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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, 2021

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, 5th Floor, New York NY

 

10022

(Address of principal executive offices)

 

(Zip Code)

 

(212883-3800

(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 15, 2021, there were 61,325,544 shares of Class A common stock, par value $0.01 per share, and 4,899,457 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 

 


Table of Contents

 

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

Part I. Financial Information

 

 

Item 1.

Financial Statements

 

3

Item 2.

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

 

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4.

Controls and Procedures

 

32

Part II. Other Information

 

 

Item 1.

Legal Proceedings

 

33

Item 1A.

Risk Factors

 

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

33

Item 3.

Defaults Upon Senior Securities

 

33

Item 4.

Mine Safety Disclosures

 

33

Item 5.

Other Information

 

33

Item 6.

Exhibits

 

34

Signatures

 

 

35

 

 

2


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

Condensed Consolidated Financial Statements (Unaudited)

 

 

 

Page

 

 

 

Condensed Consolidated Statements of Financial Condition as of March 31, 2021 and December 31, 2020

 

4

Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020

 

5

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020

 

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

 

7

Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2021 and 2020

 

8

Notes to Condensed Consolidated Financial Statements

 

9

 

3


Table of Contents

 

 

Moelis & Company

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

155,402

 

 

$

 

202,477

 

Restricted cash

 

 

 

1,081

 

 

 

 

807

 

Receivables:

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for credit losses of $6,183 and $3,775 as of March 31, 2021 and December 31, 2020, respectively

 

 

 

71,824

 

 

 

 

89,297

 

Accrued and other receivables

 

 

 

45,427

 

 

 

 

11,916

 

Total receivables

 

 

 

117,251

 

 

 

 

101,213

 

Deferred compensation

 

 

 

15,676

 

 

 

 

12,004

 

Investments

 

 

 

118,427

 

 

 

 

211,826

 

Right-of-use assets

 

 

 

171,857

 

 

 

 

177,069

 

Equipment and leasehold improvements, net

 

 

 

52,067

 

 

 

 

49,977

 

Deferred tax assets

 

 

 

423,281

 

 

 

 

424,345

 

Prepaid expenses and other assets

 

 

 

16,055

 

 

 

 

16,726

 

Total assets

 

$

 

1,071,097

 

 

$

 

1,196,444

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

Compensation payable

 

$

 

59,889

 

 

$

 

220,058

 

Accounts payable, accrued expenses and other liabilities

 

 

 

24,583

 

 

 

 

25,026

 

Amount due pursuant to tax receivable agreement

 

 

 

324,064

 

 

 

 

307,581

 

Deferred revenue

 

 

 

8,105

 

 

 

 

2,692

 

Lease liabilities

 

 

 

193,876

 

 

 

 

196,614

 

Total liabilities

 

 

 

610,517

 

 

 

 

751,971

 

Commitments and Contingencies (See Note 11)

 

 

 

 

 

 

 

 

 

 

Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 66,648,561 issued and 61,325,544 outstanding at March 31, 2021; 1,000,000,000 authorized, 61,986,927 issued and 58,027,844 outstanding at December 31, 2020)

 

 

 

666

 

 

 

 

620

 

Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 4,899,457 issued and outstanding at March 31, 2021; 1,000,000,000 authorized, 5,948,750 issued and outstanding at December 31, 2020)

 

 

 

49

 

 

 

 

59

 

Treasury stock, at cost; 5,323,017 and 3,959,083 shares as of March 31, 2021 and December 31, 2020, respectively

 

 

 

(226,381

)

 

 

 

(152,170

)

Additional paid-in-capital

 

 

 

1,101,205

 

 

 

 

1,052,322

 

Retained earnings (accumulated deficit)

 

 

 

(393,166

)

 

 

 

(420,682

)

Accumulated other comprehensive income (loss)

 

 

 

(856

)

 

 

 

(201

)

Total Moelis & Company equity

 

 

 

481,517

 

 

 

 

479,948

 

Noncontrolling interests

 

 

 

(20,937

)

 

 

 

(35,475

)

Total equity

 

 

 

460,580

 

 

 

 

444,473

 

Total liabilities and equity

 

$

 

1,071,097

 

 

$

 

1,196,444

 

 

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

 

 

4


Table of Contents

 

 

Moelis & Company

Condensed Consolidated Statements of Operations

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Revenues

 

$

 

263,866

 

 

$

 

153,706

 

Expenses

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

 

156,499

 

 

 

 

95,120

 

Occupancy

 

 

 

7,695

 

 

 

 

7,231

 

Professional fees

 

 

 

5,999

 

 

 

 

4,236

 

Communication, technology and information services

 

 

 

8,659

 

 

 

 

8,392

 

Travel and related expenses

 

 

 

1,610

 

 

 

 

7,944

 

Depreciation and amortization

 

 

 

1,449

 

 

 

 

1,199

 

Other expenses

 

 

 

9,512

 

 

 

 

5,142

 

Total expenses

 

 

 

191,423

 

 

 

 

129,264

 

Operating income (loss)

 

 

 

72,443

 

 

 

 

24,442

 

Other income and (expenses)

 

 

 

3,179

 

 

 

 

(1,660

)

Income (loss) before income taxes

 

 

 

75,622

 

 

 

 

22,782

 

Provision (benefit) for income taxes

 

 

 

(176

)

 

 

 

