Good morning, ladies and gentlemen, thank you for standing by. Welcome to Evercore Fourth Quarter and Full-Year 2018 Financial Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. [Operator Instructions] This conference call is being recorded today, Wednesday, January 30, 2019. I would now like to turn the call over to your host, Evercore’s Head of Investor Relations, Jamie Easton. Please begin, ma’am.

Good morning, and thank you for joining us today for Evercore’s fourth quarter and full-year 2018 financial results conference call. I’m Jamie Easton, Evercore’s Head of Investor Relations. Joining me on the call today are Ralph Schlosstein, our President and Chief Executive Officer; John Weinberg, our Executive Chairman; and Bob Walsh, our CFO. After our prepared remarks, we will open the call for questions. Earlier today, we issued a press release announcing Evercore’s fourth quarter and full-year 2018 financial results. The company’s discussion of our results today is complementary to that press release, which is available on our website at evercore.com. This conference call is being webcast live on the For Investors section of the website and an archive of 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, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to, those discussed in Evercore’s filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures which are non-GAAP measures that we believe are meaningful when evaluating the company’s performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release which, as I previously mentioned, is posted on our website. As we continue to believe it is important to evaluate Evercore’s performance on an annual basis. As we’ve noted previously, our results for any particular quarter are influenced by the timing of transaction closings. I’ll now turn the call over to Ralph.

Thank you, Jamie, and good morning, everyone. 2018 was a very successful year for Evercore. We served a growing number of clients, providing independent and objective advice regarding important strategic transactions, raising strategic capital for many important clients and advising on key investments and wealth management decisions. We added significant talent, enabling us to serve more clients to serve our clients more comprehensively and to grow our business in the future. And we delivered value to our shareholders, reporting our 10th consecutive year of growth in revenues, operating income, net income and earnings per share, with revenues surpassing $2 billion for the first time in our history and operating income approaching $600 million. We project that we have once again increased our market share in advisory fees among all public firms that report their advisory revenues separately. Based on the reported advisory revenues and consensus estimates for our competitors, it is probable that we will be the largest independent advisory firm in terms of revenues for 2018 and the fourth largest globally. Underwriting revenues exceeded $70 million for the year, delivering strong growth in this important capability. And we experienced market share growth in equities, as commissions and checks were up 4% in the second-half of 2018, when compared with our second-half of 2017. Wealth Management continued to contribute delivering steady revenue growth. Assets under management in our Investment Management business increased to $9.1 billion at the end of the year. Our strong results enabled us to return more than $376 million of capital through increased dividends and share repurchases. We remain committed to our long-term capital return strategy, offsetting any dilution, potential dilution from annual bonus awards and investments in new hires each year, while returning a meaningful portion of earnings as dividends. These achievements meaningfully advanced our goal…

Thank you, Ralph. The business environment for investment banking service has been broadly favorable. Strategic activity increased, as announced transactions greater than $1 billion grew. Activism remained elevated and private equity activity has increased. Demand for independent advice for both capital raising and balance sheet management is growing, as equity and debt issuance were strong for most of the year and restructuring of debt, including in-court bankruptcy cases grew. Equities environment continues to evolve, as clients rationalize their payments for research and executional services. Let me now briefly comment on our highlights. We advised on 663 client transactions during 2018, a record number compared to 574 in 2017. We advised on three of the five largest transactions announced during the year, including Takeda-Shire, the largest deal of the year. We advised on the two largest Technology, Media and Telecommunications deal announced during the year and ranked as the top independent bank in the TMT sector globally. Notably, TMT was the largest sector for 2018. Our industrials and consumer verticals gained traction as we advised on significant transactions in each of these sectors. We served as bookrunner for 35 of 50 underwriting transactions, including as lead underwriter on our first IPO. Our work on the CSE Privatization in Mexico, both as an advisor and an underwriter, was highlighted when the transaction was recognized as a 2018 Deal of the Year by Banker magazine. We are continuing to expand the breadth of capabilities we offer to this financial sponsor community. In the fourth quarter, we welcomed our eight and final Advisory SMD hire for 2018, Anthony Laubi, to our Industrials team. For the year, we added 14 SMDs, eight recruited from other firms and six promoted internally, building our presence in consumer, adding to our strengths in industrials, restructuring and private capital…

