Q2 2020 Evercore Inc Earnings Call

[music].

Welcome to and of course second quarter 2020, <unk> financial results Conference call.

During today's presentation, all parties will be in listen only mode. Following the presentation. The conference will be open for questions.

The other question please press.

This star followed by wine on your touch town telephone.

Please press star zero for operators say since it anytime.

Participants you then speaker equipment and made the necessary to pick up your handset before making your selection.

This conference call is being recorded today Wednesday July 22nd 2020, I would now like to turn the conference over to your hosts Evercores head of Investor Relations Halle Miller. Please go ahead man.

Thank you can atria good morning, and thank you for joining us today for Evercores second quarter 2020 financial results Conference call.

Hi, Alan Miller of acquired head of Investor Relations.

Joining me on the call today are Ralph lost sign and online Bank, our co chairman and co Ceos and Bob Walsh our CFO.

After our prepared remarks, well open up the call for questions.

Earlier today, we issued a press release announcing Evercores second quarter 2020 financial result.

The company's discussion of our results today is complementary to press release, which is available on our website at Evercore dotcom.

Okay and calls being webcast live in the for investors section of our website and an art I thought it will be available for 30 days beginning approximately one hour after the conclusion of this call.

Yes, I point out that during the course of this conference call. We may make a number of forward looking statements, including with respect to coal bed methane team as discussed in our earnings release. This morning filed on form 8-K. The worldwide covert 19 pandemic has negatively affected our business and is expected to continue to negatively and significantly affect our business.

At this time it is uncertain how long are business will be negatively affected by cobot 19, and the associated economic and market downturn.

Any forward looking statements that we make including those about Kobin 19, and its effect on our business are subject to various risks and uncertainties and are important factors that could cause actual outcomes to differ material materially from those indicated in these statements.

These factors include but are not limited to those just gotten evercores filings with the FCC, including our annual report on form 10-K quarterly reports on form 10-Q on 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 our meaningful when evaluating the company's performance.

A detailed disclosures on these measures and the GAAP reconciliation you should refer to the financial data contained within our press release, which is posted on our website.

We continue to believe that is important to evaluate evercores 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 route.

Thank you Holly and good morning to everyone.

Let me start by saying that is this a pleasure to be doing my first call with John.

Co chairman and co Ceos of Evercore.

As we said in our press release last week.

We have built a great partnership in the almost four years that John has been here.

Collaborating on all important decisions for turning to the management of the firm and the strategic strategic direction of our business.

Our new titles formalize, what we have been doing for several years already and along with Roger whose role has not changed at all contrary to some reports in the press we greatly look forward to a very successful future for evercore.

I am sure you will agree that the challenges of the past quarter have been myriad and significant.

First the rapid spread of coded 19 pandemic drove lockdowns around the world and has inspired race develop diagnostics treatments and vaccines.

The pandemic them Lockdown, then gave rise to an unprecedented global economic downturn record levels of unemployment and in response fiscal and monetary stimulus that has been applied with unwrap unprecedented size and rapidity.

Financial markets, you can't predict lead volatile first downtime and up.

But they currently are reasonably healthy in Stark contrast to the health of the real economy.

And in the midst of all this much needed call for a higher level will be quality in social justice in our society and the significantly greater commitment to diversity and inclusion in the workplace.

Partnership with John and Roger and more broadly the culture within our firm has helped us navigate this challenging environment and to stay focused on both our clients and our people.

Before I comment on our results I want to provide an update on how we use a firm have responded to these events in the first half from both an operational and a business standpoint.

The vast majority of our team continues to work remotely that we are beginning to return to working in some of our offices.

This transition back to the office in contrast to our move to working remotely is happening at a measured pace.

Systems with local government director directives designed to protect the communities in which we work and our own policies.

To protect our people and their families.

We have embrace new technologies that allow us to communicate with our clients and our colleagues despite our physical distance.

And we remain focused on the needs of our clients, helping them by leveraging our broad and diverse capabilities.

This focus has resulted in a number of things.

First M&A assignments that makes strategic sense before the downturn.

Continued to be announced or if announced have been completed.

Capital raising assignments, both in the equity and debt markets have been occurring at levels dramatically higher than at any time in our history.

And we have seen an unprecedented surge of restructuring and refinancing transactions.

On a highly expedited basis.

And finally on our invest our research and in our wealth management business, a greater engagement with investing clients than at any time in our history.

John will.

Cover our performance in greater detail in his remarks.

Following the tragic events in Minnesota, We also saw much needed call for higher level of social justice and more extensive commitment to diversity and inclusion in the workplace in the you out and elsewhere. They call that we strongly in bricks.

We have taken the time to reflect the bulls for social justice and above hard about racism and prejudice that's still persist.

As I already today.

We have come away with the awareness and commitment that we need to strengthen our own diversity and inclusion efforts here at Evercore.

We are a market leader for our business accomplishments and we will extend the same energy and focus on our diversity and inclusion initiatives.

Just to make ourselves better but to try and have a more positive impact on our communities and the world in which we live.

As we look to the second half of the year. We are following a set of operating principles that are very similar to those that we discussed with you three months ago.

First we remain committed to ensuring the health wellness and safety of our team and their families and to achieving our diversity and inclusion goals.

Second our teams are focused on addressing the immediate needs of our corporate institutional investor and wealth management clients, while helping them be better position.

The eventual economic recovery.

Third we are sustaining our operating infrastructure to support flexible and efficient working arrangements as we plan and implement our return to office on a thoughtful and disciplined basis.

And finally, we remain committed to maintaining our strong and liquid balance sheet.

Our results for the second quarter and the first half reflect both the momentum that we had in them at a before the onset of the pandemic.

And our ability to pivot to meet our clients changing needs in currently challenging economic and financial markets.

As a general matter previously announced M&A transactions continue towards completion.

And the broader advisory capabilities that we have built and strengthened over the last several years have allowed us to continue to serve our clients on their most pressing financial and strategic issues.

Let me turn specifically to the numbers.

Second quarter adjusted net revenues of 513.9 million decreased 4% versus the second quarter of 29 team.

For the first six months of Twentytwenty adjusted net revenues of 948.9 million decreased 1% versus the prior year.

Although our revenues from investment banking that is advisory fees underwriting fees and commissions.

Increased by 2% versus the prior period.

Second quarter advisory fees of 336.5 million declined 24% compared to the second quarter of 29 Pete.

Which was an unusually strong quarter in fact, our third best quarter for advisory fees in our history.

Advisory fees for the six months of Twentytwenty were 695.6 million a decline of 10% compared to the prior year period.

We expect our marked advisory share.

Market share and advisory fees, among all publicly reported firms on a trailing 12 month basis to be 8.2% compared to 8.3% at year end 2019.

Second quarter underwriting fees of 93.6 million increased more than 450%.

Compared to the second quarter of 29 key.

Underwriting fees in the second quarter were higher than our underwriting fees for all of 29 team, which was a record year in underwriting fees for us.

For the first six months of the year underwriting fees were 114.7 billion, an increase of more than 160% versus the prior year period.

Third quarter underwriting fees are already off to a strong start and we are working hard to sustain this momentum.

Commissions in related fees, so 54.1 million increased 11% versus the second quarter of 2019.

For the first six months of Twentytwenty commissions and related fees of $109.5 billion increased 21% versus the prior year period.

Asset management and administration fees from our consolidated businesses were 15.2 million, an increase of 4% compared to the second quarter 2019.

For the first six months of Twentytwenty asset management ministration fees from our consolidated businesses were 30.5 million an increase of 5% from the prior year period.

Turning to expenses.

Our compensation ratio for the second quarter is 65% and our compensation ratio for the first six months of 20, 20% to 63.6%.

Word of explanation about the compensation ratio.

63.6% accrual in the first half reflects as it has in past years, an estimate for the full year compensation ratio, which includes an estimate for twentytwenty incentive compensation.

Given the uncertainty about revenues for the remainder of the year and the uncertainty about the level of market compensation for our younger employees in Twentytwenty, we have significant lean more uncertainty about the full year compensation ratio than at this time in prior years.

Our intention is to pay our younger employees at market rates as we always have and to pay our more senior employees and the way that fairly balances the short term and longer term interests of our shareholders, but short term interest being higher earnings this year and the longer term interest fee keeping the team together.

That has produced more than $2 billion or revenue in 2018 and 29.

And investing in new talent for our future growth.

So we are doing our best to have our six month compensation ratio be within the range of possible outcomes for the full year, although the uncertainty about both revenues and market compensation for our employees is considerably higher than in prior years.

Non compensation costs of 77.1 billion in the second quarter declined 11% from the second quarter 2019 for the first six months non compensation costs of 159.9 billion declined 4%.

Bob will comment on this further in his remarks.

Adjusted operating and adjusted net income of $102.7 million and 71.8 million declined 26, and 929% respectively and adjusted earnings per share of 100 of $1.53 declined 26% all versus second quarter Aplenty 19 with.

First six months of 2020 adjusted operating income adjusted net income of 185.3 million in 129.6 million declined 21% at 29%, respectively. Adjusted earnings per share of $2.74 declined 27% versus.

Six month period.

We remain focused on our capital return and management strategy.

Year to date, we returned 206 million to shareholders through dividends and repurchases of 1.9 million shares at an average price of $76.22.

We have offset the dilution associated with equity grants for the year. So any additional share repurchases and twentytwenty will be dependent on our second half revenues and earnings earnings balanced by our intention to maintain our strong liquidity position.

Our board declared a dividend of 58 cents consistent with prior quarters and reflective of our results for the quarter, Our board and management will continue to evaluate the dividend on quarterly basis as the effect of the pandemic on revenues becomes more clear, although the current expectation absent any extraordinary.

The decline in revenues and a significant reduction in our cash position is that our current dividend will be maintained.

Let me now turn the call over to job to discuss the current market environment and to comment further on our investment banking business John.

Thank you Ralph.

