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Section 1: 8-K (8-K)

mc-8k_20200422.htm
false 0001596967 0001596967 2020-04-22 2020-04-22

 

 

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): April 22, 2020

 

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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title

Trading Symbol

Name of Exchange on which registered

Class A Common Stock

MC

New York Stock Exchange (NYSE)

 

Indicate by check mark whether the registrant is an emerging growth company 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 April 22, 2020, Moelis & Company issued a press release announcing financial results for the first quarter ended March 31, 2020.

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 7.01    Regulation FD Disclosure

On April 22, 2020, 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 filed as Exhibit 99.2 to this Form 8-K and is also 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 9.01    Financial Statements and Exhibits

(d)    Exhibits:

 

 

 

Exhibit

 

 

Number

    

Description

99.1

 

Press release of Moelis & Company dated April 22, 2020

99.2

 

Moelis & Company Investor Presentation dated April 2020

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 



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: April 22, 2020

 

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

mc-ex991_6.htm

Exhibit 99.1

 

 

Moelis & Company Reports First Quarter 2020 Financial Results;

Quarterly Dividend of $0.255 Per Share

 

First quarter revenues of $153.7 million, up 12% from the first quarter of 2019

GAAP net income of $0.44 per share (diluted) for the first quarter of 2020; Adjusted net income of $0.45 per share (diluted) for the first quarter, including an $0.18 per share tax benefit

Continued to execute on organic growth strategy

 

Added four Managing Directors in the U.S. since our last earnings release

 

New hires will further strengthen our client coverage in the consumer goods and oil & gas sectors, expand our private equity solutions group, and add capabilities in advising corporates on activist strategies

Strong balance sheet with cash and short term investments of $145.4 million and no debt or goodwill

Declared quarterly dividend of $0.255 per share; temporarily modified dividend to retain capital and provide greater financial flexibility during this period of uncertainty related to COVID-19

During the first quarter, the firm executed its Business Continuity Planning strategy, with essentially all employees working from home under shelter-in-place restrictions

 

We have continued to successfully and virtually support our clients who need quality advice, judgment and focus during this challenging time

NEW YORK, April 22, 2020 – Moelis & Company (NYSE: MC) today reported financial results for the first quarter ended March 31, 2020.  The Firm’s revenues of $153.7 million increased 12% over the prior year period. The Firm reported first quarter 2020 GAAP net income of $30.1 million, or $0.44 per share (diluted) compared with $16.2 million or $0.25 per share (diluted) in the prior year period.  On an Adjusted basis, the Firm reported net income of $31.3 million or $0.45 per share (diluted) for the first quarter of 2020, which compares with $18.2 million of net income or $0.27 per share (diluted) in the prior year period.   GAAP and Adjusted net income in the first quarter of 2020 both include tax benefits of $0.23 per share, and $0.18 per share, respectively, related to the settlement of share based awards and tax relief pursuant to the CARES Act.

“In the current unprecedented environment, the emphasis on balance sheets and business models are now at the forefront of conversations across all companies.  However, for Moelis & Company, building and maintaining a fortress balance sheet has been at the core of our business since inception.  As a

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result, I believe that we will emerge from this period of prolonged uncertainty even stronger than when we went into it, said Ken Moelis Chairman and Chief Executive Officer.

“In addition to our strong financial position, we have built a resilient advisory business that is designed to perform in all economic cycles.  We are currently seeing the benefits of our model in action, as we quickly pivot the platform and organize around our leading restructuring and recapitalization team.  This has led to a significant increase in activity recently, and I feel confident about the contributions from this franchise over the longer term.”

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 80% 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 20% is owned by other partners of Moelis & Company Group LP and is primarily subject to U.S. federal tax at the partner level (certain state and local and foreign income taxes are incurred at the company level).  The Adjusted results included herein apply certain adjustments from our GAAP results, including the assumption that 100% of the Firm’s first quarter 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.

