity, which we and other firms with strong restructuring practices are benefiting from. And that after we get through that period, we should see a period of time both of merger activity and recapitalization or re-floating of some of these companies that are in the process of being restructured today. We really like our position because we are literally the only firm in the entire industry that has strong energy Investment Banking, strong restructuring and a strong equity underwriting capability with an industry-leading research team. So, this is something that we feel will provide a lot of opportunity for us over the next two year to three year period of time from all three of those parts of the practice.

And should we see any -- much of that impact or at least a good part of the restructuring impact this year, in second half or you're already seeing it?

I think we're already beginning to see some impact of the restructuring activity. Our restructuring team is pretty flat out at the moment and from what I understand from our competitors in the independent Investment Banking business. And keep in mind, they are really the only players in the restructuring business, that's pretty true across the industry and I think the comments from the other -- from our competitors earnings reports reflect that.

Daniel Paris, Goldman Sachs.

Ralph, you gave some comments around Senior Banker recruiting that imply another strong year to come, but below last year's levels of recruiting. So just wanted to parse out how much of that forecast is kind of supply versus demand. So in other words, are there less bankers available for hire this year? Are you guys just kind of being more selective?

It's actually more reverting to what we've done historically. Last year was an extraordinary year, I think we've said as long as long as I've been here and probably as long as we've been public that we hope to hire four to seven Advisory SMDs a year that's been the practice every year. We've also said that if circumstances evolved in a way that we had an opportunity to hire more high quality SMDs that we would seize that opportunity. Last year we did that both because we had the opportunity to hire a little bit more in the industry practices and also, let's not forget that we were ramping up our ECM activities, two of the ten that we hired last year were in ECM, which was not a hiring area in the past. So it's really driven more by the reversion to our historical practice and last year was the anomaly.

As a footnote, just to speak for myself, the supply is actually rising.

Dan, the other point, that you would have seen in the press release is, we're also adding talent in research, Tom Gallagher, has committed to join us, covering insurance and we see a lot of supply there to build out that business over time as well.

Got it. That's all really helpful context and maybe just following up on that, I think a similar line. I know there's a lot of moving parts, but any way you can help us frame how to think about the comp ratio for 2016. I guess my question is, to extent the top-line keeps growing, can we expect continued comp leverage or do we need to be aware of kind of the outsized recruiting year that you had last year?

I think our practice will be the same as it's been for the last several years, which is we think carefully about our expectations at the beginning of the year, which is much reflected here. And we'll adjust the comp ratio as the year plays out as you point out particularly as revenues are realized, but this is our best thinking today.

And maybe just one more if I could squeeze in. Ralph, you touched on the fact that you guys have -- obviously have a very strong energy banking team on the M&A side. I think you made the comment in the past that energy has been a smaller piece of restructuring pie for you guys, so just trying to get a sense of whether you think the presence that you have in M&A will trickle through on the energy restructuring way a bit -- ?

And the reason it's been a smaller piece of the restructuring pie is there wasn't a lot of restructuring activity in energy and the largest restructuring EFH, we're the lead restructuring advisor. So, I think we are -- as the activity has picked up in the energy sector, the restructuring activity, the fact that we have both a strong energy banking relationships and a very strong restructuring practice has obviously benefited us.

Brennan Hawken, UBS.

Brennan here. So just wanted to hit on M&A quickly and restructuring -- do you think that the capital raising on the equity front by some energy firms has helped to move as to maybe a clear winners and losers type environment where you can start to set a clearing price for some of the assets for sale. Do you think that, that's maybe helped along some of the restructuring pick up that you've seen and maybe can you add a little bit to the dynamics you're seeing playing out in that marketplace?

I mean the honest answer to your question is, we have no idea. I think we're as close to the ebb and flow of transactions in energy as anybody, remember at 2014 and 2015, we were the number one ranked firm in the world in energy M&A measured by dollars or number of deals. We're also one of the top three firms in the world in restructuring. But I don't think anybody has a better feel for this than we do and we don't know.

Alright. And then on M&A and what you're seeing, I appreciate Roger that you expect 2016 to be healthy and pick back-up. So I guess, does that mean that we're not really seeing the volatility in credit and equity markets that we had in the beginning of the year, impacting C-suite risk appetite. And also, are you starting to see availability of deal financing come back in a way that is meaningful and can allow for some of the softness we've seen in announcements recently to get offset?

Well, the answer to your last question is, yes, there's been some improvement in the credit markets and credit availability and deal financing. But keep in mind, January was a very volatile difficult month and all you really have to do is look at the level of commodity prices since January, which obviously have come up a lot. And the level of share prices themselves, which are back to record levels, and the mix and so forth to see that conditions, broadly speaking, in the financial markets have eased and improved greatly since January. Now, I'm not smart enough to know whether that'll continue tomorrow, let alone, six months from now. But at the moment, our condition from a credit availability point of view, from a share price point of view, from a business outlook point of view continue to be moderately favorable for M&A. Let's not also -- and let's not forget that the vast world of investment grade corporations have large cash positions on their balance sheet and are not nearly as dependent upon the financing markets as your question might imply.

Sure. And then on the hiring front, can you guys walk through the -- what's included in the 80 SMDs and does that imply that we got three departures or two departures, does it include the three hires in the press release? Just help me do with the math on that front.

We had 80 at the beginning of the year which included --.

We ended last year with 79.