The volatile market environment has created opportunities across products geographic regions and industry sectors.

As the quarter began merger activity was muted as clients manage through the dislocation of the sudden impact of the cobot 1919 pandemic.

We were fortunate to have the opportunity to assist our clients with broad based stead advisory assignments.

Equity issuance as well as advising them on restructuring challenges.

A restructuring group has been especially busy we believe opportunities to assist our clients will continue as accommodative credit markets are giving companies time to address their liquidity needs and recover we believe there's significant opportunity in several sectors, including energy consumer retail and industrial.

In the capital markets Theres been extensive opportunity to assist clients in raising capital in both debt and equity markets in both the private and public arenas.

We had our strongest period ever in equity underwriting and while we do not participate materially in public debt capital raises we had the opportunity to assist clients on a number of innovative liability management assignments the momentum in our debt advisory and equity capital markets businesses has continued into the third quarter.

Private capital transactions for sponsors slowed considerably in the beginning of the quarter, but it's picked up more recently.

Issuers have become comfortable conducting diligence work Julie.

Activism assignments similarly slowed early in the quarter, but the pace of business has started to recover more recently.

Investor clients remains focused on financial markets throughout the quarter, both institutional and wealth management and trading activity remains high.

Significantly.

During the quarter the level of announced M&A activity slowed dramatically as clients appropriately turned inward driving many of the activities I just summarize.

Announced M&A volumes were down 41% in the first six months of 2020, and the number of announced transactions is down 15%.

The second quarter was particularly weak.

And now global M&A volumes were down more than 50% compared to last year's second quarter and the number of announced transactions declined 29%.

Several of the key conditions necessary for a healthy M&A market. We're we're absent in the most in most sectors of the economy during the quarter and remain generally absent today.

However, the basis of recovery may be forming.

The equity markets are currently strong for many sectors access to financing and readily available capital and credit.

Began to improve throughout the quarter.

And CEO confidence began to slightly improve as the quarter closed but granted from a low basis.

Dialogues and discussions with clients around strategic opportunities have begun to slowly picked up during the last few weeks and processes involving financial sponsors are beginning in new.

I am for the moment guardedly optimistic about the merger market overall, when the markets begin to show sustained stability CEO confidence will grow which will drive an increase in strategic activity until then we will continue to actively communicate and engage with our clients to help them navigate the current challenges and to be there.

Let them during the eventual recovery.

Let me now turn to our performance in investment banking.

Our revenues during the second quarter and first six months of 2020 held up well despite increasingly challenging conditions.

We sustained our number one ranking for volume of announced M&A transactions over the last 12 months, both globally and in the U.S. among independent firms.

Among all firms were once again number four in the U.S. and announced volume over the last 12 months and we ranked number three among all firms in the US based on number of transactions for the first six months of 2020, we continue to work hard to increase our.

Fear of the market.

We were pleased to continue to advise on some of the most important M&A assignments of the first half including three.

Of the 10 largest global M&A transactions and four of the five largest M&A transactions in the United States.

Our restructuring and debt advisory teams are extremely busy our us restructuring team has worked on the same number of assignments in the first half as it did for the entire year of 2019.

We are pleased that we ranked number one among all firms in number of announced restructuring deals and number of completed restructuring deals in the us in the league tables for the first half of the year and we've been involved in seven of the 10 largest bankruptcies.

By total actual liabilities year to date.

These accomplishments stem from our model of integrating our restructuring and debt experts.

And our industry focused bankers.

Our deep expertise in restructuring and debt matters with central to our ability to work with large number of large new clients.

Two recent examples include we were an adviser to Boeing on its on a $25 billion offering of seek senior notes and an adviser to Ford on its 8 billion dollar debt financing.

Deep expertise was also a catalyst for our work in specialized markets. For example types, where we advised on four of five announced type deals.

Before the financing markets reopened.

Our underwriting business has performed extremely well in the market. We served as an active bookrunner for co manager on six of the 10 largest ipos in the first half of 2020.

We completed our largest ever active book run transaction, when we advised PMC on the secondary offering of its 22% stake in Blackrock at the time of these announcements. This deal was the largest deal year to date.

We advise danaher on its Upsized 3.1 billion dollar offering which was split between common stock and convertible preferred stock.

And we were an active bookrunner on select quote the first non healthcare IPO in the cobot environment.

Well these large assignments contributed meaningfully to our quarterly results. We also participated in many more transactions across a broad range of sectors, demonstrating our ability to work in diverse areas and markets.

And while issuances up across the board, we also more than doubled.

Overall share in the first six months compared to the same period last year.

Our shareholder advisory and activism defense and are on private capital advisory businesses. So.

Assignments are already in progress and we move toward completion in many.

We are proud to advise on the first ever proxy contest to have decided in a virtual annual meeting. It was six it was a successful outcome for our client and our private funds. We've completed the first fully virtual fund raise which was oversubscribed and attracted both current and new investors.

In our equities business, our connectivity with Investor and advisory assignment remains elevated as they have become to rely on us for valuable insights during a period of significant market dislocation and our traders continue to help our clients execute in volatile markets.

Before I wrap up my remarks I.

I would like to take a moment to acknowledge our exceptional team.

Our people have responded to the challenges of the current environment and have served our clients with distinction.

The results I, just summarized are testament to their teamwork and their commitment to our clients.

And to one another.

I would be remiss, if I did not welcome John scores, though to the firm that's an advisory senior managing director enhancing our capital markets.

Advisory practice and strengthening our coverage of the technology sector.

We will remain open to opportunistically, adding other high quality individuals who can bring value to our clients.

Finally, as we look towards the second half of the year, we are aware of the many headwinds and uncertainties ahead.

Despite the challenges of working apart.

Results so far in 2020 demonstrate the power of a team working extremely well together with a consistent focus on clients.

Is this kind of collaboration that defines us.

And it's a key ingredient to our ongoing success.

I very much and looking forward to continuing to lead evercore through this downturn and eventual recovery in partnership with routes and of course Roger.

I truly believe that our best opportunities ahead of us.

And I'm excited by the prospects and direction of our firm.

Let me now turn it over to pop to discuss our GAAP results and other financial matters Bob.

Good morning, starting with our GAAP results for the second quarter of 2020 revenues net income and earnings per share on a GAAP basis were 507.1 million 56.4 million and $1.35 cents, respectively for the first half of Twentytwenty net revenues net income and earnings per share on again.

Basis were 934 million 934 million.

87.6 million and $2.08 respectively.

Assistant with prior periods, our adjusted results exclude certain items that principally relate to our acquisitions and dispositions and also include the full share count associated with those acquisitions.

Specifically, we adjusted for cross associated with divesting of class Jay LP units.

Entered in conjunction with the ISI acquisition.

The first half, we Expensed 1.1 million related to the class Jay LP units the class Jay LP units have been fully expensed.

Our adjusted results for the quarter also exclude certain items related to the realignment strategy that began in the fourth quarter of 2019.

As we noted last quarter, we expect to incur separation and transition benefits from related costs of approximately $38 million.

Point 2 million, which was recorded as special charges in the second quarter Twentytwenty.

These charges are excluded from our adjusted results year to date, we have recorded 30.3 million as special charges related to the realignment initiative.

As we mentioned on our last call. We have entered into an agreement with the leaders of our business in Mexico to purchase our broker dealer there.

Which principally provides investment services.

Completion of this sale is subject to regulatory approval.

We've requested that approval in June and closing is expected to occur shortly after approval to grant.

We continue to reduce review additional opportunities in smaller markets. These opportunities could result in further charges in twentytwenty pursued please.

Separately, we completed the sale of a trust business, which was part of HCV.

During the second quarter.

Our adjusted results for the quarter and first six months also excluding special charges of 44 million in 1.9 million.

Respectively related to accelerated depreciation expense.

Turning to other revenues second quarter other revenue increased compared to the prior year period, primarily as a result of gains a 15.5 million in the investment funds portfolio, which is used as an economic hedge against a portion of our deferred cash compensation program.

Other revenues for the first six months of Twentytwenty decreased versus the prior year.

Similarly, reflecting a net loss of 6.8 million on this investment fund portfolio.

This amount will of course fluctuate.

And the significant market rebound during the quarter drove quarterly gains.

Well the quarter day, so the quarter gains were not enough to more than offset the first quarter market decline.

With regard to non compensation costs firmwide non compensation costs per employee for approximately $43000 for the second quarter down 13% on a year over year basis. The decrease in non compensation cost per employee versus last year, primarily reflects lower traveling related expenses.

And professional fees.

As we mentioned on our last call. We began a thorough review of our non compensation costs before it becomes a bit 19, then that.

We continue to adapt our operations in response to the current downturn and remain focused on reducing on non compensation costs, including cutting non essential.

Costs related to travel researching subscriptions and deferring fat certain capital projects. So we are well positioned throughout the direct downturn as well as into the inevitable recovery.

Our GAAP tax rate for the second quarter was 24.5% compared to 24.8 presented the prior year period.

On a GAAP basis, the share count was 41.9 million for the second quarter, our share count for our adjusted earnings per share was 47 million shares down versus the prior year period, driven by share repurchases at a lower average share price.

Finally, with regard to our financial position, we hold 1 billion of cash and cash equivalents at approximately 100 million in investment securities as of the ended the quarter.

We have transitioned nearly all liquid assets to cash and cash equivalents in the first half.

Our current assets exceed current liabilities by approximately $950 million.

As Ralph noted, we continue to monitor our cash levels liquidity regulatory capital requirements debt covenants and all of our other contractual obligations regularly and carefully.

We'll now be pleased to answer any questions.

Thank you we will now begin question and answer session. As a reminder, if you have a question. Please press star followed by line.

Thank you take some time, if he would like to withdraw your question. Please press the pound here.

Hey, either speakers. Please thank you may need to lift your handset, let me clear selection.

Our first question comes through the line as Evan Brian We can't carry you May proceed.

Okay, great good morning, everyone.

So first question here.

