Attached files

file filename
8-K - 8-K - Moelis & Coa15-21895_18k.htm

Exhibit 99.1

 

 

Moelis & Company Reports Third Quarter 2015 Financial Results;

Quarterly Dividend of $0.30 Per Share

 

·                  Third quarter revenues of $151.8 million, up 18% from the third quarter of 2014; first nine month revenues of $377.1 million, up 1% from the same period in 2014

 

·                  Adjusted Pro Forma net income of $0.45 per share (diluted) for the third quarter and $1.11 per share (diluted) for the first nine months of 2015, respectively; GAAP net income of $0.47 per share (diluted) and $1.07 per share (diluted) for the third quarter and first nine months of 2015, respectively

 

·                  Continued to execute on growth strategy

 

·                  Appointed Co-Founders Navid Mahmoodzadegan and Jeff Raich as Co-Presidents; Rick Leaman appointed Vice Chairman of Moelis & Company

 

·                  Appointed John A. Allison as an independent member of the Board of Directors

 

·                  Announced the hiring of two Managing Directors in the U.S. since our last earnings release to enhance industry expertise in consumer and technology, media and telecommunications; added 11 net Managing Directors year-to-date

 

·                  Cash of $200.8 million and no debt at quarter-end

 

·                  Declared quarterly dividend of $0.30 per share

 

NEW YORK, October 28, 2015 — Moelis & Company (“we” or the “Firm”) (NYSE: MC) today reported financial results for the third quarter ended September 30, 2015.  The Firm’s total revenues of $151.8 million for the third quarter represented an increase of 18% from the third quarter of 2014.  Adjusted Pro Forma net income was $25.1 million or $0.45 per share (diluted) for the third quarter of 2015, as compared with $23.2 million or $0.42 per share (diluted) in the prior year period.

 

For the first nine months of 2015, revenues were $377.1 million, increasing 1% from the prior year period and resulting in $61.2 million of Adjusted Pro Forma net income, or $1.11 per share (diluted).  This compares with $66.0 million of Adjusted Pro Forma net income or $1.20 per share (diluted) in the first nine months of 2014.

 

On a GAAP basis, the Firm reported net income of $34.6 million or $0.47 per share (diluted) for the third quarter and $81.4 million or $1.07 per share (diluted) for the first nine months of 2015.

 

1



 

This compares to GAAP net income of $32.8 million and a net loss of $5.7 million for the third quarter and first nine months of 2014, respectively, or a net loss of $0.82 per share (diluted) for the period from the IPO closing on April 22, 2014 through September 30, 2014.

 

“Our third quarter revenues reflect accelerated growth in our M&A related activity driven by new business and clients and the continued maturation of our Managing Directors.  We continue to attract top talent and ended the quarter with 104 Managing Directors and over 460 advisory professionals.  Despite recent market volatility, we remain optimistic about our opportunities to grow our Firm and deliver value to our shareholders,” 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.

 

Moelis & Company completed its IPO on April 22, 2014 and introduced a new corporate structure. Currently 37% of the operating partnership (Moelis & Company Group LP) is owned by the corporation (Moelis & Company) and is taxed as a corporation.  The remaining 63% is owned by partners and is primarily subject to tax at the partner level (except for certain state and local and foreign income taxes).  The Adjusted Pro Forma results included herein remove the impact of adjustments to the Company’s Tax Receievable Agreement and 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. We believe the Adjusted Pro Forma 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 Pro Forma results is presented in the Appendix to this press release.