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

 

  

 

US. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended March 31,

 

($ in thousands except per share data)

 

2020

 

 

2019

 

 

2020 vs. 2019 Variance

 

 

2020

 

 

2019

 

 

2020 vs. 2019 Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

153,706

 

 

$

137,783

 

 

 

12

%

 

$

153,706

 

 

$

137,783

 

 

 

12

%

Income (loss) before income taxes

 

 

22,782

 

 

 

11,719

 

 

 

94

%

 

 

25,667

 

 

 

12,615

 

 

 

103

%

Provision for income taxes

 

 

(7,344

)

 

 

(4,458

)

 

 

65

%

 

 

(5,585

)

 

 

(5,557

)

 

 

1

%

Net income (loss)

 

 

30,126

 

 

 

16,177

 

 

 

86

%

 

 

31,252

 

 

 

18,172

 

 

 

72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

4,996

 

 

 

2,607

 

 

 

92

%

 

 

-

 

 

 

-

 

 

N/M

 

Net income (loss) attributable to Moelis & Company

 

$

25,130

 

 

$

13,570

 

 

 

85

%

 

$

31,252

 

 

$

18,172

 

 

 

72

%

Diluted earnings per share

 

$

0.44

 

 

$

0.25

 

 

 

76

%

 

$

0.45

 

 

$

0.27

 

 

 

67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/M = not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Revenues

We earned revenues of $153.7 million in the first quarter of 2020, as compared with $137.8 million in the prior year period, representing an increase of 12%.  This compares favorably with a 23% decrease in

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the number of global completed M&A transactions in the same period1.  The increase in quarterly revenues was driven by an increase in the number of transaction completions, as well as an increase in average fees earned per completed transaction as compared with the prior year period.  Toward the end of the quarter, we saw many M&A transactions being put on hold due to the uncertainty and market volatility caused by COVID-19. COVID-19 has adversely impacted our business and is expected to continue to have a significant and adverse effect on our business, revenues and operating results in the short term.  

 

We continued to execute on our strategy of organic growth.  In the year-to-date 2020 period, we promoted five of our advisory professionals to Managing Director and added four external Managing Directors to enhance our expertise in important sectors, products and regions.  Since our last earnings release, we added four veteran Managing Directors in the U.S. to provide financial and strategic advice to consumer goods clients, augment our global oil & gas franchise, expand our ability to provide seamless industry, product and execution capabilities to financial sponsors and their portfolio companies, and add to our coverage in advising corporates on activist strategies.

 

Expenses

The following tables set forth information relating to the Firm’s operating expenses.

 

  

 

US. GAAP

 

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended March 31,

 

($ in thousands)

 

2020

 

 

2019

 

 

2020 vs. 2019 Variance

 

 

2020

 

 

2019

 

 

2020 vs. 2019 Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Compensation and benefits

 

$

95,120

 

 

$

90,161

 

 

 

6

%

 

$

95,025

 

 

$

89,265

 

 

 

6

%

     % of revenues

 

 

61.9

%

 

 

65.4

%

 

 

 

 

 

 

61.8

%

 

 

64.8

%

 

 

 

 

   Non-compensation expenses

 

$

34,144

 

 

$

37,993

 

 

 

-10

%

 

$

34,144

 

 

$

37,993

 

 

 

-10

%

     % of revenues

 

 

22.2

%

 

 

27.6

%

 

 

 

 

 

 

22.2

%

 

 

27.6

%

 

 

 

 

Total operating expenses

 

$

129,264

 

 

$

128,154

 

 

 

1

%

 

$

129,169

 

 

$

127,258

 

 

 

2

%

     % of revenues

 

 

84.1

%

 

 

93.0

%

 

 

 

 

 

 

84.0

%

 

 

92.4

%

 

 

 

 

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

 

 

Total operating expenses on a GAAP basis were $129.3 million for the first quarter of 2020.  On an Adjusted basis, operating expenses were $129.2 million for the first quarter of 2020 as compared with $127.3 million in the prior year period.  The increase in operating expenses was driven by increased compensation and benefits expenses.  

Compensation and benefits expenses on a GAAP basis were $95.1 million in the first quarter of 2020.  Adjusted compensation and benefits expenses (which exclude the amortization of IPO awards for the prior year reported period) were $95.0 million for the first quarter of 2020, as compared with $89.3

 

1 

Source: Thomson Financial as of April 4, 2020; includes all transactions greater than $100 million in value

3


 

million in the prior year period.  The Adjusted compensation and benefits ratio for the current quarter was 62% versus 65% in the prior year period.  

Non-compensation expenses on a GAAP and Adjusted basis were $34.1 million for the first quarter of 2020 as compared with $38.0 million for the prior year quarter.  The decrease in non-compensation expenses were primarily related to decreased travel and other business development expenses related to social distancing restrictions due to the COVID-19 virus, in addition to our continued and focused expense discipline.  Our non-compensation expense ratio was 22% in the current period versus 28% in the prior year period.

