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Section 1: 8-K (8-K)

mc-8k_20180723.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8‑K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 23, 2018

 

MOELIS & COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware

 

001‑36418

 

46‑4500216

(State or other jurisdiction of

 

(Commission

 

(IRS Employer

incorporation)

 

File Number)

 

Identification No.)

 

399 Park Avenue, 5th Floor

 

 

New York, New York

 

10022

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (212) 883‑3800

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 


Item 2.02    Results of Operations and Financial Condition

On July 23, 2018, Moelis & Company issued a press release announcing financial results for its second quarter ended June 30, 2018.

A copy of the press release is attached hereto as Exhibit 99.1. All information in the press release is furnished but not filed.

Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(d) On July 20, 2018, the Board of Directors (the “Board”) of Moelis & Company (the “Company”) elected Elizabeth Crain as a director of the Company.  Ms. Crain’s term will begin on July 23, 2018.  

 

Ms. Crain was designated by Moelis & Company Partner Holdings LP (“Holdings”) pursuant to the Stockholders Agreement, dated April 14, 2014 (the “Stockholders Agreement”) between the Company, Holdings and certain other shareholders giving Holdings the right to designate a majority of the members of the Board for so long as the Class B Condition (as defined in the Stockholders Agreement) is satisfied. The Stockholders Agreement was filed by the Company on Form 8-K on April 22, 2014.  

 

Item 7.01    Regulation FD Disclosure

On July 23, 2018, Moelis & Company (the “Company”) updated the investor presentation available under “Events and Presentations” on the Investor Relations section of its website. The updated presentation is available using the following link: http://investors.moelis.com/event. The information in this Item 7.01 of this Form 8‑K is furnished as of the date hereof, and the Company disclaims any obligation to correct or update this information, its website or the presentation in the future. The contents of the Company’s website are not included or incorporated by reference into this Form 8‑K, and any references to such website are intended to be inactive textual references only. All information in this Item 7.01 of this Form 8‑K is furnished but not filed.

Item 8.01 Other Events.

As required under Section 5 of the Company’s 2014 Omnibus Incentive Plan, the Compensation Committee of the Company’s Board of Directors equitably reduced the exercise price of the Company’s outstanding options to purchase common stock by $1.50 from $19.45 per share to $17.95 per share.  Such options are held by certain current and former employees of the Company, including officers and directors.  

 

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits:

 

 

 

Exhibit

 

 

Number

    

Description

99.1

 

Press release of Moelis & Company dated July 23, 2018.

 



EXHIBIT INDEX

 

 

 

Exhibit

 

 

Number

    

Description

99.1

 

Press release of Moelis & Company dated July 23, 2018.

 



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

MOELIS & COMPANY

 

 

 

By:

/s/ Joseph Simon

 

 

Name:

Joseph Simon

 

 

Title:

Chief Financial Officer

 

 

 

 

Date: July 23, 2018

 

 

 

 

(Back To Top)

Section 2: EX-99 (EX-99)

mc-ex99_6.htm

Exhibit 99.1

 

Moelis & Company Reports Second Quarter 2018 Financial Results;

Special Dividend of $1.50 Per Share in Addition to

Regular Quarterly Dividend of $0.47 Per Share

 

Record Second Quarter and First Half Revenues

 

Second quarter revenues of $220.4 million, up 28% from the second quarter of 2017; first half revenues of $439.8 million, up 27% from the same period of 2017

GAAP net income of $0.72 per share (diluted) for the second quarter and $1.47 per share (diluted) for the first half of 2018; Adjusted net income of $0.78 per share (diluted) and $1.62 per share (diluted) for the second quarter and first half of 2018, respectively

Continued to execute on organic growth strategy

 

Added nine Managing Directors year to date through internal development and key external hires; hiring pipeline remains robust

Appointed Elizabeth Crain, Chief Operating Officer and Founding Partner, to our Board of Directors

