Robert B. Walsh - Evercore Partners, Inc. Ralph L. Schlosstein - Evercore Partners, Inc. Roger C. Altman - Evercore Partners, Inc..

Ashley Neil Serrao - Credit Suisse Securities (USA) LLC (Broker) James Mitchell - The Buckingham Research Group, Inc. Brennan McHugh Hawken - UBS Securities LLC Conor Fitzgerald - Goldman Sachs & Co. Steven J. Chubak - Nomura Securities International, Inc. Devin P. Ryan - JMP Securities LLC.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Evercore Third Quarter and Nine Months 2016 Financial Results Conference Call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference call will be open for questions.

This conference call is being recorded today, Wednesday, October 26, 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..

Thank you very much. Good morning and thank you for joining us today for Evercore's third quarter and nine-month 2016 financial results conference call. I'm Bob Walsh, Evercore's Chief Financial Officer. And joining me on the call today are Ralph Schlosstein, President and Chief Executive Officer, and Roger Altman, our Chairman.

After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's third quarter 2016 financial results. The company's discussion of the third quarter results today is complementary to that press release, which is available on our website at evercore.com.

This conference call is being webcast live on the Investor Relations section of the website, and an archive of it will be available beginning approximately one hour after the conclusion of this call for 30 days. I want to point out that during the course of this conference call, we may make a number of forward-looking statements.

These forward-looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.

These factors include, but are not limited to, those discussed in Evercore's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements.

In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance.

For detailed disclosures on these measures and their GAAP reconciliation, 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 closing. I'll now turn the call over to Ralph..

Thanks, Bob, and good morning, everyone. As you might expect, we are quite pleased with our third quarter and year-to-date operating results.

While the announced M&A activity is generally weaker than last year, the operating environment continues to be quite favorable to our independent advisory business model, as clients increasingly seem to be embracing our approach of senior level unconflicted advice.

Our third quarter results were primarily driven by the success of our Advisory business, particularly in the United States. M&A activity in our healthcare, TMT, financial services, and energy practices remains high. While at the same time, our restructuring, activist and defense, and capital raising practices continue to be strong.

We clearly have gained significant market share this year. As you know, we monitor our market share of Advisory fees among all firms that are public and report their advisory fees separately. This includes all the large firms, except Barclays, which does not reported its advisory fees separately and all of the public independent firms.

At the end of last year, our market share was 5.1% on a trailing 12-month basis and it was 5.7% on a trailing 12-month basis at the end of the second quarter.

While most of the European firms and the independent firms have yet to report, we are confident that our market share on a trailing 12-month basis at the end of this quarter will be 6% or higher.

In Equities, Evercore ISI was recognized by Institutional Investor as by far the best independent research firm in the U.S., as we ranked number three among all firms on an unweighted basis and number two on a weighted basis.

We also had the second highest number of number one ranked analyst, a testament to our commitment to both elite research and excellent client service. Our strong results also continue our record of significant capital return to our shareholders.

Our board has approved an increase of $0.03 to our quarterly dividend, which will now be $0.34 per share per quarter. This is the ninth consecutive year that we have increased our dividend.

And year-to-date we have repurchased 3.4 million shares at an average price of $47.58, enough to offset all share issuance for bonuses, for new hires, and to offset some of the share issuance in connection with the ISI acquisition.

With these market share gains, it appears that we are on a path this year to be the six, seventh or eighth largest factor globally in Advisory revenue, quite a dramatic change from a few years ago. Let me briefly go over the adjusted numbers, and Bob will have additional comments on comparable GAAP measures in his remarks.

First let's talk about the quarter. Third quarter net revenues were $383.5 million, up 25% versus the same period last year, a record for the third quarter and our second best quarter in our history. As we have discussed in the past, revenues are influenced by the timing of transaction closing, which impacted us somewhat favorably this quarter.

It has been always our practice to highlight this when it impacts the quarter positively or negatively. This time it was positive. Although, even without this benefit, our results still would have been very strong. Net income, also a record for the third quarter, was $62.4 million, with adjusted EPS of $1.22.

These results are up 45% and 51%, respectively, from the prior year. Our adjusted EPS also is equal to our record quarterly EPS in the fourth quarter last year, as our focus on buybacks has reduced the share count year-over-year. Operating margins were 27.7%, up from 24% a year ago.