 

2



 

GAAP and Adjusted Pro Forma Selected Financial Data (Unaudited)

 

 

 

U.S. GAAP

 

Adjusted Pro Forma*

 

 

 

Three Months Ended September 30,

 

($ in thousands except per share data)

 

2015

 

2014

 

2015 vs.
2014
Variance

 

2015

 

2014

 

2015 vs.
2014
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

151,789

 

$

128,651

 

18

%

$

151,789

 

$

128,651

 

18

%

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

86,277

 

68,148

 

27

%

84,806

 

66,670

 

27

%

Non-compensation expenses

 

25,603

 

24,730

 

4

%

25,603

 

24,730

 

4

%

Total operating expenses

 

111,880

 

92,878

 

20

%

110,409

 

91,400

 

21

%

Operating income (loss)

 

39,909

 

35,773

 

12

%

41,380

 

37,251

 

11

%

Other income (expenses)

 

(456

)

617

 

N/M

 

49

 

617

 

-92

%

Income (loss) from equity method investments

 

450

 

1,105

 

-59

%

450

 

1,105

 

-59

%

Income (loss) before income taxes

 

39,903

 

37,495

 

6

%

41,879

 

38,973

 

7

%

Provision for income taxes

 

5,273

 

4,710

 

12

%

16,751

 

15,784

 

6

%

Net income (loss)

 

34,630

 

32,785

 

6

%

25,128

 

23,189

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

24,540

 

26,285

 

-7

%

 

 

N/M

 

Net income (loss) attributable to Moelis & Company

 

$

10,090

 

$

6,500

 

55

%

$

25,128

 

$

23,189

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.47

 

$

0.40

 

18

%

$

0.45

 

$

0.42

 

8

%

 


N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted Pro Forma

 

 

 

U.S. GAAP

 

Adjusted Pro Forma*

 

 

 

Nine Months Ended September 30,

 

($ in thousands except per share data)

 

2015

 

2014

 

2015 vs.
2014
Variance

 

2015

 

2014

 

2015 vs.
2014
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

377,074

 

$

374,855

 

1

%

$

377,074

 

$

374,855

 

1

%

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

211,333

 

300,793

 

-30

%

207,015

 

196,020

 

6

%

Non-compensation expenses

 

71,679

 

71,661

 

0

%

71,679

 

67,963

 

5

%

Total operating expenses

 

283,012

 

372,454

 

-24

%

278,694

 

263,983

 

6

%

Operating income (loss)

 

94,062

 

2,401

 

N/M

 

98,380

 

110,872

 

-11

%

Other income (expenses)

 

(474

)

622

 

N/M

 

31

 

622

 

-95

%

Income (loss) from equity method investments

 

3,510

 

(2,966

)

N/M

 

3,510

 

(508

)

N/M

 

Income (loss) before income taxes

 

97,098

 

57

 

N/M

 

101,921

 

110,986

 

-8

%

Provision for income taxes

 

15,652

 

5,790

 

N/M

 

40,768

 

44,950

 

-9

%

Net income (loss)

 

81,446

 

(5,733

)

N/M

 

61,153

 

66,036

 

-7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

58,889

 

6,777

 

N/M

 

 

 

N/M

 

Net income (loss) attributable to Moelis & Company

 

$

22,557

 

$

(12,510

)

N/M

 

$

61,153

 

$

66,036

 

-7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.07

 

$

(0.82

)

N/M

 

$

1.11

 

$

1.20

 

-8

%

 


N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted Pro Forma

 

3



 

Revenues

 

For the third quarter of 2015, revenues were $151.8 million as compared with $128.7 million in the third quarter of 2014, representing an increase of 18%.  Our quarterly revenue growth was primarily driven by both increased M&A related activity and higher fees per completed M&A transaction.

 

For the first nine months of 2015, revenues were $377.1 million as compared with $374.9 million in the same period of 2014.  We advised 213 total clients in the first nine months of 2015 (104 of whom paid fees equal to or greater than $1 million) as compared with 206 clients (99 of whom paid fees equal to or greater than $1 million) during the same period in 2014.

 

We continued to execute on our strategy of profitable expansion.  Since our last earnings release, we hired two Managing Directors to strengthen our industry expertise in consumer and technology, media and telecommunications, resulting in a total of four Managing Directors in the U.S. and one Managing Director in the U.K. who started during the quarter.

