Evercore Partners' (EVR) CEO Ralph Schlosstein on Q4 2015 Results - Earnings Call Transcript

| About: Evercore Partners (EVR)

Evercore Partners Inc. (NYSE:EVR)

Q1 2016 Earnings Conference Call

April 27, 2016 08:00 AM ET

Executives

Bob Walsh - Senior Managing Director and CFO

Ralph Schlosstein - President and CEO

Roger Altman - Chairman

Analysts

Steven Chubak - Nomura

Jim Mitchell - Buckingham Research

Daniel Paris - Goldman Sachs

Brennan Hawken - UBS

Ashley Serrao - Credit Suisse

Devin Ryan - JMP Securities

Operator

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 opened 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.

Bob Walsh

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; 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’ll 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.

Ralph Schlosstein

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 seasonally lower than other quarters, but this was the best first quarter in our firms’ 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 in to 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 pickup in restructuring activities. 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 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 in to the second quarter, as we earned 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 4 to 7 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 a $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 rates senior notes that we borrowed from Mizuho. Very importantly, we returned a $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 issued for 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 for 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 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 cost 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 an investment banking performance and the M&A environment generally.

Roger Altman

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 level of quarter one 2015 year-over-year that is. 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 margins because it takes new partners a while 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 6th 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 a 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 for advice related to 14 separate capital raising transactions and then you also have as I mentioned the 3.3 million from five underwriting transactions.

Productivity 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 people rose again to about 5.3%, that’s our best estimate and that would be our higher 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. At jus this past Monday, we also announced that Dan Ward will 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 abruptly 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. The companion total on the US side, not global but US, was 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 transactions, because the dollar volumes are 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. The 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.

Ralph Schlosstein

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 measured 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 $35.1 billion Mexican pesos 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.

Bob Walsh

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 120 million pesos at the time, converting ECB to a wholly owned entity.

Just for context, ECB is our next 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 facilitates cost reduction initiatives which are currently under way.

Secondly with respect to the financing that Ralph mentioned, we placed a 170 million of fixed rate term debt with six insurance companies and retired the $120 million variable rate loan with Mizuho. We [don’t] have a weighted average maturity of about 8 years ranging from 5 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 debt financing of approximately $200 million essentially consistent with our position in to 2015 before Mizuho exercise the warrants they held.

Turning to our adjusted results, they are presented on a basis that is consistent with prior periods for the quarter and excludes certain costs that are directly related to our equities and other acquisitions. Both significantly we have adjusted for costs associated with divesting of equity granted in conjunction with the ISI acquisition. In the first quarter we expense 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 in the EPS denominator. Our forecast 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 down for the quarter, which was 5% lower than Q4 and 3% lower than Q1 of last year.

Turning to the equities business, the adjusted operating margins which governed the ultimate payout of the G and H units for the equities business was 16.2% for 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 satisfied with the performance threshold for these units for 2015.

Focusing on taxes, our adjusted 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 earning in businesses with minority owners and earnings generated outside of the US. The elimination of minority interest balances or ECB and Atlanta 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 repressed 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 million.

Now with that operator, we can open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] our first question comes from Steven Chubak with Nomura.

Steven Chubak - Nomura

Roger may be just a quick question the M&A environment. I appreciated your comments noting that the environment remained healthy, but focusing in on the European business specifically; it contributed about 25% of your revenue last year and has given some of the concern surrounding Brexit. I don’t know if you can give us any insight in to what you’re hearing from corporates on the European side and whether you think that should cause any delay in completion, at least or announcement over the next couple of months.

Roger Altman

Well I can’t say of course, whether there is any downward pressure on transaction volume as a result of the June 23 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 Brexit. 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, if I see it, and we’ll see if it’s right.

Steven Chubak - Nomura

Bob appreciate your comments talking about the factors that were driving the gap adjusted versus US GAAP compensation. I suppose what I am struggling with is, how do I reconcile the increase in the units divested that’s due to its strong performance with the - as much as you know the material change in share count which is also directly linked to the performance of either side.

Bob Walsh

David as you know, on an adjusted basis, we have put in all of the shares in to the share count that we expect to issue, and we’re taking out the compensation expense. So, as we’ve 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 to sort of show them the path to running a successful business. And as you saw the results for the first quarter of 2016 are also consistent with or well above the level needed to earn those units.

So the question remains, how will the business perform over the five year term? We built five year forecasts to estimate how many of the Hs would ultimately turn in to shares that we were issued and the business is performing pretty much on that plan.