Our compensation ratio was 56.8% for the quarter, lower than the 57.4% in the same period of last year. As we have discussed in the past, we review our targeted compensation ratio each quarter and make adjustments reflecting our realized results and expectations for the remainder of the year.

For the nine-month period, we have lowered our expected compensation ratio to 57.3% from 57.6%, driven by a higher than expected rate of revenue growth. We will, of course, further adjust this accrual in the fourth quarter, depending on both our results and expected compensation levels, both within Evercore and at our competitors.

Non-compensation costs increased to $59.5 million, or 15.5% of revenues, principally reflecting continued growth in the head count of our business. Bob will have more to say on this in his remarks. Now let's talk briefly about the year-to-date numbers. Growth in revenues and net income for the first nine months also was very strong.

Net revenues grew 22% to $988.9 million and adjusted net income grew 39% to $148.6 million. This is the eighth consecutive year of uninterrupted revenue growth for the nine-month period. Earnings per share for the first nine months increased 43% to $2.88, another record.

Once again, reflecting our strong operating performance and our share repurchase activity. Operating margins in the first nine months were 25.5% versus 22.5% last year.

We are particularly pleased with the operating leverage that we are delivering, which is due to strong revenue growth, disciplined management of non-comp expenses, and a steady reduction in our share count. Let me now turn the call over to Roger to comment on our Investment Banking performance and the M&A environment generally..

Good morning, everyone. As Ralph said, we had a record third quarter and a record nine months in Investment Banking. Our revenues for the third quarter of 2016 were $365 million, up 30% over the comparable quarter a year ago. And for the nine months revenues were $927 million, up 26% from the nine months of 2015.

The operating contribution for the quarter was $102 million, up 55% over the comparable quarter a year ago. And the operating contribution for the nine months was $236 million, up 42% over the comparable period a year ago. The Advisory fees component of our revenue, which of course is the biggest, was $301 million for the third quarter.

That's the second highest quarterly total we've realized. On top of that, underwriting revenues were $8 million for the quarter, up from the third quarter a year ago, and Equities revenues or commissions were $54 million for the third quarter, down slightly from the comparable period a year ago, third quarter a year ago.

Our third quarter Advisory revenues included 65 fees of $1 million or more, as compared to 35 such fees in the third quarter of 2015. That's an 86% increase. And for the nine months, we saw 164 such fees compared to 112 for the nine months of 2015, and that's a 46% increase.

Our equity capital markets and debt capital markets groups together completed underwriting transactions in the quarter, which raised $14.8 billion per client, up from $4.3 billion last quarter, that is a quarter ago.

And our total of Advisory fees in the third quarter included $16.3 million in fees for advice on 17 capital raising transactions, 17, that compares to advising on 11 such transactions during the third quarter a year ago.

For the nine-month period, we advised on 51 capital raising transactions, generating fees of $35 million in comparison to 31 such deals generating a similar amount in fees for the third quarter a year ago. All those totals are in addition to the underwriting totals.

As Ralph alluded, our comp ratio in Banking fell to 56.8%, down from 57.9% last quarter and down from 57.9%, the same number, for the third quarter of 2015. And that's what you would expect when revenues are strong, as this quarter's were.

So, our operating margin in Banking improved to 28.1% for the quarter, up very substantially from the 23.6% of a year ago's quarter.

On productivity, which is a measure, as you know, that we watch carefully, average revenue per SMD on our traditional rolling 12-month basis was a strong $13.3 million globally, up 10% year-over-year, and particularly strong when you realize that the 2016 quarterly figure reflects 79 senior managing directors versus 66 in the year ago figure.

Ralph talked about our market share, I won't repeat that. It's the highest it's ever been, but let me give you a few details within it. We finished the quarter as the number one ranked independent firm in the United States in terms of the league tables for announced transactions in healthcare, and second globally.

And we finished second among all firms in terms of the league tables on announced transactions in energy. Now, those are two of the most active sectors in the world, so those are pretty impressive results. And, of course, we finished first in terms of independent firms in the U.S.

market on announced transactions, in other words Evercore was number one for the nine months in the U.S. on announced transactions in the league tables among independent firms. And Ralph noted the superb results for Evercore ISI research, I won't repeat that too, but very, very strong and impressive.

