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Exhibit 99.1

Moelis-logo

Moelis & Company Reports Full Year and Fourth Quarter 2017 Financial Results;

Declares Special Dividend of $1.50 Per Share

and Increases Regular Quarterly Dividend to $0.47 Per Share

Record Full Year Revenues and Adjusted Net Income

Record annual revenues of $684.6 million, up 12% from the prior year; fourth quarter revenues of $169.2 million, down 17% from a record Q4 2016

GAAP net income of $0.78 per share (diluted) for the full year and GAAP net loss of $(0.72) per share (diluted) for the fourth quarter 2017; Adjusted net income of $2.29 per share (diluted) for the full year and $0.52 per share (diluted) for the fourth quarter 2017

Continued to execute on organic growth strategy

  Added 16 Managing Directors in 2017 to enhance expertise in important sectors, products and regions; ended the year with 512 bankers, up 15% from the prior year

  Strong 2018 pipeline of Managing Director hires

  Promoted five additional advisory professionals to Managing Director in early 2018

Strong cash flow generation and record amount of capital returned to shareholders

  Ended 2017 with cash and liquid investments of $309.0 million and no debt or goodwill

  Declared second special dividend related to 2017 of $1.50 per share; increased regular quarterly dividend by 27% to $0.47 per share

  Returned $10.14 per share to shareholders through dividends since April 2014 IPO1 

NEW YORK, February 7, 2018 – Moelis & Company (NYSE: MC) today reported financial results for the year ended December 31, 2017.  The Firm’s fiscal year 2017 revenues of $684.6 million represented an increase of 12% over the prior year and our largest annual revenues on record.  GAAP net income for the period was $126.5 million, or $0.78 per share (diluted), compared with $141.9 million or $1.58 per share in the prior year period.  On an Adjusted basis, the Firm reported net income of $145.6 million for fiscal year 2017 as compared with $104.5 million in the prior year.  On a per share basis, the Firm reported Adjusted net income of $2.29 per share (diluted) in 2017, up 27% from the $1.80 per share (diluted) reported in the prior year period.


1Includes dividends declared herein but not yet paid

1


 

 

The Firm’s fourth quarter revenues of $169.2 million decreased 17% over the prior year period.    The Firm reported fourth quarter 2017 GAAP net loss of $(5.7) million, or $(0.72) per share (diluted), compared with GAAP net income of $54.7 million or $0.58 per share (diluted) in the prior year period.    On an Adjusted basis, the Firm reported net income of $34.1 million or $0.52 per share (diluted) for the fourth quarter of 2017, which compares with $39.3 million of net income or $0.66 per share (diluted) in the prior year period.    

“We are delivering high quality, discrete, and trusted advice on some of the largest and most complex transactions in the world.  Our record full year revenues reflect this momentum and demonstrate the power of our collaborative model and the continued maturation of our brand.  We are encouraged by current activity levels and believe there is significant runway left in the current M&A cycle,” said Ken Moelis, Chairman and Chief Executive Officer.

“Moelis & Company is poised to benefit from its competitive positioning, a healthy global economy and new U.S. tax legislation, which should enhance our already strong capital generation capabilities.  With today’s announcement of a $1.50 per share special dividend and a 27% increase to our regular quarterly dividend, we will have returned $4.08 per share in dividends related to 2017.  We are committed to returning all of our excess capital to shareholders, while continuing to invest in our business.”

“To that end, we also made significant investment in our global network in 2017, adding 16 Managing Directors with our largest class of internal promotes and a number of high quality external hires.  We remain a top destination for talent, and our recruiting pipeline is strong.    As our team grows and our network strengthens, we are well positioned to capitalize on increased deal activity in 2018.” 

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 60% 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 40% 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 the impact related to the enactment of the Tax Cuts and Jobs Act, 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 results, when presented together with comparable GAAP results, are useful to investors to compare our performance across periods and to better understand our operating results. A reconciliation between our GAAP results and our Adjusted results is presented in the Appendix to this press release.

