- Record fourth quarter revenues of
$204.6 million, up 17% from the same period of 2015; record annual
revenues of $613.4 million, up 11% over fiscal year 2015
- GAAP net income of $0.58 per share
(diluted) for the fourth quarter and $1.58 per share (diluted) for
fiscal year 2016; Adjusted net income of $0.66 per share (diluted)
for the fourth quarter and $1.80 per share (diluted) for fiscal
year 2016, up 27% and 10% respectively from the prior year
periods
- Continued to execute on organic growth
strategy
- Recruited five Managing Directors in 2016
to enhance expertise in important sectors and regions; ended the
year with 446 bankers, including 102 Managing Directors
- Entered Mexico through strategic alliance
with Alfaro, Dávila y Ríos, S.C. in 2016; Moelis & Company is
present in the two largest markets in Latin America
- Promoted eight advisory professionals to
Managing Director in early 2017, representing the largest class of
internal promotes in the Firm’s history
- Strong cash flow generation and
significant capital returns
- Ended 2016 with cash and short term
investments of $351.9 million and no debt or goodwill
- Declared special dividend of $1.25 per
share in December 2016; 16% increase in regular quarterly dividend
to $0.37 per share in January 2017
- Returned $2.56 per share to investors
through regular and special dividends1
Moelis & Company (NYSE: MC) today reported financial results
for the fourth quarter and fiscal year ended December 31, 2016. The
Firm’s fourth quarter revenues of $204.6 million increased 17% over
the prior year period and represented our largest quarter of
revenues since inception. The Firm reported fourth quarter 2016
GAAP net income of $54.7 million, or $0.58 per share (diluted).
Adjusted net income of $39.3 million or $0.66 per share (diluted)
for the fourth quarter of 2016 compared with $29.1 million or $0.52
per share (diluted) in the prior year period.
1 Represents dividends declared with respect to 2016
performance
The Firm’s fiscal year 2016 revenues of $613.4 million
represented an increase of 11% over the prior year and our largest
annual revenues on record. GAAP net income for the period was
$141.9 million, or $1.58 per share (diluted). On an Adjusted basis,
the Firm reported net income of $104.5 million or $1.80 per share
(diluted) for fiscal year 2016, as compared with $90.2 million or
$1.63 per share (diluted) in the prior year period.
“We achieved record revenues in 2016 as our investments in
talent around the globe and exceptional collaboration across
geographies and products led to an increasing number of client
relationships. We are experiencing significant momentum not only in
the U.S., but in emerging regions such as India, Asia, the Middle
East and Brazil as the M&A cycle continues and restructuring
activity expands globally,” said Ken Moelis Chairman and Chief
Executive Officer.
“In early 2017, we promoted eight advisory professionals to
Managing Director, the largest class in our Firm’s history.
Internal promotion and talent development continue to be an
important element of our successful growth story.”
“Since becoming a public company in early 2014, we have grown
revenues by nearly 50%2, entered new markets and expanded our
product offering, all with a keen focus on return on invested
capital. This has resulted in the generation of substantial excess
cash which we have returned to our shareholders. We ended 2016 well
positioned to capitalize on strong market activity, the continued
maturation of our global platform and meaningful opportunities for
expansion.”
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.
_____________________________
2 Based on fiscal year 2013 revenues of $411.4 million and
fiscal year 2016 revenues of $613.4 million
In the second quarter of 2016, the Firm modified the description
of its unaudited non-generally accepted accounting principles
(“non-GAAP”) measure presented in its quarterly earnings release
and other supplementary information from “Adjusted Pro Forma” to
“Adjusted.” This modification impacted the descriptions only. The
amounts and principles used to derive the Adjusted data have been
consistently applied. We believe the Adjusted results, when
presented together with comparable GAAP results, are useful to
investors to compare our performance across periods and to better
understand our operating results. A reconciliation between our GAAP
results and our Adjusted results is presented in the Appendix to
this press release.