Headcount, the total Investment Banking head count rose to 1,155 at the end of the quarter, up from 1,102 last quarter and 1,019 a year ago, and we completed the quarter with 81 senior managing directors. Now let me make a few comments on the M&A market. First the data, then the commentary.

Global announced M&A totals were down 8% quarter-over-quarter and 21% year-over-year. The key weakness there was in the U.S. market, which was down 44% quarter-over-quarter and 31% year-over-year. On the completed transaction side rather than announced, completed transactions in the U.S. market for the nine months were up 3%.

Completed transactions across the world were down 8% year-to-date. Couple of editorial comments. Number one, a lot of the weakness in announced deals year-to-date may have been remedied by this recent spate of transactions we've seen, a rash of transactions over the past week or two.

We'll have to wait-and-see the data on that, and of course, we're still in the first part of the quarter anyway. But more important, secondly, 2015 was a very, very strong year, a record year in terms of global M&A. And so 2016, while down a bit, is a strong year by any historical measure.

And if you look at M&A totals on a rolling four quarters basis, which is an intellectually more sound way to look at it, you see that the past three years have seen very strong and rising M&A totals until this year. But my point is, this is a solid – that's the word I would use – a solid U.S. and solid global M&A market.

And the reason for that, as we've discussed many times on these calls, is that the basic elements which are always conducive to healthy levels of merger volume remain in place. Namely, ultra-low interest rates, high equity prices, abundant credit availability, and reasonable business confidence.

When you have those elements, you're going to have good levels of M&A volume, and we do. I'll turn it back to Ralph..

Thanks, Roger. Let me talk briefly about Equities and Investment Management. Our Equities business contributed net revenues of $55.6 million in the quarter, including $2.2 million attributable to equity underwritings. Commission revenues were down 8% versus the third quarter of last year, reflecting the overall decline in the U.S.

equity market volume of 13% versus this quarter last year. Of note, volatility last year surged in July, given global growth concerns and concerns about growth in China.

And we did not experience a similar period of sustained volatility this quarter, and you can read in the papers this morning about the record low volatility we have in the equity markets today.

Net revenues for the business are $177.5 million year-to-date, including $167.4 million from commissions and checks, which are up 3% in comparison with the prior year.

Overall, the business produced operating margins of 22% in the quarter and 21% in the first nine months of the year, up from last year and meeting our expectations, given market conditions. Once again, the eliteness of our Equities business was recognized in the Institutional Investor ranking.

As I noted at the outset and Roger did as well, Evercore ISI has been recognized as the number one independent research firm in the U.S. and number three among all firms. Last year, we were tied with three other firms for the number three position.

But over the last year we have outpaced our competitors and seen the single greatest year-over-year increase in votes of any firm in the ranking. We appreciate this vote of confidence from our clients and we continue to work hard to serve our clients and to translate this recognition of our capabilities into greater financial returns.

Investment Management reported net revenues and operating income of $18.3 million and $3.7 million, respectively, and produced an operating margin of 20% for the quarter. Year-to-date, net revenues were $62 million and operating income was $16.3 million. The year-to-date operating margin was 26% compared to 22% last year.

These results predominately reflect contributions from our Wealth Management and Trust businesses, which continue to perform very well. We completed the transfer of control of our Mexican private equity business to Glisco Partners, an entity formed by the principals of that business.

Bob will provide further comments on our GAAP results, as well as our non-comp cost and several other financial matters.

Bob?.

As Ralph mentioned, we completed the transfer of control of our Mexico Private Equity Business at the end of the quarter. As this transaction is a sale, we recognized the gain of $400,000 in our GAAP results. This gain is excluded from our adjusted results.

The sale includes earn-out consideration, which will be realized over time as the economics are related to fee streams and carry that are by their nature contingent. Assets under management of $304 million related to this business have removed from our reported AUM amount in Q3.

Revenue on a GAAP basis of $386.3 million and $994.7 million were a record for a third quarter and nine-month period, respectively, just as they were a record on an adjusted basis. Net income attributable to Evercore Partners, Inc.

was $34.7 million for the quarter and $64.1 million for the nine-month period, each reflecting substantial growth in comparison with the comparable prior year period.