Provision for Income Taxes

The corporate partner (Moelis & Company) currently owns 80% of the operating partnership (Moelis & Company Group LP) and is subject to corporate U.S. federal and state income tax.  Income on the remaining 20% 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 first quarter 2020 income was taxed at our corporate effective tax rate of 25.2%, together with a tax benefit of approximately $9.1 million from the delivery of equity-based compensation at a price above the grant date price and a $2.9 million benefit from the tax relief provisions under the CARES Act, we have a net tax benefit of approximately $5.6 million as compared with modest pre-tax income.

Capital Management and Balance Sheet

On April 20, 2020, the Board of Directors of Moelis & Company declared a quarterly dividend of $0.255 per share.  The $0.255 per share will be paid on June 30, 2020 to common stockholders of record on May 4, 2020.  We believe that modifying our quarterly dividend is the prudent approach in this uncertain environment.  By retaining capital we will enhance our financial flexibility and maintain a position of strength for the post-COVID-19 recovery.  We remain committed to returning all of our excess capital when normal business activity resumes.

Moelis & Company continues to maintain a strong financial position, and as of March 31, 2020, we held cash and liquid investments of $145.4 million and had no debt or goodwill on our balance sheet.

During the first quarter of 2020, we repurchased 869,779 shares of our common stock for a total cost of $31.6 million.

Earnings Call

We will host a conference call beginning at 5:00pm ET on Wednesday, April 22, 2020, accessible via telephone and the internet.  Ken Moelis, Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our first quarter 2020 financial results.  Following the review, there will be a question and answer session.  

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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 First Quarter 2020 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 10142177.

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 20 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.      

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 based on certain assumptions and estimates and 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.  We believe these factors include, but are not limited to, those described under "Risk Factors" discussed in our Annual Report on Form 10-K for the year ended December 31, 2019, subsequent reports filed on Form 10-Q and our other filings with the SEC.  These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release including those statements herein with respect to the negative effect that the COVID-19 pandemic has had and the significant and adverse effect it is expected to continue to have on our business in the short term.  The scale, scope and duration of the impact of the COVID-19 pandemic on our business, revenues and operating results is unpredictable and depends on many factors outside of our control.  Statements herein about the effects of the COVID-19 pandemic on the firm’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently estimated.  In addition, new risks

5


 

and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results.  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 adjusting the accounting impact of certain items 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:

MediaContact:

Chett Mandel

Andrea Hurst

Moelis & Company

Moelis & Company

t: + 1 212 883 3536

t: + 1 212 883 3666

[email protected]

m: +1 347 583 9705

 

[email protected]

 

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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

March 31,

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

153,706

 

 

$

137,783

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

    Compensation and benefits

 

 

 

95,120

 

 

 

90,161

 

    Occupancy

 

 

 

7,231

 

 

 

4,819

 

    Professional fees

 

 

 

4,236

 

 

 

5,179

 

    Communication, technology and information services

 

 

 

8,392

 

 

 

7,962

 

    Travel and related expenses

 

 

 

7,944

 

 

 

11,497

 

    Depreciation and amortization

 

 

 

1,199

 

 

 

1,155

 

    Other expenses

 

 

 

5,142

 

 

 

7,381

 

Total Expenses

 

 

 

129,264

 

 

 

128,154

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

24,442

 

 

 

9,629

 

    Other income (expenses)

 

 

 

(1,660

)

 

 

2,090

 

Income (loss) before income taxes

 

22,782

 

 

 

11,719

 

    Provision (benefit) for income taxes

 

 

 

(7,344

)

 

 

(4,458

)

Net income (loss)

 

30,126

 

 

 

16,177

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

4,996

 

 

 

2,607

 

Net income (loss) attributable to Moelis & Company

$

25,130

 

 

$

13,570

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

    Basic

 

 

 

52,666,457

 

 

 

48,309,358

 

    Diluted

 

 

 

57,092,982

 

 

 

55,108,335

 

Net income (loss) attributable to holders of shares of Class A common stock per share

 

 

 

 

 

 

 

    Basic

 

 

$

0.48

 

 

$

0.28

 

    Diluted

 

 

$

0.44

 

 

$

0.25

 

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 March 31, 2020

 

Adjusted items

 

GAAP

 

 

Adjustments

 

 

Adjusted

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

95,120

 

 

$

(95

)

(a)

$

95,025

 

Other income (expenses)

 

