- Third quarter revenues of $150.7
million compare with $151.8 million of revenues in the third
quarter of 2015; first nine month revenues of $408.8 million, up 8%
from the same period of 2015
- GAAP net income of $0.39 per share
(diluted) for the third quarter and $0.99 per share (diluted) for
the first nine months of 2016; Adjusted net income of $0.44 per
share (diluted) for the third quarter and $1.14 per share (diluted)
for the first nine months of 2016
- Continued to execute on organic growth
strategy― Entered into a strategic alliance with Alfaro,
Dávila y Ríos, S.C., Mexico’s leading independent strategic and
finacial advisory firm; Moelis & Company is now present in the
two largest markets in Latin America― Added an Oil & Gas
Senior Advisor in the Houston office to advise upstream clients;
augments existing team of five Managing Directors and is the third
senior hire in Houston this year― Added a Senior Advisor
with significant M&A and operating experience and deep
relationships with multinational companies in healthcare,
industrials and business services
- Strong balance sheet with $235.6
million of cash and short-term investments and no debt at
quarter-end
- Declared quarterly dividend of $0.32
per share
Moelis & Company (“we” or the “Firm”) (NYSE: MC) today
reported financial results for the third quarter ended September
30, 2016. The Firm’s total revenues for the third quarter were
$150.7 million, representing a decrease of 1% from the prior year
period. The Firm reported third quarter 2016 GAAP net income of
$35.3 million, or $0.39 per share (diluted). On an Adjusted basis,
the Firm reported net income of $25.7 million or $0.44 per share
(diluted) for the third quarter of 2016, as compared with $25.1
million or $0.45 per share (diluted) in the prior year period.
Total revenues for the first nine months of 2016 were $408.8
million, up 8% from the $377.1 million of revenues earned in the
first nine months of 2015. GAAP net income for the period was $87.1
million, or $0.99 per share (diluted). On an Adjusted basis, the
Firm reported net income of $65.2 million or $1.14 per share
(diluted) for the first nine months of 2016, as compared with $61.2
million or $1.11 per share (diluted) in the prior year period.
“Following a strong first half of the year, our third quarter
revenues were flat with the prior year quarter, despite the M&A
market being down almost 20% globally1. However, we continue to see
strong M&A-related activity and growing restructuring-related
activity, particularly in the US,” said Ken Moelis, Chairman and
Chief Executive Officer.
“During the third quarter we expanded our global footprint with
a strategic alliance in Mexico, and we recently bolstered our Oil
& Gas and M&A expertise with veteran Senior Advisors. We
continue to invest in the organic growth of our business, which we
believe results in a significantly higher return on invested
capital. This allows us to generate significant cash flow which we
will continue to return to our investors.”
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 38% 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 62% 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
all outstanding Class A partnership units of Moelis & Company
Group LP have been exchanged into Class A common stock of Moelis
& Company.
In the second quarter of 2016, the Firm modified the description
of its unaudited non-generally accepted accounting principles
(“non-GAAP”) measure presented in its quarterly earnings release
and other supplementary information from “Adjusted Pro Forma” to
“Adjusted.” This modification impacted the descriptions only. The
amounts and principles used to derive the Adjusted data have been
consistently applied. 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.
1 Source: Thomson Financial as of October 5, 2016; includes all
transactions greater than $100 million in value
GAAP and Adjusted
(non-GAAP) Selected Financial Data (Unaudited)
U.S. GAAP Adjusted (non-GAAP)*
Three Months Ended September 30, ($ in thousands except
per share data) 2016 2015
2016 vs. 2015Variance
2016 2015
2016 vs. 2015Variance
Revenues $150,676 $151,789 -1 % $150,676 $151,789 -1 %
Income (loss) before income taxes 41,863 39,903 5 % 42,504
41,879 1 % Provision for income taxes 6,550 5,273 24 % 16,789
16,751 0 %
Net income (loss) 35,313 34,630 2 % 25,715 25,128
2 % Net income (loss) attributable to noncontrolling
interests 25,824 24,540 5 % - - N/M Net income (loss) attributable
to Moelis & Company $9,489 $10,090 -6 % $25,715 $25,128 2 %
Diluted earnings per share $0.39 $0.47 -17 % $0.44 $0.45 -2
% N/M = not meaningful * See Appendix for a reconciliation
of GAAP to Adjusted (non-GAAP)
U.S. GAAP
Adjusted (non-GAAP)* Nine Months Ended September 30,
($ in thousands except per share data) 2016
2015
2016 vs. 2015Variance
2016 2015
2016 vs. 2015Variance
Revenues $408,765 $377,074 8 % $408,765 $377,074 8 %
Income (loss) before income taxes 103,852 97,098 7 % 107,729
101,921 6 % Provision for income taxes 16,715 15,652 7 % 42,553
40,768 4 %
Net income (loss) 87,137 81,446 7 % 65,176 61,153
7 % Net income (loss) attributable to noncontrolling
interests 63,785 58,889 8 % - - N/M Net income (loss) attributable
to Moelis & Company $23,352 $22,557 4 % $65,176 $61,153 7 %
Diluted earnings per share $0.99 $1.07 -7 % $1.14 $1.11 3 %
N/M = not meaningful * See Appendix for a reconciliation of
GAAP to Adjusted (non-GAAP)
Revenues
For the third quarter of 2016, revenues were $150.7 million,
representing a decrease of 1% from the record third quarter of 2015
in which we earned $151.8 million of revenues. This compares
favorably with an 18% decrease in the number of global completed
M&A transactions in the same period1.
