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Evercore Partners Inc. (NYSE:EVR)

Q2 2008 Earnings Call Transcript

July 24, 2008 8:00 am ET

Executives

Robert Walsh – Senior Managing Director, CFO and EVP

Roger Altman – Chairman and CEO

Bernard Taylor –Vice Chairman

Analysts

Eric [ph] – Lehman Brothers

Ken Worthington – JP Morgan

William Tanona – Goldman Sachs

Operator

Welcome to the Evercore Partners second quarter 2008 financial results conference call. (Operator instructions) This conference is being recorded today, July 24. I would now like to turn the conference over to your host, Evercore Partners Chief Financial Officer, Robert Walsh. Please go ahead, sir.

Robert Walsh

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

Earlier this morning we issued a press release announcing Evercore’s second quarter 2008 financial results. The Company’s presentation today is complementary to that press release, which is available on our Web site at www.evercore.com. This conference call is being webcast live on the Investor Relations section of the Evercore Web site 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 filing with the Securities and Exchange Commission including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K.

I want to remind you that the Company assumes no duty to update any forward looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted pro forma or non-GAAP financial measures, which we believe are meaningful in evaluating the Company’s performance. For detailed disclosures on these measures and their GAAP reconciliations you should refer to the financial data contained within our press release, which as previously mentioned is posted on our Web site.

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 Roger for a review of our second quarter highlights and results.

Roger Altman

Good morning everyone. I'm doing this from our London office. Bob and other members of the firm are in New York, and hopefully this bi-continental approach will be smooth and not otherwise. Now you've seen the press release but just to start, let me just put the numbers right out there. For the three months, the quarter, the firm's revenue was a bit over $60 million compared to high 65's for the quarter a year ago, a decline of 9%. Adjusted pro forma net income was about $6 million, down from $15.5 million same quarter a year ago, and adjusted pro forma earnings per share $0.17 against $0.47. For the six months $105 million in round numbers of revenue, down from $155 million, $10.3 million of adjusted pro forma net income, down from $32.5 million and earnings per share $0.30 against $.99. Those are the key numbers. Now let me make a few comments about them.

From my point of view, the firm had a solid second quarter. Our advisory revenue for example in these days, that's our main business, actually exceeded this year's first quarter by 42% and last year's comparable quarter by 2%. So, our advisory revenues were actually up year over year and sequentially. And under these market conditions that is a good result. We advised on two of the ten largest transactions during the quarter, they were representing Time Warner Cable and the spin-off from Time Warner and representing EDS and Hewlett-Packard. Our press release contains the full list of noteworthy transactions on which we advised. I might note that one of our best transactions, the sale of De Ruiter Seeds to Monsanto, also was handled by one of our newest partners.

We ranked third in M&A among boutiques for the first half of the year, and we ranked first for the past 12 months. You've heard me say this before, but I'd like to repeat it because I think it's domain [ph]. We were also first over the entire 2003, 2007 period, and I might say that we ranked third because at the very last moment (inaudible) happened and a couple of other firms to their credit were in that deal. I might also note that for the first half of 2008, speaking globally, Evercore had the same number of prepaying clients as it had for the same period of 2007, the exact same number. In a difficult environment like this one, I think that's a sign of health.

Further more, we are continuing to globalize the firm. We are in the process of expanding our advisory presence in continental Europe and in Latin America, and we will have more to say on those steps, the specifics of them before year end. I also want to particularly note that our restructuring business is expanding nicely. We are doing more such business right now and higher quality business than at any time in Evercore's history, and we are handling several of the largest and highest profile assignments in the market and I'm quite optimistic about our outlook in that business. One more broad point about the long-term dynamics of the whole business, since 1980, the compound annual growth rate in announced M&A transactions globally had been 25%. If you look at it on a dollar volume basis, it's been 23%.

The point is that this advisory business or the M&A business is one with very good long-term growth dynamics. And the question anybody should ask in a softer climate like one is, "Do we see any scenario whereby the growth rates that we've experienced historically, that I just referred to, diminish in the future?" And I have a simple one word answer to that, and that is "no". They don't because the relentless pace of globalization and the related need for scale. The entry of China, India and other like nations into the global M&A mainstream, which is just beginning, and the return of functioning leverage to enter markets which will of course occur, all suggests long-term growth in line with the nearly 30-year very strong secular growth which we've all seen.