Consistent with prior periods, our adjusted results exclude certain costs that are directly related to our acquisitions and dispositions, particularly costs related to our Equities business. Most significantly, we adjust for costs associated with the vesting of LP Units and Interests granted in conjunction with the ISI acquisition.

In the first nine months, we expensed $66.1 million related to this equity, in comparison with $65.1 million for the first nine months of 2015. As a reminder, our adjusted presentation includes all of the shares we expect to issue for the Equities business in the EPS denominator.

Our forecasts that drive the number of shares expected to be issued did not change in the quarter.

Turning to non-compensation costs, firm-wide operating costs per employee, which is the key metric we track, were $112,000 for the first nine months, a 5% decline versus 2015, as growth in non-compensation costs other than business development costs were lower than our growth in head count.

Firm-wide operating costs per employees were $38,000 for the quarter, which is up 3% from the second quarter of this year.

The biggest driver of the increase is costs related to growth in head count, including increased facilities costs as we grow our physical space and elevated professional fees principally associated with recruiting new senior managing directors.

Quarter-to-quarter comparisons will be inherently lumpy, as many of our costs are seasonal and relate to the level of business activity or are otherwise non-recurring. In the Equities business, our adjusted operating margins, which govern the ultimate payout of the G and H Units, are 14% for the first nine months.

The decline in adjusted margins in the third quarter reflect a revenue decline indicated by Ralph, while expenses remained essentially flat. As I've indicated previously, we remain very focused on expense discipline in this business, but progress will be lumpy at times.

Our adjusted tax rate for the nine-month period increased to 38.05%, as we're generating an increased percentage of our earnings in the United States. Our GAAP results reflect an effective tax rate of 47.3% for the first nine-month period.

Our GAAP effective tax rate is impacted by the non-deductible nature of the ISI acquisition-related compensation expense, as well as the geographic mix of our earnings.

Our Q3 share count for adjusted earnings per share was 51.4 million shares, essentially flat in comparison with the prior quarter, as the reduction inherent in share repurchases offset the normal increase attributed to the vesting of deferred compensation awards. On a GAAP basis, the share count was 43.7 million shares.

Finally, our cash position remains strong, as we hold $512 million of cash and marketable securities at September 30, with current assets exceeding current liabilities by approximately $380 million.

Ralph?.

the Institutional Investor ranking, where we have done extraordinarily well over the past two years. Believe me, we have lots more to do here and we certainly are not resting on our laurels. But we are making good progress in consistently establishing our eliteness in our two key businesses.

And we are quite consistently taking market share in a highly competitive business in good times and in less good times. Let's now open the floor to questions. Thank you..

Thank you, sir. We will now begin the question-and-answer session. Our first question is from the line of Ashley Serrao from Credit Suisse. Your line is open..

Good morning..

Good morning, Ashley..

So just first question on the hiring outlook. I know you've been selective, but curious whether you are seeing an increase in Evercore caliber talent being available for hire in the Advisory business, and how would you characterize the overall hiring environment today? Thank you..

Yeah. It's probably a little early to tell. Over the next month or two we'll start to build a backlog for next year. I would say that, because of accomplishments of the firm, we unquestionably are a destination of choice for those high-quality advisory bankers who are interested in the independent advisory model.

I would also say that there have been quite a large number of senior professionals who've left the larger firms for firms like Evercore and our competitors, and also to establish even smaller firms, so-called kiosks. So we expect to be able to do as we have.

We always say, we're going to hire four to seven senior managing directors in our Advisory business. I don't see any reason sitting here today that we wouldn't say exactly the same thing about last year. So far this year we've hired five. Last year we were able to hire a total of 10, although two were in equity capital markets, ECM.

So it was really eight in the pure client-facing Advisory businesses. So I don't expect next year will be different sitting here today from any other year..

Our next question comes from the line of Jim Mitchell with Buckingham Research. Your line is open..

Hey, good morning. Hey, Bob, cash balances were up, it looks like, almost $200 million quarter-over-quarter; didn't seem like your borrowings increased.

Is that really – was there anything unusual in there or is that just cash flow and limited buybacks during the quarter?.

Just cash flow from operations, Jim..

Given how much – I think that's the highest levels you've ever had in the third quarter. Typically it goes up in the fourth quarter as well.