For the first nine months of 2016, revenues were $408.8 million
as compared with $377.1 million in the same period in 2015,
representing an increase of 8%. The increase in revenues reflects
continued strong M&A activity and a larger number of total
clients advised. We advised 246 clients (120 of whom paid fees
equal to or greater than $1 million) in the first nine months of
2016 as compared with 213 clients (104 of whom paid fees equal to
or greater than $1 million) during the same period in the prior
year.
We continued to execute on our strategy of profitable expansion.
During the third quarter, we entered into a Strategic Alliance in
Mexico with Alfaro, Dávila y Ríos, S.C. which will focus on
cross-border transactions and further expand our global footprint.
The Firm is now present in Brazil and Mexico, Latin America’s two
largest markets. We also announced the addition of a Senior Advisor
in Houston who adds to the Firm’s growing capabilities covering Oil
& Gas clients, and a Senior Advisor who will deepen the Firm’s
client relationships with multinational companies.
1 Source: Thomson Financial as of October 5, 2016; includes all
transactions greater than $100 million in value
Expenses
The following tables set forth information relating to the
Firm’s operating expenses, which are reported net of client expense
reimbursements.
U.S. GAAP Adjusted (non-GAAP)*
Three Months Ended September 30, ($ in thousands)
2016 2015
2016 vs. 2015Variance
2016 2015
2016 vs. 2015Variance
Expenses Compensation and benefits $88,046 $86,277 2%
$87,405 $84,806 3% % of revenues 58% 57% 58% 56% Non-compensation
expenses $22,516 $25,603 -12% $22,516 $25,603 -12% % of revenues
15% 17% 15% 17% Total operating expenses $110,562 $111,880 -1%
$109,921 $110,409 0% % of revenues 73% 74% 73% 73% * See
Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
U.S. GAAP Adjusted (non-GAAP)* Nine Months
Ended September 30, ($ in thousands) 2016
2015
2016 vs. 2015Variance
2016 2015
2016 vs. 2015Variance
Expenses Compensation and benefits $240,912 $211,333
14% $237,035 $207,015 15% % of revenues 59% 56% 58% 55%
Non-compensation expenses $68,289 $71,679 -5% $68,289 $71,679 -5% %
of revenues 17% 19% 17% 19% Total operating expenses $309,201
$283,012 9% $305,324 $278,694 10% % of revenues 76% 75% 75% 74%
* See Appendix for a reconciliation of GAAP to Adjusted
(non-GAAP)
Total operating expenses on a GAAP basis were $110.6 million for
the third quarter and $309.2 million for the first nine months of
2016. On an Adjusted basis, operating expenses were $109.9 million
for the third quarter of 2016 as compared with $110.4 million for
the third quarter of 2015, and $305.3 million for the first nine
months as compared with $278.7 million in the prior year period.
The increase in operating expenses in 2016 resulted from increased
compensation and benefits expenses.
Compensation and benefits expenses were $88.0 million on a GAAP
basis in the third quarter and $240.9 million for the first nine
months of 2016. Adjusted compensation and benefits expenses (which
exclude the amortization of IPO awards for both 2015 and 2016) were
$87.4 million and $237.0 million for the third quarter and first
nine months of 2016, respectively, as compared with $84.8 million
and $207.0 million for the third quarter and first nine months of
2015, respectively. The Adjusted compensation and benefits ratio
increased from 56% in the third quarter and 55% in the first nine
months of 2015 to 58% of revenues in the current year periods. The
increased compensation ratio reflects an additional tranche of
equity amortization expense arising from the 2015 equity incentive
grants made in early 2016 as well as modified vesting terms
associated with that equity.
