MC - Earnings call transcript Q1 2024

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Operator

Good afternoon, and welcome to the Moelis & Company earnings conference call for the first quarter of 2024. To begin, I'll turn the call over to Mr. Matt Tsukroff.

Matthew Tsukroff

Good afternoon, and thank you for joining us for Moelis & Company's First Quarter 2024 Financial Results Conference Call.

On the phone today are Ken Moelis, Chairman and CEO; and Joe Simon, Chief Financial Officer.

and would call note statements, in may subject various I made the which the begin, identified with to this those the of on contain risks Company's Risk we Factors like to Moelis that to remarks are from section Before time including & time filings uncertainties, certain forward-looking SEC. from Actual results anticipated. could those currently differ materially no to forward-looking undertakes update obligation firm statements. The any

with the measures, comparable certain to measures, adjusted relevant measures. measures when turn references presented can investors include these information information together and which to to to results by today investor firm's comments be GAAP useful found operating other results. better on in over Our website our understand these call and discuss now earnings of financial I'll across GAAP adjusted reconciliation with our periods We at investors.moelis.com. are financial compare our believe our release, Reg to the Joe required to relations the The financial results. provided several G is

Joseph Simon

prior pivoting trend in revenue period. quarter, remains $XXX this of Thanks, in everyone. business. There call, our primarily restructuring. over challenging. through We go to on that then On revenues is comment results, the Matt, XX% and achieved of but afternoon, constructively. I'll growth financial year is to Ken conversion The first early the increase today's The the to will good representing and continues attributable increase revenue build, an M&A further pipeline more is evidence million

expenses. Moving to

Our first quarter XX%. was comp ratio

which third visibility have X quarter be in in on the similar we quarter. be to ratio to the the year, full likely expect better is We until

quarterly continues was $XX non-comp XX.X%. be quarter, excluding The ratio approximately quarter transaction-related first run expenses. rate underlying million per to Our

taxes. to Moving

tax rate be XX% corporate to is the full year. expected Our for underlying

we of productivity. resume more of We achieve to once the expect target a XX% normalized level

lastly, And per turn call maintain strong quarterly the a funded we balance dividend over a of no allocation, sheet now share. capital regular Ken. the Board I'll declared with continue to Regarding $X.XX to And debt.

Kenneth Moelis

everyone. Joe, Thanks, and good afternoon,

closer We to getting are M&A recovery. an

participants and are Our to cost open, and M&A pipeline adjusted sponsor both are of as to current corporate Financing capital. have markets dialogues build the active. continues market

capital flow Our which is structure continue we current be mandates, seeing advisory and as team coming restructuring we environment, capital in capabilities. a maturities as strong to consistent our and financing this open which of believe and benefit to an expect optimal out-of-court combines markets both market the market restructurings, our for specialize business we from

hired X Finally, credit in X first the cover and energy the quarter, in we funds. managing X to directors, sector

positive, forward. environment going for outlook questions. is With open clients on it our to and up the Our for and that, are focused deal going I'm execution we

Operator

from comes question first with Citizens Your Instructions] JMP. [Operator Ryan Devin

Alexander Jenkins

get filling for we've just around speak well. and act. information fairly to hearing, any frame what with what guess Jenkins and the the dialogues Alex hearing in commentary you're time firms I need hearing you're place these been start, I'd perspective would the in sponsor Devin your up to something for love as Ryan. to positive of Most is of just to backdrop? has This can recently been you terms helpful expecting on be picking you're or

Kenneth Moelis

Yes.

So a that's question. good

in strategic of publics with to is our bifurcated more M&A do weighted right business the Let quarter strategics market first and you strategics. I almost And the is reason I actually now. shape time there's me frame deals being give the kind The a for unlimited. just think think -- that of

think to they they're PE they the -- something do paid be X think it that's usually expertises. X I deals -- usually in and matters you They're and you purchase available no when timing. their at come years, a there's have things of is execute. Interestingly, when I ] to and of one when good they accomplish, one for whole So are there's firms exit, and to of [

if January, the cuts. line the Fed of the I odds, approach supposed you year, of that's was happen what mean this and think first to was X was the part betting you I kind rate the telling year. market

might ready those X, go you're market, You X get but to for not of happen. X, until going cuts

time it's everybody we're time and for want that you large our think which vet if pipe at to take was way, you're trying and me happened market. By to NBRC, not we been deals is to pipeline companies time want market, cuts we our and rate for want to we highs, on, where as handicapping is the is been say, but paid extremely do, ready, to the what so I -- as were busy say think probably we our well, this you -- that X you'll going. saw transactions let what ever let's of But year. get I has

