Moelis & Co 10-Q for FY2023 Q2

Moelis & Co (MC)

10-Q 2023-07-27 For: 2023-06-30

Added on April 09, 2026

About this 10-Q

Moelis & Co filed this 10-Q on July 27, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $13.25M; compared with net income of $43.86M a year earlier

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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)


Title	Trading Symbol	Name of Exchange on which registered
Class A Common Stock	MC	New York Stock Exchange (NYSE)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


		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	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
Part II. Other Information			36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		39


	Page

Condensed Consolidated Statements of Financial Condition as of June 30, 2023 and December 31, 2022	4
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	5
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	7
Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2023 and 2022	8
Notes to Condensed Consolidated Financial Statements	10


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


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


	June 30,		December 31,
	2023		2022
Assets
Cash and cash equivalents	$	160,199	$	206,794
Restricted cash		615		745
Receivables:
Accounts receivable, net of allowance for credit losses of $1,768 and $1,729 as of June 30, 2023 and December 31, 2022, respectively		36,127		47,825
Accrued and other receivables		15,598		8,514
Total receivables		51,725		56,339
Deferred compensation		27,766		15,100
Investments		87,210		265,245
Right-of-use assets		161,298		152,341
Equipment and leasehold improvements, net		59,826		57,152
Deferred tax assets		437,595		429,649
Prepaid expenses and other assets		31,692		33,504
Total assets	$	1,017,926	$	1,216,869
Liabilities and Equity
Compensation payable	$	68,773	$	243,176
Accounts payable, accrued expenses and other liabilities		27,188		11,929
Amount due pursuant to tax receivable agreement		304,780		302,356
Deferred revenue		10,379		7,708
Lease liabilities		201,117		192,762
Total liabilities		612,237		757,931
Commitments and Contingencies (See Note 11)
Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 76,713,672 issued and 66,573,485 outstanding at June 30, 2023; 1,000,000,000 authorized, 73,063,181 issued and 63,986,404 outstanding at December 31, 2022)		767		730
Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 4,489,778 issued and outstanding at June 30, 2023; 1,000,000,000 authorized, 4,635,898 issued and outstanding at December 31, 2022)		45		46
Treasury stock, at cost; 10,140,187 and 9,076,777 shares at June 30, 2023 and December 31, 2022, respectively		(448,613)		(403,857)
Additional paid-in-capital		1,502,470		1,412,795
Retained earnings (accumulated deficit)		(660,529)		(560,690)
Accumulated other comprehensive income (loss)		(3,988)		(4,529)
Total Moelis & Company equity		390,152		444,495
Noncontrolling interests		15,537		14,443
Total equity		405,689		458,938
Total liabilities and equity	$	1,017,926	$	1,216,869


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	179,871	$	242,520	$	367,691	$	544,608
Expenses
Compensation and benefits		145,794		140,092		294,033		316,729
Occupancy		6,872		6,267		12,706		12,077
Professional fees		6,907		5,570		11,853		9,885
Communication, technology and information services		11,215		10,108		22,049		18,887
Travel and related expenses		9,213		9,366		20,181		17,009
Depreciation and amortization		1,936		1,841		4,009		3,880
Other expenses		7,520		7,077		13,837		14,515
Total expenses		189,457		180,321		378,668		392,982
Operating income (loss)		(9,586)		62,199		(10,977)		151,626
Other income and (expenses)		(5,629)		(3,046)		(3,883)		(5,281)
Income (loss) before income taxes		(15,215)		59,153		(14,860)		146,345
Provision (benefit) for income taxes		(1,969)		15,296		(5,177)		28,894
Net income (loss)		(13,246)		43,857		(9,683)		117,451
Net income (loss) attributable to noncontrolling interests		(1,272)		4,894		(1,375)		12,773
Net income (loss) attributable to Moelis & Company	$	(11,974)	$	38,963	$	(8,308)	$	104,678
Weighted-average shares of Class A common stock outstanding
Basic		68,504,772		66,290,442		67,852,077		65,572,013
Diluted		68,504,772		69,811,979		67,852,077		70,171,256
Net income (loss) per share attributable to holders of shares of Class A common stock
Basic	$	(0.17)	$	0.59	$	(0.12)	$	1.60
Diluted	$	(0.17)	$	0.56	$	(0.12)	$	1.49