(7,344

)

Net income (loss)

 

 

 

75,798

 

 

 

 

30,126

 

Net income (loss) attributable to noncontrolling interests

 

 

 

9,269

 

 

 

 

4,996

 

Net income (loss) attributable to Moelis & Company

 

$

 

66,529

 

 

$

 

25,130

 

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

60,932,966

 

 

 

 

52,666,457

 

Diluted

 

 

 

66,360,217

 

 

 

 

57,092,982

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

1.09

 

 

$

 

0.48

 

Diluted

 

$

 

1.00

 

 

$

 

0.44

 

 

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

5


Table of Contents

 

Moelis & Company

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net income (loss)

 

$

 

75,798

 

 

$

 

30,126

 

Foreign currency translation adjustment, net of tax

 

 

 

(744

)

 

 

 

(1,630

)

Other comprehensive income (loss)

 

 

 

(744

)

 

 

 

(1,630

)

Comprehensive income (loss)

 

 

 

75,054

 

 

 

 

28,496

 

Less: Comprehensive income (loss) attributable to noncontrolling interests

 

 

 

9,180

 

 

 

 

4,670

 

Comprehensive income (loss) attributable to Moelis & Company

 

$

 

65,874

 

 

$

 

23,826

 

 

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

6


Table of Contents

 

Moelis & Company

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in thousands)

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

 

75,798

 

 

$

 

30,126

 

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

 

 

 

 

 

 

 

 

 

 

Bad debt expense

 

 

 

3,149

 

 

 

 

518

 

Depreciation and amortization

 

 

 

1,449

 

 

 

 

1,199

 

Equity-based compensation

 

 

 

50,963

 

 

 

 

38,255

 

Deferred tax provision

 

 

 

21,245

 

 

 

 

(6,723

)

Other

 

 

 

(2,615

)

 

 

 

2,099

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

14,401

 

 

 

 

5,565

 

Accrued and other receivables

 

 

 

(32,589

)

 

 

 

(1,899

)

Prepaid expenses and other assets

 

 

 

(587

)

 

 

 

117

 

Deferred compensation

 

 

 

(3,660

)

 

 

 

(4,925

)

Compensation payable

 

 

 

(160,178

)

 

 

 

(150,260

)

Accounts payable, accrued expenses and other liabilities

 

 

 

1,969

 

 

 

 

9,454

 

Deferred revenue

 

 

 

5,409

 

 

 

 

1,439

 

Dividends received

 

 

 

2,279

 

 

 

 

1,942

 

Net cash provided by (used in) operating activities

 

 

 

(22,967

)

 

 

 

(73,093

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

Purchase of investments

 

 

 

(78,723

)

 

 

 

(28,152

)

Proceeds from sales of investments

 

 

 

173,046

 

 

 

 

181,249

 

Note payments received from employees

 

 

 

70

 

 

 

 

 

Purchase of equipment and leasehold improvements

 

 

 

(3,539

)

 

 

 

(13,139

)

Net cash provided by (used in) investing activities

 

 

 

90,854

 

 

 

 

139,958

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

Dividends and distributions

 

 

 

(39,685

)

 

 

 

(88,689

)

Proceeds from exercise of stock options

 

 

 

 

 

 

 

11,819

 

Treasury stock purchases

 

 

 

(74,211

)

 

 

 

(31,636

)

Net cash provided by (used in) financing activities

 

 

 

(113,896

)

 

 

 

(108,506

)

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

 

 

 

(792

)

 

 

 

(2,176

)

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

 

 

 

(46,801

)

 

 

 

(43,817

)

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

 

 

 

203,284

 

 

 

 

168,572

 

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

 

$

 

156,483

 

 

$

 

124,755

 

Supplemental cash flow disclosure:

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

 

1,913

 

 

$

 

1,560

 

Other non-cash activity

 

 

 

 

 

 

 

 

 

 

Cumulative effect adjustment upon adoption of ASU 2016-13

 

$

 

 

 

$

 

364

 

Dividend equivalents issued

 

$

 

5,131

 

 

$

 

12,125

 

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

 

$

 

3,903

 

 

$

 

786

 

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

 

$

 

25

 

 

$

 

96

 

 

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

 

 

7


Table of Contents

 

 

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, 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

 

 

 

 

(39,013

)

 

 

 

 

 

 

 

(5,803

)

 

 

 

(39,685

)

Treasury Stock Purchases

 

 

 

 

 

 

 

 

(1,363,934

)

 

 

 

 

 

 

 

 

 

 

 

(74,211

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,211

)

Equity-based payments to non-employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

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

 

 

1,049,293

 

 

 

(1,049,293

)

 

 

 

 

 

 

10

 

 

 

 

(10

)

 

 

 

 

 

 

 

2,161

 

 

 

 

 

 

 

 

 

 

 

 

1,742

 

 

 

 

3,903

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

Balance as of March 31, 2021

 

 

66,648,561

 

 

 

4,899,457

 

 

 

(5,323,017

)

 

$

 

666

 

 

$

 

49

 

 

$

 

(226,381

)

 

$

 

1,101,205

 

 

$

 

(393,166

)

 

$

 

(856

)

 

$

 

(20,937

)

 

$

 

460,580

 

 

 

 

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, 2020

 

 

52,773,617

 

 

 

10,397,915

 

 

 

(2,757,558

)

 

$