Do you feel like that's – you're going to put all that excess capital to work? Any change in how you think about buybacks versus, say, a special or something like that?.

No, I wouldn't anticipate any change in what we've been doing, Jim..

Okay. And then maybe on your outlook, you talked about all three areas looking constructive, including restructuring. I think some of your peers have been sort of mixed on restructuring, given that the environment's improved, particularly in energy.

What gives you more confidence in the outlook for restructuring from here?.

Well, don't misinterpret what we said, please. This is one of those unusual environments. In fact, I can't remember another one, when M&A volume broadly at Evercore is good and restructuring activity also is good, because historically they've been almost perfectly countercyclical. When one is up, the other is down, and vice versa.

But our message is not that restructuring levels are at all-time high. It's because in the broad market all restructuring – in other words they aren't. It's just that they are healthy at a time in the M&A cycle when you would expect them to be very weak..

All right. Fair enough. And, Bob, thanks for giving us the number of bankers. If we can get everyone else to do it, that will be great..

Our next question is from the line of Brennan Hawken with UBS. Your line is open..

Thanks for taking the question. Good morning. Just a quick follow-up there on Jim's question. We had cash spike on the balance sheet and also buyback's down a pretty -- this is – was pretty low level for buybacks here.

Can you tell us or give us some specific logic, is there a reason why capital seems to be building on the balance sheet here?.

Yeah, Brennan, as you know, we were extremely aggressive in buybacks in the first half of the year, sort of covering – offsetting all of the dilution caused by bonus awards, as well as new hires to-date.

So when you balance that sort of aggressive buyback in the first half of the year, where we thought it was a good opportunity to do that against the need to just buildup some cash as you approach the end of the year, be in a position to fund bonuses, et cetera, it was a light quarter, but our strategy for buybacks and returning capital is unchanged..

Bob, correct me if I'm wrong, but this is pretty simple. If we pay cash bonuses in the first quarter of next year, you can build up that cash linearly over the four quarters or you can try to be a little bit more opportunistic about when you purchase shares.

We used the cash in the first half the year to purchase shares and in the second half of the year we have to make up for that to have enough cash to pay bonuses.

That's pretty simple concept, right?.

Okay. And then I appreciate the margin in the Equities business in the first half. But could we get it to the 10th percentile there just so we can make it comparable to your prior disclosures? And is it possible to get margin in the third quarter as well? It seems like margin is dipping in that business.

Obviously, there are some environmental pressures.

But can you tell us why that wouldn't make you want to rethink and adjust maybe your expectation for dilution on that deal?.

So we actually did give it to you today to that percentile, it is 14.0%. And as I noted....

That's for the deal..

Yeah..

Not for the reported (38:17)..

Brennan....

Yeah..

Brennan always focuses on the deal..

Okay..

And, Brennan, in my comments in the third quarter and as Ralph mentioned, revenues were a bit softer for us in the quarter. Expenses were flat. And that's going to have the effect on margins that you've observed. For purposes of the deal, it's an annual measure.

So in our view, giving you the year-to-date results as we sort of move to measuring the Gs (38:50) at the end of this year again, that's the right measurement. The math as you observed, the margins were weaker in the third quarter..

Yes, yes, okay, terrific.

And then just last one, obviously, a personal issue here somewhat, but given the importance – is there any color you can provide on how Schoenebaum is doing and any potential expected timing for him to return from medical leave?.

Obviously, medical leave is a private matter. We're not going to discuss that and he is told us that his expectation is that he will be back by the end of the year..

Okay terrific. Hopefully that's the case. Hopefully he's doing well. Thanks a lot..

Thanks..

Our next question is from the line of Conor Fitzgerald from Goldman Sachs. Your line is open..

Good morning. I just wanted to follow-up on some of your comments about the recent strength in the M&A market.

Don't want to ask about any particular deals, but just given the chilling effect we saw on the market when some large deals broke at the beginning of this year, I wanted to get your thoughts on whether it was important to kind of see some of the larger transactions that are still pending kind of close to get renewed CEO confidence about pursuing M&A?.

Well, I'm not seeing myself any diminishing confidence in the total. Again, look, on a medium or longer-term historical basis don't suggest any lack of confidence either. You have to appreciate or you might appreciate that a very small percentage of deals face tight regulatory scrutiny.