GAAP and Adjusted
(non-GAAP) Selected Financial Data (Unaudited)
U.S. GAAP Adjusted
(non-GAAP)* Three Months Ended December 31, ($ in
thousands except per share data) 2016 2015
2016 vs. 2015 Variance 2016 2015
2016 vs. 2015 Variance Revenues $204,608
$174,789 17% $204,608 $174,789 17%
Income (loss) before income
taxes 62,822 46,966 34% 64,155 48,419 32% Provision for income
taxes 8,094 8,195 -1% 24,826 19,368 28%
Net income (loss)
54,728 38,771 41% 39,329 29,051 35% Net income (loss)
attributable to noncontrolling interests 39,693 28,224 41% - - N/M
Net income (loss) attributable to Moelis & Company $15,035
$10,547 43% $39,329 $29,051 35% Diluted earnings per share
$0.58 $0.48 21% $0.66 $0.52 27% N/M = not meaningful * See
Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
U.S. GAAP Adjusted (non-GAAP)* Twelve
Months Ended December 31, ($ in thousands except per share
data) 2016 2015 2016 vs. 2015 Variance
2016 2015 2016 vs. 2015 Variance
Revenues $613,373 $551,863 11% $613,373 $551,863 11%
Income
(loss) before income taxes 166,674 144,064 16% 171,884 150,340
14% Provision for income taxes 24,809 23,847 4% 67,379 60,136 12%
Net income (loss) 141,865 120,217 18% 104,505 90,204 16%
Net income (loss) attributable to noncontrolling interests
103,478 87,113 19% - - N/M Net income (loss) attributable to Moelis
& Company $38,387 $33,104 16% $104,505 $90,204 16%
Diluted earnings per share $1.58 $1.55 2% $1.80 $1.63 10%
N/M = not meaningful * See Appendix for a reconciliation of GAAP to
Adjusted (non-GAAP)
Revenues
We earned revenues of $204.6 million in the fourth quarter of
2016, as compared with $174.8 million in the prior year period,
representing an increase of 17% and our largest quarter of revenues
in Firm history. For the year ended December 31, 2016, revenues
were $613.4 million as compared with $551.9 million in 2015, or an
increase of 11%. This represents our largest year of revenues on
record and compares favorably with a 7% decrease in the number of
global completed M&A transactions in the same period3. The
increase in full year revenues reflects continued strong M&A
activity, particularly in the US, and improved restructuring
activity, which contributed to a greater number of transaction
completions and the largest number of total clients advised in our
Firm’s history. We advised 305 clients (167 of whom paid fees equal
to or greater than $1 million) in fiscal year 2016 as compared with
269 clients (139 of whom paid fees equal to or greater than $1
million) during the same period in the prior year.
In early 2017, we promoted eight of our advisory professionals
to Managing Director: Ryan Bell (US/Healthcare), Ping Chen (Hong
Kong/APAC Coverage), Abhinav Gattani (UK/Technology), Matt Hughes
(US/M&A), Ramy Ibrahim (US/Gaming & Leisure), Bassam Latif
(US/Restructuring), Weihan Lee (Hong Kong/M&A) and Glenn
Muscosky (US/Infrastructure). This represented our largest class of
promotes to date.
_____________________________
3 Source: Thomson Financial as of January 3, 2017; includes all
transactions greater than $100 million in value
Expenses
The following tables set forth information relating to the
Firm’s operating expenses, which are reported net of client expense
reimbursements.
U.S. GAAP Adjusted
(non-GAAP)* Three Months Ended December 31, ($ in
thousands) 2016 2015 2016 vs.
2015 Variance 2016 2015 2016 vs.
2015 Variance Expenses Compensation and benefits
$119,981 $99,891 20% $118,648 $95,982 24% % of revenues 59% 57% 58%
55% Non-compensation expenses $23,102 $31,457 -27% $23,102 $31,457
-27% % of revenues 11% 18% 11% 18% Total operating expenses
$143,083 $131,348 9% $141,750 $127,439 11% % of revenues 70% 75%
69% 73% * See Appendix for a reconciliation of GAAP to
Adjusted (non-GAAP)
U.S.