Steven Chubak - Nomura

Bob may be just one follow-up and just switching gears for a moment; there was some mentioning of the seasonality and the advisory business. It appears that your seasonality typically is more pronounced in 1Q, and I was hoping you could remind us of what some of the factors are which results in that magnified seasonality if you were relative than may be some of your competitors.

Roger Altman

It’s 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 backend loaded business, year-over-year, because people rush to complete transaction before year end and there are tax factors and some of the other factors. So ever since I’ve been in it, the business has always been backend 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.

Bob Walsh

And Steven my observation would be for those that have reported actually our year-over-year revenue results and advisory year would have been comparable or better.

Roger Altman

I mean let’s be direct. 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 did better than the peer firms who have reported.

Steven Chubak - Nomura

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

Roger Altman

The question what do you mean by the secondary advisory.

Steven Chubak - Nomura

Like private equity.

Bob Walsh

Steven, let me at it. Our private capital and our private funds business, those inherently more back loaded. But if you look at the independent virtually all of them have that business today.

Operator

Our next question comes from Jim Mitchell with Buckingham Research.

Jim Mitchell - Buckingham Research

Just a couple of 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.

Bob Walsh

We’ve framed it over a 2 to 3 year horizon which is the same framing that we used in the prior authorization which was 7 million shares. So we pumped it to 7.5.

Roger Altman

If you think by the little historical context, so last year we issued 2.6 million shares as part of bonus compensation. We issued another 350 or 400 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 shares 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 five year period and obviously we can only say hope because it depends on the performance of the business, our cash flow, share price etcetera, etcetera that we would over the five year period we purchase 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 doesn’t seem like a huge amount in my view.

Bob Walsh

For the time horizon will work.

Jim Mitchell - Buckingham Research

And maybe just a bigger picture on the energy sector opportunity you guys have highlighted that. Can you talk about the different funds, whether it is recapitalization through equity underwriting, M&A or restructuring, how you feel your positioned to capture that and if you can at least may be help us think about the size of that opportunity.

Ralph Schlosstein

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 a 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 addition SMD in London and a team of about 17 or 18 people.

And as Roger indicated, we’ve just announced the hiring of Dan Ward, who ran energy, metals, materials, mining and natural resources etcetera at Deutsche Bank and he will be our eight 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 after we get through that period, we should see a period of time both of merge activity and recapitalization or refloating 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 to three year period of time, from all three of those parts of the practices.

Jim Mitchell - Buckingham Research

And should we see much of that impact for at least a good part of the restructuring impact this year second half or you’re already seeing it?

Ralph Schlosstein

I think you’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 player in the restructuring business that’s pretty true across the industry and I think the comments from the our competitors earnings, reports reflect that.

Operator

Our next question comes from Daniel Paris with Goldman Sachs.

Daniel Paris - Goldman Sachs

Ralph you gave some comments around senior banker recruiting that implies 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 or are you guys just kind of being more selective on who you are being hiring.

Ralph Schlosstein

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 I’ve been here and probably as long as we’ve been public that we helped to hire 4 to 7 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 cease 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 activity. So two of the 10 that we hired last year were an ECM which was not an hiring area in the past. So it’s really driven more by the reversion to our historical practice and last year was the anomaly.

Roger Altman

As a footnote, it’s just speaking for myself, the supply is actually rising.

Bob Walsh

Dan the other point that you would have seen in the press release is we’re also adding talent in research. Tom Gallagher was committed to join us on covering insurance and we see a lot of supply there to go about that business overtime as well.

Daniel Paris - Goldman Sachs

And may be just following up on that in a similar line, I know there’s a lot of moving parts, but anyway you could help us frame how to think about the comp ratio for ’16. And I guess my question is to the extent the topline keeps growing, can we expect continued comp leverage or do we need to be aware of kind of the outsized recruiting that you had last year.

Bob Walsh

Our practice will be the same as has been for the last several years, which is we think it carefully about our expectations at the beginning of the year which is what’s reflected here and will adjust the comp ratio as the year plays out as you pointed out particularly as revenues are realized. But this is our best thinking today.

Daniel Paris - Goldman Sachs

And maybe just one, if I could squeeze in, Ralph you touched on the fact that you guys probably had a very strong energy banking team on the M&A side. I think you’ve made the comment in the past that energy has been a smaller piece of the 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 where you’ve been many --.

Ralph Schlosstein

The reason it’s been in smaller piece of the restructuring pie is there wasn’t a lot of restructuring activity in energy and the larges restructuring, EFH were the lead restructuring advisors. So, I think 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 benefitted us.