Thank you, John. Let me begin by briefly discussing the change in our presentation of our adjusted revenues. As Ralph noted earlier, in the fourth quarter, we advised our adjusted presentation to eliminate the netting of revenue and non-compensation expenses related to client-related expenses, expenses associated with revenue sharing engagements with third parties and provisions for uncollected receivables. This adjustment brings our results more in line with our U.S. GAAP presentation and the presentation of our competitors, but has no impact on operating income, net income or earnings per share. A supplement reflecting the updated presentation for our quarterly historical results for 2016 through 2018 has been posted to the For Investors section of our website. Moving to our GAAP results. Net revenues, net income and earnings per share on a GAAP basis of $2.1 billion, $377 million and $8.33, respectively, were a record for the year, just as they were a record on an adjusted basis. For the fourth quarter, net revenues, net income and earnings per share on a GAAP basis were $771 million, $163 million and $3.67, respectively, were also records. As noted in the earnings release, we adopted the new revenue recognition guidance under GAAP on January 1st of this year – last year. Following adoption, we now review open transactions at period-end, which we anticipate are near closing to determine whether, as of period-end, all material conditions for closing have been met and it would have been probable that a significant reversal of any revenue recognized for those transactions would not occur in a future period. During the fourth quarter, we recognized $3.4 million of advisory fees as variable consideration that would have been included in the first quarter of 2019 under prior revenue recognition guidance. Consistent with prior periods, our adjusted results for the…

Thanks, Bob. We begin 2019 very well positioned, especially with respect to our business and talent pipelines. First, with regard to our advisory business. We started the year with several notable announcements advising on the two largest deals in the U.S. and the largest UK transaction in 2019. These announcements showcase the diversity of our coverage of sectors, capabilities and geographies. Our backlog continues to be strong notwithstanding the strong quarter that we have just reported. With respect to talent, we recently promoted seven of our Advisory Managing Directors to Senior Managing Director. We now have 33 internally promoted SMDs and a 11-fold increase since 2010 when we had just three. Talent developed at the firm now represents over 30% of our advisory group SMD population. In terms of external SMD hires, 2019 is also off to a solid start. We recently announced that Zaheed Kajani joined us from Citigroup as an SMD focusing on Internet and digital media. And we announced yesterday that John Startin will join us in April from Goldman Sachs, leading our Metals, Materials & Mining practice globally. Between these promotions and new hires, we have reached a new milestone. We now have 107 Advisory Senior Managing Directors. While this is an impressive number, we still have significant opportunities to add talent in almost every sector to enhance our advisory capabilities globally. In addition, we continue to invest in Evercore ISI, and already in 2019 announced an addition to our leadership team, Marc Harris as Director of Research. We also strengthened our senior research team with Ravi Mehrotra in Healthcare. Moreover, we have a couple of other senior research analysts, who we expect will commit shortly to join our platform. With the strong foundation we’ve built and the very strong and much appreciated support of our clients, we had a very successful 2018. We start 2019 in the best position ever to serve our clients globally and to create value for our shareholders. And while I must say, we begin to build our revenues every January 1, we are confident that we have set a path for continued excellence and success in the coming years. Thanks very much, and we’ll now open it up for questions.

Thank you, sir. We’ll now begin the question-and-answer session. [Operator Instructions] Our first question comes from Brennan Hawken with UBS. Your line is open.

Good morning, guys. Thanks for taking the question.

Good morning.

So clearly, we saw from the results here why you guys were not too worried about the timing here that held back last quarter. So pretty solid to see that come through. And Ralph, I know you commented that despite the strength that the backlog remained strong. So just curious about how you guys are feeling in light of that, given that we’ve seen announced M&A volume slowed the last couple of quarters. How do you feel about this high bar that you’ve set for the full-year 2018 and growing off of that base given some of the crosscurrents that we’re seeing?

Well, actually, Brennan, I thought of retiring after this year. But, look, we’ve had some volatility in the markets over the last three months or so. I think, we said – I said publicly at a couple of investor conferences that had that volatility or if that volatility continued, that at some point, we would expect it to affect our backlogs. To date, we see no evidence of that. And what I can tell you is, whether that is a function of the continued activity in dialogue broadly in the M&A markets or whether it is more unique to Evercore or to all of the independent firms or most of the independent firms. But to date, we really don’t see any impact and/or, as John said, our backlogs remain strong.

Yes. And I just, Brennan, I would just add to that and just say, as we look at what we’re dealing with right now in terms of client dialogue and in terms of activities for our bankers, we really haven’t seen a fall off. Having said that, we are like you watching this year unfold and we recognize that there are risk factors and there are things that could enter into it that could impact CEO confidence levels and also financeability. And so whereas right now, we feel very good about where we are. We’re watching like you are as this year unfolds.

