Yahoo Finance Moelis & Co (MC) (Q1 2024) Earnings Call Transcript Highlights: Strong Revenue Growth and ...
Revenue: $217 million in Q1 2024, up 17% year-over-year.
Compensation Ratio: 75% in Q1.
Non-Compensation Expense Ratio: 21.7% in Q1.
Quarterly Dividend: $0.6 per share declared.
Corporate Tax Rate: Expected to be 34%.
Debt: No funded debt reported.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you speak to what you're hearing in terms of the sponsor backdrop and any timeframe information or place you're expecting? A: Kenneth Moelis, Chairman and CEO of Moelis & Company, explained that there is a bifurcated market with strategic deals being more prevalent in the first quarter. He noted that private equity firms are timing their deals strategically, waiting for potential rate cuts before making moves. However, he anticipates that as the market stabilizes, even without rate cuts, there will be a significant unleashing of pent-up activity.
Q: Can you just speak to the momentum in the tech space relative to market expectations? A: Kenneth Moelis remarked that the tech team has met their expectations and has deepened their expertise and client relationships over the past year. Despite a challenging environment for M&A, he is satisfied with the team's performance and client engagement.
Q: Are you seeing the new hires over the last year or so compared to what you've seen in hiring and promotions in years past? A: Kenneth Moelis expressed optimism about the recent hires, stating that the quality of talent and client interactions has been very high. He noted that while the market conditions have made it challenging to convert these into transactions, the overall integration and performance of new hires have been promising.
Q: What is your outlook for the restructuring business, and can you provide contributions to revenue from restructuring and capital markets? A: Kenneth Moelis provided insights into the restructuring landscape, noting that higher interest rates might pressure the lower-performing companies into restructuring. He highlighted the availability of rescue capital which is helping companies avoid Chapter 11 by refinancing at higher rates. He also mentioned that restructuring, along with capital markets and other non-M&A activities, contributed to about 50% of their business in the quarter.
Q: How has the recruiting environment evolved, and what are your expectations for recruiting this year? A: Kenneth Moelis clarified that they do not plan to match the previous year's level of recruiting. He mentioned that the recent hires, especially in energy, were part of a strategic move to fill specific gaps, and while they are open to opportunistic hires, they do not anticipate a large influx of new hires similar to last year.
Q: With the reopening of equity and debt markets, how do you see the outlook for the capital markets business? A: Kenneth Moelis is bullish on the capital markets business, noting that the availability of capital and the reopening of markets are positive developments. He emphasized that their focus on bespoke, large-scale financing solutions fits well with the current market dynamics where traditional equity and debt offerings are becoming more active.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