I guess, a little bit of a crystal ball question, but I appreciate all the commentary on.

The moving parts of the backdrop.

With respect to restructuring the capital advisory business I guess specifically.

How should we think about those businesses ability to offset the slower M&A.

Argument and really.

I get the back half of this year will likely be soft as M&A has slowed and those restructuring revenues can you take some time to come into the model, but as we start to look into 2021, perhaps M&A is starting to recover at that point, how can we think about the base level of some of these other being.

Non M&A businesses and what that can mean for the model if you look out a bit.

Well, let me start with that and I'm sure job.

Something to add.

First of all.

As we pointed out on our.

Previous call.

M&A is a.

It is our largest revenue business historically.

And so.

Even though these businesses are doing.

We are extremely active right now.

We hadn't anticipated that they the activity would be sufficient to.

Offset.

The decline in M&A activity.

In the first half of the year.

They did.

But there's an element of.

You know sort of previously announced or near announced transactions that were working their way through the system, which.

Affected M&A activity.

In the first half of the year, which given the.

Pretty sharp decline in announced M&A in the first half of this year, specifically in the second quarter.

We would expect M&A activity.

In use in the second half.

Would be affected by what happened in the first half of the year.

I think it's pretty clear that.

We have very strong businesses.

In all of these.

Areas.

And I think one of the biggest questions Devon is the.

How quickly does the recovery in M&A occur.

And.

You know if this is gonna be a long answer, but if you go back to the financial crisis.

And prior to that M&A had been.

Characterized by two to three year down cycles, and five to eight year Upcycles.

And I said back in like 20 and 2011 in 2012. There was this book written about the economy.

Hi.

Carmen Reinhart.

And.

Got the other guys name, but it was called this time is different and it basically talked about that in recoveries from financial flea induced recessions are slower and longer and I hypothesize back then.

That.

It's quite possible that the recovery in M&A.

I would be slower and longer and we did have a literally got 10 year period of.

Improving M&A activity until it came to us as screeching halt early this year.

The interesting question. This time is that we've had.

The sharpest downturn.

And seem to be in the middle certainly in the markets if not that real economy, yes.

The sharpest upturn that we've ever experience.

Obviously significantly affected by.

Unprecedented monetary stimulus.

And unprecedented fiscal stimulus that is.

Both huge.

Already three times, what was applied after the financial crisis.

And was applied with incredible rapidity.

First two stimulus.

Legislation.

Pieces of legislation where pass before we even at our first report of a decline in GDP, whereas in the financial crisis. The stimulus legislation was.

Past.

In the third quarter GDP I.

I think it's quite possible.

That.

Because of the fiscal and monetary stimulus in the obvious effects, it's already had on the.

Equity market and the effect of the fed action and stimulus.

On the.

Debt markets.

That this could be.

The shortest.

You know cyclical downturn in M&A activity.

But we really don't know.

At this point I think we're certainly starting to see.

You know.

Green shoots.

Maybe even a little bit.

Green shoots.

234 weeks ago that are starting to actually.

Pop up even a little bit more out of the ground in the M&A dialogue that we're having.

With our clients, but we're still going to need some greater visibility about the future direction of the economy.

Before we can say that.

We're confident that.

We're going to see a recovery and before Ceos have the confidence to make.

Larger strategic decisions, John you want to add for that.

Sure Ralph.

I'd say anecdotally.

We clearly are seeing activity in terms of strategic dialogue, but.

It is really hard to estimate when those will really turn into larger strategic initiatives.

Right now I think that a lot of the dialogue going on are seeing our opportunistic and and and I believe that when we start to see mergers or start to come in well start smaller in terms of our existing businesses like restructuring in financing those are going very well for us.

And those will continue and as you said very.

Really.

The restructuring.

Businesses, often are back loaded so speeds will be coming in in the back but really the merger engine is going to be what powers. Our 2021, we just don't know exactly when that kick in.

Clearly.

Right now, we're seeing dialogue, but no big activity and we just don't know the other thing about the merger business, which you probably know is once it starts it takes some time to gather momentum in that when you. When you start talking about a deal it often takes.

Some time before that deal ends up being a revenue source for the firm and so you will see and it'll take time, it's certainly not in the next three or four weeks, but we'll see how it goes I think it's going to be as you said crystal ball. The good news for US is we feel like we've got very strong dialogue going in we stayed very much in touch with our cloud.

And so we feel like we're very much at the floor in terms of talking about the strategy and and the go forward.

Okay terrific I appreciate all that color and just maybe a quick follow up for Bob on non compensation costs I heard your comments around.

Looking at area potentially maybe tighten the belt a bit and.

On the other and you have kind of a pretty unique environment for the second quarter. So.

Some unusual items here. So just trying to think about kind of what that non compensation expense base kind of could look like come off of this quarter's trajectory kind of appreciating that theres, some unusual items around travel and peonies, specifically, but any the items or you think maybe could have more permanent.

Implications to the positive or negative.

Seven there's a lot of puts and takes in this set of numbers.

The.

Higher level of commissions and the exceptionally higher level of underwriting obviously drive costs.

We are happy for those expenses of course.

We're spending a lot of time now.

Thinking about how travel.

May change given technology.

How professional fees.

Okay, and how we continue to use subscriptions and data it's too soon to annualize them.

But we're going to push hard for 90 days and then 90 days after that.

Make sure where.

Kind of in the ZIP code of the second quarter, which is our first quarter.

Fully working remotely.

Okay, great. Thanks, everyone.

And our next question comes from Hello, Hello, Michael Steele you May proceed.

Yes.

You you mentioned anecdotally they are starting to see as strategic dialogue, but it's hard to see when it comes through but.

Can you talk about deal activity coming through as a result of the stressed environment. So.

Is there more activity coming from companies that might want to shore up that balance sheets by setting any businesses or.

Yeah companies that are more willing to sell as a result of the uncertainty and the environment, especially given that.

Asset managers in beef onto a lot of dry powder here.

[music].

Let me start with that and I'm sure Russell fill in.

We see a lot of activity.

The financial sponsors right now clearly they have a lot of dry powder.

Initially in the beginning of this piece of this downturn period I think sponsors were very much internally focused looking at their portfolios and making sure that they protected.

Those portfolio companies now I think theres a lot more activity in terms of looking at opportunities and.

Our observations would be that there are some pretty material dialogue going on and people are thinking.

About doing those types of things.

The stress related deals are out there.

And I think that they're clearly companies who are looking the ones who are very strong and have come through this period are looking at themselves and saying. This is a time when we have relative strengths and therefore, we should be looking and so some of the dialogues that we're having a very strong companies, whose balance sheets impact and who really believes that they have an opera.

Unity.

And so there is definitely activity there.

As you implied there are companies that are under stress and they're looking at those kinds of opportunities to sell off assets and and stabilize themselves and those activities are on also and I'd say that that we're seeing a mix of both.

And I'd say that probably the merger market will begin with smaller deals. Initially I don't think you'll see some of the very big strategic things in the very beginning.

And those will be some of the transactions that you implied which are the.

The smaller deals where where companies are trying to create some liquidity for themselves and also looking at opportunities to strengthen and bigger companies that are looking at those kinds of opportunities and trying to buy them. The other thing that you didn't mention that I think she's worth noting is that.

Technology and health care continue to be very healthy sectors.

There there they are.

Accessing public markets.

Easily and clearly they are being valued in the public market it quite high rate and level and so there is definitely opportunity on on those different sectors in those sectors to be looking at activity and I think there are a lot of companies looking at those.

In those sectors for opportunities because those are ones that are being welcomed and and are being well received.

The only thing I would add is that we certainly saw in the.

Second quarter.

Most immediate form of liquidity provision and balance sheet restoration was in the form of.

Record levels of.

Debt issuance.

And record levels of equity and equity Lick linked security.

Issuance and obviously for the most depressed companies that was often in the form of convertible offerings are pipes or or or whatever.

And the reason that happened is that.

If if somebody wanted to sell a division.

In April in order to shore up their balance sheet.

There was not a real long lineup of buyers for anything so the public markets.

Came to the initial means of balance sheet restoration and now companies are starting to look more seriously at what I would consider to be.

They would consider to be less still new to forms of strengthening their balance sheets.

Got it and maybe on that point, you clearly had a great first half and the underwriting business and you mentioned that three Q.

As you off a strong start but I was wondering if you can give more colonial pipeline there.

Assuming that the times trauma announcement to completion was lower than what Youve previously seen so maybe there was a little bit of a full forward that but I was wondering how we should think about revenues for the rest of the I should we think about them coming more ratably over threeq and Fourq, you or should we still expect the stronger threeq or their focus as.

Well the the pipelines.

Our pipelines generally are strong.

And that's true of our.

Underwriting pipeline as well the underwriting pipeline is.

Up somewhat.

They are both.

Lesser utility at the moment for different reasons, the M&A pipeline is of lesser utility because there.

Our things in there that have been put on pause, which are or would that are still are just starting to get.

Picked up again.

And so we just don't know the probability of getting actually two announcements in the M&A pipeline because of the uncertainty.

The.

Pipeline in in underwriting is.

You know is less useful for different reasons and that is that.

Transactions pipe pop up.

Very quickly.

And they're not in the pipeline and they can become too revenue realization in a couple of weeks I mean for example, the.

The.

This position by PNC of their Blackrock stake, which we were at Ash that book runner in literally was.

Two weeks from the time that we received the first call until the transaction was.

Price and it wouldn't have been in any backlog. So the backlogs are strong.

But there.

Not as useful as they would be in a more stable environment. It obviously an equity underwriting.

Continued.

Stability slash strength in the equity markets is pretty important to that sustenance of that activity and I think the only comment we made is that in that.

The first three weeks of July.

And you guys can figure this out because it's all public information.

Our our activity.

Continued to be strong.

Great. Thank you.

And our next question comes from Michael Brown, I hate to dump Leach.

You May proceed.

Okay.

Yes.

And so forth asking about restructuring.