Declared $1.97 per share in dividends, comprised of a $1.50 per share special dividend in addition to the $0.47 per share regular quarterly dividend

Strong balance sheet with cash and short term investments of $191.2 million and no debt or goodwill

NEW YORK, July 23, 2018 – Moelis & Company (NYSE: MC) today reported financial results for the second quarter ended June 30, 2018.  The Firm’s revenues of $220.4 million increased 28% over the prior year period and represented our largest quarter of revenues since inception. The Firm reported second quarter 2018 GAAP net income of $53.1 million, or $0.72 per share (diluted), compared with $49.5 million, or $0.57 per share (diluted), in the prior year period.  On an Adjusted basis, the Firm reported net income of $52.2 million, or $0.78 per share (diluted), for the second quarter of 2018, which compares with $41.5 million of net income, or $0.66 per share (diluted), in the prior year period.  GAAP and Adjusted net income in the second quarter of 2018 include tax benefits of $0.10 per share and $0.11 per share, respectively, related to the settlement of share based awards.

1


First half 2018 revenues were a record $439.8 million and represented an increase of 27% over the prior year period.  GAAP net income for the period was $107.1 million, or $1.47 per share (diluted), as compared with $88.9 million, or $1.04 per share (diluted), in the prior year period.  On an Adjusted basis, the Firm reported net income of $108.0 million, or $1.62 per share (diluted), in the first half of 2018, as compared with $75.1 million, or $1.20 per share (diluted), in the prior year period.  GAAP and Adjusted net income in the first half of 2018 include tax benefits of $0.28 per share and $0.30 per share, respectively, related to the settlement of share based awards.

“Our record second quarter revenues reflect the strength of our franchise as we continued to capitalize on a robust environment for M&A and experienced growth across our additional strategic advisory offerings.  We expect to maintain our momentum as we continue to develop the world’s leading bankers and integrate them into a cohesive global network that delivers exceptional client service around the world,” said Ken Moelis, Chairman and Chief Executive Officer.

“Our capital-light business model and focus on organic growth creates substantial shareholder value, as evidenced by today’s announcement of a $1.50 per share special dividend in addition to our regular quarterly dividend of $0.47 per share.  Including today’s announcement, we will have returned over $10 per share in dividends over the last three years.”  

The Firm’s revenues and net income can fluctuate materially depending on the number, size and timing of completed transactions on which it advised as well as other factors.  Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.  

Currently 70% of the operating partnership (Moelis & Company Group LP) is owned by the corporate partner (Moelis & Company) and is subject to corporate U.S. federal and state income tax. The remaining 30% is owned by other partners of Moelis & Company Group LP and is primarily subject to tax at the partner level (except for certain state and local and foreign income taxes). The Adjusted results included herein remove the impact of compensation expenses specifically related to the Firm’s IPO awards, and apply the corporate tax rate to all earnings under the assumption that 100% of the Firm’s second quarter 2018 income was taxed at our corporate effective tax rate.  We believe the Adjusted results, when presented together with comparable GAAP results, are useful to investors to compare our performance across periods and to better understand our operating results. A reconciliation between our GAAP results and our Adjusted results is presented in the Appendix to this press release.

2


GAAP and Adjusted (non-GAAP) Selected Financial Data (Unaudited)

 

 

U.S. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended June 30,

 

($ in thousands except per share data)

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

220,405

 

 

$

172,149

 

 

 

28

%

 

$

220,405

 

 

$

172,149

 

 

 

28

%

Income (loss) before income taxes

 

 

59,157

 

 

 

59,073

 

 

 

0

%

 

 

59,859

 

 

 

60,073

 

 

 

0

%

Provision for income taxes

 

 

6,027

 

 

 

9,549

 

 

 

-37

%

 

 

7,651

 

 

 

18,590

 

 

 

-59

%

Net income (loss)

 

 

53,130

 

 

 

49,524

 

 

 

7

%

 

 

52,208

 

 

 

41,483

 

 

 