And on an average day, the type of things that anybody at Evercore is working on generally aren't in that category. I can't use the percentage in terms of what percentage of deals are chancy from a regulatory approval point of view, but in terms of number of deals, it's got to be a little less than 10%.

And so, the totals don't reflect the diminished lack of confidence. I'm personally not seeing it. I just don't think it's there.

Of course, if you're working on one of those deals within, give or take, the 10%, everybody spends a tremendous amount of time on it, but fundamentally if you just laid out, for example, every one of the deals that Evercore worked on in the third quarter – and I mentioned I think we have 65 involving fees of $1 million or more – I don't think there is either more than one or two, maybe even none, but not more than one or two that are even involving any serious regulatory scrutiny.

The press is naturally focused on a couple of great big ones that do, but that's not the day in, day out flow at all..

That's helpful. Thanks. And then, I know it's going to depend on how 4Q shakes out, but at least if I look at your backlog numbers, it looks like 4Q could be another strong revenue quarter.

So I want to follow-up and just get your thoughts around the compensation ratio, assuming that the revenue strength kind of flows through as expected, should we interpret kind of the lower compensation ratio you saw in 3Q is a sign that if the revenue strength continues, there might be some additional leverage there?.

I think you should interpret that we'll look at it again in the fourth quarter and we're not going to give you any forward-looking comments. But that was an elite answer to an elite question at an elite firm in an elite environment..

We try anyway. All right. Thanks for taking my questions..

Roger is making fun of me, because he was impressed with my comment. And eliteness requires eliteness..

Yeah. It does. To have an elite firm, you have to have elite mentality in an elite location with elite people and elite clothes and so forth, but our offices could use -.

A little sprucing, because they don't look so elite..

That's true. Sorry..

That completes my elite bingo board, so thank you..

We do have a little fun here too..

Our next question is from the line of Steven Chubak with Nomura. Your line is open..

Hi. Good morning..

Good morning..

So, one of the questions I wanted to ask and, Roger, maybe you're best to opine here is, really the disconnect that we've seen in terms of the strong momentum you've had across the business and maybe continued subdued outlook that we've heard, not just from investors, but maybe from what's also implied in consensus, where the earnings momentum continues to be quite strong.

Both you and the independent peer group have yet, despite that experience, pretty significant multiple compression. And looking at the outlook for consensus, it does imply declining productivity over the next couple of years.

But given the constructive outlook that you outlined in your prepared remarks, do you believe that that more cautious revenue or earnings outlook is misguided and would you expect to grow revenues and earnings next year?.

I can't answer that, honestly speaking. I can't, because we're not going to talk about earnings next year and I'm not going to comment on what other people think of the outlook. I mean, everyone is entitled to their own opinion and I'm just going to – just not going to take that one on..

Okay. Fair enough. I had to give it a shot..

The only thing I -.

It was a manful effort..

Yeah. I would comment, as I have a number of times, that in our business you basically have decent visibility for three months and a little bit less than decent visibility for six months.

So to ask us what earnings will be next year is -- or even if we're sitting here then in the second quarter and then asking us what they're going to be for the remainder of the year. I will say that – as I did in my concluding remarks, there are two ways that one can grow in this business.

One is to have the rising tide lift all ships, a strong M&A environment, and the other is to take market share, to take market share both in the M&A environment and to take market share by virtue of broadening the things that you are doing with your clients.

And, obviously, there is no way that we can look at the past and use that as a prologue for the future. But some of the ingredients that would suggest that market share gains might still be possible for us are certainly in place..

Thanks, Ralph. That's extremely helpful color. And just switching gears for a moment, maybe just a follow-up to one of Conor's earlier remarks.

On the question of seasonality, if we look at the seasonal pattern you've seen historically, and it's pretty consistent with the broader industry pattern, second half stronger than first half in terms of revenue and 4Q is typically the strongest quarter of the year.

And since, Ralph, you did note in your last response that you at least have visibility on the next three months, is it reasonable to expect that the fourth quarter this year is going to be the strongest one for over the last four, i.e., you're going to finish off on a stronger note?.

This is Roger. I'm older than Ralph, and so I get to say this, and Ralph just once in a while has to kind of bite his tongue. We're not going to comment on that, honestly. We just – that's not what we do on these calls, as you well know. A good try, but no..