Ralph you brought up that.

I'll be fiscal and monetary stimulus on.

That's a found impact on markets.

But it sounds like restructuring businesses busier than ever.

So relative to two months ago as your outlook for the opportunity set Asian restructuring changed at all or is there still.

More than enough and work out there too.

Really support a very strong restructuring result, as we look out to 2021.

John you want to start without.

Sure I'll start.

We we believed that our restructuring business is continuing to.

Go along in a.

In a very powerful way we are in a more dialogue looking at more situation than ever have before and because we have built our capability over over several years.

We have very strong very strong leading partners in that area. In addition.

In the firm, we've actually trained our industry bankers to work seamlessly with the restructuring. So we have a lot of capacity and frankly, what we've done is we've looked at.

Our volumes and we've we've tried to upgrade some of the quality of our business and theme been even more selective about these times we take.

So the short answer to your question is we see real opportunity going forward over the next number of quarters in our restructuring business.

We see that it continues to be.

A real revenue source and we're very very optimistic that that will continue.

Because I think where we're able to provide real quality not only in terms of.

In bankruptcy and out of bankruptcy advisory assignments, but also in terms of applying some of the restructuring and liability management skills to larger clients, which generate revenue also so.

The short answer your question as we see that going moving forward.

And it being and we're quite optimistic about the the revenue from that business.

Yes, I would just add that there's a.

There's a certain level of restructuring activity.

That.

Occurs.

Even in very strong.

Equity debt and economic.

Environments.

For example last year.

Was.

Our highest.

Europe restructuring and restructuring related.

Revenues.

That was obviously not a Europe of economic.

Stress.

But you know it would be a reasonable assumption if.

The real economy.

Recovers in a way consistent with the equity market and the debt market that.

The pace of new.

Assignments in restructuring.

Slowdown.

Somewhat but as John pointed out I think in his opening remarks it takes.

It takes.

More than one quarter multiple quarters for an assignment to.

Recognize all of the revenue potential.

Thanks for that.

And just to shift gears.

Appreciate the color you guys gave on the comp ratio outlook. It's it's helpful to add that guidepost for the second half.

Yes, it looks like the comp ratio.

Closer to 67% this quarter, if we were to exclude other revenue.

So does this quarter represent a bit of a higher bonus accruals and typical quarter just to help.

Nick full year target I mean, obviously the uncertainty for the second half.

Makes it harder to manage through so just any color you have there as to how this quarter escalate into the full year. Thanks.

Bob do you want to start with adding that are will chime in.

Sure. There's there's Jim as you would know there are many elements.

Yes, the drive comp expense our.

Costs for the amortization amortization.

<unk> expense public awards granted in prior years.

Is obviously up I'm year over year the.

Many of our fixed costs, which really reflect the overall shape of our team and seniority.

Those are up as well.

And I.

I think net debt if you take all of our incentive comp programs and there's puts and takes in there.

Net debt, there probably up a bit on the first half.

But we at the end of the day, we're focused on the whole not an end to the parks.

But.

If we had a very strong revenue.

Resulted in the first half so the incentive comp.

What would be aligned with that as well.

Ralph anything else.

Yeah. The only thing I would add is I would just repeat what I said in my opening remarks switches.

That is sitting here today.

On July 20 Threerd.

Our visibility.

With respect to two critically important elements.

The full year comp ratio is is not.

As clear as it normally would be.

The first is obviously total revenue.

And the second is.

What is going to be market rate compensation.

For.

Our non asset the populous and.

We're very.

Focused on.

You know balancing the short term and longer term interests of our shareholders. We've got a business here that in decent markets in 18, and 19 produced over $2 billion revenue.

We see no reason why when you report markets become.

Somewhat more normal.

That we won't be able to do that again and so in the.

Longer term intra intermediate to longer term interest of our shareholders, particularly when you consider the possibility that this could be a relatively.

Sure.

Quote unquote downturn.

It does not from our point of view makes sense.

To cut muscle and bone or to risk.

That we become less than what it a lot of not the best place to work.

In our business.

And we also are conscious of the fact that for us to continue to grow beyond $2 billion plus of revenue.

We need to continue invest.

In talent, which of course, if we did that this year would also have an effect.

On the.

The reported comp ratio for the year. So they are just a lot of moving parts right now.

We're very focused on making sure that we have a.

More valuable company when we come out at this.

And at the same time, we also recognized.

Our obligations to all of our shareholders.

To be.

Absolutely.

As tight as we possibly can in terms of.

Sharing what will.

Almost inevitably be a weaker revenue year this year.

Fairly between.

The people who work in the business and the people who owned the business.

One third of going by the way work in the business.

Got it thanks for all that kind of.

Your next question comes on we funded hockey.

Yes.

You May proceed.

Thanks for taking my question I, just wanted to try to understand the comments around comp I know that this is a very unusual year, but just to put a finer point to it.

First half 63.6 so.

Where are you on the ratio side are you, saying that.

How does your best guess for the comp ratio for the year given.

You know all of the caveats around and uncertain revenue environment.

I think what we're saying is that it exactly what I said, we thought very carefully about what we said in though it's within the range of possible outcomes.

Okay.

And then I guess so follow up.

A little bit controversial here so.

But why not give it to try.

It seems as though this cycle is working out.

There are different than last last cycle, you have both bracket firms that were on their heels. He had trading that was a huge source of pain for some of your both bracket competitors, which weighed on comps and so far we've seen the inverse we've seen trading actually quite strong we've seen some of.

These other revenue sources for some of your main competitors deliver in a pretty strong way.

Does this mean that we could end up seeing elevated comp.

At Evercore through this cyclical downturn that's actually.

Defensive instead of offensive.

Whereas last cycle, you were able to lean in higher and we saw me investments made via the comp line, but this time, it's done to retain and to ensure that you can keep the strong squad you guys have on the field.

I think that that the there is certainly.

The answer is brand we don't know.

But there certainly is.

A chance.

That the large firms.

Who are in a quite different position financially in this downturn versus the last downturn.

Choose to share the windfall.

Process that they've gotten from volatility and.

Very large underwriting issuance.

In the second quarter.

You know that those windfalls don't go predominant.

Or exclusively to the shareholders in date.

They they get shared somewhat with the employees, we just don't know the answer to that.

If you.

You might know betters, if you've been on calls with those executives.

Our impression so far is that.

They they happen.

Goes in to do that they focus more on their shareholders and also that in many cases the the.

Pickup in.

Trading profit and underwriting activity has been offset by.

Credit reserves and impairments in.

Direct investments that they've made so.

And John and I, both speak periodically to senior executives.

Of these companies and I would tell you at least the ones, which items with which with whom I've spoken they really don't have a view yet either as to what they're going to do at year end.

So it's just that we have a great deal more uncertainty and its possible brand in that.

That.

Comp for the.

The typical M&A.

BP or director.

Ido.

It's possible that will be affected materially by the decline in M&A and its possible said they'll choose to to make it that to affect their comp less materially.

And so but we have to be.

Prepared to respond to whatever they do because obviously.

We are pretty with virtually no turnovers, it's not because of comp I might add its really because of culture and we do pay fair.

Ken we're gonna have to continue to do that.

Okay. Thanks, Thanks for tuning the.

Let me controversial question just one final follow Brandon.

Sure I still like your controversial question was going to be why the Hell did you do the ISI acquisition.

[laughter].

I just I just ask those types of questions from the shores of the Ecas Ralph's [laughter] the.

It's how should we think about salaries and benefits are the restructuring efforts that you're doing can that lead those expenses to be actually down this quarter or sorry. This this this year or should we think about them as a little bit higher just given.

Raises and such.

Brad and they're a little bit higher given raises and such and the shape of the team at the moment the head count is.

A little bit down not a lot down.

So shade of the team, it's a little heavier.

So it's a bit higher.

Okay. Thank you. Thanks for that appreciate it and I'm sure. Ralph you were pretty site to see DCM come through given the ideal anyway. So that was a solid sell it typically calendar.

Okay. Thank you.

And our next question comes from that point like autonomy research.

You May proceed.

Hey, guys. Thank you for taking my question and good morning, and thanks for all of the information so far.

So I'll be precise with my question on.

I think the over generalize conclusion from last quarter's earnings calls was that no one knows when a recovery and M&A announcements might begin.

Based on your commentary earlier is that fair to say that on the margin should have a bit more clarity now.

John you want to start with that or.

Sure.

I'd say.

We don't have a lot more clarity because whereas we see.

Real dialogue and.

Absolutely true to say that the types of dialogues, we're having are much more specific and much more targeted.

And much more actionable.

It's really hard to know when those will really kick in and become tangible.

And and begin to be execution oriented rather than strategic wins and on and thinking so I guess it.

The best way to stated we see that were closer to that really kicking in and really beginning momentum.

With respect to the strategic initiatives.

But it's really hard to say that we have clarity at this point because I I think it's going to take a little bit more time before we do.

Yeah, I would just that.

Okay sounds like a cheeky comments, but it's it's taught a logically true we know were three months closer to the recovery than we were three months ago.

But we don't have a huge amount more clarity as to when that recovery will begin other than the fact that.

They're clearly as John indicated.

The the here so there's a little bit more.

Robustness and seriousness to the discussions that are occurring today than those that were occurring three months ago.

So the right things are happening.

But they could be rail.

Awesome. Thanks, guys.

And our next question performs at height Hypothetically you May proceed.

Just a couple of sexual ones I guess for Bob.

Was the end of period SMB count and were any revenues pulled into Threeq you from a.

Q from Threeq to closing.

117, and approximately 9 billion.

Okay, and secondly, I was a little surprise.

Here earlier on the call the M&A pipeline quanta qualified as being strong.

Given that closings continue at announcements have been so sluggish can you talk a little bit more to that maybe remind us what exactly is in your pipeline because that's the visible pipeline, we could see kind of head in the wrong way.

Yes, I think the.