Non-compensation expenses on a GAAP and Adjusted basis were
$22.5 million for the third quarter of 2016 as compared with $25.6
million for the third quarter of 2015. Our non-compensation expense
ratio decreased to 15% from 17% in the same period of the prior
year. For the first nine months of 2016, GAAP and Adjusted
non-compensation expenses were $68.3 million as compared with $71.7
million for the same period of the prior year, and the
non-compensation expense ratio decreased to 17% from 19%, driven by
continued expense discipline.
Provision for Income Taxes
The corporate partner (Moelis & Company) currently owns 38%
of the operating partnership (Moelis & Company Group LP) and is
subject to corporate U.S. federal and state income tax. Income on
the remaining 62% 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 all
outstanding Class A partnership units of Moelis & Company Group
LP to have been exchanged into Class A common stock of Moelis &
Company such that 100% of the Firm’s third quarter 2016 income was
taxed at our corporate effective tax rate of 39.5%, versus 40.0% in
the prior year period.
Capital Management and Balance Sheet
Moelis & Company continues to maintain a strong financial
position, and as of September 30, 2016, we held cash and short term
investments of $235.6 million and had no debt or goodwill on our
balance sheet.
On October 25, 2016, the Board of Directors of Moelis &
Company declared a quarterly dividend of $0.32 per share to be paid
on December 7, 2016 to common stockholders of record on November
22, 2016.
Earnings Call
We will host a conference call beginning at 5:00pm ET on
Wednesday, October 26, 2016, accessible via telephone and the
internet. Ken Moelis, Chairman and Chief Executive Officer, and Joe
Simon, Chief Financial Officer, will review our third quarter 2016
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 Third
Quarter 2016 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 10093107.
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
with over 650 employees based in 17 offices in North and South
America, Europe, the Middle East, Asia and Australia. For further
information about Moelis & Company, please visit
www.moelis.com.
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.
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
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Revenues $150,676 $151,789 $408,765 $377,074
Expenses Compensation and benefits 88,046 86,277 240,912
211,333 Occupancy 4,096 3,836 14,941 11,228 Professional fees 2,804
5,116 7,551 12,813 Communication, technology and information
services 5,496 4,862 16,101 13,403 Travel and related expenses
4,490 5,951 16,452 16,695 Depreciation and amortization 817 646
2,359 1,954 Other expenses 4,813 5,192 10,885
15,586 Total expenses 110,562 111,880 309,201
283,012
Operating income (loss) 40,114
39,909 99,564 94,062 Other income (expenses) 187 (456 ) 391 (474 )
Income (loss) from equity method investments 1,562 450
3,897 3,510
Income (loss) before income
taxes 41,863 39,903 103,852 97,098 Provision for income taxes
6,550 5,273 16,715 15,652
Net income
(loss) 35,313 34,630 87,137 81,446 Net income (loss)
attributable to noncontrolling interests 25,824 24,540
63,785 58,889 Net income (loss) attributable
to Moelis & Company $9,489 $10,090 $23,352
$22,557
Weighted-average shares of Class A common
stock outstanding
Basic 20,926,745 20,184,835 20,807,189
19,919,675 Diluted 24,301,063 21,466,021
23,516,239 21,105,523 Net income (loss) attributable
to holders of shares of Class A common stock per share Basic $0.45
$0.50 $1.12 $1.13 Diluted $0.39
$0.47 $0.99 $1.07
Moelis & Company
Reconciliation of GAAP to Adjusted
(non-GAAP) Financial Information
Unaudited
(dollars in thousands, except share and
per share data)
Three Months Ended September 30, 2016
Adjusted Items GAAP Adjustments
Adjusted
(non-GAAP)
Compensation and benefits $88,046 ($641) (a) $87,405
Income (loss) before income taxes 41,863 641 42,504 Provision for
income taxes 6,550 10,239 (b) 16,789 Net income (loss) 35,313
(9,598) 25,715 Net income (loss) attributable to
noncontrolling interests 25,824 (25,824) - Net income (loss)
attributable to Moelis & Company $9,489 $16,226 $25,715
Weighted-average shares of Class A common
stock outstanding
Basic 20,926,745 33,699,539 (b) 54,626,284 Diluted 24,301,063
33,699,539 (b) 58,000,602
Net income (loss) attributable to holders
of shares of Class A common stock per share
Basic $0.45 $0.47 Diluted $0.39 $0.44 (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) Assumes all
outstanding Class A partnership units have been exchanged into
Class A common stock. Accordingly, an adjustment has been made such
that 100% of the Firm’s income is taxed at the corporate effective
tax rate of 39.5% for the period presented.