Yes, that’s all really fair. So no signs of it yet, but carefully watching. That’s great. And then could you, I think, Ralph, you highlighted a few hires that you all expected might be joining here soon. What is the competition for talent right now out on the street? How do you feel about it beyond the preview or that you gave us on the fact that you think there might be some folks in who soon would be announced as 2019 progresses? How do you feel about the hiring here in the coming year? I know it’s always a case-by-case basis, but are you feeling good about adding folks?

Well, I think, we always say at the beginning of the year that we expect to add four to seven or five to eight new hires from outside, and I think we would say exactly the same thing at the beginning of this year. The last couple of years, we’ve tended to be at the upper-end of that range. And so I think a little too early to say, but I certainly think there’s a reasonably good shot that, that would be the case again this year. And in terms of the competition for talent, it’s always fierce. We do believe we have a pretty unique proposition within the independent advisory firms, both in terms of our culture and the breadth of capabilities that we have. And I know when I sit down with senior people who are considering moving, I generally say to them, it’s my view that they can do more business with their client base at Evercore than they can at any other independent firm because of the breadth of our capabilities. And I really don’t get any pushback on that. So I like our competitive position. With respect to our recruiting, we have had a rule, which is that we are not going to overreach for growth. And what we mean by that is, when we have opportunities to hire really good people, we hire really good people. But we’re not going to hire people that we don’t think are really good just because we need to kind of fill out an area. Right now, what we’re seeing in terms of people who are willing to talk to us and wanting to hear what we have to say is that, there’s a very healthy number of people who want to have dialogues with us. And we’re going to try and grow responsibly, but we’re not going to overstretch to get people to come in and we’re going to keep that philosophy. And so, hopefully, that has actually worked well for us over the last few years, and we’re hoping it continues to do so. But the dialogues are quite healthy with respect to people out there.

Terrific. Thanks for all the color.

Thank you. Our next question comes from Jeff Harte of Sandler O’Neill. Your line is open.

Hey, good morning, guys.

Good morning, Jeff.

Really nice quarter. You talked about the backlog a little bit. Can you qualify it at all versus kind of prior periods, I know you won’t quantify it? But it’s just the revenue strength from closing was so strong in the fourth quarter, the pipeline we can visibly see kind of seems to have declined quite a bit?

Yes, in the visible pipeline, as I think, you all recognize at this point is a rather weak predictor of how we’re doing. And I’ll repeat exactly what I said in the opening remarks that notwithstanding the strong quarter, our pipeline remains strong.

Okay. And a little about Europe with Brexit coming off, we don’t know if it would also a hard landing or a soft landing, given that you guys historically have had a really strong presence in the UK. What are you expecting? What is the kind of your expected impact from different Brexit scenarios on M&A activity levels over there?

Well, I think it’s almost as uncertain as what actually happens in Brexit itself. But what we’re basically prepared for every eventuality, we have – we certainly will be in a position if we aren’t ready to operate in whatever configuration or reconfiguration occurs between the UK and Europe. And I would say, as a general matter, the – we don’t really – we have not yet seen any real impact on European M&A activity from a negative perspective due to the uncertainty associated with Brexit. And obviously, for us, if you look at us compared to our two principal global independent advisory firm competitors, we have a quite a bit smaller footprint in Europe than they do, which represents a material opportunity for us.

In a real sense though in terms of what we do for clients, the dialogues continue to be very strong. We really have found that there is a lot of activity in terms of thinking about strategic things. And we think that we will be able to execute across borders and for our clients every bit of the way we did before. And so we anticipate that, obviously, Brexit could go any number of different ways. But we think in any way that it does go, we’re going to be able to advise our clients and help them with the strategic transactions they want to do really in any scenario.

Okay. And then finally, a competitor indicated that kind of the market volatility and macro uncertainty you carried at somewhat of a Goldilocks situation, where it wasn’t weighing on kind of traditional M&A activities, but was actually leading to a pick up and restructuring kind of new business. Are you seeing that kind of new business and both being strong situation as well?

