mc-ex991_6.htm

NEW YORK, April 30, 2019 – Moelis & Company (NYSE: MC) today reported financial results for the first quarter ended March 31, 2019. The Firm’s revenues of $137.8 million decreased 37% over the prior year period. The Firm reported first quarter 2019 GAAP net income of $16.2 million, or $0.25 per share (diluted) compared with $54.0 million or $0.75 per share (diluted) in the prior year period. On an Adjusted basis, the Firm reported net income of $18.2 million or $0.27 per share (diluted) for the first quarter of 2019, which compares with $55.8 million of net income or $0.84 per share (diluted) in the prior year period. GAAP and Adjusted net income in the first quarter of 2018 include tax benefits of $0.18 per share and $0.19 per share, respectively, related to the settlement of share based awards. GAAP and Adjusted net income in the first quarter of 2019 include tax benefits of $0.12 per share and $0.13 per share, respectively, related to the settlement of share based awards.

“Compared to a record first quarter of 2018, our first quarter 2019 financial results included fewer transaction completions. While deal completions and announcements started off slower than expected in the beginning of the year, we have seen a recent acceleration of activity across all products and our bankers remain very busy. The fundamentals of our Firm and the key drivers of M&A remain strong. We continue to execute on our long term strategy of strengthening our franchise by hiring and developing great talent and delivering exceptional advice to our clients,” said Ken Moelis, Chairman and Chief Executive Officer.

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 78% 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 22% 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 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 first quarter 2019 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.

	US. GAAP								Adjusted (non-GAAP)*
	Three Months Ended March 31,
($ in thousands except per share data)	2019			2018		2019 vs. 2018 Variance			2019			2018		2019 vs. 2018 Variance

Revenues	$	137,783		$	219,418		-37	%	$	137,783		$	219,418		-37	%
Income (loss) before income taxes		11,719			56,544		-79	%		12,615			57,554		-78	%
Provision for income taxes		(4,458	)		2,563	N/M				(5,557	)		1,743	N/M
Net income (loss)		16,177			53,981		-70	%		18,172			55,811		-67	%

Net income (loss) attributable to noncontrolling interests		2,607			20,656		-87	%		-			-	N/M
Net income (loss) attributable to Moelis & Company	$	13,570		$	33,325		-59	%	$	18,172		$	55,811		-67	%
Diluted earnings per share	$	0.25		$	0.75		-67	%	$	0.27		$	0.84		-68	%

N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

We earned revenues of $137.8 million in the first quarter of 2019, as compared with $219.4 million in the prior year period, representing a decrease of 37%. The decrease was primarily driven by fewer transaction completions, compared with a record first quarter of 2018. This compares with an 18% decrease in the number of global completed M&A transactions in the same period¹.

We continued to execute on our strategy of organic growth. During the first quarter, we hired a Managing Director to expand the Firm’s data analytics initiative.

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)	2019			2018			2019 vs. 2018 Variance			2019			2018			2019 vs. 2018 Variance
Expenses:
Compensation and benefits	$	90,161		$	127,177			-29	%	$	89,265		$	126,167			-29	%
% of revenues		65.4	%		58.0	%					64.8	%		57.5	%
Non-compensation expenses	$	37,993		$	37,172			2	%	$	37,993		$	37,172			2	%
% of revenues		27.6	%		16.9	%					27.6	%		16.9	%
Total operating expenses	$	128,154		$	164,349			-22	%	$	127,258		$	163,339			-22	%
% of revenues		93.0	%		74.9	%					92.4	%		74.4	%

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

Total operating expenses on a GAAP basis were $128.2 million for the first quarter of 2019. On an Adjusted basis, operating expenses were $127.3 million for the first quarter of 2019 as compared with $163.3 million in the prior year period. The decrease in operating expenses was associated with a decline in revenues, which drove decreased compensation and benefits expenses in the current year period.

