Evercore Inc. (EVR) Q3 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Evercore Partners Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, October 25, 2012. I would now like to turn the conference call over to your host, Evercore Partners' Chief Financial Officer, Robert Walsh. Please go ahead, sir.

Good morning. And thank you for joining us today for Evercore's Third Quarter 2012 Financial Results Conference Call. I'm Bob Walsh, Evercore's Chief Financial Officer. And joining me on the call today are Ralph Schlosstein, President and Chief Executive Officer; and Roger Altman, our Chairman. After our prepared remarks, we will open the call for questions. Earlier this morning, we issued a press release announcing Evercore's third quarter financial results. The company's presentation today is complementary to that press release, which is available on our website at www.evercore.com. This conference call is being webcast live on the Investor Relations section of the website, and an archive of it will be available beginning approximately 1 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. Those 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 included in our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted pro forma or non-GAAP financial measures, which we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and their GAAP reconciliations, you should refer to the financial data contained within our press release which, as previously mentioned, is posted on our website. We will refrain from repeating information included in the press release and focus instead on the key opportunities, challenges and changes in our business. We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings, both on the Advisory and Investment Management sides of our business. I'll now turn the call over to Ralph.

Thanks very much, Bob, and welcome, everybody. The third quarter was a good quarter for Evercore in what was a challenging environment for our industry. In terms of revenue, this was the third best quarter in the history of the firm, exceeded only by the third quarter last year and the second quarter of this year. Our Investment Banking business generated $128 million in revenue during the quarter, and has generated $364 million to date -- year-to-date, 10% higher than 2011, and a record for the first 9 months. This growth occurred despite substantial declines in the volume of announced and closed transactions year-to-date, which were down 15% to 25% depending on whether you look at announced or closed deals, and depending on whether you look at just the U.S. or globally. Quite frankly, we were taking market share in the Advisory business. Our Investment Management business generated $21 million of revenues during the quarter, an increase of 1% in comparison to the second quarter this year. We reduced our non-compensation cost by 7% versus the prior quarter, producing an operating margin for the third quarter of 20%. We continue to add high-quality talent, 4 new Senior Managing Directors joined in the quarter, creating a consumer and retail advisory practice, strengthening our restructuring and debt advisory practice and establishing our presence in Toronto, Canada. We added a research and sales team to cover REITs in our equities business, and we continue to add talented portfolio managers to our Wealth Management business, where AUM have grown to $3.8 billion. We repurchased an additional 1 million shares of stock in the quarter at an average price a little above $24 a share, bringing our total share repurchases for the year to 2.6 million shares. As a result, our share count at the end of the third quarter is essentially unchanged from 1 year ago. Our Board has authorized the repurchase of an additional 5 million shares which we expect to execute over the next couple of years. We also increased our quarterly dividend to $0.22 a share, effective in the fourth quarter. Let me quickly go over the numbers. First, the third quarter. Third quarter net revenues of $149 million were down 13% in comparison to the prior quarter, and down 8% year-over-year. However, it is important to note that the second quarter of this year was the highest quarter in the firm's history, and the third quarter last year was the second-highest. So this is the third best quarter in terms of revenue in the firm's history. Net income was $17 million for the quarter, with earnings per share of $0.40 a share. These results were down 18% from the second quarter and 13% from the same period last year. The non-compensation ratio was 20% for the quarter. With respect to year-to-date financial performance, our year-to-date net revenues were $427 million, up 4% in comparison to last year. Year-to-date, net income was $43 million with earnings per share of $0.98, down 13% versus last year, reflecting the higher level of operating cost in 2012 following our acquisition of Lexicon Partners in August of last year, investments in the growth of our business in the U.S. and Europe and weaker earnings in our Investment Management business. As we said on the second quarter earnings call, our year-to-date margins are still being dragged down, although to an ever shrinking degree, by our weak first quarter. Let me now turn the call over to Roger, who I will point out is on remotely because he's on his way to visit a client, and hopefully, the technology will work. And Roger will talk about the Advisory -- performance of our Advisory business and the M&A environment more broadly. Roger?