Yes. Bill Anderson joined on January 1st.

Two have joined and one of our SMDs at the end of the year has moved to [Senior Advisor].

Okay. And then I sure hope that that sound is at my line. Anyway, the last one I guess, did you have any updated timeframe on hitting your ECM revenue aspirations that you hit on? Of course current quarter or 1Q was a really weak quarter for ECM broadly and so market conditions are obviously going to have an impact there, but the revenue run rate has been pretty substantially below (technical difficulty) --

Well, first of all, last year we said we would do $40 million to $50 million, we did a little -- just slightly over $40 million and I think what we've said is, and we never said date, but we've said that we believe that this could be a $75 million to $100 million revenue business for us. Once we're fully up and running and honestly, I couldn't tell you whether that's two years, three years, four years, and said that from the beginning and we make that statement by observing other firms that have -- that aren't all banking firms, but have good banking practices. I think we're on track, obviously subject to the market (technical difficulty)

Operator, can you hear us?

Yes, please proceed.

Operator, can you fix this busy signal.

Stand-by.

Hello? Operator (multiple speakers)

Yes. Please proceed, the beeping has discontinued.

Do we have another question?

Ashley Serrao, Credit Suisse.

I guess first question is just on growth. You've always sort of grown in areas where banks have kind of pulled back and you've done it successfully, today you have banks pulling back in Europe, even in Asia, you have presence in both regions. Just curious, just updated thoughts on how you are seeing the opportunity today, as it become more attractive than it has before. And should we expect you to invest in Asia and Europe this year?

I guess, I would differ a little bit with your premise that we've grown where others have pulled back. I think we've been very consistent in, first of all, staying only in the advisory fee-based business. So every business that we're in is a business where we compete solely on the basis of our ideas, our intellectual capital and our relationships and where the only source of revenue is fee. So, for example, the big banks are pulling back from FICC businesses, fixed income, commodities and credit. And we have absolutely no intention of ever entering those businesses. What we have always done is sought to find uniquely talented people who can produce high revenues, and we have the highest per partner revenues in the industry, as Roger alluded to. And we are consistently looking for senior professionals who can do that on an intellectual capital-based and relationship-based business like we have. And to be honest with you, wherever we can find those people and in whatever businesses they are, we're going to open a discussion with them.

Okay. And just a question on the non-comp side. Are we through all the expense initiatives and efficiency initiatives, now is there anything left?

We're never going to be finished with efficiency initiatives.

But, I guess versus what you had planned out on the -- I guess, more on the equity side, I was just more curious about that. I think you had some Bloomberg subscriptions and some other data contracts that you were sun-setting and things like that.

Well, we accomplished a 2015 program that focused on information services, it focused on travel, it focused on technology. And as Roger said, we're never done this year, so we're heavily focused on our trading platform, our trading costs, our clearing infrastructure, but at the same time we'll make some investments to improve on the operating platform a bit, particularly focused on trading, so there'll be some puts and takes [in efficiency].

Devin Ryan, JMP Securities.

Just a couple quick follow-ups here. I guess, maybe first on restructuring, just trying to understand what's occurring there real time if possible, meaning, I mean it's clear that revenue outlook is healthy from deals that have already been announced and folks are busy. But is new activity still accelerating today? Are new mandates actually picking up or just with the financial conditions using a bit over the past several months, you guys talked about it, are you seeing maybe that moderate? And then are you seeing any early signs of any activities spilling into other sectors outside of energy?

Look, there was a burst of activity, obviously tied to the decline in energy and other commodities, which has been highly focused in energy and materials related and commodities related businesses. And the question that you're asking is, have we seen spill over into other sectors? And the answer is, there is clearly restructuring activity in other sectors, but there hasn't been a pick-up in that level of activity and there is always a level of activity related to companies that have high amounts of leverage and particularly in a slow growth economy that are growing their topline and bottom line at a pace that would support that leverage. But in terms of a March pick-up in activity, that's really isolated today in the energy and materials and commodities related sectors.

And then maybe just another one here on Europe, inversions obviously got a lot of attention in the press, maybe more than deserved just given that the few percent of overall M&A activity, but curious if you guys expect any collateral damage from kind of the pressure on inversions, meaning, are there more normal cross-border deals and maybe have less of a tax element that are delayed or canceled just because companies don't want to give the impression of doing anything that could even be interpreted as an inversion?

No, the answer is no. I mean, we don't live in quite as the antiquated roles such that investors and you guys and everybody else can differentiate between what's an inversion and what is it. So the answer is no.

And then maybe just last question here on China. Clearly deals out of China have been a big theme this year within the broader M&A markets. So, I'm just curious, whether you guys think that'll continue and how much Evercore as firm is focusing on that opportunity? It seems like some of the drivers of that are still in place.

The answer is, first of all we have no idea whether it continues over the next 6 months, 12 months, 24 months, because so much of that is driven by public policy within China, which changes not infrequently and which obviously has a material effect on what you just discussed. We have a sufficient position in China to serve our clients, highly professionally and whatever they want to do in China. We have not sent an army of people to Beijing and Shanghai to scour for additional M&A transaction.

There appears to be no questions at this time. I would now like to turn the floor over to Ralph Schlosstein for any closing comments.

Great. Thanks everybody for your time and attention and we'll look forward to talking to you next quarter.

This concludes today's Evercore first quarter 2016 financial results conference call. You may now disconnect.