 

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 Pro Forma*

 

 

 

Three Months Ended September 30,

 

($ in thousands)

 

2015

 

2014

 

2015 vs.
2014
Variance

 

2015

 

2014

 

2015 vs.
2014
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

86,277

 

$

68,148

 

27

%

$

84,806

 

$

66,670

 

27

%

% of revenues

 

57

%

53

%

 

 

56

%

52

%

 

 

Non-compensation expenses

 

$

25,603

 

$

24,730

 

4

%

$

25,603

 

$

24,730

 

4

%

% of revenues

 

17

%

19

%

 

 

17

%

19

%

 

 

Total operating expenses

 

$

111,880

 

$

92,878

 

20

%

$

110,409

 

$

91,400

 

21

%

% of revenues

 

74

%

72

%

 

 

73

%

71

%

 

 

Income (loss) before income taxes

 

$

39,903

 

$

37,495

 

6

%

$

41,879

 

$

38,973

 

7

%

% of revenues

 

26

%

29

%

 

 

28

%

30

%

 

 

 


N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted Pro Forma

 

4



 

 

 

U.S. GAAP

 

Adjusted Pro Forma*

 

 

 

Nine Months Ended September 30,

 

($ in thousands)

 

2015

 

2014

 

2015 vs.
2014
Variance

 

2015

 

2014

 

2015 vs.
2014
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

211,333

 

$

300,793

 

-30

%

$

207,015

 

$

196,020

 

6

%

% of revenues

 

56

%

80

%

 

 

55

%

52

%

 

 

Non-compensation expenses

 

$

71,679

 

$

71,661

 

0

%

$

71,679

 

$

67,963

 

5

%

% of revenues

 

19

%

19

%

 

 

19

%

18

%

 

 

Total operating expenses

 

$

283,012

 

$

372,454

 

-24

%

$

278,694

 

$

263,983

 

6

%

% of revenues

 

75

%

99

%

 

 

74

%

70

%

 

 

Income (loss) before income taxes

 

$

97,098

 

$

57

 

N/M

 

$

101,921

 

$

110,986

 

-8

%

% of revenues

 

26

%

0

%

 

 

27

%

30

%

 

 

 


N/M = not meaningful

* See Appendix for a reconciliation of GAAP to Adjusted Pro Forma

 

Total operating expenses on an Adjusted Pro Forma basis were $110.4 million for the third quarter of 2015 as compared with $91.4 million for the third quarter of 2014.  For the first nine months of 2015, Adjusted Pro Forma operating expenses were $278.7 million as compared with $264.0 million in the same period of 2014.  The increase in operating expenses in 2015 is primarily attributable to an increase in headcount with the addition of 85 advisory professionals since the third quarter of 2014.  This headcount growth is reflected in higher compensation and benefits expenses and non-compensation expenses.  The pre-tax income margin was 28% on an Adjusted Pro Forma basis for the third quarter and 27% for first nine months of 2015 as compared with 30% for both the third quarter and first nine months of 2014.

 

In the third quarter of 2015, compensation and benefits expenses on an Adjusted Pro Forma basis were $84.8 million, or 56% of revenues, which compares with $66.7 million of compensation and benefits expenses and 52% of revenues in 2014.  In the first nine months of 2015, compensation and benefits expenses on an Adjusted Pro Forma basis were $207.0 million, or 55% of revenues, which compares with Adjusted Pro Forma compensation and benefits expense of $196.0 million, or 52% of revenues in the first nine months of 2014.  The increased compensation ratio is attributable to the additional tranche of equity awarded in early 2015 and the increase in headcount combined with modest revenue growth.

 

Adjusted Pro Forma non-compensation expenses were $25.6 million for the third quarter of 2015 as compared with $24.7 million for the same period of the prior year.  Our Adjusted Pro Forma non-compensation expense ratio decreased to 17% from 19% in the same period of the prior year, primarily driven by increased revenues plus the timing of our annual client event, which was held during the third quarter of 2014 versus the fourth quarter of 2015.  For the first nine months of 2015, Adjusted Pro Forma non-compensation expenses were $71.7 million as compared with $68.0 million for the same period of the prior year.  The Adjusted Pro Forma non-compensation expense ratio increased to 19% from 18% primarily driven by flat revenues and increases in headcount related non-compensation expenses, partially offset by the timing of our annual client event.