2


 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

 

Twelve Months Ended December 31,

 

($ in thousands except per share data)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

684,615 

 

$

613,373 

 

12 

%  

$

684,615 

 

$

613,373 

 

12 

%

Income (loss) before income taxes

 

 

350,351 

 

 

166,674 

 

N/M

 

 

219,844 

 

 

171,884 

 

28 

%

Provision for income taxes

 

 

223,827 

 

 

24,809 

 

N/M

 

 

74,285 

 

 

67,379 

 

10 

%

Net income (loss)

 

 

126,524 

 

 

141,865 

 

N/M

 

 

145,559 

 

 

104,505 

 

39 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

97,124 

 

 

103,478 

 

N/M

 

 

-

 

 

-

 

N/M

 

Net income (loss) attributable to Moelis & Company

 

$

29,400 

 

$

38,387 

 

N/M

 

$

145,559 

 

$

104,505 

 

39 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.78 

 

$

1.58 

 

N/M

 

$

2.29 

 

$

1.80 

 

27 

%


N/M = not meaningful

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended December 31,

 

($ in thousands except per share data)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

169,167 

 

$

204,608 

 

-17 

%  

$

169,167 

 

$

204,608 

 

-17 

%

Income (loss) before income taxes

 

 

187,277 

 

 

62,822 

 

N/M

 

 

53,535 

 

 

64,155 

 

-17 

%

Provision for income taxes

 

 

192,927 

 

 

8,094 

 

N/M

 

 

19,407 

 

 

24,826 

 

-22 

%

Net income (loss)

 

 

(5,650)

 

 

54,728 

 

N/M

 

 

34,128 

 

 

39,329 

 

-13 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

19,163 

 

 

39,693 

 

N/M

 

 

-

 

 

-

 

N/M

 

Net income (loss) attributable to Moelis & Company

 

$

(24,813)

 

$

15,035 

 

N/M

 

$

34,128 

 

$

39,329 

 

-13 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

(0.72)

 

$

0.58 

 

N/M

 

$

0.52 

 

$

0.66 

 

-21 

%


N/M = not meaningful

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

Revenues

For the year ended December 31, 2017, revenues were $684.6 million as compared with $613.4 million in 2016, or an increase of 12%.    This represents our largest year of revenues on record and compares favorably with a 1% decrease in the number of global completed M&A transactions in the same period2.The increase in full year revenues reflects strong and continued growth in M&A activity as well as increased Capital Markets advisory activity. Restructuring activity also improved slightly over the prior year, despite the low default rate environment.


2Source: Thomson Financial as of January 4, 2018; includes all transactions greater than $100 million in value

3


 

 

Revenues of $169.2 million in the fourth quarter of 2017 were down 17% from the $204.6 million of revenues earned in the fourth quarter of 2016,  which was our best quarter of revenues on record.    The decrease in quarterly revenues was the result of fewer transaction closings during the quarter, primarily due to a softer restructuring environment compared to the fourth quarter of 2016. 

We continued to execute on our strategy of profitable expansion.    Since our last earnings release we  announced two Managing Directors in the U.S. who will strengthen our industry expertise in Healthcare and FinTech, and a Managing Director in London who will enhance our Consumer coverage in EMEA.   We are also committed to the development of our internal talent, and in early 2018 we promoted five of our advisory professionals to Managing Director: Ben Axelrod (U.S./M&A), Frank Del Vecchio (EMEA/Capital Markets), Anthony Doeh  (EMEA/Business Services), Mark Laoun (U.S./Financial Sponsors) and Swati Rao (U.S./Healthcare).