Uhhhhh – that was me biting my tongue..

Perhaps – well, I guess we'll leave it at that. Thank you for taking my questions..

I don't know how the transcript is going to reflect that, but..

Our next question is from the line of Devin Ryan with JMP Securities. Your line is open..

Hey, thanks. Good morning..

Good morning..

Maybe a question on senior banker capacity and then kind of how you're thinking about that right now, really how much more can people work? And I know that's maybe a tough thing to answer, but I'm just trying to think about framing it, because clearly productivity is quite high.

During the summer it sounded like one of the biggest tasks at the firm was just thinking about resource allocation and making sure people were going after kind of the highest revenue opportunities.

And so maybe that's another way of asking, how much higher productivity could go, or whether productivity is structurally higher? But I'm just trying to think about the capacity at the firm right now..

Well, the answer to that is we don't know. Like many of the forward-looking questions that you ask. If you look back historically, if you go back to the period of time 2010 to 2013, M&A, as I said in my comments, was completely flat during that period of time. During that period of time, our productivity grew from $7 million to roughly $10 million.

I can't give you a concrete answer on why that happened, but we have a view and the view is, number one, the average quality of our senior managing directors drifted upward, both through joinings and leavings.

Number two, and this is an anecdotal thing, as the brand of the firm grew a little bit during that period of time, we probably got one or two more and that's per SMD per year and maybe we had a slightly higher batting average. And then number three, we have been, as Roger indicated in his remarks, broadened the things that we do with our clients.

This morning we have – we were the IPO advisor on the largest IPO in Britain this year and the largest healthcare IPO ever in Europe. That's a capability that we had anecdotally at the firm, but now we have a focused effort on advising companies on their IPOs and equity offerings in Europe. So, there are number of things that have happened.

I think the average quality has gone up, what we're doing with clients has gone up, and the brand has improved. I think that that continues to be the case in the last couple of years, when you've had both an upward drift in M&A activity in 2014 and 2015 and a little bit of a downward drift today.

So all we can do is keep doing what we're doing, which is hire the very best people that we can and to interact with our clients on as many things as we can possibly do at a very elite level, to coin a word that Roger selected..

All right. That's really helpful color. I appreciate it and that's a tough one. Maybe another difficult one, just bigger picture. The Advisory business has been a secular growth industry over time just as economies develop and more companies are increasingly comfortable with M&A.

So that leads to more deals and then higher market caps drive deal volumes higher. So I'm curious if you guys are seeing any indicators that would suggest the M&A markets are maturing. You've had a lot more activity out of some of more nascent markets like China and some other areas as well.

So I'm just curious kind of your view of that secular trajectory.

And then when you think about future growth opportunities in the Advisory space, what areas do you think have the best trajectory within that?.

Short answer to your question is no, and to give you a couple of illustrations as to why it is no. A few years ago, let's say 10, tech M&A was quiet or low.

Today, tech – and I'm not talking about TMT, but tech would be one of the three or four biggest sectors globally, up from maybe number 10 or 15 10 years ago, and I'm not trying to be precise there in terms of 10 years ago, just giving you a metaphor. And healthcare, a similar trajectory, maybe you have to go back further, but take biotech.

Biotech M&A is very active. 12, 14 years ago there was no biotech M&A, and I could go on and on.

So whether it's places around the world – look at China related volume, for example, we just advised on the Hilton transaction vis-à-vis HNA, or whether it's sector that weren't active becoming active, I don't see any secular slowdown or secular maturation..

Okay. That's very helpful. Just last one here.

Any thoughts on how much the election, if at all, is having an impact on activity and do you see activity improving on the M&A side, I guess in particularly post the election?.

I don't think the election is having any impact. And it would – if it's not having any impact now, it probably won't have any impact after the election. I can't say that for sure, but I don't see any evidence that the election is having an impact on M&A volume. I haven't personally (53:16) transactions where it was even discussed really..

Got it, okay. Great. Thank you, guys, for taking my questions..

Thank you..

Thanks, Devin..

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

Normally I would have extensive closing remarks, but I'm biting my tongue. So we look forward to talking to you in another quarter..

Thank you all..

Thanks, everybody..

This concludes today's Evercore third quarter and nine-month 2016 financial results conference call. You may now disconnect..