I I to think you think X cuts. I believe need handicapping rate And is we to to down -- and the don't rate fast-forward cuts. today, X

interest for need fairly begin transact if think 'XX years, time. to that basis will you there have to knew relative are timing to they be PE rate that the -- if over but it think hey, them, rates I and be X that cut, you to period on to I if ability think relative told aggressively And firms, world of not we don't was no guarantee is long you high can wouldn't there available, the closely. a we you that rates stability of project. not will I a rate capital XXX% And cut

between, think of I is. unleash and the my be to get this is transact improve it it cut divergence lot activity we're a down going activity. think were to answer, rates have think you're honing a to that And environment and I in environment, rate but would So I I going to lower not it That's going long hey, as pent-up the thought really was in, will a think to, start do value. people we I

Alexander Jenkins

the guess color, you as a in momentum Awesome. the just speak sense. follow-up base Thanks makes you just That to can I the expectations? the Great. market hired lot relative on SVB year, a guys tax for team last of to too. rate

Kenneth Moelis

know year market expectations. They've don't the thought I I what team. day. of think think the X met -- the almost X year our But it's it we is that to

call focus. better year, as on have I all think I stronger, it. We've deeper, PE lot -- did they we gotten it earnings last It's in areas. not of said, this announced a

We're period, but happy with we're months, M&A backlog, It's like of -- given coverage, the expertise, of industry, extremely as the optimal XX very client rest were in So time to almost penetration, worked revenues, just it. the the happy hoping. we it's the last not context execute exactly with the satisfaction, the market. on

Operator

Your next JPMorgan. with Ken question comes from Worthington

Kenneth Worthington

(sic) you Are same promotions you years know and but terms in to how rate? still success I new just past? hires seeing of line? bankers or recent figured new sort and more the so Any better coming it's last in SVB early rate SBV a [ give lines, color there? in you So can the are what seeing you've the seen you Are might compared year have beyond view. fit better these hirings of those along ], hire success over in

Kenneth Moelis

had hired would the at let of better the people the But beginning bullish. probably XXXX again, you just people the at XXXX. Ken, say me a XXXX beginning very hire of I'm than you

as shouldn't -- put So you I could been we done we've have that It's It's context. In been good think to also better. market thought. I I'll context, somebody. because it say has in insult hiring as have the been that

think quality. that road talent are more them. They're spent in of sectors a I are good. -- on The time that highest is with interactions of client the the are I'd active. very lot the

So But them. convert backlog has a It's I'm with is happy pleased very the I'm to exceptional, connectivity client I the to like year final tough just that and and a it. feel transaction. large base pretty to with been XXXX

Kenneth Worthington

then rate expanding your Great. comments. on maybe Okay. And

'XX, a at levels for what that spoke or M&A longer means I sort opportunity? businesses. If does rate really your of for in rates implications have extended think XXXX. your even of various for out figure either to comments environment period higher about Trying these beyond an restructuring we're sentiment

Kenneth Moelis

is of clear, this trigger actually you out So resurgence companies quality coming. in the buy would who by a a companies. in and the market asset This up M&A. don't that buyers rate the I all somebody that it's cut have it's and What in quality a January your there you there probability sale are are think buy. be M&A. the don't capital when to happens need point, rate idea there's There hey, back says, you put in there. way, We the markets, to if believe availability are I held X to people quality quality at think I -- like cuts for is asset almost believe

of the it. kind fine. and There's wait if wrong have probably You quality -- with assets. It's It's doing you going quality way, it's nothing assets. by growing

executing, accelerate to issues even market there. cuts we if guarantee by It there'll market market is wait dramatically rate at I sale regulatory that would will pretty said, environment. waiting back for is right only there paper don't that rate think waiting private believe I think wait, good CCC to go thing. like because holding I And this that and for well, want a cut be rate explode out years, they're quality now be you public this would types actually a side. believe coming into the to fine from side I will way, know think public my point, the There that a the hit market in away don't B, you're May, would be -- different I transactions people I have already But I wouldn't that large opportunity If There happens, -- X to X in be dramatically I and I that's FTC think if to finance market the just I So environment. kick rate I executing, thing a the to thing. transactions best be do say, June, don't capital, great. aggressive. the I your with a transactions. And believe pretty this now needs is of the off it no might for be these bad is the that as if asset. guaranteed, I with somebody take acquisition that if difference. is capital is here the

Operator

comes Your Yaro James next from Goldman question with Sachs.

