Greenhill, Evercore Fall on Lower Advising Revenue

Greenhill & Co. (GHL) fell the most in nine months and Evercore Partners Inc. (EVR) also slipped in New York trading after the firms reported that fourth-quarter revenue from advising clients declined.

Greenhill tumbled 5.7 percent to close at $52.10, the most since April 18. Advisory revenue decreased 25 percent to $75.4 million from a year earlier, the New York-based firm said yesterday in a statement, and slid 1.5 percent to $287 million for the year.

Evercore, the advisory firm founded by former Deputy U.S. Treasury Secretary Roger C. Altman, declined 2.7 percent to $56.10 after reporting revenue from investment banking, composed primarily of fees from advising clients, dropped 3.8 percent to $188 million from a year earlier. Investment-banking revenue for all of 2013 increased 17 percent to $666.8 million, the New York-based firm said today in a statement.

“Greenhill’s banking revenues were 8 to 9 percent below at least what we were expecting whereas Evercore’s was only a couple of percentage points below,” Jeffery Harte, an analyst at Sandler O’Neill & Partners LP, said in an interview. “Relatively speaking, the shortfall in advisory revenues for Greenhill was bigger than for Evercore.”

Greenhill’s fourth-quarter profit advanced to $15.8 million, or 53 cents a share, from $15.1 million, or 50 cents, a year earlier, the New York-based company said, fueled by reductions in compensation costs.

Compensation Costs

Greenhill reduced its investments in the quarter to an “immaterial” amount and is “now down to essentially a pure advisory firm,” Chief Executive Officer Scott Bok, 54, said yesterday in a conference call with analysts.

Full-year profit increased 11 percent to $46.7 million, or $1.55 a share, Greenhill said. The firm earned $1 million or more in fees from 58 clients last year, 12 percent fewer than in 2012, according to the statement.

Employee compensation costs dropped 17 percent in the quarter to $40.5 million, or 53 percent of revenue, from a year earlier, while total operating expenses declined 14 percent to $55.2 million, the company said.

Greenhill rose 11 percent in 2013, compared with a 98 percent gain for Evercore. The shares have slipped 10 percent and 6.2 percent, respectively, this year.

‘Flat’ Advisory

Evercore boosted investment-banking operating income by more than 20 percent for a third consecutive year in what was generally a “flat” advisory market, Altman, 67, said in the statement. Evercore remains a relatively U.S.-centric business, he said in a conference call, and the U.S. market had performed better than the rest of the world in mergers and acquisitions.

Investment-banking revenue includes fees from its institutional equities business, which contributed $12.5 million in the fourth quarter and $42.2 million for the full-year, Evercore said. Revenue from investment management increased 28 percent to $25 million in the quarter and 20 percent to $95.8 million for the year, the firm said.

“There’s been a better environment for asset management than for M&A, and that’s probably helped Evercore some, as well,” Sandler O’Neill’s Harte said.

Profit in the fourth-quarter fell to $16.9 million, or 42 cents a share, from $19 million, or 56 cents, a year earlier, the firm said. For the year, net income from continuing operations rose 89 percent to a record $74.8 million.

To contact the reporter on this story: Sarah Jacob in New York at sjacob19@bloomberg.net

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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