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)*

 

 

 

Twelve Months Ended December 31,

 

 ($ in thousands)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

401,384 

 

$

360,893 

 

11 

%  

$

397,170 

 

$

355,683 

 

12 

%

% of revenues

 

 

59 

%  

 

59 

%  

 

 

 

58 

%  

 

58 

%  

 

 

Non-compensation expenses

 

$

118,949 

 

$

91,391 

 

30 

%  

$

118,949 

 

$

91,391 

 

30 

%

% of revenues

 

 

17 

%  

 

15 

%  

 

 

 

17 

%  

 

15 

%  

 

 

Total operating expenses

 

$

520,333 

 

$

452,284 

 

15 

%  

$

516,119 

 

$

447,074 

 

15 

%

% of revenues

 

 

76 

%  

 

74 

%  

 

 

 

75 

%  

 

73 

%  

 

 


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

 

Three Months Ended December 31,

 

 ($ in thousands)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

99,156 

 

$

119,981 

 

-17 

%  

$

98,177 

 

$

118,648 

 

-17 

%

% of revenues

 

 

59 

%  

 

59 

%  

 

 

 

58 

%  

 

58 

%  

 

 

Non-compensation expenses

 

$

31,350 

 

$

23,102 

 

36 

%  

$

31,350 

 

$

23,102 

 

36 

%

% of revenues

 

 

19 

%  

 

11 

%  

 

 

 

19 

%  

 

11 

%  

 

 

Total operating expenses

 

$

130,506 

 

$

143,083 

 

-9 

%  

$

129,527 

 

$

141,750 

 

-9 

%

% of revenues

 

 

77 

%  

 

70 

%  

 

 

 

77 

%  

 

69 

%  

 

 


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

Total operating expenses on a  GAAP basis were $520.3 million for the year and $130.5 million for the fourth quarter ended December 31, 2017.  On an Adjusted basis, operating expenses were $516.1 million for fiscal year 2017 as compared with $447.1 million in 2016, and $129.5 million for the fourth quarter of 2017 as compared with $141.8  million in the prior year period.  The increase in

4


 

 

operating expenses for the full year is associated with increased revenues, which drove increased compensation and benefits expenses, as well as higher non-compensation expenses. 

Compensation and benefits expenses on a GAAP basis were $401.4 million and $99.2 million in the fiscal year and fourth quarter ended December 31, 2017, respectively.    Adjusted compensation and benefits expenses (which exclude the amortization of IPO awards for the reported periods)  were $397.2 million and $98.2 million for the fiscal year and fourth quarter ended December 31, 2017, respectively.    This compares with $355.7 million and $118.6 million for the fiscal year and fourth quarter ended December 31, 2016, respectively.    The Adjusted compensation and benefits ratio was consistent at 58% of revenues in both the current and prior year periods.

Non-compensation expenses on both a GAAP and Adjusted basis were $118.9 million in fiscal year 2017 as compared with $91.4 million in the prior year.    In the fourth quarter of 2017, GAAP and Adjusted non-compensation expenses were $31.4  million as compared with $23.1 million in the same period of the prior year.  The year over year increase in non-compensation expenses is primarily attributable to the growth in our business, including increased recruiting fees, as well as new business development and transaction related charges.    Our non-compensation expense ratio was 17% for the full year, in-line with our long-term target of approximately 15% to 18% of revenues.

Other Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

Twelve Months Ended December 31,

 ($ in thousands)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

$

177,728 

 

$

509 

 

N/M

 

$

43,007 

 

$

509 

 

N/M


N/M = not meaningful

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP

 

Adjusted (non-GAAP)*

 

 

Three Months Ended December 31,

 ($ in thousands)

    

2017

    

2016

    

2017 vs.
2016
Variance

    

2017

    

2016

    

2017 vs.
2016
Variance

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

$

144,840 

 

$

118 

 

N/M

 

$

10,119 

 

$

118 

 

N/M


N/M = not meaningful

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

For fiscal year 2017, other income on a GAAP and Adjusted basis was $177.7 million and $43.0 million, respectively, as compared with $0.5 million on both  a GAAP and Adjusted basis in the prior year.  Other income on both a GAAP and Adjusted basis includes gains of $41.7 million arising from Moelis Australia’s IPO in April 2017 and subsequent share issuances through the remainder of the year.  The GAAP results also include $134.7 million of other income related to the estimated re-measurement of the liability pursuant to the Firm’s Tax Receivable Agreement

5


 

 

(“TRA”) in connection with the enactment of the Tax Cuts and Jobs Act (see Provision for Income Taxes below for more information). 