 

(1,660

)

 

 

2,790

 

(a)(b)

 

1,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

22,782

 

 

 

2,885

 

 

 

25,667

 

Provision for income taxes

 

 

(7,344

)

 

 

1,759

 

(b)(c)

 

(5,585

)

Net income (loss)

 

 

30,126

 

 

 

1,126

 

 

 

31,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

4,996

 

 

 

(4,996

)

(d)

 

-

 

Net income (loss) attributable to Moelis & Company

 

$

25,130

 

 

$

6,122

 

 

$

31,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

       Basic

 

 

52,666,457

 

 

 

12,958,022

 

(d)

 

65,624,479

 

       Diluted

 

 

57,092,982

 

 

 

12,958,022

 

(d)

 

70,051,004

 

Net income (loss) attributable to holders of shares of Class A common stock per share

 

 

 

 

 

 

 

 

 

 

 

 

      Basic

 

$

0.48

 

 

 

 

 

 

$

0.48

 

      Diluted

 

$

0.44

 

 

 

 

 

 

$

0.45

 

 

(a)

Reflects a reclassification of $0.1 million of other income to compensation and benefits expense associated with the forfeiture of fully vested awards from the enforcement of non-compete provisions.

 

(b)

Tax Receivable Agreement liability adjustments are made to Other income (expenses) for GAAP purposes. These adjustments are reclassified to provision for income taxes to reflect the net economic impact in the tax line.

 

(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 for the period stated. Our tax provision includes a tax benefit related to the settlement of share-based awards of $9.1 million and a $2.9 million benefit from the tax relief provisions under the CARES Act; excluding such discrete benefits, 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 March 31, 2019

 

Adjusted items

 

GAAP

 

 

Adjustments

 

 

Adjusted

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

90,161

 

 

$

(896

)

(a)

$

89,265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

11,719

 

 

 

896

 

 

 

12,615

 

Provision for income taxes

 

 

(4,458

)

 

 

(1,099

)

(b)

 

(5,557

)

Net income (loss)

 

 

16,177

 

 

 

1,995

 

 

 

18,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

2,607

 

 

 

(2,607

)

(c)

 

-

 

Net income (loss) attributable to Moelis & Company

 

$

13,570

 

 

$

4,602

 

 

$

18,172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

      Basic

 

 

48,309,358

 

 

 

13,053,465

 

(c)

 

61,362,823

 

      Diluted

 

 

55,108,335

 

 

 

13,053,465

 

(c)

 

68,161,800

 

Net income (loss) attributable to holders of shares of Class A common stock per share

 

 

 

 

 

 

 

 

 

 

 

 

      Basic

 

$

0.28

 

 

 

 

 

 

$

0.30

 

      Diluted

 

$

0.25

 

 

 

 

 

 

$

0.27

 

 

(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.

(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 for the period stated. Our tax provision includes an excess tax benefit related to the settlement of share-based awards of $8.7 million; excluding such discrete benefit, our effective tax rate for the period presented would have been 25.3%.

(c)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

A-3

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Section 3: EX-99.2 (EX-99.2)

mc-ex992_33.pptx.htm

Slide 0

April 2020 Exhibit 99.2

Slide 1

This presentation 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 based on certain assumptions and estimates and 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. We believe these factors include, but are not limited to, those described under "Risk Factors" discussed in our Annual Report on Form 10-K for the year ended December 31, 2019. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. In particular, statements herein about the effects of the COVID-19 pandemic on the firm’s business, results, financial position and liquidity may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently estimated. In addition, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results. 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. Forward Looking Statements [ ]

Slide 2

Premier Global Independent Investment Bank Global footprint 20 geographic locations in the Americas, Europe, the Middle East, Asia and Australia Trusted advisor Focus on M&A, Restructuring, Capital Solutions, Capital Markets and Private Funds Advisory Expertise across all major industries World class coverage 127 MDs with an average of over 21 years of experience 1 Consistent Performance Top ten global M&A advisor for completed M&A 2 Number one Global and US restructuring advisor 3 Q1 2020 revenues of $154 million, up 12% from the prior year Healthy balance sheet with strong cash position and no debt or goodwill Commitment to return 100% of excess capital to shareholders Positioned well to emerge stronger from this period of prolonged uncertainty Notes: As of 4/22/2020 Source: Dealogic – FY 2019 M&A Revenue Source: Refinitiv – FY 2019 Completed Deals (by value) [ ]