What I was I said two things number one it continues to be strong, but not nearly as reliable as it was historically because it is filled with a lot of things that have been in there.

While which.

The parties, who were working with having said we're not interested in this anymore.

But there aren't.

You know.

Intense active discussions.

At the moment, so thats the.

That's the requirement.

Hi.

That makes sense.

You dropped off for further.

I'm, sorry, I said the.

If you look at the.

The pipeline it's still contains.

A lot of.

Elements, which.

Or potential transactions that have.

You know not been.

Abandoned by the party with whom we're working.

But the.

Level of intensity of the dialogue.

Is less.

Then it might otherwise be.

If it was going to convert very quickly. So there are lot of things that are.

In the pipeline or on the drawing boards, but.

The level of intensity of discussion.

You know not in all of them, but in some of them is.

Well below what it would be they're still in the pipeline because the client hasn't said.

You know, we're going to band ending this stage said, we want to take care of this part of our balance sheet or take care of this issue.

Our existing businesses before we pick up this dialogue again, so that's how.

I guess I would reconcile the the two statements.

Oh.

If that makes sense okay.

Okay, Yes, and this is maybe a curiosity but.

Year ago, we thought the U.S. selection would be a big source of uncertainty.

The looming U.S. selection come up much in client dialogues are does really that kind of taken aback seats.

Right now.

Good.

I don't know.

I know you go out let's say.

I was going to say right now.

The main focus.

Of of Ceos management teams and boards is really trying to get some certainty with respect to the economy picks health crisis, and how things play out.

I am certain that as we get closer to the election, there will be most more focus on that.

And there will be focused with respect to the tax regimes that would follow from something as people make projections.

But right now I'd say.

Front and center is the economy and the implications with respect to how this health crisis is going to play out.

I agree okay. Thank you.

[noise] and our next question comes from Richard Winston with Goldman Sachs. You May proceed.

Yes, Sir your line I mean, they didn't meet your line.

Thanks.

Jamie.

Yes, we can.

Sorry about that.

Yes. This is testimony on for Richard today.

Certainly understand your comments on investing through the cycle.

But could you just spend a moment and elaborate on the recruiting environment as you see it today and your opportunity to actually invest in shrunk down at this point.

Well as we said on the.

The last call the.

The recruiting environment.

It hasn't changed dramatically the pull of.

Sure you know the.

Total or the attraction of affirm like Evercore.

Which allows us.

Bankers, who are so inclined.

Two.

Spend the vast majority of their time working with their clients as a trusted advisor.

Really hasn't.

Changed that much over the last.

Handful of years other than the fact that.

I think because of the breadth of.

Things that we can do.

With clients here.

John and I are able to sit in front of any recruit.

And say to them.

If you want to if you're interested in pursuing the independent firm business model.

We can talk to logically say to you that you can do more business with your.

Client base at Evercore than you can at any other independence from and the reason we can say that is that.

We have the number one.

Activist Defense practice, we've got we're the only independent from an equity underwriting capability, which obviously was important this quarter.

We have a top absolutely top tier restructuring practice.

So we have for example.

Figure one backdrop I'm not going to go to the sector.

He is generating almost all of this.

Teams revenue this year in restructuring.

And he joined us.

I think those last year.

And.

He would.

It wouldn't have been able to do any of this business at his prior.

From.

And.

It could have done this at other independent firms, but then when those clients.

Start to re equity bi fuel also be able to do that here, which he couldn't do it any other independent firms so the whole of.

Evercore, particularly I think is as strong as it's ever been.

You know the the push is really I think.

Is.

Certain because of the points that we discussed before we just don't know what compensation.

In the for the most senior people in the big firms.

It's going to be.

This year, but we certainly have.

You know we've generally higher.

Four to seven people every year.

We've hired two so far.

And I think it's John in my.

Suspicion that will will be in that range by the time, we get to the end of year.

This year as well maybe at the lower end rather than the higher end, but we definitely will be in that range.

Great. Thank you and then briefly on the dividend should we remain in a down cycle for longer than anticipated.

Can you discuss how would you prioritize your use of cash, particularly between covering current dividend obligation investing for the business.

This is something that when your public peers as previously indicated so so just getting a sense on how you're prioritizing your cash management in a tougher revenue backdrop.

Yes, it's hard to see a.

A cash.

A scenario where.

We would be choosing between.

Investing in the but they've been in investing in the business and the dividends because our you know as you can see our cash position is very strong.

Okay. Thank you very much.

I would now like occurring for any closing remarks.

No we just.

Thank you all of you for being on end.

John and I.

[noise] are extremely excited about the future and the opportunity to.

To continue to work together at our.

New titles, so we'll see in three months.

Thank you.

This concludes todays evercore.

Elegant finance conference call you may now disconnect.

[music].

[music].

[music].

[music].

Well of course second quarter 2020, <unk> results conference call.

During today's presentation, all parties will be in listen only mode. Following the presentation.

Well be open for questions.

If you have a question please Craig.

The star followed by <unk>.

Oh telecom.

Ladies first of all right there for operators say anytime.

From a different you can speak a quick.

Sorry that the <unk> 70 for making their selection.

This conference call is being recorded today Wednesday July 27 in 2020, I would now like a turn the conference over to your house and of course head of Investor Relations Hallead Miller. Please go ahead ma'am.

Thank you Andrea good morning, Thank you for joining us today for Evercore.

Third quarter 2020 financial results conference call.

Probably miller of a quite head of Investor Relations.

Joining me on the call today are Ralph was fine and online like our co chairman and co Ceos and Bob was actually up though.

After our prepared remarks, well open up the copper question.

Earlier today, we issued a press release announcing Evercores second quarter 2020 financial result.

Oh gosh nearby results. It is complementary to the press release, which is available on our website <unk> dot com.

Okay called thing what past life for Investor section of our website at <unk> I thought it will be available for 30 days beginning approximately one hour after the conclusion of this call.

I want to point out that during the course of this conference call and they make a number of forward looking statements, including with respect to covert 19.

That's an <unk> earnings release. This morning filed on form 8-K, a worldwide Cobot 19 pandemic has negatively affected our doesn't it.

It took an opinion, it's definitely a significantly up [laughter].

At this time and if I start and how long are business will be negatively affected by cobot 19, and the associated economic and market downturn.

Any forward looking statements, we make including knows about 19 and its effect on our that are subject to various risks uncertainties and I'm sure that could cause actual outcomes to differ materially materially from those indicate any statement.

These factors include but are not limited to those just got than ever court filings with the FCC, including our annual report on form 10-K.

Early reports on form 10-Q on current report on form 8-K.

I want to remind you that the company assumes no duty to update any forward looking statement.

And our presentation side, unless otherwise indicated well be discussing adjusted financial measures, which are non-GAAP measure, we believe our meaning all when evaluating the companys performance.

For a detailed disclosures on these metrics and the GAAP reconciliation you should refer to the financial data contained within our press release, which is posted on our website.

We continue to believe that is important to evaluate evercores performance on an annual basis.

As we've noted previously our results for any particular quarter are influenced by the timing of transactional clothing.

I'll now turn call over there.

Thank you Holly and good morning, everyone.

Let me start by saying that it's a pleasure to be doing my first call with John That's co chairman and co Ceos of Evercore.

As we said in our press release last week, we have built a great partnership in the almost four years the job that's been here.

Elaborating on all important decisions returning to the management of the firm and the strategic strategic direction a bar business.

Our new titles formalize, what we have been doing for several years already and along with Roger whose role has not changed at all contrary to some reports in the press we greatly look forward to in a very successful future for Evercore.

I am sure you will agree that the challenges of the past quarter have been myriad and significant.

First the rapid spread of Cobot 19 pandemic drove lockdowns around the world and has inspired a race develop diagnostics treatments and vaccines.

The pandemic and locked down then gave rise to an unprecedented local economic downturn record levels of unemployment and in response fiscal and monetary stimulus that has been applied with unwrap unprecedented size and rapidity.

Financial markets, you can't predict leap volatile first outlined that up.

But they currently are reasonably healthy and Stark contrast to the health of the real economy.

And then in the midst of all this a much needed call for a higher level of the quality and social justice in our society and its significantly greater commitment to diversity and inclusion in the workplace.

Partnership with John and Roger and more broadly the culture within our firm has helped us navigate this challenging environment and to stay focused on both our clients and our people.

Before I comment on our results I want to provide an update on how we as a firm have responded to these events in the first half from both an operational and a business standpoint.

The vast majority of our team continues to work remotely that we are beginning to return to working in some of our offices.

This transition back to the office in contrast to our move to working remotely is happening at a measured pace consistent with local government director directives designed to protect the communities in which we work at our own policies.

To protect our people and their families.

We have embraced new technologies that allow us to communicate with our clients and our colleagues despite our physical systems.

We remain focused on the needs of our clients, helping them by leveraging our broad diverse capabilities.

This focus has resulted in a number of things.

First M&A assignments that makes strategic sense before the downturn.

Continued to be announced or if it now have been completed.

Capital raising assignments, both in the equity and debt markets have been occurring at levels dramatically higher than at any time in our history.

And we have seen an unprecedented surge of restructuring and refinancing transactions.

And on a highly expedited basis.

And finally on our Investor on our research and in our wealth management business, a greater engagement with investing clients than at any time in our history.

Jabil.

Copper our performance in greater details in his remarks.

Following the tragic events in Minnesota, We also saw much needed call for higher level of social justice and more extensive commitment to diversity and inclusion in the workplace in the U.S. and elsewhere. They call that we strongly and breaks.

We have taken the time to reflect on falls for social Justice and above part about racism and prejudice that's still persist.

Hi, Eddie today.

We have come away with the awareness commitment that we need to strengthen our own diversity and inclusion efforts here at Evercore.

We are a market leader for our business accomplishments and we will expand the same energy and focus on our diversity and inclusion initiatives.

Just to make ourselves better but to try and have a more positive impact on our communities and the world in which we live.

