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 June 30, 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)

(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 July 15, 2021, there were 61,008,468 shares of Class A common stock, par value $0.01 per share, and 4,852,219 shares of Class B common stock, par value $0.01 per share, outstanding.

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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
Part II. Other Information			38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	39
Item 6.	Exhibits	40
Signatures		41

2

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

Condensed Consolidated Financial Statements (Unaudited)

	Page
Condensed Consolidated Statements of Financial Condition as of June 30, 2021 and December 31, 2020	4
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020	5
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020	6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	7
Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2021 and 2020	8
Notes to Condensed Consolidated Financial Statements	10

3

Moelis & Company

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(dollars in thousands, except per share amounts)

	June 30,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	196,451	$	202,477
Restricted cash		1,077		807
Receivables:
Accounts receivable, net of allowance for credit losses of $4,354 and $3,775 as of June 30, 2021 and December 31, 2020, respectively		72,212		89,297
Accrued and other receivables		27,489		11,916
Total receivables		99,701		101,213
Deferred compensation		15,979		12,004
Investments		130,369		211,826
Right-of-use assets		167,865		177,069
Equipment and leasehold improvements, net		56,992		49,977
Deferred tax assets		421,384		424,345
Prepaid expenses and other assets		18,196		16,726
Total assets	$	1,108,014	$	1,196,444
Liabilities and Equity
Compensation payable	$	187,358	$	220,058
Accounts payable, accrued expenses and other liabilities		7,391		25,026
Amount due pursuant to tax receivable agreement		324,620		307,581
Deferred revenue		11,586		2,692
Lease liabilities		192,266		196,614
Total liabilities		723,221		751,971
Commitments and Contingencies (See Note 11)
Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 66,740,855 issued and 61,008,468 outstanding at June 30, 2021; 1,000,000,000 authorized, 61,986,927 issued and 58,027,844 outstanding at December 31, 2020)		667		620
Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 4,852,219 issued and outstanding at June 30, 2021; 1,000,000,000 authorized, 5,948,750 issued and outstanding at December 31, 2020)		49		59
Treasury stock, at cost; 5,732,387 and 3,959,083 shares as of June 30, 2021 and December 31, 2020, respectively		(248,093)		(152,170)
Additional paid-in-capital		1,152,104		1,052,322
Retained earnings (accumulated deficit)		(493,485)		(420,682)
Accumulated other comprehensive income (loss)		954		(201)
Total Moelis & Company equity		412,196		479,948
Noncontrolling interests		(27,403)		(35,475)
Total equity		384,793		444,473
Total liabilities and equity	$	1,108,014	$	1,196,444

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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues	$	360,907	$	159,938	$	624,773	$	313,644
Expenses
Compensation and benefits		214,017		149,616		370,516		244,736
Occupancy		6,689		7,673		14,384		14,904
Professional fees		5,802		5,195		11,801		9,431
Communication, technology and information services		8,216		7,563		16,875		15,955
Travel and related expenses		2,870		1,548		4,480		9,492
Depreciation and amortization		1,637		1,076		3,086		2,275
Other expenses		3,458		4,419		12,970		9,561
Total expenses		242,689		177,090		434,112		306,354
Operating income (loss)		118,218		(17,152)		190,661		7,290
Other income and (expenses)		2,762		(3,277)		5,941		(4,937)
Income (loss) before income taxes		120,980		(20,429)		196,602		2,353
Provision (benefit) for income taxes		27,778		(11,385)		27,602		(18,729)
Net income (loss)		93,202		(9,044)		169,000		21,082
Net income (loss) attributable to noncontrolling interests		13,861		(3,312)		23,130		1,684
Net income (loss) attributable to Moelis & Company	$	79,341	$	(5,732)	$	145,870	$	19,398
Weighted-average shares of Class A common stock outstanding
Basic		63,150,538		56,130,614		62,102,403		54,449,690
Diluted		67,554,777		56,130,614		67,147,825		58,362,500
Net income (loss) per share attributable to holders of shares of Class A common stock
Basic	$	1.26	$	(0.10)	$	2.35	$	0.36
Diluted	$	1.17	$	(0.10)	$	2.17	$	0.33

