0000950170-24-086165.txt : 20240725 0000950170-24-086165.hdr.sgml : 20240725 20240724173601 ACCESSION NUMBER: 0000950170-24-086165 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 68 CONFORMED PERIOD OF REPORT: 20240630 FILED AS OF DATE: 20240725 DATE AS OF CHANGE: 20240724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Moelis & Co CENTRAL INDEX KEY: 0001596967 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] ORGANIZATION NAME: 02 Finance IRS NUMBER: 464500216 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36418 FILM NUMBER: 241139162 BUSINESS ADDRESS: STREET 1: 399 PARK AVENUE, 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: (212) 883-3800 MAIL ADDRESS: STREET 1: 399 PARK AVENUE, 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 mc-20240630.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 June 30, 2024

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

 

img188347962_0.jpg 

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 July 10, 2024, there were 70,362,748 shares of Class A common stock, par value $0.01 per share, and 4,432,288 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 


2


3


 

 

Moelis & Company

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

June 30,

 

December 31,

 

 

2024

 

2023

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

150,434

 

$

186,417

Restricted cash

 

 

809

 

 

798

Receivables:

 

 

 

 

 

 

Accounts receivable, net of allowance for credit losses of $2,286 and $1,263 as of June 30, 2024 and December 31, 2023, respectively

 

 

51,590

 

 

51,219

Accrued and other receivables

 

 

22,939

 

 

12,416

Total receivables

 

 

74,529

 

 

63,635

Deferred compensation

 

 

33,111

 

 

17,133

Investments

 

 

87,153

 

 

210,357

Right-of-use assets

 

 

165,158

 

 

171,998

Equipment and leasehold improvements, net

 

 

66,696

 

 

63,803

Deferred tax assets

 

 

444,034

 

 

437,238

Prepaid expenses and other assets

 

 

28,905

 

 

28,380

Total assets

 

$

1,050,829

 

$

1,179,759

Liabilities and Equity

 

 

 

 

 

 

Compensation payable

 

$

139,941

 

$

259,771

Accounts payable, accrued expenses and other liabilities

 

 

25,136

 

 

32,626

Amount due pursuant to tax receivable agreement

 

 

288,410

 

 

304,567

Deferred revenue

 

 

3,671

 

 

4,649

Lease liabilities

 

 

209,220

 

 

215,684

Total liabilities

 

 

666,378

 

 

817,297

Commitments and Contingencies (See Note 11)

 

 

 

 

 

 

Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 80,712,812 issued and 70,362,748 outstanding at June 30, 2024; 1,000,000,000 authorized, 76,859,499 issued and 66,675,039 outstanding at December 31, 2023)

 

 

807

 

 

768

Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 4,432,288 issued and outstanding at June 30, 2024; 1,000,000,000 authorized, 4,489,778 issued and outstanding at December 31, 2023)

 

 

44

 

 

45

Treasury stock, at cost; 10,350,064 and 10,184,460 shares at June 30, 2024 and December 31, 2023, respectively

 

 

(459,585)

 

 

(450,859)

Additional paid-in-capital

 

 

1,651,502

 

 

1,573,702

Retained earnings (accumulated deficit)

 

 

(831,053)

 

 

(767,587)

Accumulated other comprehensive income (loss)

 

 

(4,171)

 

 

(3,928)

Total Moelis & Company equity

 

 

357,544

 

 

352,141

Noncontrolling interests

 

 

26,907

 

 

10,321

Total equity

 

 

384,451

 

 

362,462

Total liabilities and equity

 

$

1,050,829

 

$

1,179,759

 

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,

 

2024

 

2023

 

2024

 

2023

Revenues

$

264,586

 

$

179,871

 

$

482,071

 

$

367,691

Expenses

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

197,873

 

 

145,794

 

 

362,348

 

 

294,033

Occupancy

 

7,073

 

 

6,872

 

 

14,162

 

 

12,706

Professional fees

 

5,961

 

 

6,907

 

 

12,126

 

 

11,853

Communication, technology and information services

 

11,990

 

 

11,215

 

 

24,234

 

 

22,049

Travel and related expenses

 

8,511

 

 

9,213

 

 

20,474

 

 

20,181

Depreciation and amortization

 

2,434

 

 

1,936

 

 

4,809

 

 

4,009

Other expenses

 

10,676

 

 

7,520

 

 

18,048

 

 

13,837

Total expenses

 

244,518

 

 

189,457

 

 

456,201

 

 

378,668

Operating income (loss)

 

20,068

 

 

(9,586)

 

 

25,870

 

 

(10,977)

Other income and (expenses)

 

1,708

 

 

(5,629)

 

 

5,937

 

 

(3,883)

Income (loss) before income taxes

 

21,776

 

 

(15,215)

 

 

31,807

 

 

(14,860)

Provision (benefit) for income taxes

 