Operator

Our next question comes from the line of Brennan Hawken with UBS.

Brennan Hawken - UBS

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 us to may be 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 pickup that you’ve seen and maybe can you add a little bit to the dynamics you’re seeing going out in that market place.

Roger Altman

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, if anybody remembers in ’14 and ’15 we were the number one ranked firm in the world in energy M&A measured by dollars in a number of deals. We were also one of the top three firms in the world at restructuring. I don’t think anybody has a better feel for this than we do and we don’t know.

Brennan Hawken - UBS

And then on M&A and what you’re seeing appreciate Roger that you expect 2016 to be healthy and pick back up. So, 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 the announcements recently to get offset.

Roger Altman

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 will come up a lot and the level of share prices themselves to 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.

I am not smart enough to know whether that will continue tomorrow, let alone six months from now. But at the moment, conditions from a credit availability point of view, from a share price point of view, from a business outlook point of view continued to be moderately favorable for M&A.

Ralph Schlosstein

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.

Brennan Hawken - UBS

Sure. And then on the hiring front, can you guys walk through 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 the math on that front.

Roger Altman

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

Bob Walsh

We ended last year with 79.

Roger Altman

Yeah, Bill Anderson joined on January 1.

Bob Walsh

Two have joined and one of our SMDs at the end of the year has moved to senior --.

Brennan Hawken - UBS

The last one I guess, do you have any updated or 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 our market conditions are obviously going to have an impact there. But the revenue run rate has been pretty substantially below --.

Ralph Schlosstein

Well first of all last year we said we would do 40 million to 50 million, we did just slightly over 40 million and I think what we’ve said is and we never set dates, but we’ve said that we believe that this could be a $75 million to $100 million revenue business for us. Once we are fully up and running and honestly I couldn’t tell you whether that two years, three years, four years and said that from the beginning and we make that statement by observing other firms that aren’t both [backend] firms but have good banking practice. So I think we are on track obviously subject to the market [Technical Difficulty].

Operator can you hear us?

Operator

Yes, please proceed.

Bob Walsh

Operator can you fixed this signal?

Operator

Stand by. Please proceed the beeping has discontinued.

Bob Walsh

We have another question.

Operator

Our next question comes from Ashley Serrao with Credit Suisse.

Ashley Serrao - Credit Suisse

First question 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 and even in Asia you have presence in both regions. Just curios, just updated thoughts on how you are seeing opportunity today, has it become more attractive than it has before, and should we expect you to invest in Asia and Europe this year.

Ralph Schlosstein

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 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 we are the only source of revenues that [speak]. So for example, the big banks are pulling back from big businesses, fixed income commodities and credit, and we have absolutely no intention of ever entering those businesses.

What we have always done is sort to find uniquely talented people who can produce high revenue and we have highest per partner revenues in the industry as Roger alluded to, and we’re consistently looking for senior professionals who can do that on an intellectual capital base and relationship based business like we have. And to be honest with you wherever we can find those people and in whatever business they are, we’re going to open a discussion with them.

Ashley Serrao - Credit Suisse

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

Roger Altman

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

Ashley Serrao - Credit Suisse

I guess versus what you have planned out more on the equity side versus I am 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.

Bob Walsh

We accomplished our 2015 program that focused on information services, it focused on travel, it focused on technology. As Roger said, we’re never done this year, 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 with that particularly focused on trading. So there’s will be some puts and takes in equities.

Operator

Our next question comes from the line of Devin Ryan from JMP Securities.

Devin Ryan - JMP Securities

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

Ralph Schlosstein

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 businesses. And the question that you’re asking is, have we seen spillover in to other sectors? And the answer is, there’s clearly restructuring activity in other sectors, but there hasn’t been a pickup in that level of activity and there’s always a level of activity related to companies that have high amount of leverage and particularly in a slow growth economy that aren’t growing their topline and bottom line at a pace that would support that leverage. But in terms of a marked pickup in activity that’s really isolated today in the energy and materials and commodities related sectors.

Devin Ryan - JMP Securities

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

Ralph Schlosstein

The answer is no. We don’t live in quite as (inaudible) to worlds such that investors and you guys and everybody else can’t differentiate between what’s an inversion and what isn’t. So the answer is no.

Devin Ryan - JMP Securities

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 will continue and how much Evercore as a firm is focusing on that opportunity, it seems like some of the drivers of that are still in place.

Ralph Schlosstein

The answer is, first of all we have no idea whether it continues for the next six 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 positioning 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 scover for additional M&A transactions.

Operator

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

Ralph Schlosstein

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

Operator

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

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