Slide 3

Moelis & Company Milestones 2007 – 2008 Founded and Raised Growth Capital from Global Institutional Investors Hired Restructuring Team 2009 – 2010 Entered Hong Kong, China, India & Middle East IPO in April 2014 (NYSE: MC) Formed Private Funds Advisory Business 2011 – 2014 Expanded into Brazil & established German presence Mexico Alliance with Alfaro, Dávila y Scherer, S.C. Completed Energy Team build out 2015 – 2016 Australian Joint Venture listed on Australian Securities Exchange Formed Shareholder Defense and Capital Solutions Group Expansion into Continental Europe and the Benelux & Nordic Regions 2017 – 2019 Established European Business Formed Joint Venture in Australia Japan Alliance with SMBC/SMBC Nikko & $93 Million Investment [ ]

Slide 4

Our Business: Relationships, Judgment and Experience Los Angeles, US London, UK Hong Kong, CN Japan Strategic Alliance with SMBC / SMBC Nikko Boston, US Dubai, UAE Houston, US New York, US San Francisco, US Beijing, CN Frankfurt, DE Mumbai, IN Paris, FR São Paulo, BR Sydney, AUS Joint Venture Chicago, US Melbourne, AUS Joint Venture Global footprint to serve client needs with approximately 875 bankers ¹ Washington, DC, US Note: As of 4/22/2020 Globally integrated platform valuable to clients and difficult to replicate Mexico City, MX Strategic Alliance with Alfaro, Dávila y Scherer, S.C. Amsterdam, NL [ ]

Slide 5

Acquisition of Forest City Realty Trust, Inc. Sale to Shiseido Company, Limited Acquisition of Tarsus Group plc Restructuring of 7.5% Senior Notes due 2020 Restructuring $11.4bn Restructuring All-share combination with Flutter Entertainment plc Acquisition of Twenty-First Century Fox, Inc. CBS and Viacom all-stock merger Exchange of Cash and Class C Common Stock for Class V Tracking Stock Long-term Credit Card Agreement with Capital One Sale to Nexstar Media Group, Inc. Sale of two portfolios of mortgages and unsecured loans to Citi, with financing provided by PIMCO Exchange Offer Transformative global collaboration with Gilead Sciences, Inc. Sale to Harsco Corporation Sale to Cantel Medical Corp. Merger with Option Care Enterprises, Inc. Restructuring Sale to Goldman Sachs Group, Inc. Fundraise for Luminate Capital Partners II, LP Restructuring and sale of substantially all assets to ESL Investments, Inc. Strategic partnerships and stake sales to Eni and OMV in ADNOC Refining Acquisition by Expedia Group, Inc. $845mm £668mm Sale to Marriott Vacations Worldwide Corporation $5.1bn $500mm Initial Public Offering $500mm Restructuring and Recapitalization £2.1bn Acquisition of Meridian Health Plans $2.5bn Private Placement of Common and Convertible Preferred Equity $2.5bn Restructuring $2.6bn Acquisition by Dominion Energy, Inc. $4.2bn Acquisition of Peoples $4.3bn €8.7bn Sale to WestRock Company $5bn $16.2bn $19bn Merger with HRG Group, Inc. $10bn Reinsurance of Financial Guaranty Policies to Assured Guaranty Corp. $13.5bn Recent Transactions with Marquee Clients $85.1bn $48bn Capital Raise through Convertible Bonds Issuance $532mm Sale to Facebook, Inc. $21.7bn Restructuring and Structuring of New Trade Finance Facilities $5.9bn Sale of a Stake in ADNOC Drilling to Baker Hughes, a GE Company $550mm Restructuring $3bn $7.2bn £4.9bn $3bn Exchange offer, consent solicitations, and term loan amendment and extension $4.4bn Sale to Greif, Inc. $1.8bn $5.1bn $625mm $775mm $3.7bn $1.7bn $750mm $5.5bn 11.0 million share common stock offering $762mm Restructuring $4bn $5.8bn $2.6bn Settlement agreement of its international arbitration award against EGAS and EGPC $1.6bn Acquisition of Bemis Company, Inc. $6.8bn Restructuring $1.6bn Sale of Kokusai Electric Corporation to Applied Materials, Inc. $2.2bn Common stock commitment by Canada Pension Plan Investment Board $750mm Sale of The National Titanium Dioxide Company Limited’s (Cristal) Titanium Dioxide Business to INEOS Enterprises $700mm U.S. Media and Sports Wagering Partnership with FOX Sports $430mm Restructuring and Sale of Aubstantially All Assets to ESL Investments, Inc. $5.5bn Acquisition by Expedia Group, Inc. Sale to Cantel Medical Corp. Sale to Digital Realty, Inc. Initial Public Offering $2.6bn $775mm Restructuring Acquisition of Twenty-First Century Fox, Inc. Acquisition of Tarsus Group plc Acquisition of AK Steel Holding Corporation £668mm $3bn All-Share Combination with Flutter Entertainment plc Sale to Goldman Sachs Group, Inc. Sale of Two Portfolios of Mortgages and Unsecured Loans £4.9bn Restructuring CBS and Viacom All-Stock Merger Sale to Shiseido Company, Limited Sale to Brookfield Infrastructure Partners LP $845mm $2.6bn Acquisition of Banco Santander Puerto Rico Exchange of Cash and Class C Common Stock for Class V Tracking Stock Sale to Nexstar Media Group, Inc. Common Stock Commitment by CPPIB $1.1bn $21.7bn $750mm Exchange Offer, Consent Solicitations, Term Loan Amendment and Extension Exchange Offer $4.4bn €2.9bn Transformative Global Collaboration with Gilead Sciences, Inc. Merger with Option Care Enterprises, Inc. $3.7bn $750mm $85.1bn $48bn $7.2bn $8.4bn $19bn $29.4bn (Incl. Greenshoe) $5.1bn $16.2bn €8.7bn [ ] Advisors to select non-litigating pref. stockholders $500bn