For the fourth quarter of 2017, other income on a GAAP and Adjusted basis was $144.8 million and $10.1 million, respectively, as compared with $0.1 million on both a GAAP and Adjusted basis in the prior year period.  On both a GAAP and Adjusted basis in the fourth quarter, we recorded a gain of $9.7 million related to Moelis Australia’s October 2017 share placement.  The re-measurement impacts related to the Tax Cuts and Jobs Act were excluded from our Adjusted results.

Provision for Income Taxes 

The corporate partner (Moelis & Company) currently owns 60% of the operating partnership (Moelis & Company Group LP) and is subject to corporate U.S. federal and state income tax.  Income on the remaining 40% 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.  In connection with the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which reduced the U.S. federal corporate tax rate in future years, our deferred tax assets, which consist primarily of step-up in tax basis related to the exchange of partnership units and deferred equity compensation, were re-measured at the new rate, resulting in a charge of $181.0 million.  This charge, together with the reduction in the TRA liability of $134.7 million (described above in Other Income), resulted in a net estimated charge of $46.3 million in our GAAP results.  

For Adjusted purposes, we have excluded the impact of compensation expenses specifically related to the Firm’s IPO awards as well as the estimated balance sheet re-measurement impact related to the enactment of the Tax Cuts and Jobs Act.  We have also 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 full year and fourth quarter 2017 income was taxed at our corporate effective tax rate of 33.8% and 36.3% respectively, versus 39.2% and 38.7% in both prior year periods.  The decrease in the tax rate for the full year is primarily attributable to a tax benefit related to the appreciation of the Company’s stock price between employee equity grant date and delivery date, and a decline in nondeductible items as a percentage of income before taxes.

Capital Management and Balance Sheet

Moelis & Company continues to maintain a strong financial position, and as of December 31, 2017, we held cash and liquid investments of $309.0 million and had no debt or goodwill on our balance sheet.

On February 6, 2018, the Board of Directors of Moelis & Company declared a special dividend of $1.50 per share and increased the regular quarterly dividend to $0.47 per share.  The $1.97 per share will be paid on March 7, 2018 to common stockholders of record on February 20, 2018. 

6


 

 

With the payment of these dividends, we will have returned $4.08 per share to investors through regular and special dividends with respect to 2017 activities,  demonstrating our strong cash flow generation and ongoing commitment to returning 100% of our excess capital to shareholders.

Earnings Call

We will host a conference call beginning at 5:00pm ET on Wednesday,  February 7,  2018, accessible via telephone and the internet.  Ken Moelis,  Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our full year and fourth quarter 2017 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 Fourth Quarter 2017 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 10115825.

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 750 employees in 19 geographic locations in the Americas, 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 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

7


 

 

undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

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

Contacts

 

 

Investor Contact:

Media Contact:

Michele Miyakawa

Andrea Hurst

Moelis & Company

Moelis & Company

t: + 1 310 443 2344

t: + 1 212 883 3666

michele.miyakawa@moelis.com

m: +1 347 583 9705

 

andrea.hurst@moelis.com

 

 

8


 

Appendix 

GAAP Consolidated Statement of Operations (Unaudited) 

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

 

 


 

Moelis & Company

GAAP Consolidated Statement of Operations

Unaudited

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

 

Three Months Ended
December 31,

 

    

2017 

    

2016 

    

2017 

    

2016 

 

 

 

 

 

 

 

 

 

Revenues

 

$

684,615 

 

$

613,373 

 

$

169,167 

 

$

204,608 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

401,384  

 

 

360,893 

 

 

99,156 

 

 

119,981 

Occupancy

 

 

17,101  

 

 

18,696 

 

 

4,431 

 

 

3,755 

Professional fees

 

 