GAAP Adjusted (non-GAAP)* Twelve Months Ended
December 31, ($ in thousands) 2016
2015 2016 vs. 2015 Variance 2016
2015 2016 vs. 2015 Variance
Expenses Compensation and benefits $360,893 $311,224 16%
$355,683 $302,997 17% % of revenues 59% 56% 58% 55%
Non-compensation expenses $91,391 $103,136 -11% $91,391 $103,136
-11% % of revenues 15% 19% 15% 19% Total operating expenses
$452,284 $414,360 9% $447,074 $406,133 10% % of revenues 74% 75%
73% 74% * See Appendix for a reconciliation of GAAP to
Adjusted (non-GAAP)
Total operating expenses on a GAAP basis were $143.1 million for
the fourth quarter and $452.3 million for the fiscal year ended
December 31, 2016. On an Adjusted basis, operating expenses were
$141.8 million for the fourth quarter of 2016 as compared with
$127.4 million in the prior year period, and $447.1 million for
fiscal year 2016 as compared with $406.1 million in 2015. The
increase in operating expenses in 2016 resulted from increased
compensation and benefits expenses, which were partially offset by
a decrease in non-compensation expenses.
Compensation and benefits expenses on a GAAP basis were $120.0
million in the fourth quarter and $360.9 million for the fiscal
year ended December 31, 2016. Adjusted compensation and benefits
expenses (which exclude the amortization of IPO awards for both
2016 and 2015) were $118.6 million and $355.7 million for the
fourth quarter and fiscal year 2016, respectively, as compared with
$96.0 million and $303.0 million for the fourth quarter and fiscal
year 2015, respectively. The Adjusted compensation and benefits
ratio increased from 55% in the fourth quarter and fiscal year 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
$23.1 million for the fourth quarter of 2016 as compared with $31.5
million for the prior year quarter. Our non-compensation expense
ratio decreased to 11% from 18% in the same period of the prior
year. For the fiscal year ended December 31, 2016, GAAP and
Adjusted non-compensation expenses were $91.4 million as compared
with $103.1 million for the same period of the prior year. The full
year non-compensation expense ratio decreased to 15% from 19%,
driven in part by lower professional fees, including lower
consulting and recruiting fees compared with the prior year, as
well as by our continued expense discipline and increased
revenues.
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 fourth quarter and full year
2016 income was taxed at our corporate effective tax rates of 38.7%
and 39.2% respectively, versus 40.0% in both prior year
periods.
Capital Management and Balance Sheet
Moelis & Company continues to maintain a strong financial
position, and as of December 31, 2016, we held cash and short term
investments of $351.9 million and had no debt or goodwill on our
balance sheet.
On January 4, 2017, the Board of Directors of Moelis &
Company declared a quarterly dividend of $0.37 per share to be paid
on March 17, 2017 to common stockholders of record on March 3,
2017. The Board of Directors also declared a special dividend of
$1.25 per share in December 2016 which was paid on January 5,
2017.
Including the regular quarterly dividend announced in January,
we will have returned $2.56 per share to investors through regular
and special dividends with respect to 2016 performance,
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 8, 2017, accessible via telephone and the
internet. Ken Moelis, Chairman and Chief Executive Officer, and Joe
Simon, Chief Financial Officer, will review our fourth quarter and
full year 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 Fourth
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 10099427.