Slide 6

Fully Integrated Advisory Platform Comprehensive capabilities across products, industries and geographies coupled with independent, uncompromised advice Integrated Advisory Platform Product Expertise Industry Coverage Global Footprint Consumer & Retail Energy, Power & Infrastructure Financial Institutions Financial Sponsors General Industrials Healthcare Real Estate, Gaming, Lodging & Leisure Technology, Media & Telecommunications Mergers & Acquisitions Recapitalization & Restructuring Capital Structure Advisory Capital Markets Financial Institutions Advisory Private Funds Advisory Shareholder Advisory Capital Solutions Sovereign Advisory North America South America Europe Middle East Asia Australia [ ]

Slide 7

Compelling Investment Opportunity Differentiated model Strong partnership culture One-Firm philosophy with one global P&L Focus on internal development Strong, asset light balance sheet with no debt and no goodwill Durable model with premier restructuring and m&a franchises Longer term growth opportunities Leading total shareholder return since IPO 1 [ ] Source: CapIQ, Dividend Adjusted Share Price calculation beginning April 15, 2014 and concluding March 31, 2020; compared to indexed peer set of Evercore, Greenhill, Houlihan Lokey, Lazard, and PJT

Slide 8

Differentiated Model Global Collaboration Global partnership approach One firm P&L (non commission-based compensation) Optimal structure for client advice and talent development Ability to quickly pivot resources to new business opportunities related to the market uncertainty caused by COVID-19 High ROIC Profitable organic growth Internal talent development (34% of current MDs are promotes) 1 Commitment to Shareholders Return 100% of excess cash Disciplined expense management Clean balance sheet with no debt or goodwill Note: As of 4/22/2020 [ ]

Slide 9

Fortress Balance Sheet and Disciplined Capital Management Strong financial position Cash and liquid investments of $145 million 1 Undrawn revolver No debt No goodwill Virtually no cash compensation obligations arising from prior years Minimal capital requirements Commitment to return all excess capital to shareholders through dividends, special dividends and share repurchases Note: As of 3/31/2020 [ ]

Slide 10

Advised on over $1 trillion of restructuring transactions across more than 400 assignments since 2008 Approximately 60% of Company-side transactions are completed out-of-court Advised on 8 of the 10 largest restructurings in 2018 and 2019 Global network essential to maximize client outcome Global team of over 50 bankers with long-standing core group that has worked together for over 20 years No conflicts and discretion Leader in Recapitalization & Restructuring Advisory Note: 1. Thomson Reuters; 2019 U.S. Completed Restructurings (Jan. 1 – Dec. 31); investment banks only RANK ADVISOR NO. DEALS VALUE ($MM) 1 Moelis 36 $93,015 2 PJT Partners 43 92,192 3 Houlihan Lokey 76 68,553 4 Lazard 29 58,544 5 TRS Advisors 4 33,390 6 Rothschild 16 31,421 7 AlixPartners 19 29,257 8 Perella Weinberg 5 28,987 9 GLC Advisors 5 27,009 10 Jefferies 5 23,490 2019 Restructuring Advisor of the Year [ ] KEY HIGHLIGHTS 2019 GLOBAL COMPLETED RESTRUCTURINGS 1