Now, the advisory environment right now you all know this is challenging. We added 7 new advisory partners last year. They are all world class bankers. I wouldn't trade in any of them, and they expand the production capacity of the firm very considerably. Yes, that production takes longer to ramp up in this climate, it simply does. But the benefits of that expansion will manifest themselves, perhaps more slowly, but they will manifest themselves over the medium and longer term, we are very confident on that. We’ve already one new partner this year when we announced Dan Celentano in our restructuring group joined us from Bear Stearns. Our most recent estimate for the full year is that we will have added approximately 4 new partners including Dan by the time the year has ended.

One is likely to be a new partner in Evercore Capital Partners, our private equity arm. And two others are likely to be advisory partners, likely one in New York and one in Europe – one in the US excuse me, and one in Europe. But none of the latter three have been actually signed up but they will be announced, and of course hand shakes and tentative agreements can always fall away but that’s our goal. You might ask, “Why is Evercore adding partners in a year like this?” We are doing so because we believe in the potential of our firm and we want to invest in it. As I said before, the medium and long-term outlook is simply a good one.

In addition, this particular market condition affords rare recruiting opportunities and we are able to find people and make the types of economic agreements with them that one doesn’t normally see. So, we will not be adding at the rate of last year, and we indicated before we wouldn’t, but we are not shutting this off either. Let me turn then to a few comments on our investing business.

To begin with, we are making commitments to new lines of investing businesses. When Evercore went public, we committed ourselves to better balancing the firm between its advising practice and its investing business as we used to be. And we are now taking concrete steps toward realizing goal. On Monday of this week, we announced that Evercore had invested 7 million pounds, $14 million in Pan-Asset Management headquartered here in London. This is a recently formed asset allocation advisory business with the UK market as its initial focus and we now own 50% of this firm with no other principles of the firm, which is now being renamed Evercore Pan-Asset Management for a long time.

When we have completed other agreements on new investing business as we will announce them but the point I want to stress here is that you will see others before the end of this year. On Evercore Capital Partners as I said, we will add another partner shortly or at least that’s our expectation. And once that person is on Board, we’ll promptly launch the formal marketing process for ECP III as we call it. This was of course delayed by Austin Beutner’s retirement. I will be leading the marketing efforts on that front together with the full ECP team. It’s conjectural to discuss when ECP might realize its final closing on this third fund, but 2009 is certainly the goal for that.

On the whole, our investing businesses are in transition right now and they are not profitable. But we expect that our expansion will give Evercore a more diversified and a profitable investing platform for 2010. At that time between Evercore Capital Partners, Evercore Asset Management, Protego Casa de Bolsa in Mexico, Evercore Capital Partners Mexico, Pan-Asset Management and others will be announcing between now and the end of the year, we will have a very different firm. Again this is what we said we would do when we went public. It was a major reason for going public and that’s why we are taking these steps now. They take a while to prepare and to get ready on but now we are in execution mode.

Third subject I want to raise is simply dissecting our results for the quarter. You’ve already seen that our revenues for the quarter were down only moderately $5 million from the year earlier levels, but our earnings were down 60%. And the reason is that compensation expenses rose $13 million year over year, and that was only offset or offset modestly by roughly $3 million drop, $2.8 million to be specific in non-comp expenses. And the main reason that comp expenses rose this way is this. We added 8 new partners last year, but 7 of those 8 joined the firm after June 30, 2007. So, none of their costs were reflected in our first half of 2007. In contrast, all 8 of them are reflected in 2008. So, very simple, we have 7 more partners and the related cost in 2008 than we did in 2007.

Theoretically or ideally, your revenues expand right off of that to reflect that, but in this climate that ramp up is taking longer. There’s also a secondary reason, the second quarter of 2007 we inaugurated our own part cash, part equity system at partner comp to align up with all other Wall Street firms do the same thing. And the shares issued to partners instead of cash, that’s upon 4-year basis, linear-basis 4 years. And that means that the equity portion of comp is spread over 4 years not one year. So, that serves to lower our comp expense in last year’s second quarter, we explained all this at that time. But we don’t have that benefit this year. So, if you will, our comp expense for the second quarter of last year was – that got a one-time benefit by inaugurating this part-cash, part-equity system instead of all cash. But that one-time benefit of course is not repeated in 2008.

