February 2020 - Moelis & Company
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
February 2020
Forward Looking Statements
This presentation contains forward looking statements, which reflect the
Company’s current views with respect to, among other things, its operations and
financial performance. You can identify these forward looking statements by the
use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,”
“may,” “will,” “should,” “seeks,” “target,” “approximately,” “predicts,”
“intends,” “plans,” “estimates,” “anticipates” or the negative version of these
words or other comparable words. Such forward looking statements are subject
to various risks and uncertainties. Accordingly, there are or will be important
factors that could cause actual outcomes or results to differ materially from those
indicated in these statements. For a further discussion of such factors, you
should read the Company’s filings with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly update or
review any forward looking statement, whether as a result of new information,
future developments or otherwise.
[1]Premier Global Independent Investment Bank
Global footprint
— 20 geographic locations in the Americas, Europe, the Middle East, Asia and Australia
Trusted advisor
— Focus on M&A, Restructuring, Capital Markets Advisory and Private Funds Advisory
World class coverage
— 126 MDs with an average of over 22 years of experience 1
Consistent Performance
— Top ten global M&A advisor for completed M&A 2
— Number one Global and US restructuring advisor 3
Strong growth with significant opportunities ahead
— Record 2H 2019 revenues of $455 million, the strongest six month period in Firm
history
Healthy balance sheet with strong cash position and no debt or goodwill
Commitment to return 100% of excess capital to shareholders
Notes:
1. As of 12/31/2019
2. Source: Dealogic – FY 2019 M&A Revenue
3. Source: Refinitiv – FY 2019 Completed Deals (by value) [2]Moelis & Company Milestones
Founded and Raised Growth Capital from Global Institutional Investors
2007 – 2008
Hired Restructuring Team
Established European Business
2009 – 2010 Formed Joint Venture in Australia
Japan Alliance with SMBC/SMBC Nikko & $93 Million Investment
Entered Hong Kong, China, India & Middle East
2011 – 2014 IPO in April 2014 (NYSE: MC)
Formed Private Funds Advisory Business
Expanded into Brazil & established German presence
2015 – 2016 Mexico Alliance with Alfaro, Dávila y Scherer, S.C.
Completed Energy Team build out
Australian Joint Venture listed on Australian Securities Exchange
2017 – 2019 Formed Shareholder Defense and Capital Solutions Group
Expansion into Continental Europe and the Benelux & Nordic Regions
[3]Our Business:
Relationships, Judgment and Experience
Global footprint to serve client needs with over 600 bankers ¹
Amsterdam, NL
London, UK Frankfurt, DE
Chicago, US Boston, US Paris, FR
San Francisco, US New York, US Beijing, CN
Washington, DC, US Japan
Los Angeles, US Strategic Alliance with
Houston, US Dubai, UAE SMBC / SMBC Nikko
Mexico City, MX
Mumbai, IN Hong Kong, CN
Strategic Alliance
with Alfaro, Dávila y
Scherer, S.C.
São Paulo, BR
Sydney, AUS
Joint Venture
Melbourne, AUS
Joint Venture
Globally integrated platform valuable to clients and difficult to replicate
Note: [4]
1. As of 12/31/2019Differentiated Model
Global partnership approach
Global
One firm P&L (non commission-based compensation)
Collaboration
Optimal structure for client advice and talent development
Profitable organic growth
High ROIC
Internal talent development (34% of current MDs are promotes) 1
Return 100% of excess cash
Commitment to
Shareholders Disciplined expense management
Clean balance sheet with no debt or goodwill
Note: [5]
1. As of 2/5/2020Recent Transactions with Marquee Clients
$29.4bn $21.7bn
$85.1bn $48bn Exchange of Cash and Class $19bn
(Incl. Greenshoe)
Acquisition of Twenty-First CBS and Viacom C Common Stock for Class All-Share Combination with
Century Fox, Inc. All-Stock Merger Initial Public Offering V Tracking Stock Flutter Entertainment plc
£4.9bn
$16.2bn €8.7bn $8.4bn $7.2bn Sale of Two Portfolios of
Sale to Nexstar Mortgages and Unsecured
Restructuring Restructuring Sale to Digital Realty, Inc. Media Group, Inc. Loans
$5.5bn $5.1bn $4.4bn
Restructuring and Sale of Transformative Global Exchange Offer, Consent $3.7bn €2.9bn
Aubstantially All Assets to Collaboration with Solicitations, Term Loan Merger with Option Care
ESL Investments, Inc. Gilead Sciences, Inc. Amendment and Extension Enterprises, Inc. Exchange Offer
$3bn $2.6bn $2.6bn $1.1bn Up to $950mm
Acquisition of AK Steel Sale to Brookfield Acquisition by Acquisition of Banco
Holding Corporation Infrastructure Partners LP Expedia Group, Inc. Santander Puerto Rico Sale to Alkermes plc
£668mm $845mm $775mm $750mm $750mm
Acquisition of Sale to Shiseido Sale to Cantel Common Stock Sale to Goldman Sachs
Tarsus Group plc Company, Limited Medical Corp. Commitment by CPPIB Group, Inc.