As we look to the second half of the year. We are following a set of operating principles that are very similar to those that we discussed with you three months ago.

First we remain committed to ensuring the health wellness and safety of our team and their families and to achieving our diversity and inclusion goals.

Second our teams are focused on addressing the immediate needs of our corporate institutional investor and wealth management clients, while helping them be better position.

The eventual economic recovery.

Third we are sustaining our operating infrastructure to support flexible and efficient working arrangements as we plan and implement our return to office on a thoughtful and disciplined basis.

And finally, we remain committed to maintaining our strong and liquid balance sheet.

Our results for the second quarter and the first half reflect both the momentum that we had in them at a before the onset of the pandemic.

And our ability to pivot to meet our clients changing needs in currently challenging economic and financial markets.

As a general matter previously announced M&A transactions continued towards completion.

And the broader advisory capabilities that we have built and strengthened over the last several years have allowed us to continue to serve our clients on their most pressing financial and strategic issues.

Let me turn specifically to the numbers.

Second quarter adjusted net revenues of 513.9 billion decreased 4% versus the second quarter of 29 team.

For the first six months of Twentytwenty adjusted net revenues of 948.9 billion decreased 1% versus the prior year.

Although our revenues from investment banking that is advisory fees underwriting fees and commissions.

Increased by 2% versus the prior period.

Second quarter advisory fees of 336.5 million declined 24% compared to the second quarter of 29 Pete.

Which was an unusually strong quarter in fact, our third best quarter for advisory fees in our history.

Advisory fees for the six month of Twentytwenty were 695.6 million a decline of 10% compared to the prior year.

Year period.

We expect our marked advisory share our market share and advisory fees. Among all publicly reported firms on a trailing 12 month basis to be 8.2% compared to 8.3% at year end 2019.

Second quarter underwriting fees at $93.6 million increased more than 450% compared to the second quarter Aplenty Nike.

Underwriting fees in the second quarter were higher than our underwriting fees for all of 2019, which was a record year in underwriting fees for us.

For the first six months of the year underwriting fees were 114.7 billion, an increase of more than 160% versus the prior year period.

Third quarter underwriting fees already off to a strong start and we are working hard to sustain this momentum.

Commissions and related fees, so 54.1 million increased 11% versus the second quarter of 20 Nike.

The first six months of Twentytwenty commissions and related fees of $109.5 billion increased 21% versus the prior year period.

Asset management and administration fees from our consolidated businesses were 15.2 million, an increase of 4% compared to the second quarter 2090.

For the first six months of Twentytwenty asset management ministration fees from our consolidated businesses were 30.5 million an increase of 5% from the prior year period.

Turning to expenses.

Our compensation ratio for the second quarter is 65% and our compensation ratio for the first six months of 20, 20% to 63.6%.

Word of explanation about the compensation ratio.

The 63.6% accrual in the first half reflects as it has in past years and estimate for the full year compensation ratio, which includes that estimate for twentytwenty incentive compensation.

Given the uncertainty about revenues for the remainder of the year and the uncertainty about the level of market compensation for our younger employees. In 2020, we have significant Lee more uncertainty about the full year compensation ratio than at this time in prior years.

Our intention is to pay our younger employees at market rates as we always have and to pay our more senior employees and the way that fairly balances the short term and longer term interests of our shareholders, but short term interest being higher earnings this year and the longer term interest keeping the team together.

That has produced more than $2 billion or revenue in 2018 and 29.

And investing in new talent for our future growth.

So we're doing our best to have our six month compensation ratio be within the range possible outcomes for the full year, although the uncertainty about both revenues and market compensation for our employees is considerably higher than in prior years.

Non compensation costs of 77.1 billion in the second quarter declined 11% from the second quarter 2019.

First six months non compensation costs of 159.9 billion declined 4% Bob will comment on this further in his remarks.

Adjusted operating and adjusted net income of $102.7 million 71.8 million, the time, 26, and 929% respectively.

Adjusted earnings per share of 100, and at $1.53 declined 26% all versus second quarter Aplenty 19.

First six months of 2020 adjusted operating income adjusted net income of 185.3 million at 129.6 million declined 21% at 29%, respectively. Adjusted earnings per share of $2.74 declined 27% versus the prior.

Six month period.

We remain focused on our capital return and management strategy year to date, we returned 206 million to shareholders through dividends and repurchases at 1.9 million shares at an average price of $76 and 22 set.

We have offset the dilution associated with equity grants for the year. So any additional share repurchases and Twentytwenty will this be dependent on our second half revenues and earnings balanced by our intention to maintain our strong liquidity position.

Our board declared a dividend of 58 cents consistent with prior quarters and reflective of our results for the quarter, Our board and management will continue to evaluate the dividend on quarterly basis as the effects of the pandemic on revenues becomes more clear, although the current expectation absent any extraordinary.

Steep decline in revenues at a significant reduction in our cash position is that our current dividends will be maintained.

I'd now turn the call over to job to discuss the current market environment. The comment further on our investment banking business John.

Thank you Ralph.

The volatile market environment has created opportunities across products geographic regions and industry sectors.

As the quarter, but can merger activity was muted as clients manage through the dislocation of the sudden impact of the cobot 1919 pandemic, we're fortunate to have the opportunity to assist our clients with broad based stead advisory assignments.

Equity issuance as well as advising them on restructuring challenges.

Our restructuring group has been especially busy we believe opportunities to assist our clients will continue as accommodative credit markets are giving companies time to address their liquidity needs and recover we believe there's significant opportunity in several sectors, including energy consumer retail and industrial.

[music].

In the capital markets Theres been extensive opportunity to assist clients in raising capital in both debt and equity markets in both the private and public arenas.

We had our strongest period ever in equity underwriting and while we do not participate materially in public debt capital raises we had the opportunity to assist clients on a number of innovative liability management assignments the momentum in our debt advisory and equity capital markets businesses has continued into the third quarter.

Private capital transactions for sponsors slowed considerably in the beginning of the quarter, but it's picked up more recently.

Sure it's have become comfortable conducting diligent.

Work Julie.

Activism assignments similarly slowed early in the quarter, but the pace of business has started to recover more recently.

Investor clients remains focused on financial markets throughout the quarter, both institutional and wealth management and trading activity remains high.

Significantly.

During the quarter the level of announced M&A activity slowed dramatically as clients appropriately turned inward driving many of the activities I just summarize.

Announced M&A volumes were down 41% in the first six months of 2020, and the number of announced transactions is down 15%.

The second quarter was particularly weak.

And now global M&A volumes were down more than 50% compared to last year's second quarter and the number of announced transactions declined 29%.

Several of the key conditions necessary for a healthy M&A market. We're we're absent in the most in most sectors of the economy during the quarter and remain generally apps and today.

However, the basis of recovery may be forming.

The equity markets are currently strong for many sectors access to financing and readily available capital and credit.

Began to improve throughout the quarter.

And CEO confidence began to slightly improved as the quarter closed but granted from a low base.

Dialogue and discussions with clients around strategic opportunities have begun to slowly picked up during the last few weeks and process involving financial sponsors are beginning in new.

I am for the moment guardedly optimistic about the merger market overall when the markets begin to showed sustained stability CEO confidence will grow which will drive an increase in strategic activity until then we will continue to actively communicate and engage with our clients to help them navigate the current challenges and to be there.

During the eventual recovery.

Let me now turn to our performance in investment banking.

Our revenues during the second quarter and first six months of 2020 held up well despite increasingly challenging conditions.

We sustained our number one ranking for volume of announced M&A transactions over the last 12 months.

Both globally and in the U.S. among independent firms.

Among all firms were once again number four in the U.S. and announced volume over the last 12 months and we ranked number three among all firms in the U.S. based on number of transactions for the first six months of 2020, we continue to work hard to increase our share of the market.

We were pleased to continue to advise on some of the most important M&A assignments of the first half including three.

Of the 10 largest global M&A transactions and four of the five largest M&A transactions in the United States.

Our restructuring and debt advisory teams are extremely busy our us restructuring team has worked on on the same number of assignments in the first half as it did for the entire year of 2019.

We're pleased that we ranked number one among all firms in number of announced restructuring deals and number of completed restructuring deals in the U.S. in the league tables for the first half of the year and we've been involved in seven of the 10 largest bankruptcies.

By total actual liabilities year to date.

These accomplishments stem from our model of integrating our restructuring and debt experts.

And our industry focused bankers.

Our deep expertise in restructuring and debt matters with central to our ability to work with large number of large new clients.

Two recent examples include we were an adviser to Boeing on it on a 25 billion dollar offering of senior notes and an adviser to Ford on its 8 billion dollar debt financing.

Deep expertise was also a catalyst for our work in specialized markets for example, pipes, where we advised on four of five announced type deals.

Before the finance markets reopened.

Our underwriting business has performed extremely well in the market we served.

As an active bookrunner for co manager on six of the 10 largest ipos in the first half of 2020.

We completed our largest ever active book run transaction, when we advised PNC on the secondary offering of its 22% stake in Blackrock.

At the time of these announcements this deal was the largest deal year to date.

We'd buy danaher on its Upsized 3.1 billion dollar offering which was split between common stock and convertible preferred stock.

And we were active bookrunner on select quote the first non healthcare IPO in the cobot environment.

Well these large assignments contributed meaningfully to our quarterly results. We also participated in many more transactions across a broad range of sectors, demonstrating our ability to work in diverse areas in markets.

And while issuances up across the board, we also more than doubled.

Overall share in first six months compared to the same period last year.

Our shareholder advisory and activism defense and are on private capital advisory businesses.

And Simon.

Already in progress and we move toward completion and many.

We are proud to advise on the first ever proxy contest to have decided in a virtual annual meeting. It was six it was a successful outcome for our client and our private funds. We've completed the first fully virtual fund raise which was oversubscribed and attracted both current and new investors.

In our equities business, our connectivity within Investor and advisory assignment remains elevated.