6,855

 

 

(1,969)

 

 

(599)

 

 

(5,177)

Net income (loss)

 

14,921

 

 

(13,246)

 

 

32,406

 

 

(9,683)

Net income (loss) attributable to noncontrolling interests

 

1,760

 

 

(1,272)

 

 

2,679

 

 

(1,375)

Net income (loss) attributable to Moelis & Company

$

13,161

 

$

(11,974)

 

$

29,727

 

$

(8,308)

Weighted-average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

72,148,948

 

 

68,504,772

 

 

71,239,595

 

 

67,852,077

Diluted

 

75,788,525

 

 

68,504,772

 

 

75,593,865

 

 

67,852,077

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

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.18

 

$

(0.17)

 

$

0.42

 

$

(0.12)

Diluted

$

0.17

 

$

(0.17)

 

$

0.39

 

$

(0.12)

 

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,

 

 

2024

 

2023

 

2024

 

2023

Net income (loss)

 

$

14,921

 

$

(13,246)

 

$

32,406

 

$

(9,683)

Foreign currency translation adjustment, net of tax

 

 

504

 

 

305

 

 

(275)

 

 

589

Other comprehensive income (loss)

 

 

504

 

 

305

 

 

(275)

 

 

589

Comprehensive income (loss)

 

 

15,425

 

 

(12,941)

 

 

32,131

 

 

(9,094)

Less: Comprehensive income (loss) attributable to noncontrolling interests

 

 

1,788

 

 

(1,252)

 

 

2,647

 

 

(1,327)

Comprehensive income (loss) attributable to Moelis & Company

 

$

13,637

 

$

(11,689)

 

$

29,484

 

$

(7,767)

 

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,

 

 

2024

 

2023

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

32,406

 

$

(9,683)

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

 

 

 

 

 

 

Bad debt expense (benefit)

 

 

1,667

 

 

42

Depreciation and amortization

 

 

4,809

 

 

4,009

Equity-based compensation

 

 

85,935

 

 

93,219

Deferred tax provision (benefit)

 

 

(599)

 

 

(5,135)

Other

 

 

(881)

 

 

(2,881)

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(2,122)

 

 

11,948

Accrued and other receivables

 

 

(4,214)

 

 

(6,947)

Prepaid expenses and other assets

 

 

(550)

 

 

1,956

Deferred compensation

 

 

(15,986)

 

 

(12,555)

Compensation payable

 

 

(119,829)

 

 

(174,492)

Accounts payable, accrued expenses and other liabilities

 

 

(6,849)

 

 

14,681

Deferred revenue

 

 

(978)

 

 

2,661

Dividends received

 

 

2,155

 

 

2,189

Net cash provided by (used in) operating activities

 

 

(25,036)

 

 

(80,988)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investments

 

 

(40,890)

 

 

(34,615)

Proceeds from sales of investments

 

 

163,684

 

 

213,331

Notes issued to employees

 

 

(6,330)

 

 

Purchases of equipment and leasehold improvements

 

 

(7,704)

 

 

(6,684)

Net cash provided by (used in) investing activities

 

 

108,760

 

 

172,032

Cash flows from financing activities

 

 

 

 

 

 

Payments for dividends and tax distributions

 

 

(90,726)

 

 

(92,953)

Payments for treasury stock purchases

 

 

(8,726)

 

 

(44,756)

Payments under tax receivable agreement

 

 

(20,103)

 

 

Net cash provided by (used in) financing activities

 

 

(119,555)

 

 

(137,709)

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

 

 

(141)

 

 

(60)

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

 

 

(35,972)

 

 

(46,725)

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

 

 

187,215

 

 

207,539

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

 

$

151,243

 

$

160,814

Supplemental cash flow disclosure

 

 

 

 

 

 

Cash paid (received) during the period for:

 

 

 

 

 

 

Income taxes, net

 

$

1,244

 

$

2,622

Other non-cash activity:

 

 

 

 

 

 

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

 

$

1,092

 

$

302

Dividends in kind

 

$

8,915

 

$

11,199

Non-cash settlement of accounts receivable

 

$

261

 

$

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

 

$

82

 

$

 

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, 2024

76,859,499

 

4,489,778

 

(10,184,460)

 

$

768

 

$

45

 

$

(450,859)

 

$

1,573,702

 

$

(767,587)

 

$

(3,928)

 

$

10,321

 

$

362,462

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

16,566

 

 

 

 

919

 

 

17,485

Equity-based compensation

3,436,930

 

 

 

 

34

 

 

 

 

 

 

45,618

 

 

 

 

 

 

14,326

 

 

59,978

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(719)

 

 

(60)

 

 

(779)

Dividends declared ($0.60 per share of Class A Common Stock) and tax distributions

 

 

 

 

 

 

 

 

 

 

6,007

 

 

(48,066)

 