Three Months Ended September 30, 2015 Adjusted
Items GAAP Adjustments Adjusted
(non-GAAP)
Compensation and benefits $86,277 ($1,471) (a) $84,806
Operating income (loss) 39,909 1,471 41,380 Other income
(expenses) (456) 505 (b) 49 Income (loss) before income
taxes 39,903 1,976 41,879 Provision for income taxes 5,273 11,478
(b)(c) 16,751 Net income (loss) 34,630 (9,502) 25,128 Net
income (loss) attributable to noncontrolling interests 24,540
(24,540) - Net income (loss) attributable to Moelis & Company
$10,090 $15,038 $25,128
Weighted-average shares of Class A
common stock outstanding
Basic 20,184,835 33,932,671 (c) 54,117,506 Diluted 21,466,021
33,932,671 (c) 55,398,692
Net income (loss) attributable to holders
of shares of Class A common stock per share
Basic $0.50 $0.46 Diluted $0.47 $0.45 (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) Reflects the netting of GAAP adjustments made
to the amount pursuant to the Company’s Tax Receivable Agreement
against provision for income taxes. (c) Assumes all
outstanding Class A partnership units have been exchanged into
Class A common stock. Accordingly, an adjustment has been made such
that 100% of the Firm’s income is taxed at the corporate effective
tax rate of 40.0% for the period presented.
Nine Months Ended September 30, 2016 Adjusted
Items GAAP Adjustments Adjusted
(non-GAAP)
Compensation and benefits $240,912 ($3,877) (a) $237,035
Income (loss) before income taxes 103,852 3,877 107,729
Provision for income taxes 16,715 25,838 (b) 42,553 Net income
(loss) 87,137 (21,961) 65,176 Net income (loss) attributable
to noncontrolling interests 63,785 (63,785) - Net income (loss)
attributable to Moelis & Company $23,352 $41,824 $65,176
Weighted-average shares of Class A common
stock outstanding
Basic 20,807,189 33,819,095 (b) 54,626,284 Diluted 23,516,239
33,819,095 (b) 57,335,334
Net income (loss) attributable to holders
of shares of Class A common stock per share
Basic $1.12 $1.19 Diluted $0.99 $1.14 (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) Assumes all outstanding Class A partnership
units have been exchanged into Class A common stock. Accordingly,
an adjustment has been made such that 100% of the Firm’s income is
taxed at the corporate effective tax rate of 39.5% for the period
presented.
Nine Months Ended
September 30, 2015 Adjusted Items GAAP
Adjustments Adjusted
(non-GAAP)
Compensation and benefits $211,333 ($4,318) (a) $207,015
Operating income (loss) 94,062 4,318 98,380 Other income
(expenses) (474) 505 (b) 31 Income (loss) before income
taxes 97,098 4,823 101,921 Provision for income taxes 15,652 25,116
(b)(c) 40,768 Net income (loss) 81,446 (20,293) 61,153 Net
income (loss) attributable to noncontrolling interests 58,889
(58,889) - Net income (loss) attributable to Moelis & Company
$22,557 $38,596 $61,153
Weighted-average shares of Class A common
stock outstanding
Basic 19,919,675 34,197,831 (c) 54,117,506 Diluted 21,105,523
34,197,831 (c) 55,303,354
Net income (loss) attributable to holders
of shares of Class A common stock per share
Basic $1.13 $1.13 Diluted $1.07 $1.11 (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) Reflects the netting of GAAP adjustments made
to the amount pursuant to the Company’s Tax Receivable Agreement
against provision for income taxes. (c) Assumes all
outstanding Class A partnership units have been exchanged into
Class A common stock. Accordingly, an adjustment has been made such
that 100% of the Firm’s income is taxed at the corporate effective
tax rate of 40.0% for the period presented.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161026006813/en/
Moelis & CompanyInvestor Relations:Michele Miyakawa,
+1-310-443-2344michele.miyakawa@moelis.comorMedia:Andrea Hurst, +
1-212-883-3666M: +1-347-583-9705andrea.hurst@moelis.com
Moelis (NYSE:MC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Moelis (NYSE:MC)
Historical Stock Chart
From Oct 2023 to Oct 2024