James Yaro

to us quickly. outlook this for could start want you just your Maybe on just on update restructuring I business.

pretty how a activity quarter did this was strong You about there talk there.

could perhaps for to as outlook us we done the maybe markets, ahead? So you capital the then and you contributions give and management XX restructuring as Chapter both if from look And revenue have historically? liability

Kenneth Moelis

a is that for some Well, I'm of here give quality I'll sure sense to rescue but a do going said, to Yes, sure is high part But and that where are of The insert have enter the strong to interesting if the into -- had restructuring a I've This cut company enforce not of rate not rate some look, market need and become that of risk to you out historically, what's for happen M&A transactions. I very kind I'm that we take it good, is some going maturities that's hit you market like is. to isn't done part interest of you part to capital try plague the market and itself has willing performing, mode. rates available. higher capital available. continue

lot which might traded credit not have $X.XX, $X.XX, XX to you're the market, crisis. a years of lot which in the so $X.XX. downturn, But those credits And a ago last in been of the down seeing

this might in at Transactions a more EBITDA in You $X.XX, It don't went lot a $X.XX under market huge have cycle, there paper. the to deals. higher $X.XX, equity was put of be that multiples.

single in level than the leverage, bankrupt. matter for go every to And and try would a which of extend person, the X finance. come finance runway what or And somebody company so will bigger the equity rather believe more there single slice Xx to me, leaves possibly every a owner rate, value put same of in of under was No to that. they

these financing, structure, -- a lot some that. Rescue moving we're of seeing of maturities techniques. extension through So by out exchange offer of

in a good there big of there as continue early through Chapter it's I getting will the are course, to Chapter as downturn solutions but the some quality in be ownership by long to sponsors who XXs, Of a last not way, it quicker. market XX and and the because it's was of think getting

think, because and M&A going of way, the business. weakest I put continue, this our part do will out, called the our that is the pressure bottom more we higher So the that non-M&A -- by rates the economic of weakest XX% as parts on of think I way, was will was the performance. By market it our -- one of quarter,

So our that non-M&A, was restructuring, capital PFA markets, XX%. and includes and about

James Yaro

helpful. incredibly That's

And fundraising Just and few the remained these businesses. And change, to at past taking think sort in secondaries structural these view? robust by growth then other much businesses, a transact to past separately, using versus the I more the of to vehicles M&A? slow of LP speak just PE a each been ability how step you using on back, of of regular over could in for these year lack is fairly the fundraising PE, has structures M&A have whereas and these funds generate continuation your of funds to Are outlook grown activities and way the liquidity. changes years, some pace. Maybe industry continuation primary driven

Kenneth Moelis

to consolidation. really made primary a by the business think willing it it's business. fundraise a right, But be and you're X fundraise I XX not years I primary -- the same lot That's money the had to pay -- points gotten think was time, look, in it's in ago. over A who the to commoditized and on those going funds don't And there's also good was needed first-time introduced. introduced of be get to were -- a

think be many funds large many consolidation. and existing funds LPs. capital, lack there's there'll -- their just going to to of not won't started, back new I There as be due as a being the are

there's a And smaller be primary so to market into. and smaller go going to

your you continuation that You're think as just to of generated a to of funds lack have pitch becoming as concept. I part to don't a do bigger with it have M&A. It's is right in about asset. what the tool by an

private maintain asset I think out generated in by asset for and it. manager it's like what crystallize it's and an It's was an like asset continuous dream manager lay equity. accomplishes, -- for and they to they crystallize an forward almost asset if retain it good again. a a you you the They a solution the carry go fund get restart carry, to

a will positives product think, has it and important So real I some and that, that is continue to grow. be

Operator

from Chubak Your Wolfe with Steven next comes question Research.