Finally, a word about our comp ratio, it was 61% for the first six months of ’08, as compared to 47% for the same period a year earlier. Without the partners we added, our comp ratio for ’08 would have been quite a bit lower. You’ll see that we included a new compensation break down in our earnings release. It compares compensation expense in our advisory business, the compensation expense for the whole firm and given the investing results and the fact that business right now is not profitable; the comp ratio for our main business advisory is lower than it is for all of Evercore.

I want to repeat that our long-term goal for the comp ratio is 50%, but we are going to have to return our investing activities to full health before that will be achieved. I expect that side of the investing business to be – where it should be by 2010. So, we are not going to achieve 50% over the next 18 months. I think we can do better than we just did but we are not going to get 50% in that period. So that’s the end of my observations about the quarter and let’s open it up to questions that any of you I hope will have.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. (Operator instructions) The first question comes from the line of Roger Freeman with Lehman Brothers. Please state your question.

Eric – Lehman Brothers

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

Roger Altman

Hi, it’s Roger. It’s a good question. But it’s really hard to quantify that. I mean I really couldn’t do that very well, my own partners let alone externally. So, let me try to answer it this way. The restructuring business as you know is counter cyclical to the M&A business, when M&A volume periodically gets soft like it did in ’02 and ’03 or is in ’08 here in the second half of ’07. The restructuring business picks up because the reasons that cause the softness in M&A are the same reasons that cause the pickup in restructuring namely a higher level of distress. So, there’s no one answer to your question because restructuring could account for a quite meaningful share of total revenue in a – in one of these periodic soft period on M&A, but the average for restructuring as a percentage of the total over the long term will not be the same as at that peak in a weak period. You see my point?

Eric – Lehman Brothers

Yes.

Roger Altman

So, taking a figure is hard to do. In addition, a lot of people in the firm are involved in our restructuring work not just the restructuring department itself. Because right now, I’m sure you have noticed there hasn’t been a big upsurge in bankruptcies themselves. We may see that, probably will see that but haven’t yet. We are not at the point we were 5, 6, 7 years ago when you had Enron, Worldcom and a lot of other great big bankruptcies, as I say that may happen but hasn’t yet. So, the restructuring is going on is out of court restructuring and companies that are in distress and restructuring themselves but not all the way to Chapter 11. And so, lot’s of people in the firm are involved in this. I’m one of them for example. So, I really can’t give you a number as to what percentage I think of the total revenue on the advisory side of restructuring should be. But it's certainly talkable as we build this business out, and I wouldn’t take this as a figure for this year or next year that at some point, it could be as high as 20% or 25%.

Eric – Lehman Brothers

Great. Thanks.

Roger Altman

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

Eric – Lehman Brothers

And that’s just to be clear of advisory or the full firm?

Roger Altman

No, of advisory. I’m not – I don’t know how to calculate it for the full firm because –

Eric – Lehman Brothers

Yes. Fair enough.

Roger Altman

Now we are going to have a much more broad and robust investing platform looking at about 18 months in – I don’t want to get into that discussion. I’d just say in advisory.

Eric – Lehman Brothers

I agree.

Roger Altman

But again, that’s not a short-term forecast, please.

Eric – Lehman Brothers

Of course.

Roger Altman

I’m not making a comment about ’08 or ’09. I’m just saying as long-term matter, it’s entirely possible that restructuring would be 20% to 25% of the firm’s advisory revenue.

Eric – Lehman Brothers

Picking up on the comments about building your investment management business, so in wealth management do you think that this is going to be mostly down track [ph] acquisition or do you think that you might actually organically start to throw away it?

Roger Altman

In acquisition and startup. Startup meaning, you recruit a team of people, a list out so to speak, right. You recruit a team of people from xyz institution, you back them. You put them in business and it’s in effect a joint venture between you and the team. So, it’ll be a combination of acquisition and list out/ startup.

Eric – Lehman Brothers

Okay. And then my last question and I’ll hop back in the queue. On the build out of a network of affiliate investment managers, would you be fully acquiring or taking stakes in these businesses, what does your pipeline look like? How far long are you in this process of building out really this new line of business? Thanks.