Slide 11

Strong Record of Organic Growth MOELIS & COMPANY REVENUES ($MM) M&A Y-o-Y Change 1 13.7% (3.0%) (4.0%) 11.9% (4.5%) (6.9%) (1.2%) (3.4%) (8.0%) (23.3%) Default Rates 2 1.9% 2.6% 2.8% 2.1% 2.5% 4.4% 3.4% 3.0% 2.4% 2.7% Source:Thomson Reuters Notes: Based on global completed number of M&A transactions greater than $100 million for the three month period ended 3/31/2020 Based on average trailing twelve month default rate from Moody’s “Annual Default Study: Corporate Default and Recovery Rates” Market Metrics 2011 – LTM Q1 2020 CAGR = 12% $886 [ ]

Slide 12

Long-Term Growth Drivers 411 – LTM Q3 – 42% 411 – 600 – 46% 411 – 610 – 48% 86 2013 102 2016 8 promotes 2 leavers Premier M&A Franchise Differentiated Model Leading Restructuring Business Strong dialogue levels but currently experiencing a hiatus in M&A due to COVID-19 Strong relationships with Financial Sponsors Ability to execute for clients in the middle-market and with mega–cap clients Increasing market share Maturation of MDs: ~ 25% of MDs have been MDs at the firm for three years or less Expanding global brand recognition Significant whitespace Intense focus on ROIC Investment in talent development Significant Franchise Enhancement and Shareholder Value Tremendous increase in mandates since the middle of March #1 Ranking for US & Worldwide Completed Volumes in 2019 1 Named Top Restructuring Adviser for the 2019 IFR Awards Note: Source: Refinitiv – FY 2019 Completed Deals (by value) [ ]

Slide 13

Appendix

Slide 14

Reconciliation of GAAP to Adjusted (non-GAAP) Financials Source:Company filings Note: Includes reclassification associated with the forfeiture of fully vested awards from the enforcement of non-compete provisions Our Adjusted results apply certain adjustments from our GAAP results, including the assumption that 100% of the Firm’s first quarter 2020 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. [ ]

Slide 15

Quarterly Revenue Summary QUARTERLY REVENUE (Q1 2013 – Q1 2020) ($MM) Source:Company filings Note: Management primarily focuses on annual revenue measures as revenues in any quarter may not be indicative of full year results and the results of any period may vary significantly from quarter to quarter and year to year. For the purpose of understanding the Company’s historical experience for the 9-year period of 2010-2019, revenues on average were distributed over the four calendar quarters as follows: Q1: 21%; Q2: 24%; Q3: 26%; Q4: 30%. The quarterly revenue data for Q1 2013 through Q1 2020 was derived from our unaudited financial statements included in our Form 10-Qs and our audited financial statements included in our Form 10-Ks. The quarterly revenue data for 2010, 2011 and 2012 was prepared on substantially the same basis as the unaudited financial statements in our Form 10-Qs and our audited financial statements in our Form 10-Ks and includes all normal and recurring adjustments that we consider necessary for a fair presentation of revenue for these periods 1. Sum of four quarters may not add up to 100% due to rounding % of Full Year Revenue 1 15% 24% 24% 38% 22% 25% 25% 28% 18% 23% 28% 32% 21% 21% 25% 33% 25% 25% 25% 25% 25% 25% 23% 27% 18% 21% 31% 30% N/A [ ]

Slide 16

Share Count Breakdown Notes:Data represents weighted-average for the three month period ending March 31, 2020 Includes 1.2 million undelivered awards with no remaining service requirement Includes former Managing Directors and Employees In April 2020, all outstanding Class A Partnership Units will be off of lock-up As calculated under the treasury stock method For the Three Months ended March 31, 2020 (shares in millions) 2, 3 1 4 [ ]

Slide 17

% of Total Deal Count Source:Dealogic Note:Percentage represents percent of total company deal count; based on completed M&A transactions from 1/1/2017 to 12/31/2019; excludes transactions less than $100 million and those with no transaction value disclosed Historical Deal Distribution by Transaction Size [ ]

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