	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, 2023	73,063,181	4,635,898	(9,076,777)	$	730	$	46	$	(403,857)	$	1,412,795	$	(560,690)	$	(4,529)	$	14,443	$	458,938
Net income (loss)	—	—	—		—		—		—		—		3,666		—		(103)		3,563
Equity-based compensation	3,396,802	—	—		34		—		—		48,656		—		—		10,948		59,638
Other comprehensive income (loss)	—	—	—		—		—		—		—		—		256		28		284
Dividends declared ($0.60 per share of Class A common stock) and tax distributions	—	—	—		—		—		—		5,711		(46,097)		—		(5,645)		(46,031)
Treasury Stock Purchases	—	—	(1,057,278)		—		—		(44,526)		—		—		—		—		(44,526)
Class A Partnership Units or other equity converted into Class A Common Stock	240,027	(146,120)	—		3		(1)		—		(1,101)		—		—		1,325		226
Equity-based payments to non-employees	—	—	—		—		—		—		18		—		—		—		18
Balance as of March 31, 2023	76,700,010	4,489,778	(10,134,055)	$	767	$	45	$	(448,383)	$	1,466,079	$	(603,121)	$	(4,273)	$	20,996	$	432,110
Net income (loss)	—	—	—		—		—		—		—		(11,974)		—		(1,272)		(13,246)
Equity-based compensation	13,662	—	—		—		—		—		30,817		—		—		2,764		33,581
Other comprehensive income (loss)	—	—	—		—		—		—		—		—		285		20		305
Dividends declared ($0.60 per share of Class A Common Stock) and tax distributions	—	—	—		—		—		—		5,488		(45,434)		—		(6,976)		(46,922)
Treasury Stock Purchases	—	—	(6,132)		—		—		(230)		—		—		—		—		(230)
Class A Partnership Units or other equity converted into Class A Common Stock	—	—	—		—		—		—		71		—		—		5		76
Equity-based payments to non-employees	—	—	—		—		—		—		15		—		—		—		15
Balance as of June 30, 2023	76,713,672	4,489,778	(10,140,187)	$	767	$	45	$	(448,613)	$	1,502,470	$	(660,529)	$	(3,988)	$	15,537	$	405,689


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Accounts Receivable						Accounts Receivable
		Short-term Receivables	Private Funds Advisory Receivables			Total		Short-term Receivables	Private Funds Advisory Receivables			Total
Allowance for Credit Losses, beginning balance	$	1,043	$	582	$	1,625	$	2,170	$	111	$	2,281
Charge-offs, foreign currency translation and other adjustments		71		—		71		(40)		—		(40)
Recoveries		(593)		(19)		(612)		(832)		(2)		(834)
Provision for credit losses		680		4		684		1,190		22		1,212
Allowance for credit losses, ending balance	$	1,201	$	567	$	1,768	$	2,488	$	131	$	2,619


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Accounts Receivable						Accounts Receivable
	Short-term Receivables		Private Funds Advisory Receivables		Total		Short-term Receivables		Private Funds Advisory Receivables		Total
Allowance for Credit Losses, beginning balance	$	1,136	$	593	$	1,729	$	2,621	$	202	$	2,823
Charge-offs, foreign currency translation and other adjustments		(3)		—		(3)		(226)		(68)		(294)
Recoveries		(1,322)		(30)		(1,352)		(1,572)		(89)		(1,661)
Provision for credit losses		1,390		4		1,394		1,665		86		1,751
Allowance for credit losses, ending balance	$	1,201	$	567	$	1,768	$	2,488	$	131	$	2,619


	Total		Level 1		Level 2		Level 3
Financial assets:
Included in cash and cash equivalents
Sovereign debt securities	$	60,559	$	—	$	60,559	$	—
Money market funds		64,899		—		64,899		—
Total financial assets included in cash and cash equivalents		125,458		—		125,458		—
Investments
Sovereign debt securities		34,643		—		34,643		—
Common stock		5,280		5,280		—		—
Warrants		484		484		—		—
Total financial assets included in investments		40,407		5,764		34,643		—
Total financial assets	$	165,865	$	5,764	$	160,101	$	—


		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands, except per share amounts)		2023			2022			2023			2022
Numerator:
Net income (loss) attributable to holders of shares of Class A common stock—basic		$	(11,974)		$	38,963		$	(8,308)		$	104,678
Add (deduct) dilutive effect of:
Noncontrolling interests related to Class A partnership units	(a)			(a)			(a)			(a)
Net income (loss) attributable to holders of shares of Class A common stock—diluted		$	(11,974)		$	38,963		$	(8,308)		$	104,678
Denominator:
Weighted average shares of Class A common stock outstanding—basic			68,504,772			66,290,442			67,852,077			65,572,013
Add (deduct) dilutive effect of:
Noncontrolling interests related to Class A partnership units	(a)			(a)			(a)			(a)
Weighted average number of incremental shares issuable from unvested RSUs and stock options, as calculated using the treasury stock method	(b)(c)		—	(b)		3,521,537	(b)(c)		—	(b)		4,599,243
Weighted average shares of Class A common stock outstanding—diluted			68,504,772			69,811,979			67,852,077			70,171,256
Net income (loss) per share attributable to holders of shares of Class A common stock
Basic		$	(0.17)		$	0.59		$	(0.12)		$	1.60
Diluted		$	(0.17)		$	0.56		$	(0.12)		$	1.49