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 about 650 employees based in 17 offices in North and South
America, Europe, the Middle East, Asia and Australia. For further
information, 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
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
Revenues $204,608 $174,789 $613,373 $551,863
Expenses Compensation and benefits 119,981 99,891 360,893
311,224 Occupancy 3,755 3,835 18,696 15,063 Professional fees 5,023
8,098 12,574 20,911 Communication, technology and information
services 5,924 4,860 22,025 18,263 Travel and related expenses
4,118 7,634 20,570 24,329 Depreciation and amortization 824 681
3,183 2,635 Other expenses 3,458 6,349 14,343 21,935 Total expenses
143,083 131,348 452,284 414,360
Operating income
(loss) 61,525 43,441 161,089 137,503 Other income (expenses)
118 2,559 509 2,085 Income (loss) from equity method investments
1,179 966 5,076 4,476
Income (loss) before income taxes
62,822 46,966 166,674 144,064 Provision for income taxes 8,094
8,195 24,809 23,847
Net income (loss) 54,728 38,771 141,865
120,217 Net income (loss) attributable to noncontrolling
interests 39,693 28,224 103,478 87,113 Net income (loss)
attributable to Moelis & Company $15,035 $10,547 $38,387
$33,104 Weighted-average shares of Class A commonstock
outstanding Basic 21,042,993 20,377,446 20,933,757 20,021,652
Diluted 25,781,278 22,201,408 24,242,302 21,362,571 Net income
(loss) attributable to holders of shares of Class A common stock
per share Basic $0.71 $0.52 $1.83 $1.65 Diluted $0.58 $0.48 $1.58
$1.55
Moelis & Company
Reconciliation of GAAP to Adjusted
(non-GAAP) Financial Information
Unaudited
(dollars in thousands, except share and
per share data)
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 commonstock 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
ofshares of Class A common stock per share
Basic $0.71 $0.72 Diluted $0.58 $0.66
(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 38.7% for the period presented.
Three Months Ended December 31,
2015 Adjusted Items GAAP
Adjustments
Adjusted(non-GAAP)
Compensation and benefits $99,891 ($3,909) (a)(b) $95,982
Operating income (loss) 43,441 3,909 47,350 Other income
(expenses) 2,559 (2,456) (b) 103 Income (loss) before income
taxes 46,966 1,453 48,419 Provision for income taxes 8,195 11,173
(c) 19,368 Net income (loss) 38,771 (9,720) 29,051 Net
income (loss) attributable to noncontrolling interests 28,224
(28,224) - Net income (loss) attributable to Moelis & Company
$10,547 $18,504 $29,051 Weighted-average shares of Class A
commonstock outstanding Basic 20,377,446 33,762,802 (c) 54,140,248
Diluted 22,201,408 33,762,802 (c) 55,964,210 Net income (loss)
attributable to holders of shares of Class A
common stock per share
Basic $0.52 $0.54 Diluted $0.48 $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. (b) Reflects a reclassification of other income
associated with the forfeiture of fully vested Class A partnership
units to compensation and benefits expense. (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.
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 commonstock
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.
Twelve Months Ended
December 31, 2015 Adjusted Items GAAP
Adjustments Adjusted
(non-GAAP)
Compensation and benefits $311,224 ($8,227) (a)(b) $302,997
Operating income (loss) 137,503 8,227 145,730 Other income
(expenses) 2,085 (1,951) (b)(c) 134 Income (loss) before
income taxes 144,064 6,276 150,340 Provision for income taxes
23,847 36,289 (c)(d) 60,136 Net income (loss) 120,217 (30,013)
90,204 Net income (loss) attributable to noncontrolling
interests 87,113 (87,113) - Net income (loss) attributable to
Moelis & Company $33,104 $57,100 $90,204
Weighted-average shares of Class A commonstock outstanding Basic
20,021,652 34,118,596 (d) 54,140,248 Diluted 21,362,571 34,118,596
(d) 55,481,167 Net income (loss) attributable to holders of shares
of Class A
common stock per share
Basic $1.65 $1.67 Diluted $1.55 $1.63 (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 a reclassification of other income
associated with the forfeiture of fully vested Class A partnership
units to compensation and benefits expense. (c) Reflects the
netting of GAAP adjustments made to the amount pursuant to the
Company’s Tax Receivable Agreement against provision for income
taxes. (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 40.0% for the period
presented.
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version on businesswire.com: http://www.businesswire.com/news/home/20170208006237/en/
Moelis & CompanyInvestors:Michele Miyakawa, +
1 310-443-2344michele.miyakawa@moelis.comorMedia:Andrea
Hurst, + 1 212-883-3666m: +1
347-583-9705andrea.hurst@moelis.com
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