v3.23.3
Segment Operating Results
9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Segment Operating Results Segment Operating Results
Business Segments – The Company's business results are categorized into the following two segments: Investment Banking & Equities and Investment Management. The Investment Banking & Equities segment includes providing advice to clients on significant mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private placement services and commissions for agency-based equity trading services and equity research. The Investment Management segment includes Wealth Management and interests in private equity funds which are not managed by the Company.
The Company's segment information for the three and nine months ended September 30, 2023 and 2022 is prepared using the following methodology:
Revenue, expenses and income (loss) from equity method investments directly associated with each segment are included in determining pre-tax income.
Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other performance and time-based factors.
Segment assets are based on those directly associated with each segment, or for certain assets shared across segments, those assets are allocated based on the most relevant measures applicable, including headcount and other factors.
Investment gains and losses, interest income and interest expense are allocated between the segments based on the segment in which the underlying asset or liability is held.
Other Revenue, net, included in each segment's Net Revenues includes the following:
Interest income, including accretion, and income (losses) on investment securities, including the Company's investment funds which are used as an economic hedge against the Company's deferred cash compensation program, certificates of deposit, cash and cash equivalents and long-term accounts receivable
A gain on the sale of a portion of the Company's interests in ABS in the first quarter of 2022. See Note 7 for further information
Gains (losses) resulting from foreign currency exchange rate fluctuations and foreign currency exchange forward contracts
Realized and unrealized gains and losses on interests in private equity funds which are not managed by the Company
Interest expense associated with the Company’s Notes Payable and lines of credit
Adjustments to amounts due pursuant to the Company’s tax receivable agreement, subsequent to its initial establishment, related to changes in enacted tax rates
Each segment's Operating Expenses include: a) employee compensation and benefits expenses that are incurred directly in support of the segment and b) non-compensation expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, execution, clearing and custody fees, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, legal, technology, human capital, facilities management and senior management activities.
Other Expenses relate to Special Charges, Including Business Realignment Costs, which include the following:
2023 – Other Expenses for the nine months ended September 30, 2023 include expenses related to the write-off of non-recoverable assets in connection with the wind-down of the Company's operations in Mexico
2022 – Other Expenses for the nine months ended September 30, 2022 include expenses related to charges associated with the prepayment of the Company's Series B Notes during the second quarter, as well as certain professional fees related to the wind-down of the Company's operations in Mexico
The Company evaluates segment results based on net revenues and pre-tax income, both including and excluding the impact of the Other Expenses.
No client accounted for more than 10% of the Company's Consolidated Net Revenues for the three and nine months ended September 30, 2023 and 2022.
The following information presents each segment's contribution.
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2023202220232022
Investment Banking & Equities
Net Revenues(1)
$552,641 $560,518 $1,589,698 $1,880,069 
Operating Expenses479,429 433,599 1,356,853 1,404,711 
Other Expenses— — 2,921 532 
Operating Income73,212 126,919 229,924 474,826 
Income from Equity Method Investments180 451 394 989 
Pre-Tax Income $73,392 $127,370 $230,318 $475,815 
Identifiable Segment Assets$3,068,495 $2,986,364 $3,068,495 $2,986,364 
Investment Management
Net Revenues(1)
$17,579 $16,419 $52,084 $50,639 
Operating Expenses13,965 12,939 40,562 39,520 
Operating Income3,614 3,480 11,522 11,119 
Income from Equity Method Investments1,484 1,576 4,280 5,824 
Pre-Tax Income$5,098 $5,056 $15,802 $16,943 
Identifiable Segment Assets$157,303 $164,905 $157,303 $164,905 
Total
Net Revenues(1)
$570,220 $576,937 $1,641,782 $1,930,708 
Operating Expenses493,394 446,538 1,397,415 1,444,231 
Other Expenses— — 2,921 532 
Operating Income76,826 130,399 241,446 485,945 
Income from Equity Method Investments1,664 2,027 4,674 6,813 
Pre-Tax Income$78,490 $132,426 $246,120 $492,758 
Identifiable Segment Assets$3,225,798 $3,151,269 $3,225,798 $3,151,269 
(1)Net Revenues include Other Revenue, net, allocated to the segments as follows:
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2023202220232022
Investment Banking & Equities(A)
$5,729 $(5,603)$46,472 $(40,066)
Investment Management275 778 2,247 1,915 
Total Other Revenue, net$6,004 $(4,825)$48,719 $(38,151)
(A)Other Revenue, net, from the Investment Banking & Equities segment includes interest expense on the Notes Payable and lines of credit of $4,184 and $12,536 for the three and nine months ended September 30, 2023, respectively, and $4,188 and $12,696 for the three and nine months ended September 30, 2022, respectively.
Geographic Information – The Company manages its business based on the profitability of the enterprise as a whole.
The Company's revenues were derived from clients located and managed in the following geographical areas:
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2023202220232022
Net Revenues:(1)
United States$417,553 $374,571 $1,156,979 $1,408,491 
Europe and Other145,065 206,893 425,137 553,926 
Latin America1,598 298 10,947 6,442 
Total$564,216 $581,762 $1,593,063 $1,968,859 
(1)Excludes Other Revenue, Including Interest and Investments, and Interest Expense.
The Company's total assets are located in the following geographical areas:
September 30, 2023December 31, 2022
Total Assets:
United States$2,777,971 $2,902,153 
Europe and Other447,827 718,770 
Total$3,225,798 $3,620,923