Roger Altman

First of all, it’s a new line of business. So, I mentioned that today as Evercore Capital Partners, the US Evercore Capital Partners Mexico, Evercore Asset Management, Protego Casa de Bolsa in Mexico, and now Evercore Pan-Asset Management. There would be other announcements this year. I want to leave it at that. And at the time we finish, it will be a considerably broader and more diversified platform of investing businesses than we have now. I think that’s the best way to put them.

Eric – Lehman Brothers

Okay. Thanks.

Operator

The next question comes from the line of Ken Worthington with JP Morgan. Please state your question.

Ken Worthington – JP Morgan

Hi, good morning. I wanted to flush out the wealth management. Wealth management, it’s a very broad term. I love to get a better sense of what your vision is, and I know spend some time on it but I’m little lost, what is the vision there? Is it about manufacturing? Is it about distribution? Is it about both, if you could just give me a little help?

Roger Altman

The vision is a very high end, typical Evercore, rather classic wealth management business. So, the focus of Pan-Asset, Evercore Pan-Asset is endowments and charities in the UK at least right now. And the focus of one of the things we are going to be doing in the US is, what I would call, it’s just my term, classic, very high net worth wealth management. So, I don’t think any particular example of another institution is an ideal one, but there’s a whole series of wealth management boutiques that have sprung up in the past 8, 10 or 12 years, and they manage family money and individual money, some institutional money but it’s mostly individuals and families. And that’s a business we are entering. So, I would say, we have a specific announcement to make but we are entering that business.

Ken Worthington – JP Morgan

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

Roger Altman

The answer is yes. I mean when we open up a firm like or we act in a firm like Pan-Asset or we probably more relevant in this question open up in the US, which we will be doing between now and the end of the year. All members of the firm are going to be assisting in the marketing of that to the relationships the firm has. So, we will communicate probably initially in writing to everyone of the firm’s relationships about the new business and what we’ve got in it, and what our goals are, and what our qualifications are. And then we’ll do it at the maximum amount of cross selling and cross marketing we can do. So, the answer is, yes.

Ken Worthington – JP Morgan

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

Roger Altman

No. It’s simple. EAM has a deep-valued small and mid-cap focus. The EAM team is really good at that. I have complete confidence in them. But that factor and there is various indices you could look at them has gotten, as that often does in a market like this, has outperformed in the market on the downside. I’m great that you (inaudible) this phone call who is the head of it, would tell you that that happens in markets like this. So, actually I don’t think EAM has made any bad investments per se, it’s just that the factor. I wish I could quote you that the index that they mostly follow, but if I’m not mistaken there’s a rustle small cap, which is the one that’s the benchmark. But if you look at it, it’s down quite a bit more than the S&P 500 or Dow Jones index, quite a bit more. So, I don’t think they’ve made bad investments, it’s just that the type of investing that they do tends to be streaky, that’s my own word, meaning that there are periods of time when that sector outperforms the market very strongly. On the other side, and there are periods of time when it outperforms the market on the downside and this is one of the latter periods. So, it’s a good team. It’s had a very good long-term record. We have confidence in them, the sector will rebound and they’ll do well. Right now it’s as I would say like the rustle small cap index, it’s outperforming on the downside.

Ken Worthington – JP Morgan

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

Robert Walsh

That I think on an absolute basis, we are seeing the costs settling in to a run rate going forward. Of course on a relative basis, you’ll see the benefits of savings because we had such high costs in the second half of last year. But on an absolute basis, I think you are seeing the costs settling in. We did include a brief additional disclosure to give some inside into costs associated with serving our clients, our transaction costs because that is a more variable component of our cost base, and of course we don’t suddenly seek to minimize those costs rather to serve clients and make sure we recover them. So, I think you are seeing the numbers about where they will be subject to client transaction costs

Roger Altman

Perfect. The only (inaudible) to make is – and please don’t take this literally. But you’ll see that non-comp expenses are falling at a rate of about $12 million a year, and I’m not give that number for the full year, but I would simply say that we are very much on track with what we have said we would do, and Bob is doing a great job on this – on reducing those very sharply year over year, and they will be reduced very sharply.

Ken Worthington – JP Morgan

Great. Thank you.

Operator

The next question comes from the line of William Tanona with Goldman Sachs. Please state your question.