Brendan O'Brien

O'Brien I on is I in Steven. This Brendan for filling start, To recruiting. guess, touch just want to

pretty expect year. this the history. a You which we new to still a recruiting relative active X to year's you're evolved to while the I start added MDs to last has just to XQ, how to level if sense hires, due this SVB year should And is wanted get recruiting in another and unlikely relatively on active environment match as front

Kenneth Moelis

X no them announced we have we which of process -- think that is were kind year, for and to of up a actually hires out think last energy when don't did, I The we plans X, year. garden I signed in last while. leave. them we anything they're duplicate No, like the

almost that of we last and year's we to energy. technology look And some part move very in at fill So transition. gaps in excited and had energy -- as

with excited we very So up. where ended

was didn't became have still team, We an to of -- look But of in that we it. it's But spectacular situation even that. We're out available, If don't something going of last of me, at leading to type many hires. non-SVB XX, occur. happened. for year. if that not to Even that part, that hire. to the do up be the I SVB some you the we think, nowhere. we did If plan don't like total anticipate we'd and very us to moved We I a aggressive. excited to It team, with mid-XXs. would that would MDs spots it expect have ended external I people

year. a where the is this we'll they we up, we'll I off some and fill going quality people for we're on think show to this if really pick clients year can, focus in where

Brendan O'Brien

equity then availability to there. over with and active sense markets. guess of could equity the a capital get business turning reopening to markets, want business. to the and been the think as just helpful. markets how you markets issuance given All lack debt you or whether months, of I through the credit right. growth that's And quite past impacting back for for capital equity But see and It's XX that That's continue I you to outlook the the

Kenneth Moelis

of of that. charge Yes. I'm bullish best and bankers put on our in it. took one very them We

distribution of chunky idea IPO, the the involves in goes clients, governance that. one-off, bespoke also, into that not entails involve very distribution. big, Again, or and of to to we one to banks. But think it big is lot of conversation. $X -- have people like things want are capital plain-vanilla PE with which often senior credit a a these putting just lender the mean I It a position plain-vanilla your and And private M&A. I often checks. of people some that and kinds billion conflict negotiation consider causes an lender, that almost the conducive firms, usually it's structure, discretion to exit rights of things if of senior all their of and not firms that it's and what oftentimes in might our secrecy involved interest are people

and yes, But conversations very -- wasn't having is ago. fact that capital the it's that available was available. because, we right business were It those hard. all the year our is a this So fantastic for

capital now solution the that bad higher. around rates is motion They and all but move capital, about those X% didn't put hit were a marrying to position The perfect going lot and of on a for there worried very be had how funds capital kinds were issues want have to up yet. federal opportunities might to I means was think our problem a get. this a looking in will rate with fact You

Operator

comes Morgan question Kenny with Stanley. next from Your Ryan

Connell Schmitz

in Schmitz This for is Connell Ryan filling Kenny.

to just going your outlook. back So

commentary seemed called a you M&A. your reserved So more in last last little resurgence than quarter for coming bit given quarter

are of back merger analogy? get have made you time Formula market, red we talked sense comments. you the X your the you said to red light X So within Powell's you last that, The better of you like of can changed. comment go where off this to -- a now about had back But we of were And at has outlook the fourth rate lights. the November

So can And the an comp kind of sequential ratio? you're XQ you then where to as give with us to ratio can environment just you gets update on a on a we guide, on similar revenue basis that a you speak follow-up, just expecting are what that? comp

Kenneth Moelis

Okay.

Let me start.

you So I our but is words stronger our know that activity exact I whatever I than tell I pipe don't is the at point. said will strong, used, NBRC that

point. To then -- which talked usually led the at to when time, in your rate any X I right coming, look, mean in lowest It was comment the to M&A, last we've don't and feels for on and about to it's waiting at than point So my been November been it's time comments Fed I rah-rah. recovery prediction. the a our like didn't -- cut is all equivalent everybody overdo I want the quarter higher first think pipe we

lights, I everybody okay, of would Formula really off. track right? X good. the I interesting X I think it that, be coming, thought, I'm it's But point to first look think -- The would from lose not is so outcome thought lights I my tear expertise. believe we So X cut coming. The not that rate I this environment. is, it interesting got -- like are going derive same to point, led were at the this okay, is is which but X part because everybody the X does --

to X.X% I people senior time the waiting going it environment. to were was well, -- it a year. of you isn't Fed saying, I is X I'm says, are when rate guy federal seat this some think you? to and the be Why the go your imagine I think are more the in at could and the for the today, clear this back what environment. think to points was the moment conclusion to wouldn't in the that What kind firm The be going a becoming funds going environment is investment months. move are at your idiot drop, next saying by if and rates it's at to XXX and looks in is the then? squirming let's we decision-makers go come of The you and could market, guy cut never that committee late is to that coming saying, Fed again. But go conclusion to talk there And I to as

some assets. We we're going go. rate cut idiots have analogy. going we're back to going my know to And Formula tie liquefy look X don't that to not not some like because gigantic miss to We're I to how to move. X

the I on the I and think are own. to on start take cars just track off, the going are cars their to going think

think to because creating this liquidity of the firms going environment and buying just I they're in the PE now and new and are assets. transacting is business go

going So they're I think to go.