Compensation and benefits expenses on a GAAP basis were $90.2 million in the first quarter of 2019. Adjusted compensation and benefits expenses (which exclude the amortization of IPO awards for the reported periods) were $89.3 million for the first quarter of 2019, as compared with $126.2 million in the prior year period. The Adjusted compensation and benefits ratio for the current quarter was 64.8%.

Non-compensation expenses on a GAAP and Adjusted basis were $38.0 million for the first quarter of 2019 as compared with $37.2 million for the prior year period. Our non-compensation expense ratio increased from 16.9% in the prior year period to 27.6% in the current period due to a substantial decline in revenues.

The corporate partner (Moelis & Company) currently owns 78% of the operating partnership (Moelis & Company Group LP) and is subject to corporate U.S. federal and state income tax. Income on the remaining 22% 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 2019 income was

taxed at our corporate tax rate of 25.3%, together with a tax benefit of approximately $8.7 million from the delivery of equity-based compensation at a price above the grant date price. A net tax benefit of approximately $5.5 million was the result of a modest pre-tax income.

On April 29, 2019, the Board of Directors of Moelis & Company declared a quarterly dividend of $0.50 per share, which will be paid on June 25, 2019 to common stockholders of record on May 10, 2019.

Moelis & Company continues to maintain a strong financial position, and as of March 31, 2019, held cash and liquid investments of $78.4 million and had no debt or goodwill.

During the first quarter of 2019, we repurchased 94,726 shares of our common stock for a total cost of $3.5 million. In addition, during the first quarter of 2019, we repurchased 522,070 restricted stock units for $23.5 million to settle tax liabilities.

We will host a conference call beginning at 5:00pm ET on Tuesday, April 30, 2019, accessible via telephone and the internet. Ken Moelis, Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our first quarter 2019 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 First Quarter 2019 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 10130225.

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.

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.

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.

	Three Months Ended March 31,
	2019			2018
Revenues	$	137,783		$	219,418

Expenses
Compensation and benefits		90,161			127,177
Occupancy		4,819			4,583
Professional fees		5,179			5,684
Communication, technology and information services		7,962			7,133
Travel and related expenses		11,497			11,560
Depreciation and amortization		1,155			1,055
Other expenses		7,381			7,157
Total expenses		128,154			164,349

Operating income (loss)		9,629			55,069
Other income (expenses)		1,377			587
Income (loss) from equity method investments		713			888
Income (loss) before income taxes		11,719			56,544
Provision for income taxes		(4,458	)		2,563
Net income (loss)		16,177			53,981
Net income (loss) attributable to noncontrolling interests		2,607			20,656
Net income (loss) attributable to Moelis & Company	$	13,570		$	33,325
Weighted-average shares of Class A common stock outstanding
Basic		48,309,358			36,169,566
Diluted		55,108,335			44,596,534
Net income (loss) attributable to holders of shares of Class A common stock per share
Basic	$	0.28		$	0.92
Diluted	$	0.25		$	0.75

	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	)			-
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

	Three Months Ended March 31, 2018
Adjusted items	GAAP		Adjustments				Adjusted (non-GAAP)
Compensation and benefits	$	127,177	$	(1,010	)	(a)	$	126,167

Income (loss) before income taxes		56,544		1,010				57,554
Provision for income taxes		2,563		(820	)	(b)		1,743
Net income (loss)		53,981		1,830				55,811

Net income (loss) attributable to noncontrolling interests		20,656		(20,656	)			-
Net income (loss) attributable to Moelis & Company	$	33,325	$	22,486			$	55,811

Weighted-average shares of Class A common stock outstanding
Basic		36,169,566		21,727,395		(c)		57,896,961
Diluted		44,596,534		21,727,395		(c)		66,323,929
Net income (loss) attributable to holders of shares of Class A common stock per share
Basic	$	0.92					$	0.96
Diluted	$	0.75					$	0.84


Investor Contact:	MediaContact:
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