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to

   noncontrolling interests

 

 

17,440

 

 

 

29,794

 

 

 

-41

%

 

 

-

 

 

 

-

 

 

N/M

 

Net income (loss) attributable to Moelis &

   Company

 

$

35,690

 

 

$

19,730

 

 

 

81

%

 

$

52,208

 

 

$

41,483

 

 

 

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.72

 

 

$

0.57

 

 

 

26

%

 

$

0.78

 

 

$

0.66

 

 

 

18

%

 

 

N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

 

 

U.S. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Six Months Ended June 30,

 

($ in thousands except per share data)

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

439,823

 

 

$

345,407

 

 

 

27

%

 

$

439,823

 

 

$

345,407

 

 

 

27

%

Income (loss) before income taxes

 

 

115,701

 

 

 

105,449

 

 

 

10

%

 

 

117,413

 

 

 

107,613

 

 

 

9

%

Provision for income taxes

 

 

8,590

 

 

 

16,546

 

 

 

-48

%

 

 

9,394

 

 

 

32,468

 

 

 

-71

%

Net income (loss)

 

 

107,111

 

 

 

88,903

 

 

 

20

%

 

 

108,019

 

 

 

75,145

 

 

 

44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to

   noncontrolling interests

 

 

38,096

 

 

 

53,895

 

 

 

-29

%

 

 

-

 

 

 

-

 

 

N/M

 

Net income (loss) attributable to Moelis &

   Company

 

$

69,015

 

 

$

35,008

 

 

 

97

%

 

$

108,019

 

 

$

75,145

 

 

 

44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.47

 

 

$

1.04

 

 

 

41

%

 

$

1.62

 

 

$

1.20

 

 

 

35

%

 

 

N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

3


Revenues

We earned revenues of $220.4 million in the second quarter of 2018, as compared with $172.1 million in the prior year period, representing an increase of 28% and our largest quarter of revenues on record.  This compares favorably with a 12% decrease in the number of global completed M&A transactions in the same period1.  The increase in revenues was driven by strong performance across our diverse platform, with particular strength in our M&A-related activity.  For the first half of 2018, revenues were $439.8 million as compared with $345.4 million in the same period of 2017, or an increase of 27%.  

As a result of the adoption of ASC Topic 606, the Firm recognized revenues of $36.9 million in the second quarter of 2018 related to certain transactions which met all material conditions for completion in the second quarter but closed during the third quarter of 2018.  Prior to January 1, 2018, revenue was generally recognized on the closing date of the transaction.  Our current period and first half 2018 revenues also include billable expense revenues, in accordance with this new accounting guidance.  Prior to adoption, billable expenses were netted against the corresponding non-compensation line item.

We continued to execute on our strategy of organic growth.  In the first half of 2018 we promoted five of our advisory professionals to Managing Director and hired four external Managing Directors to enhance our expertise in important sectors, products and regions.  This includes a veteran Managing Director that we announced since our last earnings release who will provide financial and strategic advice to global internet and digital media clients.  

Expenses

The following tables set forth information relating to the Firm’s operating expenses, which are reported net of client expense reimbursements for the 2017 periods presented.

 

 

U.S. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended June 30,

 

($ in thousands)

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

128,109

 

 

$

100,808

 

 

 

27

%

 

$

126,730

 

 

$

99,808

 

 

 

27

%

% of revenues

 

 

58.1

%

 

 

58.6

%

 

 

 

 

 

 

57.5

%

 

 

58.0

%

 

 

 

 

Non-compensation expenses

 

$

36,651

 

 

$

28,633

 

 

 

28

%

 

$

36,651

 

 

$

28,633

 

 

 

28

%

% of revenues

 

 

16.6

%

 

 

16.6

%

 

 

 

 

 

 

16.6

%

 

 

16.6

%

 

 

 

 

Total operating expenses

 

$

164,760

 

 

$

129,441

 

 

 

27

%

 

$

163,381

 

 