Our backlog reflects strength in both of those areas. Obviously with default rates last year at roughly 1%, that does prevent a hugely robust restructuring environment that tends to accompany a real downturn in the real economy, which is not something that we’re seeing at this point and quite honestly, not something that we’re anticipating for 2019 either. But as I said before, our backlogs remain strong and that is a reflection of the broad capabilities that we have as a firm, including restructuring. As you know, we – we’ve added resources to restructuring. And as you also saw this year, restructuring had a very good year despite the fact that bank – that bankruptcies weren’t up dramatically. And so we feel like that business is very healthy. So it’s going to do well really in any economic scenario as far as we can see. And so if any side of the restructuring business starts to pick up, I think, we’re well-positioned at this point. We clearly have a broad degree of capability and we’re seeing those new hires really actually complement our business tremendously.

Okay. Thank you.

Our next question comes from Mike Needham of Bank of America Merrill Lynch. Your line is open.

Hey, good morning, everyone. So the first question I’ve got is on the cash balance. You ended the year with $1.1 billion, that’s up from $700 million a year ago. And I think that current assets minus liabilities has grown close to the same rate. I’m just wondering, are there near-term cash means that you’re holding more cash for, if not, what would you view as excess?

Well, obviously, there are near-term cash needs, bonuses comes sort of top of mind from me. And as I noted, there are other cash needs that we are planning for. We’ve talked about it on a couple of calls now, most notably, facilities expansions. So, we very deliberately build cash for operating purposes, but we also want to have some flexibility, Mike, to execute the capital return strategy that Ralph mentioned, we’re in a position where we can do buybacks and normally the first quarter because of net settlement is a fairly large buyback period.

Okay. All right, got it. And then for hiring, if you guys remind expanding a little bit spending time discussing headcount growth below the Senior Managing Director level. I think the firm’s perception on the labor market has grown to be pretty strong, hoping you can touch on what you’re seeing at the more junior levels, as you inevitably generate more senior talent from with then over time?

I would say that, that is a major focus of the firm. And I think you’ve heard me say in the past that 9.5 years ago when I joined, I said that we’re going to go on a 10 to 15-year journey from a firm that grows and sustains itself primarily by filching other people’s talent to one that grows and sustains itself by hiring training, developing, mentoring and promoting itself. And the statistics that I gave you at the outset of the 11-fold increase in the number of internally promoted SMDs is evidence of that. We can’t achieve that without having extraordinarily high-quality input younger people at the beginning, because the Senior Managing Directors of 2030 are being hired today. It’s something that we focus extraordinarily highly on if you look at our the – these websites that where young people rank the places that they work versus the places that others work or their friends work, we do extraordinarily well. And that – those experiences are widely known by the talent pool that’s leaving either undergraduate school or business school. So, and that’s reflected in the extraordinarily high acceptance rate we have offers that we make either for associates who are leaving business school or analysts who are leaving undergraduate school.

Talent development for us is a strategic imperative, and both Ralph and I have spend a lot of time, not just with the the senior level later hiring, but also at the lower level. And we also spend a lot of time on a lot of our human capital programs realizing what Ralph said that developing our talent is one of the most important things we can do to self-sustain. And so I think it’s fair to say that if you look at the things that we worry about and think about all the time, it’s people development, both hiring and retaining talented people, and we really look at it on all levels.

Okay, thank you. One more on other revenues and modeling question. What drove the loss? Was that like a trading loss? Thanks.

We don’t trade, but akin to that, we still have some legacy investments from our private equity business of years gone by. So marks associated with those investments do go through other revenue and there’s a little bit of FX in there.

Thanks.

Thank you. Our next question comes from Devin Ryan of JMP Securities. Your line is open.

Hey, great. Good morning, Ralph, John and Bob, how are you?

Good morning.

Great quarter. So kind of where to begin here. I guess first question just love to talk about the M&A cycle. My sense is you’re not seeing kind of the normal signposts of a prior peak cycle. So just love to get a bit of perspective on where you think, as a firm, you’re overachieving and underachieving? And then connected to that, you’re reporting some huge average senior managing bank- some deep productivity numbers And so just try to get a sense of would you attribute that to being kind of one plus one is more than two just as you added more advisory capabilities over the years. And really, the reason I’m asking is, I just think that the numbers are so big that people are a little reluctant to kind of model further expansion from here?

Well, in terms of the merger cycle, it’s always hard to predict the cycle. All we can do is say what we’re seeing right now and what’s in front of us and how our business looks. And frankly, we are seeing healthy activity in most of our sectors, and we’re very busy with dialogues with Boards and CEOs on any number of types of transactions and all different sizes. And so I think it’s just, it’s safe to say that it’s hard to characterize this cycle of the M&A world other than to say that it’s very healthy for us right now. We’re seeing strong activity and we’re going to see it going forward. I’ll let Ralph talk a little bit about the numbers themselves on what you were referring to.