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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income (loss)	$	93,202	$	(9,044)	$	169,000	$	21,082
Foreign currency translation adjustment, net of tax		2,042		(95)		1,298		(1,725)
Other comprehensive income (loss)		2,042		(95)		1,298		(1,725)
Comprehensive income (loss)		95,244		(9,139)		170,298		19,357
Less: Comprehensive income (loss) attributable to noncontrolling interests		14,093		(3,329)		23,273		1,341
Comprehensive income (loss) attributable to Moelis & Company	$	81,151	$	(5,810)	$	147,025	$	18,016

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

6

Moelis & Company

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(dollars in thousands)

	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities
Net income (loss)	$	169,000	$	21,082
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Bad debt expense		1,301		1,576
Depreciation and amortization		3,086		2,275
Equity-based compensation		80,004		67,634
Deferred tax provision		24,206		(16,266)
Other		(5,433)		5,819
Changes in assets and liabilities:
Accounts receivable		15,614		(2,733)
Accrued and other receivables		(14,679)		(151)
Prepaid expenses and other assets		(2,797)		(378)
Deferred compensation		(3,988)		(1,878)
Compensation payable		(32,221)		(77,887)
Accounts payable, accrued expenses and other liabilities		(13,411)		166
Deferred revenue		8,897		1,644
Dividends received		2,279		1,942
Net cash provided by (used in) operating activities		231,858		2,845
Cash flows from investing activities
Purchase of investments		(116,802)		(129,934)
Proceeds from sales of investments		201,834		202,478
Notes issued to employees		—		(200)
Note payments received from employees		70		—
Purchase of equipment and leasehold improvements		(10,101)		(21,658)
Net cash provided by (used in) investing activities		75,001		50,686
Cash flows from financing activities
Dividends and distributions		(218,334)		(105,770)
Proceeds from exercise of stock options		—		11,923
Treasury stock purchases		(95,923)		(32,402)
Net cash provided by (used in) financing activities		(314,257)		(126,249)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash		1,642		(2,183)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(5,756)		(74,901)
Cash, cash equivalents, and restricted cash, beginning of period		203,284		168,572
Cash, cash equivalents, and restricted cash, end of period	$	197,528	$	93,671
Supplemental cash flow disclosure:
Cash paid during the period for:
Income taxes	$	24,464	$	1,628
Other non-cash activity
Cumulative effect adjustment upon adoption of ASU 2016-13	$	—	$	364
Dividend equivalents issued	$	28,209	$	14,621
Class A Partnership Units or other equity converted into Class A Common Stock	$	4,109	$	5,725
Forfeiture of fully-vested Group LP units or other equity units	$	25	$	96

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, 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
Net income (loss)		—		—			—			—		—			—			—			79,341			—			13,861			93,202
Equity-based compensation		45,056		—			—			—		—			—			27,699			—			—			1,342			29,041
Other comprehensive income (loss)		—		—			—			—		—			—			—			—			1,810			232			2,042
Dividends declared ($2.55 per share of Class A Common Stock) and tax distributions		—		—			—			—		—			—			23,078			(179,660	)		—			(22,067	)		(178,649	)
Treasury Stock Purchases		—		—			(409,370	)		—		—			(21,712	)		—			—			—			—			(21,712	)
Equity-based payments to non-employees		—		—			—			—		—			—			83			—			—			—			83
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges		47,238		(47,238	)		—			1		—			—			39			—			—			166			206
Balance as of June 30, 2021		66,740,855		4,852,219			(5,732,387	)	$	667	$	49		$	(248,093	)	$	1,152,104		$	(493,485	)	$	954		$	(27,403	)	$	384,793

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

8

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, 2020		52,773,617		10,397,915		(2,757,558	)	$	528	$	104	$	(107,836	)	$	872,791	$	(324,192	)	$	1,432	$	(49,000	)	$	393,827
Cumulative effect adjustment upon adoption of ASU 2016-13		—		—		—