10-Q 1 mc-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

Or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-36418

 

 

Moelis & Company

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

46-4500216

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

399 Park Avenue, 4th Floor, New York NY

 

10022

(Address of principal executive offices)

 

(Zip Code)

 

(212) 883-3800

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title

Trading Symbol

Name of Exchange on which registered

Class A Common Stock

MC

New York Stock Exchange (NYSE)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). ☐ Yes No

As of April 14, 2022, there were 64,827,108 shares of Class A common stock, par value $0.01 per share, and 4,685,898 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

Part I. Financial Information

 

3

Item 1.

Financial Statements

 

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

31

Item 4.

Controls and Procedures

 

31

Part II. Other Information

 

32

Item 1.

Legal Proceedings

 

32

Item 1A.

Risk Factors

 

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

32

Item 3.

Defaults Upon Senior Securities

 

32

Item 4.

Mine Safety Disclosures

 

32

Item 5.

Other Information

 

32

Item 6.

Exhibits

 

33

Signatures

 

 

34

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Financial Statements (Unaudited)

 

 

 

Page

 

 

 

Condensed Consolidated Statements of Financial Condition as of March 31, 2022 and December 31, 2021

 

4

Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

 

5

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021

 

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

 

7

Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2022 and 2021

 

8

Notes to Condensed Consolidated Financial Statements

 

9

 

3


 

 

Moelis & Company

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

March 31,

 

December 31,

 

 

 

2022

 

2021

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

130,420

 

$

520,213

 

Restricted cash

 

 

635

 

 

801

 

Receivables:

 

 

 

 

 

 

 

Accounts receivable, net of allowance for credit losses of $2,281 and $2,823 as of March 31, 2022 and December 31, 2021, respectively

 

 

39,273

 

 

41,870

 

Accrued and other receivables

 

 

15,372

 

 

27,698

 

Total receivables

 

 

54,645

 

 

69,568

 

Deferred compensation

 

 

22,346

 

 

11,499

 

Investments

 

 

228,346

 

 

263,341

 

Right-of-use assets

 

 

160,137

 

 

164,083

 

Equipment and leasehold improvements, net

 

 

59,583

 

 

59,163

 

Deferred tax assets

 

 

422,636

 

 

448,123

 

Prepaid expenses and other assets

 

 

18,531

 

 

18,890

 

Total assets

 

$

1,097,279

 

$

1,555,681

 

Liabilities and Equity

 

 

 

 

 

 

 

Compensation payable

 

$

99,953

 

$

503,707

 

Accounts payable, accrued expenses and other liabilities

 

 

52,316

 

 

69,883

 

Amount due pursuant to tax receivable agreement

 

 

307,115

 

 

307,363

 

Deferred revenue

 

 

5,573

 

 

4,539

 

Lease liabilities

 

 

187,407

 

 

191,890

 

Total liabilities

 

 

652,364

 

 

1,077,382

 

Commitments and Contingencies (See Note 11)

 

 

 

 

 

 

 

Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 71,824,917 issued and 63,930,282 outstanding at March 31, 2022; 1,000,000,000 authorized, 68,518,779 issued and 62,645,599 outstanding at December 31, 2021)

 

 

718

 

 

685

 

Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 4,685,898 issued and outstanding at March 31, 2022; 1,000,000,000 authorized, 4,686,344 issued and outstanding at December 31, 2021)

 

 

47

 

 

47

 

Treasury stock, at cost; 7,894,635 and 5,873,180 shares at March 31, 2022 and December 31, 2021, respectively

 

 

              (354,249)

 

 

              (256,320)

 

Additional paid-in-capital

 

 

1,306,290

 

 

1,280,498

 

Retained earnings (accumulated deficit)

 

 

              (514,502)

 

 

              (535,282)

 

Accumulated other comprehensive income (loss)

 

 

                  (1,247)

 

 

                     (560)

 

Total Moelis & Company equity

 

 

437,057

 

 

489,068

 

Noncontrolling interests

 

 

7,858

 

 

                (10,769)

 

Total equity

 

 

444,915

 

 

478,299

 

Total liabilities and equity

 

$

1,097,279

 

$

1,555,681

 

 

See notes to the condensed consolidated financial statements (unaudited).