Good morning, everyone. I'll try to make a few remarks which complement what Ralph said rather than repeat it. You see that the firm had, by historical standards, a very strong third quarter on the revenue side and a record 9 months in terms of banking revenue. And to be up 10%, as we are, in 9 months revenue in the overall transaction environment that we see today, we're really quite proud of that. This is an environment in which announced M&A volume on a global basis in dollars was down 15% from 9 months. And completed volume, which of course is the basis on which everyone is paid, fell 27% on a global basis for the 9 months. So Evercore to be up 10% and have record 9 months revenues, we think it's pretty good. We had 147 fee-paying clients during this past third quarter, that's a record, 7% higher than the second quarter. So far this year, we have about 250 fee-paying client, also a record. That's up 30% over the 9 months 2011 comparison. We had 30 fees that were greater than $1 million. We've never had a higher result than that. Competitively, the firm is very strong. Through October 15, we are eighth among all firms, not independent firms but all firms on announced transactions in the U.S. market. That's almost exactly where we've been for the past 3 years, and we are 13th globally. Now to be more precise on this, we're not only highest ranked of the independent firms in the U.S. market, but we've done about 50% more business than the next most active independent firm in the United States, which is Lazard. That's all out there in terms of Thomson Financial's published data in terms of the league tables. And I might say, if you don't mind my doing this as the founder, that's pretty good for a 17-year-old firm. We began down the largest M&A transaction in the U.S. this year, T-Mobile MetroPCS. And we've done 3 of the 5 largest transactions in the U.S. market this year. I think you know, those of you who follow us, that Evercore has historically had a particular strength in large transactions. We've had that for many years. And you can see that it's continuing in 2012. As Rob said, we're continuing to add talented partners as we have steadily done for many years and we will continue to do. Brett Pickett and Lowell Strug joined the firm during the quarter from JP Morgan after their garden lead to co-head our Consumer & Retail groups. Steve Goldstein joined the firm after his garden lead from Lazard to join our Restructuring Group. And George Estey joined the firm after his garden lead from Greenhill to run Canada for us and open our Toronto office. And as I said, we will continue, as we have so steadily for so long, to hire selectively but steadily, with a relentless focus on quality. We now have 16 Senior Managing Directors in Global Advisory, and the total Investment Banking headcount is just under 600. Productivity per senior managing director was slightly down versus a year ago, on a rolling 12 month basis, but I suspect we'll end the year about the same, we'll see. On the environment. You all know that the M&A environment has not been as strong as most people, including us, had expected when this year began. I told you the figures in terms of the decline year-over-year in global volume and U.S. volume, and those declines are meaningful. My own view is that the missing piece of the puzzle is simply the strengths, or in this case, the weakness of economic activity in the United States and Europe. We're about to see the third quarter GDP number, I believe it's tomorrow, but so far this year, United States has only grown 1.7%, that's very weak, more than 3.5 -- more than 3 years from the bottom of the great recession. And we all know that Europe is actually declining in most countries. And I think this economic activity, which for so many companies translates into a weak top line, and we're seeing that now in terms of some of the third quarter earnings results that have been put out during the past 2 or 3 days, causes certain hesitation, naturally and historically, at senior management levels. Now I see it as a two-edged sword because it makes the environment challenging now, but there's a quite a positive runway ahead. And by that, I'm referring to the medium-term, which I would say, the next couple of years. No one knows for sure, but it's likely that the growth rate in the U.S. will pick up. And it's likely, looking out again over this medium-term, that Europe will begin some recovery. I might add, finally, that our backlog is very solid. And we feel good about that. So by the measures that are important to us, Evercore is -- it has a lot of momentum. You can see, as Ralph said, that we're taking market share. You just couldn't grow the top line, in our case, by 10% over 9 months in an environment which is down, unless you were taking market share. We're adding high-quality people. The firm is stronger than ever in terms of its position in the marketplace, league standings and so forth. And I think the outlook is quite good. But we do need the environment to be at least, steady. And I'm hoping that it will be. So with that, I'm going to turn it back to Ralph or Bob.