William Tanona – Goldman Sachs

Hi, Roger. Just to refocus a little bit more on the Pan-Asset acquisition again I know that’s obvious, small part of the business but I think it’s important in terms of people understanding the asset management strategy going forward for Evercore. I guess first what did you guys pay for Pan-Asset and was that in cash and stock? And then I guess second in terms of helping us understand the strategic rationale of the deal, it’s seems like those guys deal – I guess one, they are fairly new, so what do they have in assets under managements? Two, they seem to be very focused in EPS, and I think people follow the asset management industry understand that the EPS business is a very, very scalable business. So, trying to understand what it is that you guys bring to them, and what it is that would be attractive for you guys to get into that business?

Roger Altman

I’m going to answer part of that, and I’m going to give a start turn if I can to my partner and Evercore’s Vice Chairman, Bernard Taylor, who’s sitting next to me here in London, who runs Evercore Europe, and who really did this. So, I’ll just answer just (inaudible) question and then turn over to Bern. We invested 7 million pounds in cash, and we obtained for that 50% interest in the business. The business has only been started up in the past 12 months to 15 months, and Bernard has had a long relationship with the principles of the business, so let me ask him who happens to be here and it’s just (inaudible) I mean it’s office here in London, to just comment a moment or two about the real rationale here what we bring to and so forth.

Bernard Taylor

Thank you, Roger. Pan is quite exciting because it’s a – in the UK investment management market. Unlike the US market, it’s impossible for instance to get asset allocation advise on completely independent basis. So, trustees here really don’t have the benefits of that, and there is quite a demand for it. And Pan in their first few months of operation have seen that from independent trustees running mid-sized charities things like Oxford, Cambridge colleges that sort of a size and fund through to large private investors. And so, they have a product which is giving advise effectively on asset allocation, and that gets them into trustees giving them advise which they need to defend themselves, and then pulling through with a strategy which allows the trustees, if they take that advise from asset allocation and pay for it. But they subsequently can use Pan to manage money using exchange tracker funds to bring about the asset allocation philosophy that they have presented to the trustees. So, from a model to market it is very attractive. The people are very experienced, John Redwood, who’s the Chairman of it, is one of the senior politicians. He started life as an asset manager and is regarded as being one of the bright commentators on asset management generally. And Robert Brown is very experienced; he started life as one of – Phillips & Drew, which was acquired by UBS. He ran the UBS charities business, went into can [ph] trade and developed that business, left from that and started this out. So, he is long experienced. And we are very optimistic. Most of the money as Roger said that we have invested, we spent a small amount buying our 50% stake, most of it goes in the form of development capital for the business to allow it to grow. And so from the point of view of our investment having – it’s a very sensible way to spend our money, not taking everything for that but developing the business.

William Tanona – Goldman Sachs

And then I guess moving on to the financial advisory business, what is the dialogues now that you are having with corporate executives in this environment, and how does that compare to what was going on six months ago? I guess I’m just trying to understand in terms of the backlog I’m sure there’s a lot of dialogues going on, but are you sensing that people are a little bit more skittish now given everything that’s going on with the economy than they were maybe six months ago?

Roger Altman

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

Bernard Taylor

By then, that’s the ultimate remark of that.

Roger Altman

But it’s interesting – he answered that. The corporate sector as it relates to M&A, where your clients are corporations remains in general healthy. Now within the corporate sector, firms whose businesses are relatively good or I would say are quite active. Firms whose businesses are weak, especially quite weak in some cases, of course naturally are that active, in some cases inactive. But as a whole the corporate sector is really pretty good. And as a general comment, I don’t know what the future is going to bring here, and all of us have our own opinions about whether the cycle – about where we are at the cycle. I don’t’ know better judgment on that than any of you or maybe worst judgment. But business conditions while down are not merely as bad as we’ve all seen in the past. For example, ’02 and ’03 were worse by some margin than right now. Now, are we going to go up from here or down from here, you can guess and I can guess and we’ll find out. But my answer essentially is that the corporate sector is pretty healthy as it relates to M&A, the cross boarder sector is quite active. A lot of currency factor is driving that, and of course what’s changed from a year ago today for example is the leveraged finance market, the roll of financial sponsors and all the activity they drove. Evercore participated more in that on the corporate, the south side so to speak, but nevertheless it was a big driver of activity. And that’s absent, largely absent. And so, when I say to you that we have the same number of prepaying clients for the first half that we did for ’07 exactly the same number is two ways to think about that, just being very honest. One is when you have more people so you should have more clients, and theoretically that’s a fair comment. But in a climate like this to have the same number of clients paying you fees as did a year ago, it’s pretty good. But what’s going on if the average level of fees by definition is down which means that there are fewer large deals out there so far in a way than the fees, of course 7 and the big difference is there are no first data, and deals like that, that is the last one we advised on before the cycle turned and it was from memory $28 billion or something like that, and KKR did that deal, we advised the company. And those deals of course are happening. I think that would answer.