 

 

4


 

Moelis & Company

Condensed Consolidated Statements of Operations

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

Three Months Ended March 31,

 

2022

 

2021

Revenues

$

302,088

 

$

263,866

Expenses

 

 

 

 

 

Compensation and benefits

 

176,637

 

 

156,499

Occupancy

 

5,810

 

 

7,695

Professional fees

 

4,315

 

 

5,999

Communication, technology and information services

 

8,779

 

 

8,659

Travel and related expenses

 

7,643

 

 

1,610

Depreciation and amortization

 

2,039

 

 

1,449

Other expenses

 

7,438

 

 

9,512

Total expenses

 

212,661

 

 

191,423

Operating income (loss)

 

89,427

 

 

72,443

Other income and (expenses)

 

         (2,235)

 

 

3,179

Income (loss) before income taxes

 

87,192

 

 

75,622

Provision (benefit) for income taxes

 

13,598

 

 

            (176)

Net income (loss)

 

73,594

 

 

75,798

Net income (loss) attributable to noncontrolling interests

 

7,879

 

 

9,269

Net income (loss) attributable to Moelis & Company

$

65,715

 

$

66,529

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

Basic

 

64,824,347

 

 

60,932,966

Diluted

 

70,000,473

 

 

66,360,217

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

 

 

 

 

 

Basic

$

1.01

 

$

1.09

Diluted

$

0.94

 

$

1.00

 

See notes to the condensed consolidated financial statements (unaudited).

5


 

Moelis & Company

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Net income (loss)

 

$

 

73,594

 

 

$

 

75,798

 

 

Foreign currency translation adjustment, net of tax

 

 

 

(764

)

 

 

 

(744

)

 

Other comprehensive income (loss)

 

 

 

(764

)

 

 

 

(744

)

 

Comprehensive income (loss)

 

 

 

72,830

 

 

 

 

75,054

 

 

Less: Comprehensive income (loss) attributable to noncontrolling interests

 

 

 

7,802

 

 

 

 

9,180

 

 

Comprehensive income (loss) attributable to Moelis & Company

 

$

 

65,028

 

 

$

 

65,874

 

 

 

See notes to the condensed consolidated financial statements (unaudited).

6


 

Moelis & Company

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income (loss)

 

$

73,594

 

$

75,798

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Bad debt expense (benefit)

 

 

               (288)

 

 

3,149

 

Depreciation and amortization

 

 

2,039

 

 

1,449

 

Equity-based compensation

 

 

37,067

 

 

50,963

 

Deferred tax provision

 

 

25,973

 

 

21,245

 

Other

 

 

3,192

 

 

            (2,615)

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

2,643

 

 

14,401

 

Accrued and other receivables

 

 

11,957

 

 

          (32,589)

 

Prepaid expenses and other assets

 

 

463

 

 

               (587)

 

Deferred compensation

 

 

          (10,957)

 

 

            (3,660)

 

Compensation payable

 

 

        (403,408)

 

 

        (160,178)

 

Accounts payable, accrued expenses and other liabilities

 

 

          (17,798)

 

 

1,969

 

Deferred revenue

 

 

1,040

 

 

5,409

 

Dividends received

 

 

2,029

 

 

2,279

 

Net cash provided by (used in) operating activities

 

 

        (272,454)

 

 

          (22,967)

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of investments

 

 

        (117,432)

 

 

          (78,723)

 

Proceeds from sales of investments

 

 

147,250

 

 

173,046

 

Note payments received from (issued to) employees

 

 

                  —

 

 

70

 

Purchases of equipment and leasehold improvements

 

 

            (2,458)

 

 

            (3,539)

 

Net cash provided by (used in) investing activities

 

 

27,360

 

 

90,854

 

Cash flows from financing activities

 

 

 

 

 

 

 

Payments for dividends and tax distributions

 

 

          (45,647)

 

 

          (39,685)

 

Payments for treasury stock purchases

 

 

          (97,929)

 

 

          (74,211)

 

Payments under tax receivable agreement

 

 

               (248)

 

 

                  —

 

Other proceeds

 

 

100

 

 

                  —

 

Net cash provided by (used in) financing activities

 

 

        (143,724)

 

 

        (113,896)

 

Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash

 

 

            (1,141)

 