to out might we is, to is we'll market of to I ratio, that's not supposed to comp think we're the not ratio. there best Joe guess, today's do I happen. the we'll today which what update year and but know, I'm just time I is the comp though, based what on what best estimate think put might last -- although I with that's environment, say have want things not on current was market future, and adjust, trying change. one. I think happen it we expect But the I our based not the on and what what conditions what to as our over what happen, On hope that based even predict

Operator

Brennan from Hawken Your next UBS. with comes question

Brennan Hawken

this was what recruiting typical different awards than a the given you past at So saw of relatively the comp just and structure of year? quiet in year-end environment, magnitude

Kenneth Moelis

think pretty consistent. they're I

time I -- You comp where comp and our about every I in much in component [ every to it the look of pretty like ]. -- can other compare And year terms was deferrals was I it feel market. it look was of right

Brennan Hawken

I bit is I picked up the the outstanding that than cadence. reason a the Got the more is average it. typical, stock stock guess typical ask outstanding, diluted

So I wasn't was that? and was the whether that of that sure that? stock-based Or tied -- did something function and of recruiting magnitude that on -- to was the there that the recruiting came comp a in else involved

Kenneth Moelis

We might to Joe. that, have include

Joseph Simon

Yes. No, at on it's one for new -- ultimately Each right. typically X these with comp years. of yes, X, that's exactly hires comes their visibility least

been And and year, but so there's -- combination we're and of in no comp basically the revenue, cash a basically that's there's equity. it's first guaranteed,

Brennan Hawken

Great.

Appreciate question remarkably sort active. related The of a I a Okay. has question. been -- have that. Ken, recruiting

per for have come of your previous excited the further? magnitude the a that the expect the to And remarkably a able the looking of the strong productivity high platform. watermark was Do at the be kind about ex of 'XX, you quality think sort do reasonable been high You historically, of able that do and watermark? be to the that were new extent high to 'XX move what really recruiting we to you degree would you'll mid-Xs. about up you think such order about magnitude think on of bankers MD When was that and have to watermark

Kenneth Moelis

the all, valuations gotten the know XXXX first GDP -- I -- of a time a and that. the when us, has business. one the do too, us. the But mean, and don't to take a banker. cycle unfair market look, lot what hurt the is of think average hurt a Fed Brennan. don't it's to -- of expansion Fed you of XXXX, some quality -- mean I XXXX, you But there's also I I kind And of to answer cyclical was -- in Fed -- larger

business, in do at me the can't cycle had your that's take you've I what look me the way say, the can't it 'XX it think very this just X in through years. There say, I think guess, X to You And mean X out underwriting? tell do take I you the you kind is some is best you years Do the best different golf. market, like kind you're I crappy you of tell underwriting should and right But out the of do I only do then just were I have it and cycle. than exact the think better what is. we is 'XX that. of way my look what better And tell underwriting at what But than I and an than scores. cycle. I'll to the through -- saying. You

amount don't is amount You're be to going think and plan getting more for 'XXs I every the for there out of getting I think the the right, of more I of year competitors are but 'XXs percentage we're year, I less, don't either. quality plan every -- XXXXs less, and market. And -- but

so... And

Joseph Simon

getting is better. [indiscernible]

Kenneth Moelis

Yes.

bullish haven't I than think think on -- but I be. actual -- look, would I on I a what productivity what more the the you So said think pin put -- the I'm

what I You'd me to conditions, under have market tell think.

Brennan Hawken

or I reform. Yes. And down trying to only you anything. was after -- And picked had wasn't the bump I the reason the narrow we that 'XX why was tax

some there going were it too. wasn't benefits, -- but was Fed against, So the

Operator

further I closing are at Ken the now Moelis back call will turn for any remarks. questions There no this to Mr. time.

Kenneth Moelis

to look will what in with we're line the And you. talking Thank a forward market hopefully, We you thinking. your change for to lot of time.

forward look I to So it in the Thanks. call. next

Operator

participation. Thank for This you concludes today's your conference.

disconnect. now may You

Moelis & Company (MC) 24 Apr 242024 Q1 Earnings call transcript