$

128,441

 

 

 

27

%

% of revenues

 

 

74.8

%

 

 

75.2

%

 

 

 

 

 

 

74.1

%

 

 

74.6

%

 

 

 

 

 

 

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

 

 

1 

Source: Thomson Financial as of July  3, 2018; includes all transactions greater than $100 million in value

4


 

U.S. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Six Months Ended June 30,

 

($ in thousands)

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

255,286

 

 

$

202,534

 

 

 

26

%

 

$

252,897

 

 

$

200,370

 

 

 

26

%

% of revenues

 

 

58.0

%

 

 

58.6

%

 

 

 

 

 

 

57.5

%

 

 

58.0

%

 

 

 

 

Non-compensation expenses

 

$

73,823

 

 

$

57,131

 

 

 

29

%

 

$

73,823

 

 

$

57,131

 

 

 

29

%

% of revenues

 

 

16.8

%

 

 

16.5

%

 

 

 

 

 

 

16.8

%

 

 

16.5

%

 

 

 

 

Total operating expenses

 

$

329,109

 

 

$

259,665

 

 

 

27

%

 

$

326,720

 

 

$

257,501

 

 

 

27

%

% of revenues

 

 

74.8

%

 

 

75.2

%

 

 

 

 

 

 

74.3

%

 

 

74.6

%

 

 

 

 

 

 

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

Total operating expenses on a GAAP basis were $164.8 million in the second quarter and $329.1 million in the first half of 2018.  On an Adjusted basis, operating expenses were $163.4 million in the second quarter of 2018 as compared with $128.4 million in the second quarter of 2017, and $326.7 million in the first half of 2018 as compared with $257.5 million in the prior year period.  The increase in operating expenses in both periods was associated with increased revenues, which drove increased compensation and benefits expenses, as well as higher non-compensation expenses.

Compensation and benefits expenses on a GAAP basis were $128.1 million in the second quarter and $255.3 million in the first half of 2018.  Adjusted compensation and benefits expenses (which exclude the amortization of IPO awards for the reported periods) were $126.7 million and $252.9 million in the second quarter and first half of 2018, respectively.  This compares with $99.8 million and $200.4 million in the second quarter and first half of 2017, respectively.  The Adjusted compensation and benefits ratio in both the current period and first half of 2018 was consistent at 57.5%.  

Non-compensation expenses on a GAAP and Adjusted basis were $36.7 million in the second quarter of 2018 as compared with $28.6 million in the prior year period.  Our non-compensation expense ratio was 16.6% in both the current and prior year quarters.  In the first half of 2018, GAAP and Adjusted non-compensation expenses were $73.8 million as compared with $57.1 million in the same period of the prior year, and the non-compensation expense ratio increased to 16.8% from 16.5%.  The increase in non-compensation expenses primarily resulted from the absence of contra expenses related to client reimbursements, as well as increased recruiting and transaction related charges associated with increased revenues.  

5


Other Income

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

Three Months Ended June 30,

($ in thousands)

 

2018

 

 

2017

 

 

2018 vs. 2017

Variance

 

2018

 

 

2017

 

 

2018 vs. 2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

$

1,286

 

 

$

17,695

 

 

N/M

 

$

609

 

 

$

17,695

 

 

N/M

 

 

N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

Six Months Ended June 30,

($ in thousands)

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

2018

 

 

2017

 

 

2018 vs.

2017

Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

$

1,873

 

 

$

17,933

 

 

N/M

 

$

1,196

 

 

$

17,933

 

 

N/M

 

 

N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

Other income on a GAAP basis was $1.3 million in the second quarter and $1.9 million in the first half of 2018.  On an Adjusted basis, other income was $0.6 million in the second quarter and $1.2 million in the first half of 2018.  This compares to other income of $17.7 million and $17.9 million in the second quarter and first half of 2017, respectively.  In the second quarter of 2017, we recorded a gain of $17.5 million related to our investment in Moelis Australia resulting from its issuance of new shares in connection with its IPO and acquisition of an asset manager.  No such gains were recorded in the current periods.  