	Restricted Stock Units
	2023			2022
		Weighted			Weighted
		Average			Average
	Number of	Grant Date		Number of	Grant Date
	Shares	Fair Value		Shares	Fair Value
Unvested Balance at January 1,	8,099,629	$	47.49	8,068,120	$	46.36
Granted	3,626,424		44.28	2,908,738		49.83
Forfeited	(119,074)		42.39	(92,815)		48.75
Vested	(3,454,469)		45.83	(2,867,582)		46.50
Unvested Balance at June 30,	8,152,510	$	46.72	8,016,461	$	47.64


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	(9,683)	$	117,451
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense (benefit)		42		90
Depreciation and amortization		4,009		3,880
Equity-based compensation		93,219		67,923
Deferred tax provision		(5,135)		27,632
Other		(2,881)		6,458
Changes in assets and liabilities:
Accounts receivable		11,948		(9,864)
Accrued and other receivables		(6,947)		1,946
Prepaid expenses and other assets		1,956		(26,389)
Deferred compensation		(12,555)		(9,462)
Compensation payable		(174,492)		(353,855)
Accounts payable, accrued expenses and other liabilities		14,681		(45,084)
Deferred revenue		2,661		2,306
Dividends received		2,189		2,029
Net cash provided by (used in) operating activities		(80,988)		(214,939)
Cash flows from investing activities
Purchases of investments		(34,615)		(191,621)
Proceeds from sales of investments		213,331		254,500
Purchases of equipment and leasehold improvements		(6,684)		(2,794)
Net cash provided by (used in) investing activities		172,032		60,085
Cash flows from financing activities
Payments for dividends and tax distributions		(92,953)		(88,137)
Payments for treasury stock purchases		(44,756)		(132,831)
Payments under tax receivable agreement		—		(248)
Other proceeds		—		100
Net cash provided by (used in) financing activities		(137,709)		(221,116)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash		(60)		(5,610)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(46,725)		(381,580)
Cash, cash equivalents, and restricted cash, beginning of period		207,539		521,014
Cash, cash equivalents, and restricted cash, end of period	$	160,814	$	139,434
Supplemental cash flow disclosure:
Cash paid during the period for:
Income taxes, net	$	2,622	$	72,466
Other non-cash activity:


	June 30,		December 31,
	2023		2022
Office equipment	$	18,171	$	16,157
Furniture and fixtures		14,490		14,386
Leasehold improvements		62,432		61,293
Construction in progress		5,052		1,438
Total		100,145		93,274
Less: Accumulated depreciation and amortization		(40,319)		(36,122)
Equipment and leasehold improvements, net	$	59,826	$	57,152


	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in thousands)	2023			2022			2023			2022
Supplemental Income Statement Information:
Operating lease cost	$	6,159		$	5,627		$	11,739		$	11,224

Supplemental Cash Flow Information:
Cash paid for amounts included in the measurement of lease liabilities:
Net operating cash inflows/(outflows) for operating leases	$	(6,332)		$	5,636		$	(12,414)		$	(131)
Right-of-use assets obtained in exchange for lease obligations (e.g. new leases and amendments commenced during the period)	$	15,919		$	1,951		$	16,968		$	1,951

Other Information:
Weighted-average remaining lease term - operating leases		12.26	years		13.09	years		12.26	years		13.09	years
Weighted-average discount rate - operating leases		3.74	%		3.51	%		3.74	%		3.51	%


Fiscal year ended	Sublease Income		Operating Leases
Remainder of 2023	$	(422)	$	10,586
2024		(844)		22,606
2025		(422)		20,855
2026		—		19,625
2027		—		18,643
Thereafter		—		164,122
Total Payments	$	(1,688)	$	256,437

Less: Tenant improvement allowances				(2,405)
Less: Present value adjustment				(52,915)
Total			$	201,117


						Approximate Dollar Value
				Shares Purchased		of Shares that May Yet
	Total Number			as Part of Publicly		be Purchased Under
	of Shares	Average Price		Announced Plans		the Plan or
Period	Purchased(1)	Paid per Share		or Programs(2)(3)		Programs(2)(3)
April 1 - April 30	569	$	40.68		—	$	62.5 million
May 1 - May 31	5,563		37.19		—		62.5 million
June 1 - June 30	—		—		—		62.5 million
Total	6,132	$	37.51		—	$	62.5 million


Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 22, 2014)

3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K filed with the SEC on February 23, 2022)

31.1		Rule 13a-14(a) Certification of Chief Executive Officer of the Registrant in accordance with Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Rule 13a-14(a) Certification of Chief Financial Officer of the Registrant in accordance with Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Section 1350 Certification of Chief Executive Officer of the Registrant in accordance with Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Section 1350 Certification of Chief Financial Officer of the Registrant in accordance with Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

104		Cover Page Interactive Data File (formatted as inline XBRL and contained Exhibit 101)


	MOELIS & COMPANY

	/s/ Kenneth Moelis
	Kenneth Moelis
	Chief Executive Officer

	/s/ Joseph Simon
	Joseph Simon
	Chief Financial Officer




July 26, 2023		/s/ Kenneth Moelis
		Kenneth Moelis
		Chief Executive Officer