Okay, let me talk briefly about our Institutional Equities business, continues to add clients and to take market share. We now have research coverage of 249 companies and have generated revenues from more than 290 clients. The business recently added coverage of the REIT sector, with a total of 6 new hires in sales, sales trading and research. And we do not expect any headcount growth in this business through the next year. Third quarter revenue of $5.2 million was down 23% from last quarter as we participated in fewer underwriting deals this quarter. Secondary revenues were in line with the previous quarter despite the 12% decrease in volume in the overall market. So we're taking share in this business as well. Expenses were $6.9 million, up slightly from last quarter due to the addition of the REIT team. In Investment Management, operating income for the Investment Management business was $2 million for the quarter on net revenues of $21 million. The operating margin was 9%. Assets Under Management decreased 2% to $11.6 billion as we continued to experience outflows in our Institutional Asset Management business. However, performance has improved as the year has progressed, which as I have said previously, generally is a leading indicator for stabilization of outflows and ultimately, a return to inflows. Our Wealth Management and Trust Company businesses continue to perform well, with assets under management in Wealth Management increasing by 6% during the quarter to $3.8 billion. Finally, our unconsolidated affiliated managers contributed positively this quarter, delivering $600,000 of net profit, and ABS Investment Management was the majority of that. Bob, you want to make a couple of comments on the finances?

Certainly, just 2 short comments for me. As Ralph mentioned, our non-compensation costs were down 7% sequentially, across a number of areas: facilities; travel; information services. Professional services increased as we had expected reflecting the addition of SMDs this quarter. We, of course, will remain very focused on non-compensation costs, both reducing it as a percentage of our revenues and also as a measure of the cost per each professional in the firm, where we made good progress this quarter. Our tax rate remains at 38%. Based on our full year expectations of the mix of our results, in particular, income sourced from outside of the United States and the contribution to earnings from our early-stage businesses. And finally, our financial position remains very strong with $205 million of cash and marketable securities on the balance sheet at the end of the quarter.

This is Ralph, again. Let me just make a couple of comments in conclusion. First, while our revenues are up 10% in Investment Banking year-to-date, and as Roger said, we're proud of that result, we expect our full year's revenues will exceed last year's by a higher percentage. This is basic math. As the fourth quarter last year was a relatively weak quarter, which should be easily exceeded this year, assuming that our current backlog is realized as expected. In light of this, we expect our full year operating margins for 2012 to be closer to our full-year operating margins in 2011 than they were for the first 3 quarters. And the first -- the margins last year, to remind everyone, were 20%. As we continue -- and this occurs, as we continue to mitigate the influence of our weak first quarter on our year-to-date margins. This is also basic math. That results from the fact that our weakest quarter this year will almost certainly be the first quarter and the fourth quarter last year was also relatively weak, and offers an easier comparison. Second, our Advisory business is considerably more diversified than it has been historically. Year-to-date, Advisory revenues are up 10% as we discussed. But the number of clients served year-to-date is up approximately 30% to 247. The sad news about this is that we have not booked a single advisory fee larger than $20 million this year, and we do not expect to book any in the fourth quarter. So this will be the first year in the last 4 that we have had no fees in excess of $20 million. The very good news is that our Advisory business will generate strong double-digit revenue growth this year, without the benefit of a single fee over $20 million. Third, as we look ahead into 2013, we believe that there is a reasonable probability that we will have additional opportunities to add to our team of highly talented Senior Managing Directors, both from recruiting talent externally and from internal promotions. These additions fuel future growth and value creation in the firm. And we are organizing ourselves this fall to take advantage of this opportunity, should it materialize. Finally, given the prospective opportunities to grow our Advisory business, we are focusing our excess cash flow on repurchasing shares and on growing our Advisory team and are, at the current time, limiting acquisition activity in the Investment Management business to small tuck-in acquisitions in our Wealth Management business. Our share repurchase activity last quarter and the increase in our dividend reflect this strategy. In fact, in the last 12 months we have returned $104 million to shareholders through dividends and share repurchases, well in excess of our reported net income over that period. And the board's authorization to repurchase an additional 5 million shares assures the continuation of this approach. That completes our introductory comments. We are now glad...

Ralph, let me just add one sentence. The reason there are -- we don't have any fees in excess of $20 million is really simple. What's missing in the market as a whole, are, as you all know, the giant deals. When -- if you really focus on the difference between this market and say, 2 years ago, the big corporate-to-corporate deals are missing. And so, the reason we don't have outsized fees is because the deals on which they're paid aren't in the market. I just want to clarify that.