Provision for Income Taxes

The corporate partner (Moelis & Company) currently owns 70% of the operating partnership (Moelis & Company Group LP) and is subject to corporate U.S. federal and state income tax.  Income on the remaining 30% continues to be subject to New York City unincorporated business tax and certain foreign income taxes and is accounted for at the partner level through the non-controlling interests line item.  For Adjusted purposes, we have assumed that 100% of the Firm’s second quarter 2018 income was taxed at our corporate effective tax rate of 12.8%, versus 30.9% in the prior year period.  The decrease in the tax rate is primarily attributable to a tax benefit related to the appreciation of the Company’s stock price from employee equity grant date to delivery date, as well as the enactment of the Tax Cuts and Jobs Act in 2017, which reduced the U.S. federal corporate income tax rate from 35% to 21% beginning January 1, 2018.

6


Capital Management and Balance Sheet

On July 20, 2018, the Board of Directors of Moelis & Company declared a special dividend of $1.50 per share in addition to a regular quarterly dividend of $0.47 per share.  The $1.97 per share will be paid on September 12, 2018 to common stockholders of record on August 2, 2018.

Moelis & Company continues to maintain a strong financial position, and as of June 30, 2018, we held cash and liquid investments of $191.2 million and had no debt or goodwill on our balance sheet.

Corporate Governance

On July 20, 2018, the Board of Directors elected Elizabeth Crain, Chief Operating Officer and Founding Partner, as a director of the Company.  She replaces J. Richard Leaman III, who will continue in his role as Vice Chairman of the Firm.

Earnings Call

We will host a conference call beginning at 5:00pm ET on Monday, July 23, 2018, accessible via telephone and the internet.  Ken Moelis, Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our second quarter 2018 financial results.  Following the review, there will be a question and answer session.  

Investors and analysts may participate in the live conference call by dialing 1-877-510-3938 (domestic) or 1-412-902-4137 (international) and referencing the Moelis & Company Second Quarter 2018 Earnings Call.  Please dial in 15 minutes before the conference call begins.  The conference call will also be accessible as a listen-only audio webcast through the Investor Relations section of the Moelis & Company website at www.moelis.com.

For those unable to listen to the live broadcast, a replay of the call will be available for one month via telephone starting approximately one hour after the live call ends.  The replay can be accessed at 1-877-344-7529 (domestic) or 1-412-317-0088 (international); the conference number is 10121797.

About Moelis & Company

Moelis & Company is a leading global independent investment bank that provides innovative strategic advice and solutions to a diverse client base, including corporations, governments and financial sponsors.  The Firm assists its clients in achieving their strategic goals by offering comprehensive integrated financial advisory services across all major industry sectors.  Moelis & Company’s experienced professionals advise clients on their most critical decisions, including mergers and acquisitions, recapitalizations and restructurings, capital markets transactions, and other corporate finance matters.  The Firm serves its clients from 19 geographic locations in North and South America, Europe, the Middle East, Asia and Australia.  For further information, please visit: www.moelis.com or follow us on Twitter @Moelis.     

7


Forward-Looking Statements

This press release contains forward-looking statements, which reflect the Firm’s current views with respect to, among other things, its operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “target,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. For a further discussion of such factors, you should read the Firm’s filings with the Securities and Exchange Commission. The Firm undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

Adjusted results are a non-GAAP measure which better reflect management’s view of operating results.  We believe that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable GAAP measures, are useful to investors to understand the Firm’s operating results by removing the significant accounting impact of one-time charges associated with the Firm’s IPO and assuming all Class A partnership units have been exchanged into Class A common stock.  These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of GAAP results to Adjusted results is presented in the Appendix.