 

5



 

Provision for Income Taxes

 

Prior to our IPO, the Firm was not subject to federal income taxes, but was primarily subject to New York City unincorporated business tax and certain foreign income taxes.  As a result of completing our IPO in April 2014, we have a new corporate structure and currently 37% of the operating partnership (Moelis & Company Group LP) is owned by the corporation (Moelis & Company) and is subject to U.S. federal income tax as a corporation.  Income tax on the remaining 63% 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 our non-controlling interest adjustment.  For Adjusted Pro Forma purposes, we have assumed all outstanding Class A partnership units of Moelis & Company Group LP have been exchanged into Class A common stock of Moelis & Company such that 100% of the Firm’s third quarter 2015 income was taxed at our current corporate effective tax rate of 40.0%, versus a corporate effective tax rate of 40.5% for the third quarter of 2014.

 

Capital Management and Balance Sheet

 

Moelis & Company continues to maintain a strong financial position and as of September 30, 2015, we held cash and short term investments of $200.8 million and had no debt on our balance sheet.

 

On October 28, 2015, the Board of Directors of Moelis & Company declared a quarterly dividend of $0.30 per share.  The dividend will be paid on December 8, 2015 to common stockholders of record on November 23, 2015.

 

Earnings Call

 

We will host a conference call beginning at 4:30pm ET on Wednesday, October 28, 2015, accessible via telephone and the internet.  Ken Moelis, Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our third quarter 2015 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 2015 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 10074017.

 

6



 

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 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 Pro Forma results are a non-GAAP measure which better reflect management’s view of operating results.  We believe that the disclosed Adjusted Pro Forma 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 Pro Forma results is presented in the Appendix.

 

Contacts

 

 

 

Investor Relations 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

 

7



 

Appendix

 

GAAP Consolidated and Combined Statement of Operations (Unaudited)

 

GAAP Reconciliation to Adjusted Pro Forma Financial Information (Unaudited)

 



 

Moelis & Company

GAAP Consolidated and Combined Statement of Operations

Unaudited

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

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

151,789

 

$

128,651

 

$

377,074

 

$

374,855

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

86,277

 

68,148

 

211,333

 

300,793

 

Occupancy

 

3,836

 

3,560

 

11,228

 

10,195

 

Professional fees

 

5,116

 

5,995

 

12,813

 

14,588

 

Communication, technology and information services

 

4,862

 

3,945

 

13,403

 

11,589

 

Travel and related expenses

 

5,951

 

8,083

 

16,695

 

19,433

 

Depreciation and amortization

 

646

 

542

 

1,954

 

1,636

 

Other expenses

 

5,192

 

2,605

 

15,586

 

14,220

 

Total expenses

 

111,880

 

92,878

 

283,012

 

372,454

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

39,909

 

35,773

 

94,062

 

2,401

 

Other income (expenses)

 

(456

)

617

 

(474

)

622

 

Income (loss) from equity method investments

 

450

 

1,105

 

3,510

 

(2,966

)

Income (loss) before income taxes

 

39,903

 

37,495

 

97,098

 

57

 

Provision for income taxes

 

5,273

 

4,710

 

15,652

 

5,790

 

Net income (loss)

 

34,630

 

32,785

 

81,446

 

(5,733

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

24,540

 

26,285

 

58,889

 

6,777

 

Net income (loss) attributable to Moelis & Company

 

$

10,090

 

$

6,500

 

$

22,557

 

$

(12,510

)

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

Basic

 

20,184,835

 

15,262,343

 

19,919,675

 

15,262,940

 

Diluted

 

21,466,021

 

16,205,254

 

21,105,523

 

15,262,940

 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

$

0.43

 

$

1.13

 

$

(0.82

)

Diluted

 

$

0.47

 

$

0.40

 

$

1.07

 