19,954  

 

 

12,574 

 

 

 6,280  

 

 

5,023 

Communication, technology and information services

 

 

25,173  

 

 

22,025 

 

 

6,537  

 

 

5,924 

Travel and related expenses

 

 

30,634 

 

 

20,570 

 

 

8,644 

 

 

4,118 

Depreciation and amortization

 

 

3,544 

 

 

3,183 

 

 

974 

 

 

824  

Other expenses

 

 

22,543 

 

 

14,343 

 

 

4,484 

 

 

3,458 

Total expenses

 

 

520,333 

 

 

452,284 

 

 

130,506 

 

 

143,083 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

164,282 

 

 

161,089 

 

 

38,661 

 

 

61,525 

Other income (expenses)

 

 

177,728 

 

 

509 

 

 

144,840 

 

 

118  

Income (loss) from equity method investments

 

 

8,341 

 

 

5,076 

 

 

3,776 

 

 

1,179 

Income (loss) before income taxes

 

 

350,351 

 

 

166,674 

 

 

187,277 

 

 

62,822 

Provision for income taxes

 

 

223,827 

 

 

24,809 

 

 

192,927 

 

 

8,094 

Net income (loss)

 

 

126,524 

 

 

141,865 

 

 

(5,650)

 

 

54,728 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

97,124 

 

 

103,478 

 

 

19,163 

 

 

39,693 

Net income (loss) attributable to Moelis & Company

 

$

29,400 

 

$

38,387 

 

$

(24,813)

 

$

15,035 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,597,058 

 

 

20,933,757 

 

 

34,522,450 

 

 

21,042,993 

Diluted

 

 

37,675,511 

 

 

24,242,302 

 

 

34,522,450 

 

 

25,781,278 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96 

 

$

1.83 

 

$

(0.72)

 

$

0.71 

Diluted

 

$

0.78 

 

$

1.58 

 

$

(0.72)

 

$

0.58 

 

A-1


 

 

Moelis & Company

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

Unaudited

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2017

Adjusted Items

    

GAAP

    

Adjustments

    

 

Adjusted
(non-GAAP)

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

401,384 

 

$

(4,214)

(a)  

$

397,170 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

177,728 

 

 

(134,721)

(b)  

 

43,007 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

350,351 

 

 

(130,507)

 

 

219,844 

 

Provision for income taxes

 

 

223,827 

 

 

(149,542)

(b)(c)  

 

74,285 

 

Net income (loss)

 

 

126,524 

 

 

19,035 

 

 

145,559 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

97,124 

 

 

(97,124)

 

 

-  

 

Net income (loss) attributable to Moelis & Company

 

$

29,400  

 

$

116,159 

 

$

145,559 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,597,058 

 

 

25,972,450 

(c)  

 

56,569,508 

 

Diluted

 

 

37,675,511 

 

 

25,972,450 

(c)  

 

63,647,961 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96 

 

 

 

 

$

2.57 

 

Diluted

 

$

0.78 

 

 

 

 

$

2.29 

 

 

(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)    The adjustment primarily reflects the re-measurement of our deferred tax assets and liabilities in connection with the enactment of the Tax Cuts and Jobs Act.  The deferred tax assets primarily consist of step-up in tax basis related to the exchanges of partnership units and deferred equity compensation.   The estimated impact of re-measurement of deferred tax assets of $181.0 million was included in our provision for income taxes, and the reduction in the related TRA liability of $134.7 million was included in other income, netting to a total estimated impact of $46.3 million in our GAAP results.  We have removed such net impact in our Adjusted results.

(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 33.8% for the period stated, which includes the excess tax benefit related to the settlement of share-based awards in accordance with ASU No. 2016-09 of $10.6 million. Excluding such discrete benefit, our effective tax rate for the period presented would have been 38.6%.