Look, the – I’ve sat here and tried to explain in a quantitative way why we’ve experienced the growth we have. And I think there are a number of things that have some linkage or some ability to measure quantitatively, and I think those revolve around. Number one, the breadth of capabilities that we have, which run the gamut from equity underwriting to equity advisory to debt advisory to tax capabilities to the premier activist defense practice. And what those – the breadth of those capabilities really does two things. Number one, it provides incremental revenue opportunities. So, on some of the larger mergers that we’re involved with, we actually get compensated with additional revenue for assisting with negotiating of the debt provided by, in many cases, our co-advisor. So there are opportunities for incremental revenue. But they also, I think, very importantly allow us to be the sole advisor or the lead advisor for a longer period of time, which actually affects the share of the fees that we might earn when we have a co-advisor or prevent a co-advisor in circumstances, where the first advisory in. So that’s clearly one thing that’s going on. Second thing is that, we are pretty regularly evaluating our Senior Managing Director population. And so, at this point, we have a team that you’d really like to go into battle with. And there’s always – in past years, there has always been a couple of three or four, who for whatever reason weren’t successful with our business model. And they’ve chosen to typically go back to a larger firm. So, the average quality of our SMDs is as high as it’s ever been. And then the third thing, which is hard to measure and certainly, hard to measure its effect on our business is, our brand definitely is improving a little bit, maybe more than a little bit. And the consequence of that is that, I think we get a few more add backs during the course of the year, and our batting averages maybe a little bit higher. So with the same team on the field, maybe we’re just doing a little bit more business. We’re choosing not to report the precise measurement of SMD productivity for the reason that it is quite high.

Got it. Okay, very helpful. And just a follow-up to some of that, that commentary. I mean, one thing that doesn’t seem to be getting maybe enough play in the conversation, at least, in my opinion is that it does seem like every dollar of deal value today for the firm has a potential to be more productive just with all those capabilities that you’ve added. And I don’t think that gets reflected very well in the data sources that everybody looks at. And so, you mentioned you can kind of be the M&A advisor or longer, you can advise on hedging solution to get advise on the equity raise debt financing. So I don’t know if it’s possible, but it would be great to get any more detail on kind of how average fees have been trending or any information that you would point to that fees are higher per deal size. I mean, it seems like it’s obvious from the outside, but I don’t know if there’s any quantification you can give us?

Not really. I mean, we give you information on fee events and advisory revenues.

Devin, if you simply look at this quarter’s results and fees over a $1 million, the arithmetic will tell you, it’s number of fee events is by far and away the big driver, not average fee.

Okay.

But if that had grown over time, what’s really driven the current quarter is serving more clients well.

Okay, great. I’ll leave it there. Congrats on a great quarter.

Thank you.

Thank you.

Thank you. Our next question comes from Steven Chubak of Wolfe Research. Your line is open.

Hi, good morning.

Good morning.

So wanted to start off with a question on revenue and earnings resiliency. I know you touched on this a bit in your prepared remarks, but I was hoping to dig a bit deeper. This – the result this quarter were quite impressive, but [late tackle] concerns are certainly percolating. And the $64,000 question is really how we should think about the downside risk to revenue and earnings in a garden variety of recession and it’s something that’s called quite often in our discussions with investors. I was hoping you can maybe shed some light on how you think about revenue and earnings drawdown risk for Evercore in the event of a more severe economic slowdown? And maybe more specifically, what are some of the offsets, whether it’s revenue levers you can pull or being able to flex a little bit of comp ratio to ensure that you can deliver that earnings resiliency?

Well, we are precisely as good at predicting future economic events as we are predicting the effect on our revenues. The only thing I can tell you is that, we are, as you know, in a cyclical business and as the leaders of the firm, some of them are on this call and others aren’t. We do a lot of thinking about how we will respond to a downturn in M&A, which typically accompanies a recessionary period. And we’ve done a lot of work inside the firm and socializing that broadly within the firm. We have no idea when that’s going to happen and we see no evidence of that today. And obviously, depending upon the severity of the recession, that will have an impact on the severity of our revenue decline. I would say a couple of things. One, as all of you have seen in the last few years, we’ve been significant market share gainers. I would look back at the period of time from 2010 to 2013, when M&A activity was kind of flat as a pancake. I think, it was roughly $2.2 trillion give or take $100 billion or $200 billion for four years in a row. And we grew quite successfully during that period, not because the rising tide was lifting our ship, but because we were actually taking share from our competitors. Obviously, we’re quite a bit bigger today than we were back then. But one of the things that I think it would be useful for all of you to take note of is, there seems to be a view that the larger independent firms tautologically are going to grow more slowly or take share less successfully than our brethren who are roughly half our size. I think, if you look back over…