They have become to rely on us for valuable insights during a period of significant market. These dislocation and our traders continue to help our clients execute in volatile markets.

Before I wrap up my remarks.

I would like to take a moment to acknowledge our exceptional team.

Our people have responded to the challenges of the current environment and have served our clients with distinction.

The results I, just summarize are testament to their teamwork and their commitment to our clients.

And to one another.

I would be remiss, if I did not welcome John spores, though to the firm that's an advisory senior managing director enhancing our capital markets.

Advisory practice and strengthening our coverage of the technology sector.

We will remain open to opportunistically, adding other high quality individuals who can bring value to our clients.

Finally, as we look towards second half of the year, we're aware of the many headwinds and uncertainties ahead.

Despite the challenges of working apart.

Results so far in 2020 demonstrate the power of a team working extremely well together with a consistent focused on clients.

Is this kind of collaboration that defines us.

And it's a key ingredient to our ongoing success.

I very much and looking forward to continuing to lead evercore through this downturn and eventual recovery in partnership with routes and of course Roger.

I truly believe that our best opportunities there head of us.

And I'm excited by the prospects and direction of our firm.

Let me now turn it over to Bob to discuss our GAAP results and other financial matters Bob.

Good morning, starting with our GAAP results for the second quarter of 2020 revenues net income and earnings per share on a GAAP basis were 507.1 million 56.4 million and $1.35 cents respectively.

For the first half of Twentytwenty net revenues net income and earnings per share on again basis were 934 million 934 million.

$87.6 million and $2, an eight cents respectively.

Consistent with prior periods, our adjusted results exclude certain items that principally relate to our acquisitions and dispositions and also include the full share count associated with those acquisitions, specifically, we adjusted for cross associated with divesting of class Jay LP units granted in conjunction with the ISI acquisition.

For the first half, we Expensed 1.1 million related to the glass Jay LP units.

Last Jay LP units have been believe expense.

Our adjusted results for the quarter also exclude certain items related to the realignment strategy that began in the fourth quarter 2019, as we noted last quarter, we expect to incur separation and transition benefits from related costs of approximately $38 million 8.2 million of which was record.

I did a special charges in the second quarter Twentytwenty.

These charges are excluded from our adjusted results year to date, we have recorded 30.3 million as special charges related to the realignment initiative.

As we mentioned on our last call. We have entered into an agreement with the leaders of our business in Mexico to purchase our broker dealer there.

Which principally provides investment management services.

Please note this sale is subject to regulatory approval.

We have requested that approval in June and closing is expected to occur shortly after approval is granted.

We continue to reduce review additional opportunities in smaller markets. These opportunities, resulting further chargers and twentytwenty pursued completion.

And separately, we completed the sale, how they trust business, which was part of HCV.

During the second quarter.

Our adjusted results for the quarter and first six months also excluding special charges of 8.4 million in 1.9 billion.

Respectively related to accelerated depreciation expense.

Turning to other revenues second quarter other revenue increased compared to the prior year period, primarily as a result of gains a 15.5 million in the investment funds portfolio, which is used as an economic hedge against a portion of our deferred cash compensation program.

Other revenues for the first six months of Twentytwenty decreased versus the prior year, primarily reflecting a net loss of 6.8 million on this investment fund portfolio.

This amount will of course fluctuate.

And the significant market rebound during the quarter drove quarterly gains.

Well the quarter days, so the quarter gains were not enough to more than offset the first quarter market decline.

With regard to non compensation costs, firmwide non compensation costs per employee or approximately $43000 for the second quarter down 13% on a year over year basis.

Increase in non compensation cost per employee versus last year, primarily reflects lower travel and related expenses and professional fees.

As we mentioned on our last call. We began a thorough review of our non compensation costs before they come up at 19 pandemic.

We continue to adapt our operations in response to the current downturn and remain focused on reducing on non compensation costs, including cutting non essential.

Costs related to travel research and subscriptions and deferring that certain capital projects. So we are well positioned throughout the dirt downturn as well as into the inevitable recovery.

Our GAAP tax rate for the second quarter was 24.5% compared to 24.8% in the prior year period.

On a GAAP basis, the share count was 41.9 million for the second quarter, our share count for our adjusted earnings per share was 47 million shares down versus the prior year period.

Given by share repurchases at a lower average share price.

Finally, with regard to our financial position, we hold 1 billion of cash and cash equivalents at approximately 100 million in investment securities as at the end of the quarter.

We have transitioned nearly all liquid assets to cash and cash equivalents in the first half.

Our current assets exceed current liabilities by approximately $950 million.

As Rob noted, we continue to monitor our cash levels liquidity regulatory capital requirements debt covenants and all of our other contractual obligations regularly and carefully.

I would now be pleased to answer any questions.

Thank you we will now begin question.

As a reminder, if you have a question. Please press star followed by Brian.

Hi, good takes time.

I'd like to withdraw your question. Please press the pound cake.

The speakers you may need to lift your handset, let me clear selection.

Our first question comes from the line.

Devin Ryan.

Karen.

Proceed.

Okay, great good morning, everyone.

So first question here I guess, a little bit of a crystal ball question, but I appreciate all the commentary on.

Moving parts of the backdrop.

With respect to restructuring and the capital Advisory business I guess specifically.

How should we think about those businesses ability to offset the slower M&A.

Arm and really.

I get the back half of this year will likely be soft as M&A has slowed and those restructuring revenues. It takes some time to come into the model, but as we start to look into 2021, perhaps M&A is starting to recover at that point, how can we think about the base level of some of these other vehicle.

Non M&A businesses, and then what that could mean for the model as we look out a bit.

Well, let me start with that and I'm sure job.

Something to add.

First of all.

As we pointed out on our.

Previous call.

M&A is a.

It is our largest revenue business historically.

And so.

Even though these businesses are doing.

Our extremely active right now.

We hadn't anticipated that they the activity would be sufficient to.

Upset.

Decline in M&A activity.

In the first half of the year.

They did.

But there's an element of.

You know sort of previously announced or near announced transactions that were working their way through the system, which.

Affected M&A activity.

In the first half.

The year, which given the.

Pretty sharp decline in announced M&A in the first half of this year.

Typically in the second quarter.

We would expect M&A activity revenues in the second half.

Would be affected by what happened in the first half.

The year.

I think it's pretty clear that.

We have very strong businesses.

In all of these.

Areas.

And I think one of the biggest questions Devon.

Is the how quickly does the recovery in M&A occur.

And.

This is going be a long answer, but if you go back to the financial crisis.

Prior to that M&A had been.

Characterised by two to three year down cycles, and five to eight year Upcycles.

And.

I said back in like 20 and 2011 in 2012. There was this book written about the economy Bye.

Carmen Reinhart.

And.

Got the other guys name.

But it was called this time is different and it basically talked about that in.

Recoveries Troms financial Lee induced recessions are slower and longer and I hypothesized back then.

That.

It's quite possible that recovery in M&A.

Be slower and longer and we did have a literally got 10 year period of.

Improving.

M&A activity until it came to a screeching halt early this year.

The interesting question. This time is that we've had.

The sharpest downturn.

And seem to be in the middle certainly in the markets not that real economy.

Yes.

The sharpest upturn that we better experience.

Obviously significantly affected by.

Unprecedented monetary stimulus.

And unprecedented fiscal stimulus that is.

Both huge.

Our ready three times, what was applied after the financial crisis.

And was applied with incredible rapidity.

First two stimulus.

Legislation.

Pieces of legislation where pass before we even at our first report of a decline in GDP, whereas in the financial crisis. The stimulus legislation was.

Past.

In the third quarter GDP I.

I think it's quite possible.

That.

Because of the fiscal and monetary stimulus in the obvious effects, it's already had on the.

Equity market and the effect of the fed action and stimulus.

On the.

Debt markets.

That.

This could be.

The shortest.

Cyclical downturn in M&A activity.

But we really don't know.

At this point I think we're certainly starting to see.

Yes.

Green shoots.

Maybe even a little bit.

Green shoots.

234 weeks ago that are starting to actually.

Pop up even a little bit more out of the ground in the M&A dialogue that we're having.

With our clients, but we're still going to need some greater visibility about the future direction of the economy.

Before we can say that.

We are confident that.

We're going to see a recovery and before Ceos have the confidence to make.

Larger strategic decisions, John you want to add to that.

Sure Ralph.

I'd say anecdotally.

We clearly are seeing activity in terms of strategic dialogue, but.

It is really hard to estimate when those will really turn into larger strategic initiatives.

Right now I think that a lot of the dialogue going on are seeing our opportunistic and and I believe that when we start to see mergers or start to come in ill start smaller in terms of our existing businesses like restructuring in financing those are going very well for us.

And those will continue and as you said very.

Lastly.

The restructuring.

Businesses, often are back loaded so piece will be coming in in the back but really the merger engineering is going to be what powers. Our 2021, we just don't know exactly when that kicks in.

Clearly.

Right now, we're seeing dialogue, but no big activity and we just don't know the other thing about the merger business, which you probably know is once it starts it takes some time to gather momentum in that when you. When you start talking about a deal it often takes.

Some time before that ends up being a revenue source for the firm and so.

We'll see and it'll take time, it's certainly not in the next three or four weeks, but we'll see how it goes I think it's going to be as you said crystal ball. The good news for US is we feel like we've got very strong dialogue going in we stayed very much in touch with our clients. So we feel like we're very much at the floor in terms of talking about the strategy.

And the go forward.

Okay terrific I appreciate all that color just to maybe a quick follow up for Bob on non compensation costs I heard your comments around.

Looking at areas to potentially maybe tighten the belt a bit and.

On the other hand, you have kind of a pretty unique environment for the second quarter. So.

Some unusual items here. So just trying to think about kind of what that non compensation expense base kind of could look like the office. This quarter's trajectory kind of appreciating that theres. Some unusual items around travel DNA, specifically, but any other items that you think maybe could have more permanent.

Implications to the positive or negative.

Seven there's a lot of puts and takes in this set of numbers.