Yes. Thank you, Roger. Okay. Any questions?

[Operator Instructions] Our first question comes from Devin Ryan from Sandler O'Neill.

So your market share of the Advisory fee pool which, I think is, what is really kind of the relevant metric to look at here, more so than weak payables, it's really been growing at a fast pace and at faster than any really public company that I've tracked over the past 5 years. So I'd just love to get your thoughts around that? And clearly, you can bounce around a bit, it's a good trend to have, but is that being driven, in your view, by just adding more productive MDs over, kind of, maybe what you had previously? Or is it just more of a general industry trend towards firms like Evercore that are more independent?

Well, I would say it's both. Number one, the independent firms as a whole, continue to gain market share at the expense of the universal banks and bank holding companies, that's evident in the data. By the way, the good news about that is that we have roughly 20% of the market, and the big guys have 80%. And so, there's a lot more that can move from one side to the other side, looking in the future. But that's number one. And number two, and you'll forgive me for a little overweening pride, maybe. I think Evercore is doing everything right. You know we're the, by far, the largest of the newer independent firms. I mean, fundamentally, we compare ourselves these days to Lazard and Rothschild and you can see, we're doing a lot more business right now in the U.S. than Lazard. Those firms are a lot older than we are, like by more than 100 years and they're stronger globally than we are, and much larger globally. And our goal is to ultimately surpass them. But I think we're blessed with an unblemished history, a pristine history, no baggage. And the most strongest recruiting platform of any of the independent firms including those 2, I just mentioned. And if you look at where we've recruited people from, you can see that. I've mentioned where the 4 partners who came to the firm this quarter arrived from. So I think Evercore has the single strongest hand-on recruiting. There continues to be a brain drain from the giant institutions to independent firm. And we're the particular beneficiary, more than any other firm, of that, both because I think we take recruiting a little more seriously than most in terms of the way we approach it and because we have the strongest comparative advantage in terms of where people want to go.

Okay, great. And then just maybe following up on the comment on the hiring and adding talent. As you think about senior-level hiring, you're clearly spending some earnings today to grow the earnings pool down the road. And it seems that you're doing with a balance as to not hurt margins, as you spoke about margins being roughly similar to last year, given the outlook currently. But as we think about hiring next year, I know you're still optimistic about the potential to add some really good people. So can you just talk a little about that balance and the balance between building for the long-term versus driving, I think, acceptable near-term results for shareholders?

Sure, let me take that.

Ralph, I want to comment on this. I just want to say one thing at the beginning and then I'll hand it over to him. We have a lot of blocking and tackling to do over the next 2, 3, or 4 years in terms of: a, globalizing our verticals, many of which are global but many of which really are U.S.-centric, until we, for example, put a transportation capability in London. We've put a restructuring capability in London, we're putting a health care capability in London. And -- so that's one. In addition, there were some verticals at Evercore which are either really not filled out at all or which need to be further built out. And so we have lots of very basic growth ahead of us for the next 3 or 4 years, really meat and potatoes type growth. And that's -- that makes our recruiting agenda relatively clear to us and relatively simple. Now, I'll hand it over to Ralph, having said that.

Yes. I think, Devin, you hit on the challenge perfectly. And what we aspired to do is to -- first of all, let me lay out a target. We believe that this business, when it's -- when the investments are fully made, should operate at 25%-plus operating margins. And obviously, we're a little bit away from that right now. And the reason that we're away from that is the investments we're making. We still have a little bit of a drag from the new businesses that we've started over the last couple of years, but the lion's share of that drag this year is from new additions to our team. And it is something that we watch very carefully. We -- our strong preference, assuming that the environment stays as good as it is now, which is not a great environment as we indicated, but assuming it stays as good as it is now, our strong preference is to make steady progress for that 25%. If we hire too many people, no matter how good they are, in the year that we do that, we will not -- we will probably slide backwards. So this year, we made a very conscious decision, even though we had opportunities to hire more, to hire 6. And I think that is the approach, that balanced approach, that we will continue to take. The good news is that as the pool of Senior Managing Directors gets larger, the same number of people is a little bit, not a lot, but a little bit less dilutive of the margins. So you shouldn't expect us to do a 1-year massive wholesale hiring that would take us backwards significantly or hopefully at all with respect to the margins that we're reporting today, even though that could very well be a high-value creating decision for 3 years out.

