Moelis & Company (NYSE:MC) Q1 2024 Earnings Call Transcript April 24, 2024
Moelis & Company beats earnings expectations. Reported EPS is $0.22, expectations were $0.11. MC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
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.
Matt 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. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements, which are subject to various risks and uncertainties, including those identified from time-to-time in the Risk Factors section of Moelis & Company’s filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures.
We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm’s earnings release, which can be found on our Investor Relations website at investors.moelis.com. I’ll now turn the call over to Joe, to discuss our results.
Joseph W. Simon: Thanks, Matt, and good afternoon, everyone. On today’s call, I’ll go through our financial results, and then Ken will comment further on the business. We achieved revenues of $217 million in the first quarter, representing an increase of 17% over the prior year period. The revenue increase is primarily attributable to growth in restructuring. The M&A pipeline continues to build, but conversion to revenue remains challenging. There is early evidence that this trend is pivoting more constructively. Moving to expenses. Our first quarter comp ratio was 75%. We expect the ratio to be similar in quarter two until we have better visibility on the full-year, which is likely to be in the third quarter. Our first quarter non-comp ratio was 21.7%.
The underlying quarterly run rate continues to be approximately $46 million per quarter, excluding transaction related expenses. Moving to taxes. Our underlying corporate tax rate is expected to be 34% for the full-year. We expect the target of 28% to resume once we achieve a more normalized level of productivity. Regarding capital allocation, the Board declared a regular quarterly dividend of $0.60 per share. And lastly, we continue to maintain a strong balance sheet with no funded debt. And I’ll now turn the call over to, Ken.
Kenneth Moelis: Thanks, Joe, and good afternoon, everyone. We are getting closer to an M&A recovery. Our M&A pipeline continues to build as market participants have adjusted to the current cost of capital. Financing markets are open and both corporate and sponsor dialogues are active. Our restructuring team is seeing consistent flow of mandates, and we expect this to continue as we believe the current market environment, which combines coming maturities and an open financing market to be optimal for our business as we specialize in out of court restructurings, which benefit both from our strong capital markets and capital structure advisory capabilities. Finally, in the first quarter, we hired four Managing Directors, three in the energy sector and one to cover credit funds. Our outlook for the deal environment is positive, and we are focused on our clients and execution going forward. With that, I’m going to open up for questions.
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