 

 

 

2,796

 

 

(39,263)

Treasury Stock Purchases

 

 

(158,878)

 

 

 

 

 

 

(8,394)

 

 

 

 

 

 

 

 

 

 

(8,394)

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

401,562

 

(57,490)

 

 

 

5

 

 

(1)

 

 

 

 

980

 

 

 

 

 

 

63

 

 

1,047

Equity-based payments to non-employees

 

 

 

 

 

 

 

 

 

 

307

 

 

 

 

 

 

 

 

307

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(82)

 

 

(82)

Balance as of March 31, 2024

80,697,991

 

4,432,288

 

(10,343,338)

 

$

807

 

$

44

 

$

(459,253)

 

$

1,626,614

 

$

(799,087)

 

$

(4,647)

 

$

28,283

 

$

392,761

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

13,161

 

 

 

 

1,760

 

 

14,921

Equity-based compensation

14,821

 

 

 

 

 

 

 

 

 

 

21,644

 

 

 

 

 

 

4,313

 

 

25,957

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

476

 

 

28

 

 

504

Dividends declared ($0.60 per share of Class A Common Stock) and tax distributions

 

 

 

 

 

 

 

 

 

 

2,908

 

 

(45,127)

 

 

 

 

(7,485)

 

 

(49,704)

Treasury Stock Purchases

 

 

(6,726)

 

 

 

 

 

 

(332)

 

 

 

 

 

 

 

 

 

 

(332)

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

 

 

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

8

 

 

45

Equity-based payments to non-employees

 

 

 

 

 

 

 

 

 

 

299

 

 

 

 

 

 

 

 

299

Balance as of June 30, 2024

80,712,812

 

4,432,288

 

(10,350,064)

 

$

807

 

$

44

 

$

(459,585)

 

$

1,651,502

 

$

(831,053)

 

$

(4,171)

 

$

26,907

 

$

384,451

 

8


 

Condensed Consolidated Statements of Changes in Equity (continued)

(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, 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

 

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

9


 

Moelis & Company

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(dollars in thousands, except share amounts and where explicitly stated)

1.
ORGANIZATION AND BASIS OF PRESENTATION

Moelis & Company and its consolidated subsidiaries (the “Company,” “we,” “our,” or “us”) is a leading global investment bank, incorporated in Delaware. Prior to the Company’s Initial Public Offering (“IPO”), the business operated as a Delaware limited partnership that commenced operations during 2007. Following the IPO, the operations are owned by Moelis & Company Group LP (“Group LP”), a U.S. Delaware limited partnership, and Group LP is controlled by Moelis & Company. Moelis & Company’s shareholders are entitled to receive a portion of Group LP’s economics through their direct ownership interests in shares of Class A common stock of Moelis & Company. The noncontrolling interest owners of Group LP (not Moelis & Company) receive economics of the operations primarily through their ownership interests in Group LP partnership units.

The Company’s activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, financial sponsors and governments, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters.

Basis of Presentation — The condensed consolidated financial statements of Moelis & Company include its partnership interests in Group LP, its equity interest in the sole general partner of Group LP, Moelis & Company Group GP LLC (“Group GP”), and its interests in its subsidiaries. Moelis & Company will operate and control all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP. The Company operates through the following subsidiaries:

Moelis & Company LLC (“U.S. Broker Dealer”), a Delaware limited liability company, a registered broker-dealer with the U.S. Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
Moelis & Company Israel Ltd., a limited company incorporated in Israel.

 

Moelis & Company International Holdings LLC (“Moelis International”), a Delaware limited liability company, owns the following entities and investments, directly or indirectly:

 

Moelis & Company UK LLP (“Moelis UK”), a limited liability partnership registered under the laws of England and Wales. In addition to the United Kingdom, Moelis UK maintains operations through the following branches:

 

Moelis & Company Europe Limited, Frankfurt am Main Branch (German branch)

 

Moelis & Company UK LLP, DIFC Branch (Dubai branch)

 

Moelis & Company Asia Limited (“Moelis Asia”), a limited company incorporated in Hong Kong licensed under the Hong Kong Securities and Futures Ordinance to provide financial advisory services. In addition to Hong Kong, Moelis Asia maintains operations in Beijing, China through a wholly-owned Chinese subsidiary, Moelis & Company Consulting (Beijing) Company Limited.

 

Moelis & Company Netherlands B.V., a private limited company incorporated in Amsterdam, Netherlands. In addition to Amsterdam, Moelis Netherlands maintains operations in Paris, France through a branch, Moelis & Company Netherlands B.V. French Branch

 

Moelis & Company Europe B.V., a private limited company incorporated in Amsterdam, Netherlands.

 

Moelis & Company India Private Limited, a private limited company incorporated in Mumbai, India.