Our next question comes from Brennan Hawken of UBS.

Quick one, following up on some of those comments and questions. It seems as though there's been more announcement recently of bankers moving, sort of, between boutiques, as opposed to the move from bulge to the boutiques. So I guess, what I was curious about from your perspective, are you seeing some trends that maybe might cause us to rethink the narrative of the boutiques continuing to capitalize on weakness in the bulge shops? Or is it just a little bit of noise that just happens to kind of work its way through?

I think it's the latter. I think it's the latter. Because that's not a meaningful trend. The meaningful trend is the out-migration of talent from the universal banks and bank holding companies to independent firms. I think Evercore, as I said, is the outlier in terms of benefiting from that. But I don't think there's a big trend of boutiques switching, and by the way, we don't look upon ourselves as a boutique, because with 70 partners and 900-and-something people, wherever the line on is between boutique and the next level up is, we crossed that 3 or 4 years ago.

Yes. I know. It's just an easier term saying independent financials.

I think -- I don't think it's a meaningful trend, switching between independent firms.

I think that phrase just rolls off every time myself.

I'll try and stick to your preferred term, guys. And then a quick one on M&A., while we're there. What do you think the outlook for Advisory? How does -- how do things change if Europe switches from what we've seen, kind of a mild recession into something that's more severe? Do you think that, that is going to potentially crimp activity levels?

Well, first of all, I don't think that's going to happen in Europe. I think they're probably at the low point right now or around it. Second of all, Evercore is globalizing itself relentlessly, but we only started to do that a little over 6 years ago when we went public. So we have a long way to go on that, and you can see that our business is roughly 70-30 in terms of U.S. versus international, in terms of what we have, the source of the deal. And that number keeps going up on the 30% side, but it's still weighted toward the U.S. So I mean, the big question is, will business be better next year? I personally think it will be, but I wouldn't say that just for my 2 cents, I think it will be but might I -- I wouldn't bet my kids on it. But that's the big question.

Yes. Fair enough. And then last one for me, knowing what you know now about how just rough this environment is, and obviously, cash volumes, it sounds impossible to predict. Would you do anything different as far as the Institutional Equity business, if you had perfect vision into how this was going to play out? Or are you guys -- or is it all just unchanged based upon the prospects and how this is all played out?

Well, obviously, the environment in the Institutional Equities business was -- has been, over the last 2 years, more challenging with volumes down, underwritings down than we anticipated when we entered the business. And certainly, it's been more challenging than anyone who was in the business as well. Having said that, we continue to make good progress. And I would remind everyone that the way we entered this business was in a very, very financially careful way. The business is part-owned by the professionals in the business. They are sacrificing some amount of current compensation to get the benefit of that entrepreneurial opportunity. They bought those shares, by the way, they weren't granted those shares, so the team has real skin in the game. And that makes -- that ensures that we're running a business that will attain reasonable profitability. I think we -- just as we are in Advisory, we continue to take share in that business, although obviously, our share starts at a miniscule level compared to our Advisory business. So as I said, secondary revenues were flat, second quarter to third quarter versus an industry that was down 12%. And the encouraging thing is that the -- in the first few days of this quarter, which would be I guess, probably 16, 17, 18 days at this point in time, our daily average revenues are running about 30% ahead of the second quarter. So as activity has picked up in the market as a whole a little bit, our activity has picked up quite a bit. So there are encouraging signs there. Obviously, the headwinds have been greater than we anticipated. But we still expect that this will be a valuable addition to our ability to serve our clients, which is most important and a valuable asset for our shareholders.

Our next question comes from Joel Jeffrey from KWB (sic) [ KBW ].

Just a quick -- just as a follow-up to that. Ralph, correct me if I'm wrong, did you say that the additional costs in the Institutional Equities business were up in this quarter due to the addition of the REIT team?

Predominantly, yes.

Okay. And is that going to be -- I mean, is this a onetime issue, or is that sort of in the new continuing expense base?