A-2


 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2016

Adjusted Items

    

GAAP

    

Adjustments

    

Adjusted 
(non-GAAP) 

 

 

 

 

 

 

 

Compensation and benefits

 

$

360,893 

 

$

(5,210)

(a)  

$

355,683 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

166,674 

 

 

5,210 

 

 

171,884 

Provision for income taxes

 

 

24,809 

 

 

42,570 

(b)  

 

67,379 

Net income (loss)

 

 

141,865 

 

 

(37,360)

 

 

104,505 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

103,478 

 

 

(103,478)

 

 

-  

Net income (loss) attributable to Moelis & Company

 

$

38,387 

 

$

66,118  

 

$

104,505 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

20,933,757 

 

 

33,818,953 

(b)  

 

54,752,710 

Diluted

 

 

24,242,302 

 

 

33,818,953 

(b)  

 

58,061,255 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

1.83 

 

 

 

 

$

1.91 

Diluted

 

$

1.58 

 

 

 

 

$

1.80 

 

(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 39.2% for the period presented.

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2017

Adjusted Items

    

GAAP

    

Adjustments

    

Adjusted
(non-GAAP) 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

99,156 

 

$

(979)

(a)  

$

98,177 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

144,840 

 

 

(134,721)

(b)  

 

10,119 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

187,277 

 

 

(133,742)

 

 

53,535 

Provision for income taxes

 

 

192,927 

 

 

(173,520)

(b)(c)  

 

19,407 

Net income (loss)

 

 

(5,650)

 

 

39,778 

 

 

34,128 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

19,163 

 

 

(19,163)

 

 

-  

Net income (loss) attributable to Moelis & Company

 

$

(24,813)

 

$

58,941  

 

$

34,128 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

34,522,450 

 

 

22,571,923 

(c)  

 

57,094,373 

Diluted

 

 

34,522,450 

 

 

30,710,091 

(c)  

 

65,232,541 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.72)

 

 

 

 

$

0.60 

Diluted

 

$

(0.72)

 

 

 

 

$

0.52 

 

(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.

A-3


 

 

(b)    The adjustment primarily reflects the re-measurement of our deferred tax assets and liabilities in connection with the enactment of the Tax Cuts and Jobs Act.  The deferred tax assets primarily consist of step-up in tax basis related to the exchanges of partnership units and deferred equity compensation.  The estimated impact of re-measurement of deferred tax assets of $181.0 million was included in our provision for income taxes, and the reduction in the related TRA liability of $134.7 million was included in other income, netting to a total estimated impact of $46.3 million in our GAAP results.  We have removed such net impact in our Adjusted results.

(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 36.3% for the period stated, which includes the excess tax benefit related to the settlement of share-based awards in accordance with ASU No. 2016-09 of $0.9 million. Excluding such discrete benefit, our effective tax rate for the period presented would have been 38.0%. Due to the GAAP net loss during the period, no dilutive effect of unvested stock-based awards has been added to the GAAP diluted weighted-average shares outstanding. However, the Adjusted results include the full dilutive effect of unvested stock-based awards within the diluted weighted-average shares outstanding.

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2016

Adjusted Items

    

GAAP

    

Adjustments

    

Adjusted
(non-GAAP) 

 

 

 

 

 

 

 

Compensation and benefits

 

$

119,981 

 

$

(1,333)

(a)  

$

118,648 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

62,822 

 

 

1,333 

 

 

64,155 

Provision for income taxes

 

 

8,094 

 

 

16,732 

(b)  

 

24,826 

Net income (loss)

 

 

54,728 

 

 

(15,399)

 

 

39,329 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

39,693 

 

 

(39,693)

 

 

-  

Net income (loss) attributable to Moelis & Company

 

$

15,035 

 

$

24,294 

 

$

39,329 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

21,042,993 

 

 

33,709,717 

(b)  

 

54,752,710 

Diluted

 

 

25,781,278 

 

 

33,709,717 

(b)  

 

59,490,995 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

0.71 

 

 

 

 

$

0.72 

Diluted

 

$

0.58 

 

 

 

 

$

0.66 

 

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

(b)    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 38.7% for the period presented.

A-4