Yes. I would say that you should assume that we’re looking at all the different things that we can do if there is a downturn, because these downturns, as you know and Ralph said, are inevitable. But also I want to emphasize that from our perspective, our priorities are always going to be to keep the business healthy and to make money for shareholders. But at the same time, we think it’s important that if we go into a recession, we want to come out of the downturn with more market share than what we went in with. So we’ll be working hard to be smart about how we allocate resources and invest in our business even in a situation, where volumes go down, because our overall long-term strategy is to continue to pick up market share.

Thanks for all the helpful color. And Ralph, I did like MiFID II analogy as well. So thank you for those insights. Just one follow-up for me relating to financial sponsor deal activity. How do you think your position competitively to take advantage of some of the expectations for increased deployment of some of the private equity dry powder?

We have extremely strong relationships with private equity firms, and many of our industry groups have very special relationships. We think we’re actually very well-positioned to be involved in activities. And we think that a lot of the strategic M&A advice that we give, as well as our market knowledge across the portfolios is something that is – that it’s really helping us a lot with a lot of those dialogues. We actually feel quite good about our involvement with the private equity complexes right now.

Thank you very much.

Thank you. Our next question comes from Jim Mitchell of Buckingham Research. Your line is open.

Hey, good morning. Bob, maybe you can push a little bit on cash and capital return. You guys over the last three years have – the cash has grown about over – more than doubled over the last three years. I appreciate the incremental cash needs in terms of bonuses, higher earnings, higher bonuses and the build out of the – of your new offices. But it seems more incremental than really needing double the cash you needed three years ago. You’ve been growing net cash every year. At what point do you feel like, hey, we have enough cash and every incremental net cash we produce can be returned to shareholders, whether it’s special dividend buybacks, et cetera. Just trying to get a sense of where that endpoint is, because you certainly had a pretty good opportunity in the fourth quarter to deploy cash at a pretty low multiple on your stock, and you guys didn’t really do too much?

If that endpoint is unpredictable because of all the growth plans that Ralph and John have been speaking about, we certainly want to be nimble to return – to buyback shares bluntly. And we can debate whether we’ve bought enough in the fourth quarter or not, but we certainly had a big uptick. We’re growing the business. We are entering new markets some of which are regulated. So we want to have the flexibility to support all of that.

But I mean…

From a policy point of view, we have – look, we have some unique, what I would call, relatively one-time needs, although, as you grow, you’re always doing something with space. But we have a quantum leap up here in New York. And last time, I checked contractors and landlords like to be paid in cash. And then, as we’ve done in the past, we have businesses where we don’t own 100% of the business and we buy a portion of that business. We typically do that in the first quarter. So, that is another use of cash. And then the third is, obviously, as the business grows in an unregulated environments, we do need a little bit more capital from a regulatory point of view. But those things together may create the appearance that our historical policy of – pretty much returning all of our earnings to our shareholders in one form or another is being altered. It’s not – it’s really that there are some meaningful needs for cash in the business the past year and the coming year. And obviously, we’re going to do that, because we’re growing.

Okay, fair enough. And maybe just a question on the comp ratio, it came down for the second year row to 56.7%. Is that a good jumping off point for next year? Obviously, you’ve had a very strong revenue, so I don’t want to get ahead of my – head of myself, if you feel like that was just sort of an outsized good year, or do you think that’s sustainable?

Look, I think, our visibility forward, as I’ve often said, is pretty clear to the quarter that we’re in, somewhat foggy to the next quarter and then it gets quite foggy and notwithstanding what I said about our backlogs. So we tend to be careful in our initial accruals. And I suspect when we get to the end of the first quarter, we’ll probably do the same thing again.

Okay, thanks.

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

No, thank you very much for your time. And we hope that we can be sitting here a year from now with an equally exciting result, but no promising. Take care, guys.

This concludes today’s Evercore fourth quarter and full-year 2018 financial results conference call. You may now this disconnect. Everyone, have a great day.