Contacts

Investor Contact:

 

Media Contact:

Michele Miyakawa

 

Andrea Hurst

Moelis & Company

 

Moelis & Company

t: + 1 310 443 2344

 

t: + 1 212 883 3666

michele.miyakawa@moelis.com

 

m: +1 347 583 9705

 

 

andrea.hurst@moelis.com

 

8


 

Appendix

GAAP Consolidated Statement of Operations (Unaudited)

Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information (Unaudited)

 


Moelis & Company

GAAP Consolidated Statement of Operations

Unaudited

(dollars in thousands, except for share and per share data)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

220,405

 

 

$

172,149

 

 

$

439,823

 

 

$

345,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

128,109

 

 

 

100,808

 

 

 

255,286

 

 

 

202,534

 

Occupancy

 

 

4,550

 

 

 

4,097

 

 

 

9,133

 

 

 

8,277

 

Professional fees

 

 

6,574

 

 

 

3,939

 

 

 

12,258

 

 

 

9,180

 

Communication, technology and information services

 

 

7,317

 

 

 

6,738

 

 

 

14,450

 

 

 

12,209

 

Travel and related expenses

 

 

10,851

 

 

 

8,105

 

 

 

22,411

 

 

 

14,696

 

Depreciation and amortization

 

 

1,100

 

 

 

822

 

 

 

2,155

 

 

 

1,679

 

Other expenses

 

 

6,259

 

 

 

4,932

 

 

 

13,416

 

 

 

11,090

 

Total expenses

 

 

164,760

 

 

 

129,441

 

 

 

329,109

 

 

 

259,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

55,645

 

 

 

42,708

 

 

 

110,714

 

 

 

85,742

 

Other income (expenses)

 

 

1,286

 

 

 

17,695

 

 

 

1,873

 

 

 

17,933

 

Income (loss) from equity method investments

 

 

2,226

 

 

 

(1,330

)

 

 

3,114

 

 

 

1,774

 

Income (loss) before income taxes

 

 

59,157

 

 

 

59,073

 

 

 

115,701

 

 

 

105,449

 

Provision for income taxes

 

 

6,027

 

 

 

9,549

 

 

 

8,590

 

 

 

16,546

 

Net income (loss)

 

 

53,130

 

 

 

49,524

 

 

 

107,111

 

 

 

88,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

17,440

 

 

 

29,794

 

 

 

38,096

 

 

 

53,895

 

Net income (loss) attributable to Moelis & Company

 

$

35,690

 

 

$

19,730

 

 

$

69,015

 

 

$

35,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock

   outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

41,750,396

 

 

 

28,165,552

 

 

 

38,938,952

 

 

 

27,325,145

 

Diluted

 

 

49,280,107

 

 

 

34,374,882

 

 

 

46,991,421

 

 

 

33,752,139

 

Net income (loss) attributable to holders of shares of

   Class A common stock per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.85

 

 

$

0.70

 

 

$

1.77

 

 

$

1.28

 

Diluted

 

$

0.72

 

 

$

0.57

 

 

$

1.47

 

 

$

1.04

 

 

A-1


Moelis & Company

Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information

Unaudited

(dollars in thousands, except share and per share data)

 

 

 

Three Months Ended June 30, 2018

 

Adjusted Items

 

GAAP

 

 

Adjustments

 

 

 

Adjusted

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

128,109

 

 

$

(1,379

)

(a)(b)

 

$

126,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

55,645

 

 

 

1,379

 

 

 

 

57,024

 

Other income (expenses)

 

 

1,286

 

 

 

(677

)

(b)

 

 

609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

59,157

 

 

 

702

 

 

 

 

59,859

 

Provision for income taxes

 

 

6,027

 

 

 

1,624

 

(c)

 

 

7,651

 

Net income (loss)

 

 

53,130

 

 

 

(922

)

 

 

 

52,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

17,440

 

 

 

(17,440

)

 

 

 

-

 

Net income (loss) attributable to Moelis & Company

 

$

35,690

 

 

$

16,518

 

 

 

$

52,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock

   outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

41,750,396

 