 

               (792)

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

        (389,959)

 

 

          (46,801)

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

521,014

 

 

203,284

 

Cash, cash equivalents, and restricted cash, end of period

 

$

131,055

 

$

156,483

 

Supplemental cash flow disclosure:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Income taxes, net

 

$

7,165

 

$

1,913

 

Other non-cash activity

 

 

 

 

 

 

 

Class A Partnership Units or other equity converted into Class A Common Stock

 

$

150

 

$

3,903

 

Dividends in kind

 

$

5,572

 

$

5,131

 

Forfeiture of fully-vested Group LP units or other equity units

 

$

                  —

 

$

25

 

 

See notes to the condensed consolidated financial statements (unaudited).

7


 

Moelis & Company

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(dollars in thousands, except share amounts)

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

Accumulated

 

 

 

 

 

 

 

 

Class A

 

Class B

 

 

 

Class A

 

Class B

 

 

 

 

Additional

 

Earnings

 

Other

 

 

 

 

 

 

 

 

Common

 

Common

 

Treasury

 

Common

 

Common

 

Treasury

 

Paid-In

 

(Accumulated

 

Comprehensive

 

Noncontrolling

 

Total

 

 

Stock

 

Stock

 

Stock

 

Stock

 

Stock

 

Stock

 

Capital

 

Deficit)

 

Income (Loss)

 

Interests

 

Equity

 

Balance as of January 1, 2022

 

68,518,779

 

 

4,686,344

 

 

(5,873,180

)

$

 

685

 

$

 

47

 

$

 

(256,320

)

$

 

1,280,498

 

$

 

(535,282

)

$

 

(560

)

$

 

(10,769

)

$

 

478,299

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,715

 

 

 

 

 

 

7,879

 

 

 

73,594

 

Equity-based compensation

 

3,305,692

 

 

 

 

 

 

 

33

 

 

 

 

 

 

 

 

 

20,949

 

 

 

 

 

 

 

 

 

16,085

 

 

 

37,067

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(687

)

 

 

(77

)

 

 

(764

)

Dividends declared ($0.60 per share of Class A common stock) and tax distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,572

 

 

 

(44,935

)

 

 

 

 

 

(6,284

)

 

 

(45,647

)

Treasury Stock Purchases

 

 

 

 

 

(2,021,455

)

 

 

 

 

 

 

 

 

(97,929

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(97,929

)

Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges

 

446

 

 

(446

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(774

)

 

 

 

 

 

 

 

 

924

 

 

 

150

 

Equity-based payments to non-employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

45

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100

 

 

 

100

 

Balance as of March 31, 2022

 

71,824,917

 

 

4,685,898

 

 

(7,894,635

)

$

 

718

 

$

 

47

 

$

 

(354,249

)

$

 

1,306,290

 

$

 

(514,502

)

$

 

(1,247

)

$

 

7,858

 

$

 

444,915

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

Accumulated

 

 

 

 

 

 

 

 

Class A

 

Class B

 

 

 

Class A

 

Class B

 

 

 

 

Additional

 

Earnings

 

Other

 

 

 

 

 

 

 

 

Common

 

Common

 

Treasury

 

Common

 

Common

 

Treasury

 

Paid-In

 

(Accumulated

 

Comprehensive

 

Noncontrolling

 

Total

 

 

Stock

 

Stock

 

Stock

 

Stock

 

Stock

 

Stock

 

Capital

 

Deficit)

 

Income (Loss)

 

Interests

 

Equity

 

Balance as of January 1, 2021

 

61,986,927

 

 

5,948,750

 

 

(3,959,083

)

$

 

620

 

$

 

59

 

$

 

(152,170

)

$

 

1,052,322

 

$

 

(420,682

)

$

 

(201

)

$

 

(35,475

)

$

 

444,473

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,529

 

 

 

 

 

 

9,269

 

 

 

75,798

 

Equity-based compensation

 

3,612,341

 

 

 

 

 

 

 

36

 

 

 

 

 

 

 

 

 

41,508

 

 

 

 

 

 

 

 

 

9,419

 

 

 

50,963

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(655

)

 

 

(89

)

 

 

(744

)

Dividends declared ($0.55 per share of Class A Common Stock) and tax distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,131