$

(0.82

)

 

A-1



 

Moelis & Company

Reconciliation of GAAP to Adjusted Pro Forma Financial Information

Unaudited

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

 

 

 

Three Months Ended September 30, 2015

 

 

 

GAAP

 

IPO-Related
Expense
Adjustments

 

Adjusted

 

As if
Partnership
Units
Converted to
Class A (c)

 

Adjusted
Pro Forma

 

Revenues

 

$

151,789

 

$

 

$

151,789

 

$

 

$

151,789

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

86,277

 

(1,471

)(a)

84,806

 

 

84,806

 

Non-compensation expenses

 

25,603

 

 

25,603

 

 

25,603

 

Total operating expenses

 

111,880

 

(1,471

)

110,409

 

 

110,409

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

39,909

 

1,471

 

41,380

 

 

41,380

 

Other income (expenses)

 

(456

)

505

(b)

49

 

 

49

 

Income (loss) from equity method investments

 

450

 

 

450

 

 

450

 

Income (loss) before income taxes

 

39,903

 

1,976

 

41,879

 

 

41,879

 

Provision for income taxes

 

5,273

 

771

(b)

6,044

 

10,707

 

16,751

 

Net income (loss)

 

34,630

 

1,205

 

35,835

 

(10,707

)

25,128

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

24,540

 

880

 

25,420

 

(25,420

)

 

Net income (loss) attributable to Moelis & Company

 

$

10,090

 

$

325

 

$

10,415

 

$

14,713

 

$

25,128

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

20,184,835

 

 

 

20,184,835

 

33,932,671

 

54,117,506

 

Diluted

 

21,466,021

 

 

 

21,466,021

 

33,932,671

 

55,398,692

 

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

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

 

 

$

0.52

 

 

 

$

0.46

 

Diluted

 

$

0.47

 

 

 

$

0.49

 

 

 

$

0.45

 

 


(a)         Expense associated with the amortization of restricted stock units 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 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.

 

A-2



 

 

 

Three Months Ended September 30, 2014

 

 

 

GAAP

 

IPO-Related
Expense
Adjustments

 

Adjusted

 

As if
Partnership
Units
Converted to
Class A (b)

 

Adjusted
Pro Forma

 

Revenues

 

$

128,651

 

$

 

$

128,651

 

$

 

$

128,651

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

68,148

 

(1,478

)(a)

66,670

 

 

66,670

 

Non-compensation expenses

 

24,730

 

 

24,730

 

 

24,730

 

Total operating expenses

 

92,878

 

(1,478

)

91,400

 

 

91,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

35,773

 

1,478

 

37,251

 

 

37,251

 

Other income (expenses)

 

617

 

 

617

 

 

617

 

Income (loss) from equity method investments

 

1,105

 

 

1,105

 

 

1,105

 

Income (loss) before income taxes

 

37,495

 

1,478

 

38,973

 

 

38,973

 

Provision for income taxes

 

4,710

 

190

 

4,900

 

10,884

 

15,784

 

Net income (loss)

 

32,785

 

1,288

 

34,073

 

(10,884

)

23,189

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

26,285

 

1,039

 

27,324

 

(27,324

)

 

Net income (loss) attributable to Moelis & Company

 

$

6,500

 

$

249

 

$

6,749

 

$

16,440

 

$

23,189

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

15,262,343

 

 

 

15,262,343

 

38,992,321

 

54,254,664

 

Diluted

 

16,205,254

 

 

 

16,205,254

 

38,992,321

 

55,197,575

 

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

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.43

 

 

 

$

0.44

 

 

 

$

0.43

 

Diluted

 

$

0.40

 

 

 

$

0.42

 

 

 

$

0.42

 

 


(a)         Expense associated with the one time non-cash acceleration of Managing Director unvested equity accelerated upon completion of the IPO and amortization of equity awards granted in connection with the IPO.

 

(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 40.5% for the period presented.