 

 

17,909,824

 

(d)

 

 

59,660,220

 

Diluted

 

 

49,280,107

 

 

 

17,909,824

 

(d)

 

 

67,189,931

 

Net income (loss) attributable to holders of shares of Class A

   common stock per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.85

 

 

 

 

 

 

 

$

0.88

 

Diluted

 

$

0.72

 

 

 

 

 

 

 

$

0.78

 

 

(a)

Expense associated with the amortization of Restricted Stock Units (“RSUs”) and stock options granted in connection with the IPO.  In accordance with GAAP, amortization expense of RSUs and stock options granted in connection with the IPO will be recognized over the five year vesting period; we will continue to adjust for this expense due to the one-time nature of the grant.

 

(b)

Reflects a reclassification of other income associated with the forfeiture of fully vested Class A partnership units to compensation and benefits expense.

 

(c)

An adjustment has been made to illustrate the result as if 100% of the Firm’s income is being taxed at our corporate effective tax rate of 12.8% for the period stated, which includes the excess tax benefit of $7.4 million related to the settlement of share-based awards. Excluding such discrete benefit, our effective tax rate for the period presented would have been 25.2%.

(d)

Assumes all outstanding Class A partnership units have been exchanged into Class A common stock.

A-2


 

 

 

Three Months Ended June 30, 2017

 

Adjusted Items

 

GAAP

 

 

Adjustments

 

 

 

Adjusted

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

100,808

 

 

$

(1,000

)

(a)

 

$

99,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

59,073

 

 

 

1,000

 

 

 

 

60,073

 

Provision for income taxes

 

 

9,549

 

 

 

9,041

 

(b)

 

 

18,590

 

Net income (loss)

 

 

49,524

 

 

 

(8,041

)

 

 

 

41,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

29,794

 

 

 

(29,794

)

 

 

 

-

 

Net income (loss) attributable to Moelis & Company

 

$

19,730

 

 

$

21,753

 

 

 

$

41,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock

   outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,165,552

 

 

 

28,597,043

 

(c)

 

 

56,762,595

 

Diluted

 

 

34,374,882

 

 

 

28,597,043

 

(c)

 

 

62,971,925

 

Net income (loss) attributable to holders of shares of Class A

   common stock per share

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.70

 

 

 

 

 

 

 

$

0.73

 

Diluted

 

$

0.57

 

 

 

 

 

 

 

$

0.66

 

 

(a)

Expense associated with the amortization of RSUs and stock options granted in connection with the IPO.  In accordance with GAAP, amortization expense of RSUs and stock options granted in connection with the IPO will be recognized over the five year vesting period; we will continue to adjust for this expense due to the one-time nature of the grant.

 

(b)

An adjustment has been made to illustrate the result as if 100% of the Firm’s income is being taxed at our corporate effective tax rate of 30.9% for the period stated, which includes the excess tax benefit of $4.9 million related to the settlement of share-based awards. Excluding such discrete benefit, our effective tax rate for the period presented would have been 39.1%.

 

(c)

Assumes all outstanding Class A partnership units have been exchanged into Class A common stock.

A-3


 

 

Six Months Ended June 30, 2018

 

Adjusted Items

 

GAAP

 

 

Adjustments

 

 

 

Adjusted

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

255,286

 

 

$

(2,389

)

(a)(b)

 

$

252,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

110,714

 

 

 

2,389

 

 

 

 

113,103

 

Other income (expenses)

 

 

1,873

 

 

 

(677

)

(b)

 

 

1,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

115,701

 

 

 

1,712

 

 

 

 

117,413

 

Provision for income taxes

 

 

8,590

 

 

 

804

 

(c)

 

 

9,394

 

Net income (loss)

 

 

107,111

 

 

 

908

 

 

 

 

108,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

38,096

 

 

 

(38,096

)

 

 

 

-

 

Net income (loss) attributable to Moelis & Company

 

$

69,015

 

 

$