William Tanona – Goldman Sachs

No, it is. I was just trying to get a gauge as what’s gong on in the minds of CEOs today given everything that’s going on in the markets, and just general economy. So, it is helpful. I guess it’s just the last question probably more for Bob there. In terms of the comp to the revenue ratio, obviously I know you guys don’t necessarily like to forecast but it’s – our job is to forecast what are the revenues are, but can you give us some sense as to what we should expect for a comp in that revenue ratio or an absolute level of comp for the back half of this year is the run rate that we saw in the first half more applicable or should be thinking about that somehow differently because there’s definitely some volatility in that comp to that revenue ratio in the first half of the year?

Roger Altman

Hi, Bill, I think I can make it easy so that Bob can follow me. We are not going to give that kind of guidance for two reasons. One, we don’t give guidance and two, the degree to which that knowable is limited. So, I just want to leave at that. Our comp to revenue ratio is going to be higher than we would like over the short to medium term for the reasons I discussed. Our long-term goal remains 50% but I don’t see us doing that for the next 18 months. And I don’t think it’s useful for us to try calibrate it any further because it’s not our policy and also will be trying to make something more perfect from the predictability point of view than indeed it is. Anything you want to add to that Bob, please do.

Robert Walsh

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

William Tanona – Goldman Sachs

Sure. I guess the robotal [ph] for me and I guess investors on that front would be you have to as you think about your budgeting process and we are getting closer to year end, you are obviously thinking about how you have to pay your people in order to keep them around. You would know you have the guarantees you have, so you know the fix cost that you have, and then there’s some level of activity base. So, I guess I’d just – is a little odd for us as investors and analysts to look at this and say, they can’t give us a range even if it’s a wide range in terms of, hey, it’s going to be somewhere between 55% and 60% in the back half of the year because you do have some sense as to what you need to pay your people this far into the year given the activity levels and the pipeline that you see?

Roger Altman

Yes. But this is where it’s a slippery slope for us. And that we may not agree with you, you may not agree with us. But we don’t want as a matter of policy, Bill, to give that kind of guidance. I mean the next step is, “well, what’s your backlog? Please bisect it for us. And pretty soon, you are doing what a lot of big companies do which is they are giving guidance on everything from CapEx to you name it. By the way as an advisor to the company, I think they make a mistake when they do it, and whenever ask for our point of view and people give guidance that’s on everything including whether they got fluorescent bulbs or regular bulbs in their mend [ph] rooms. I think it’s just ridiculous. So, anyway, it’s not that we can’t do it; you could make an educated guess. It’s that we don’t believe that this is the right thing for us to do as an Investor Relations approach. I’m sorry that it where we are. Our policy is we don’t give guidance.

William Tanona – Goldman Sachs

Okay. Thank you.

Operator

(Operator instructions) The next question comes from the line of Roger Freeman with Lehman Brothers. Please state your question.

Eric – Lehman Brothers

Hi, guys, it’s Eric again. I just have a quick follow up. On the buy back, are you guys still sticking to the used to be your buy back program and offsetting dilution or do you expect to be proactively repurchasing the shares, we did see the (inaudible) come down just a touch from the past quarter?

Roger Altman

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

Robert Walsh

No. As you said, Roger, that’s the – there’s no change in the position we announced last quarter.

Eric – Lehman Brothers

Okay. Thanks.

Operator

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

Roger Altman

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

Operator

This concludes today’s Evercore Partner’s second quarter 2008 financial results conference call, you may now disconnect.

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Source: Evercore Partners Inc. Q2 2008 Earnings Call Transcript

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