 

A-3



 

 

 

Nine Months Ended September 30, 2015

 

 

 

GAAP

 

IPO-Related
Expense
Adjustments

 

Adjusted

 

As if
Partnership
Units
Converted to
Class A (c)

 

Adjusted
Pro Forma

 

Revenues

 

$

377,074

 

$

 

$

377,074

 

$

 

$

377,074

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

211,333

 

(4,318

)(a)

207,015

 

 

207,015

 

Non-compensation expenses

 

71,679

 

 

71,679

 

 

71,679

 

Total operating expenses

 

283,012

 

(4,318

)

278,694

 

 

278,694

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

94,062

 

4,318

 

98,380

 

 

98,380

 

Other income (expenses)

 

(474

)

505

(b)

31

 

 

31

 

Income (loss) from equity method investments

 

3,510

 

 

3,510

 

 

3,510

 

Income (loss) before income taxes

 

97,098

 

4,823

 

101,921

 

 

101,921

 

Provision for income taxes

 

15,652

 

1,287

(b)

16,939

 

23,829

 

40,768

 

Net income (loss)

 

81,446

 

3,536

 

84,982

 

(23,829

)

61,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

58,889

 

2,594

 

61,483

 

(61,483

)

 

Net income (loss) attributable to Moelis & Company

 

$

22,557

 

$

942

 

$

23,499

 

$

37,654

 

$

61,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

19,919,675

 

 

 

19,919,675

 

34,197,831

 

54,117,506

 

Diluted

 

21,105,523

 

 

 

21,105,523

 

34,197,831

 

55,303,354

 

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

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.13

 

 

 

$

1.18

 

 

 

$

1.13

 

Diluted

 

$

1.07

 

 

 

$

1.11

 

 

 

$

1.11

 

 


(a)         Expense associated with the amortization of restricted stock units 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 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.

 

A-4



 

 

 

Nine Months Ended September 30, 2014

 

 

 

GAAP

 

IPO-Related
Expense
Adjustments

 

Adjusted

 

As if
Partnership
Units
Converted to
Class A (d)

 

Adjusted
Pro Forma

 

Revenues

 

$

374,855

 

$

 

$

374,855

 

$

 

$

374,855

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

300,793

 

(104,773

)(a)

196,020

 

 

196,020

 

Non-compensation expenses

 

71,661

 

(3,698

)(b)

67,963

 

 

67,963

 

Total operating expenses

 

372,454

 

(108,471

)

263,983

 

 

263,983

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

2,401

 

108,471

 

110,872

 

 

110,872

 

Other income (expenses)

 

622

 

 

622

 

 

622

 

Income (loss) from equity method investments

 

(2,966

)

2,458

(c)

(508

)

 

(508

)

Income (loss) before income taxes

 

57

 

110,929

 

110,986

 

 

110,986

 

Provision for income taxes

 

5,790

 

8,294

 

14,084

 

30,866

 

44,950

 

Net income (loss)

 

(5,733

)

102,635

 

96,902

 

(30,866

)

66,036

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

6,777

 

71,227

 

78,004

 

(78,004

)

 

Net income (loss) attributable to Moelis & Company

 

$

(12,510

)

$

31,408

 

$

18,898

 

$

47,138

 

$

66,036

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

15,262,940

 

 

 

15,262,940

 

38,991,724

 

54,254,664

 

Diluted

 

15,262,940

 

 

 

15,928,589

 

38,991,724

 

54,920,313

 

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

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.82

)

 

 

$

1.24

 

 

 

$

1.22

 

Diluted

 

$

(0.82

)

 

 

$

1.19

 

 

 

$

1.20

 

 


(a)         Expense associated with the one time non-cash acceleration of Managing Director unvested equity accelerated upon completion of the IPO and amortization of equity awards granted in connection with the IPO.

 

(b)         Expense associated with the one-time non-cash acceleration of unvested equity held by non-employees of Moelis & Company.

 

(c)          Expense associated with the one-time non-cash acceleration of unvested equity held by employees of the Australian JV.

 

(d)         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 40.5% for the period presented.

 

A-5