 

Moelis & Company Assessoria Financeira Ltda. (“Moelis Brazil”), a limited liability company incorporated

10


 

in São Paulo, Brazil.

 

Moelis & Company Saudi Limited, a limited liability company incorporated in Riyadh, Saudi Arabia.

 

An equity method investment in MA Financial Group Limited ("MA Financial", previously known as Moelis Australia Limited), a public company listed on the Australian Securities Exchange.

 

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting — The Company prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the combined operations, assets and liabilities of the Company. The Notes are an integral part of the Company's condensed consolidated financial statements. As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Consolidation — The Company’s policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company has ownership of the majority of voting interests. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity’s operating and financial decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company’s subsidiaries have been eliminated in consolidation.

Use of Estimates — The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

In preparing the condensed consolidated financial statements, management makes estimates and assumptions regarding:

the adequacy of the allowance for credit losses;
the assessment of whether revenues from variable consideration should be constrained due to the probability of a significant revenue reversal;
the assessment of probable lease terms and the measurement of the present value of such obligations;
the assessment of long-lived assets for impairment and measurement of impairment, if applicable;

 

the measurement and realization of deferred taxes;

 

the measurement of amount due pursuant to tax receivable agreement; and

 

other matters that affect the reported amounts and disclosures of contingencies in the condensed consolidated financial statements.

 

Cash, Cash Equivalents and Restricted Cash — Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase.

The Company’s cash is maintained in U.S. and non-U.S. bank accounts, of which most bank account balances had little or no insurance coverage (most balances are held in U.S. and U.K. accounts which exceeded the U.S. Federal Deposit Insurance

11


 

Corporation and U.K. Financial Services Compensation Scheme coverage limits). The Company’s cash equivalents are invested primarily in U.S. and U.K. sovereign debt securities and money market funds.

The Company’s restricted cash is comprised of collateral deposits primarily held by certain non-U.S. subsidiaries. These deposits are required for certain direct debit accounts and are also used to satisfy future U.S. medical claims. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of June 30, 2024 and 2023, is presented below.

 

 

June 30,

 

 

2024

 

2023

Cash

 

$

47,837

 

$

34,741

Cash equivalents

 

 

102,597

 

 

125,458

Restricted cash

 

 

809

 

 

615

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

151,243

 

$

160,814

 

Additionally, as of December 31, 2023, the Company held cash of $49,054 and cash equivalents of $137,363.

Receivables — The accompanying condensed consolidated statements of financial condition present accounts receivable balances net of allowance for credit losses based on the Company’s assessment of the collectability of customer accounts.

Included in the accounts receivable balances at June 30, 2024 and December 31, 2023 were $2,432 and $4,422, respectively, of long-term receivables related to private funds advisory capital raising engagements, which are generally paid in installments over a period of three to four years. Long-term receivables generated interest income of $23 and $53 for the three months ended June 30, 2024 and 2023, respectively, and $55 and $123 for the six months ended June 30, 2024 and 2023, respectively.

The Company maintains an allowance for credit losses that, in management’s opinion, provides for an adequate reserve to cover losses that may be incurred. For purposes of determining appropriate allowances, the Company stratifies its population of accounts receivable into two categories, one for short-term receivables and a second for private funds advisory receivables. Each population is separately evaluated using an aging method that results in a percentage reserve based on the age of the receivable, in addition to considerations of historical charge-offs and current economic conditions.

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This has the effect of reducing both the gross receivable and the allowance for credit losses. If a reserved accounts receivable is subsequently collected, such recoveries reduce the gross receivable and the allowance for credit losses and is a reduction of bad debt expense, which is recorded within other expenses on the condensed consolidated statement of operations. The combination of recoveries and the provision for credit losses of a reported period comprise the Company’s bad debt expense.

The following tables summarize credit loss allowance activity for the three and six months ended June 30, 2024 and 2023:

 

Three Months Ended June 30, 2024

 

Three Months Ended June 30, 2023

 

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

$

1,920

 

$

35

 

$

1,955

 

$

1,043

 

$

582

 

$

1,625

Charge-offs, foreign currency translation and other adjustments

 

(371)

 

 

 

 

(371)

 

 

71

 

 

 

 

71

Recoveries

 

(980)

 

 

(4)

 

 

(984)

 

 

(593)

 

 

(19)

 

 

(612)

Provision for credit losses

 

1,682

 

 

4

 

 

1,686

 

 

680

 

 

4

 

 

684

Allowance for credit losses, ending balance

$

2,251

 

$

35

 

$

2,286

 

$

1,201

 

$

567

 

$

1,768

 

12


 

 

 

Six Months Ended June 30, 2024

 

Six Months Ended June 30, 2023

 

Accounts Receivable

 

Accounts Receivable

 

Short-term Receivables

 

Private Funds Advisory Receivables

 

Total

 

Short-term Receivables

 

Private Funds Advisory Receivables