Okay.

Higher level of commissions and the exceptionally higher level of underwriting obviously drive costs.

We are happy for those expenses of course.

Spending a lot of time now.

Thinking about how travel.

May change given technology.

How professional fees may change and how we continue to use subscriptions and data.

It's too soon to annualize come.

But we're going to push hard for 90 days and then 90 days after that.

To make sure where.

Kind of in the ZIP code of the second quarter, which is our first quarter.

Fully working remotely.

Okay, great. Thanks, everyone.

And our next question comes from Hello, Hello, Michael Steele you May proceed.

Yes.

Do you you mentioned anecdotally they are starting to see as strategic dialogue, but it's hard to see when it comes through but.

Can you talk about deal activity coming through as a result of discussion environment. So.

Is there more activity coming from companies that might want to shore up that balance sheets by setting any businesses are.

Companies that are more willing to sell as it was out of the uncertainty and the environment, especially given that.

Asset managers NP give a lot of dry powder here.

[music].

Let me start with that and I'm sure Russell fill in.

We see a lot of activity.

The financial sponsors right now clearly they have a lot of dry powder.

Initially in the beginning of this piece of this downturn period I think sponsors were very much internally focused looking at their portfolios and making sure that they protected.

Those portfolio companies now I think there's a lot more activity in terms of looking at opportunities and.

Our observations would be that there are some pretty material dialogue going on and people are thinking.

About doing those types of things.

The stress related deals are out there.

And I think that they're clearly companies who are looking the ones who are very strong and have come through this period are looking at themselves and saying. This is a time when we have relative strengths and therefore, we should be looking and so some of the dialogue there were having a very strong companies, whose balance sheet its impact and who really believes that they havent opera.

Unity.

And so there is definitely activity there.

As you implied there are companies that are under stress and they're looking at those kinds of opportunities to sell off assets and and stabilize themselves and those activities are on also and I'd say that that we're seeing a mix of both.

And.

Say that probably the merger market will begin with smaller deals initially I don't think you'll see some of the very big strategic things in the very beginning.

And those will be some of the transactions that you implied which are the.

The smaller deals where where companies are trying to create some liquidity for themselves and also looking at opportunities to strengthen and bigger companies that are looking at those kind of opportunities and and trying to buy them. The other thing that you didn't mention that I think it's worth noting is that.

Technology and healthcare continue to be very healthy sectors.

There there they are.

Accessing public markets.

Easily and clearly they are being valued in the public markets.

Quite high rate and level and so there is definitely opportunity on on those different sectors in those sectors to be looking at activity and I think there a lot of companies looking at those.

In those sectors for opportunities because those are ones that are being welcomed and are being well received.

The only thing I would add is that we certainly saw in the.

Second quarter, the most immediate form of liquidity preservation and balance sheet restoration was in the form of.

Record levels of.

Debt issuance.

And record levels of equity and equity Lick linked security.

In April in order to shore up their balance sheet.

There was not real long lineup of buyers for anything so the public markets became the the initial means of balance sheet restoration and now.

Companies are starting to look more seriously at.

What I would consider to be.

I would consider to be less dilutive forms of strengthening their balance sheets.

Got it and maybe on that point, you clearly had a great first half and the underwriting business and you mentioned that three Q.

As you off a strong start but I was wondering if you can give more color on your pipeline there.

I'm, assuming that at times trauma announcement to completion was lower than what you previously seen so.

Maybe there was a little bit of a pull forward that but I was wondering how we should think about revenues for the rest of the I should we think about them coming more ratably over Threeq and Fourq, you or should we still expect the stronger threeq you their focus.

Well the pipelines.

Pipelines generally are strong.

And Thats true of our.

Underwriting pipeline as well the underwriting pipeline is.

Somewhat.

They are both.

Lesser utility at the moment for different reasons, the M&A pipeline is of lesser utility because there.

Our things in there that have been put on pause, which are or would that are still are just starting to get.

Picks up again.

And so we just don't know the probability of getting actually two announcements in the M&A pipeline because of the uncertainty.

The.

Pipeline in in underwriting.

Is.

Is less useful for different reasons and that is that.

Transactions.

GAAP up.

Very quickly.

And they're not in the pipeline and they can become too revenue realization in a couple of weeks I mean for example, the.

The.

This position by PNC of their Blackrock stake, which we were at Ash that book runner and literally was.

Two weeks from the time that we received the first call until the transaction was.

Right and it wouldn't have been at any backlog. So the backlogs are strong.

But they're not as useful as they would be in a more stable environment. It obviously an equity underwriting.

Continued.

Stability slash strength in the equity markets is pretty important to that sustenance of that activity and I think the only comment we made is that in that.

The first three weeks of July.

And you guys can figure this out because it's all public information.

Our our activity.

Continued to be strong.

Great. Thank you.

And our next question comes from Microbrowsing at KBW.

You May proceed.

[music].

Good morning, guys.

So going to asking about restructuring.

Ralph you brought up Chad.

I'll be fiscal and monetary stimulus.

Thats a found impact on markets.

But it sounds like restructuring businesses busier than ever.

So relative to some months ago as your outlook for the opportunity set facing restructuring changed at all or is there still.

More than enough and work out there too.

Really support a very strong restructuring result, as we look out to 2012 months.

John do you want to start with that.

Sure I'll start.

We we believed that our restructuring business is continuing to.

Go along in a.

In a very powerful way we are in a more dialogue looking at more situation than ever have before and because we have built our capability over over several years.

We have very strong very strong leading partners in that area. In addition.

In the firm, we've actually trained our industry bankers to work seamlessly with the restructuring. So we have a lot of capacity and frankly, what we've done is we've looked at.

Our volumes and Weve.

We've tried to upgrade some of the quality of our business and seen didnt, even more selective about these times we take.

So the short answer to your question is we see real opportunity going forward over the next number of quarters in our restructuring business.

We see that it continues to be.

A real revenue source and we're very very optimistic that that will continue.

Because I think where we're able to.

But real quality not only in terms of.

In bankruptcy and out of bankruptcy advisory assignments, but also in terms of applying some of that restructuring and liability management skills to larger clients, which generate revenue also so.

Short answer your question as we see that as going moving forward.

And it being.

We're quite optimistic about the out the revenue from that business.

Yeah, I would just add that there's.

There's a certain level of restructuring activity.

That.

Occurs.

Even in very strong.

Equity debt and economic.

Environments.

For example last year.

Was.

Our highest.

Right.

Europe restructuring and restructuring related.

Revenues.

That was obviously not a Europe of economic.

Stress.

But it would be a reasonable assumption if.

The real economy.

Recovers in a way consistent with the equity market and the debt market that.

The pace of new.

Assignments in restructuring.

Slowdown.

Somewhat but as John pointed out I think in his opening remarks it takes.

It takes.

More than one quarter multiple quarters for an assignment to.

Recognize all of the revenue potential.

Thanks for that.

And just a shift gears.

Appreciate the color you guys gave on the comp ratio outlook. It's helpful to add that guidepost for the second half.

Yes, it looks like the comp ratio.

Closer to 67% this quarter, if we were to exclude other revenue.

So does this quarter represent a bit of a higher bonus accruals and typical quarter just to help.

To make the full year target I mean, obviously the uncertainty for the second half.

Makes it harder to manage through so yes, any any color you have there as to how this quarter slated for the full year. Thanks.

Bob do you want to start with added that are will chime in.

Sure. There's there's Joe as you would know there are many elements.

Yes that drive comp expense our.

Costs for the amortization amortization.

Expense public awards granted in prior years.

Is obviously up year over year the.

Many of our fixed costs, which really reflect the overall shape of our team and seniority.

Those are up as well.

And I.

I think that that if you take all of our incentive comp programs and there's puts and takes in there.

Net debt, there probably up a bit on the first half.

But.

At the end of the day, we're focused on the whole not an end of the parks.

But.

We had a very strong revenue.

Resulted in the first half so the incentive comp.

What would be aligned with that as well.

Anything else.

Yes, the only thing I would add is I would just through key what I said in my opening remarks, which is.

That is sitting here today.

July 20 Threerd.

Our visibility.

With respect to two critically important elements.

The full year comp ratio.

Is there is not as clear as it normally would be.

The first is obviously total revenue.

And the second is.

What is going to be market rate compensation.

For.

Our non asset the populous and.

We're very.

Focused on.

Balancing the short term and longer term interests of our shareholders. We've got a business year that in decent markets in 18, and 19 produced over $2 billion revenue.

We see no reason why report markets become.

Somewhat more normal.

That we won't be able to do that again and so in the.

Longer term into intermediate to longer term interest of our shareholders, particularly when you consider the possibility that this could be a relatively.

Sure.

Quote unquote downturn in M&A.

It does not from our point of view makes sense.

To cut muscle and bone.

Board at risk.

That we become less than what it a lot of not the best place to work.

In our business.

And we also are conscious of the fact that.

For us to continue to grow beyond $2 billion plus of revenue.

We need to continue invest.

In talent, which of course, if we did that this year would also have an effect.

On the.

The reported comp ratio for the year. So theyre just a lot of moving parts right now.

Very focused on making sure.

That we have a.

More valuable company when we come out at this.

And at the same time, we also recognize.

Our obligations to all of our shareholders.

To be.

Absolutely.

As tight as we possibly can in terms of.

Sharing.

Will almost inevitably be a weaker revenue year this year.

Fairly between.

The people who work in the business and the people on the business one third of going by the way work in the business.

Got it thanks for all that.

Your next question comes from Union Hakan, Yes.

Christine.

Thanks for taking my question I, just wanted to try to understand the comments around comp I know that this is a very unusual year, but just to put a finer point to it.

First half 63.6 so.

On the ratio side are you, saying that.

That is your best guess for the comp ratio for the year given.

All of the caveats around and uncertain revenue environment.

I think what we're saying is that it exactly what I said, we thought very carefully about what we said it fits within the range of possible outcomes.