Well, it -- Bob, maybe you want to add color to this? But what does happen is when you add people in the middle or the end of the year, that tends to squeeze their comp into whatever remains of the year. So I think, it probably has a little bit of both. And do correct me if I'm wrong, Bob, the team costs will also show up in the fourth quarter. But then when you get to the first quarter of next year, you'll have the -- a similar phenomenon that we had the last year, where you actually -- you'll see a little bit of a decline.

Yes. Joel, the team arrived late in the third quarter, so we're seeing some costs for them. Obviously, with the full quarter next year and the phenomena Ralph described, we'll see more. The team is hopefully following on the path of transport, where having the right sales trading and research complementing banking capabilities is a good combination for us on the top line.

Okay. Great. And then, Bob, maybe this is an appropriate question for you. And you guys have made comments about focusing on non-comp expense. I mean, how do you guys look at it? Is it a function of revenue or is it -- as a percentage? Or is more on a, sort of, per head basis?

We look at both, Joel. Each are important with revenue fluctuating. Obviously, sometimes the statistic might look better or worse in a quarter. But over time, it should be below 20%. And the cost per head should go down as we gain scale.

But the math of it is that the cost per head is at -- is what drives the number and the ratio is driven by the top line. Predominantly.

Our next question comes from Hugh Miller from Sidoti.

I guess, just in talking about some of the recruiting possibilities for you guys. I realized it's been a very difficult environment. But can you just give a sense of the productivity you're seeing and the ramp-up on the people that you have brought in in the last 2 years? And whether or not, given the market conditions if they're improving, I know that you have your long-term target, $10 million per advisor, but we're obviously in a very difficult environment right now. But can you just talk about the progress you're seeing there from productivity from the recent hires?

Be glad to. Let me say, first of all, we've done a lot of work on this going back to 2007 and looked at each class of partners that we hired. And while obviously there are exceptions, and this is a generalization, but the typical meter of things, if you take all of those hires is first year, it's pretty hard to generate revenue because on average, they join in July or August, and it's hard to get an assignment and get paid in the remaining 4 or 5 months of the year. The first full year, they generally are in the 4 to 7 range on average, which is enough to cover their costs and the costs of the team that we add to support them. And generally in the second full year, they're earning, they're generating revenues comparable to those who've been here for a long time. Interestingly enough, the team that we hired, 7 partners last year, and their production is better than that. It's much more reflective of the average productivity for the firm as a whole. So the more recent hires have actually contributed at a more accelerated pace than we would have observed over the last -- the previous 5 classes. But is that a trend? I think it's much too early to say.

Yes. And are you seeing any differential between internal promotions versus the external recruiting in that?

I think it's probably too early to tell. That -- the internal promotions tend to be a little younger than the people we hire externally. So I -- there is also a bit of a -- typically, it's a bit of a ramp-up period for them as well.

Okay. And then just another question about -- you gave us some color and commentary on the near-term and the medium-term outlook for the European region, for industry activity. Can you just talk about how you view your franchise there? And whether or not, given that scenario, is restructuring your staffing level is something that you think about? Or is it just a function of being less active on the recruiting side there until you have greater confidence in, kind of, the trends?

First of all, we're expanding our capabilities in Europe rather than -- not cutting them back, that's number one. Now remember, Evercore is a London-centered firm. We don't have offices on the continent, we're not planning to have offices in the real sense of that on the continent. And so we're being careful in that regard. But we're doing more business, not less business from London. And we think the outlook again, over the medium-term, I don't know about the next 3 or 4 months, is good. And as I said before, we're very steadily globalizing a whole series of all our verticals by putting industry capabilities. And I mentioned health care, transportation and restructuring in London as we go forward. So are we cutting back in Europe? The answer is no.

Okay. All right. I appreciate the insight there, it's very helpful. And the last question I have is just with regards to a little bit of a housekeeping here. And I apologize, I hopped on late, if you did talk about this, but it appears within the Asset Management segment, revenue was relatively stable quarter-over-quarter. We had, I think, somewhat of a little bloated comp ratio in the second quarter but it came down meaningfully here in the third quarter. I just wanted to get a sense if there was anything kind of unusual in the third quarter for the Asset Management segment's comp ratio?

No. Not really.

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

Thank you very much for your time, all of you, and we look forward to talking to you at the end of the fourth quarter. Have a great day.

This concludes today's Evercore Partners Third Quarter 2012 Financial Results Conference Call. You may now disconnect.