[6]Compelling Investment Opportunity
Leading track record of growth
Differentiated model
— Strong partnership culture
— One-Firm philosophy with one global P&L
— Focus on internal development
Significant shareholder returns over last three years
— Returned $11.50 1 in cash per share in dividends
Strong, asset light balance sheet with no debt and no goodwill
Longer and steadier M&A cycle; leading restructuring franchise
despite low default environment
Continued maturation of global network
— ~ 25% of MDs have been MDs at the firm for three years or less
Note:
[7]
1. Includes dividends declared but not yet paidSubstantial Organic Growth and Cash
Flow Generation
Significant Growth Since With Focus on Managing Generates High Cash
our IPO… the Business… Returns
82% 1 revenue growth Raised regular dividend
200% from $0.17 2 to $0.51
No debt per quarter
86 MDs at IPO and 126
today No acquisitions
Returned $17.56 3 in cash
No goodwill per share in dividends
Entered new markets,
sectors and products Expense
management Returned over 65% of IPO
price in dividends 3
Over $525 million
returned in capital with
respect to 2018 and 2019
Notes:
1. Based on fiscal year 2013 revenues of $411 million and fiscal year 2019 revenues of $747million
performance years 3,4
2. Represents dividend contemplated at time of IPO
3. Includes dividends declared but not yet paid [8]
4. Includes dividends, special dividends and share repurchasesGrowth Drivers
Leading Restructuring
Premier M&A Franchise Differentiated Model
Team
Increasing Market Share Growing restructuring Maturation of MDs on global
business in low default platform
Strong fundamentals of
environment
M&A remain in place Expanding global brand
#1 Ranking for US & recognition
Technological disruption to
Worldwide Completed
lead to longer cycle Collaborative model delivers
Volumes in 2019 2
exceptional client advice
Financial Sponsors need to
Named Top Restructuring
put capital to work Intense focus on ROIC
Adviser for the 2019 IFR
Global M&A volumes still Awards Investment in talent
below peak 2007 levels 1 development
Significant Franchise Enhancement and Shareholder Value
Notes:
1. Per Thomson Reuters as of January 3, 2020; based on announced deal volumes > $100mm for the twelve months ended 12/31/2019 [9]
2. Source: Refinitiv – FY 2019 Completed Deals (by value)Strong Record of Organic Growth
MOELIS & COMPANY REVENUES ($MM)
$886
$747
$685
$613
$552
$519
$386 $411
$268
Market 2011 2012 2013 2014 2015 2016 2017 2018 2019
Metrics
M&A Y-o-Y
Change 1 13.7% (3.0%) (4.0%) 11.9% (4.5%) (6.9%) (1.2%) (3.4%) (8.0%)
Default Rates 2 1.9% 2.6% 2.8% 2.1% 2.5% 4.4% 3.4% 3.0% 2.4%
Source: Thomson Reuters
Notes:
1. Based on global completed number of M&A transactions greater than $100 million for the twelve month period ended 12/31/2019 [ 10 ]
2. Based on average trailing twelve month default rate from Moody’s “Annual Default Study: Corporate Default and Recovery Rates”Strong Balance Sheet and Disciplined
Capital Management
Strong financial position
— Cash and liquid investments of $342 million 1
— No debt or goodwill
Minimal capital requirements
Commitment to return all excess capital to shareholders through dividends
and share repurchases
— Record level of open market share repurchases in 2019
— Declared special dividend of $0.75 per share in Q1 2020; eighth special
dividend declared in Firm history
— Increased regular quarterly dividend by 2% to $0.51 per share; seventh
regular quarterly dividend increase
— Board of Directors authorized $100 million repurchase plan in Q1 2019
Note:
1. As of 12/31/2019 [ 11 ]Moelis & Company: Leading Dividend Yield
$5.00 11.0%
$4.66
10.3%
$4.50 9.6% 10.0%
$4.08
$4.00
8.9% 9.0%
$3.50
$2.75 7.6%
$3.00 8.0%
$2.76
$2.56 $2.50
6.5%
$2.50 $0.75
7.0%
$2.00 4.9% $1.90 $1.25
$1.60 6.0%
$1.50 $0.80
5.0%
$1.00 $1.00 $2.01
$1.91
$1.58
$1.10 $1.31 4.0%
$0.50
$0.60
$- 3.0%
2014 2015 2016 2017 2018 2019
1
Regular Dividends Special Dividends Dividend Yield
Commitment to Return Excess Cash to Shareholders
Note:
1. Includes all regular and special dividends declared with respect to Moelis’s activities related to each fiscal year. Dividend yield calculated based on average share price
during each fiscal year ended December 31 [ 12 ]Appendix
Reconciliation of GAAP to
Adjusted (non-GAAP) Financials
Twelve Months Ended December 31, 2019
Adjusted
($ in thousands) U.S. GAAP Adjustments (non-GAAP)
Revenues $746,534 - $746,534
Expenses
Compensation and Benefits $488,439 $(18,185)¹ $470,254
Non Compensation Expenses $143,552 - $143,552
Total Operating Expenses $631,991 $(18,185) $613,806
Operating Income $114,543 $18,185 $132,728
Compensation Ratio 65.4 % 63.0 %
Non-Compensation Ratio 19.2 % 19.2 %
Operating Income Margin 15.3 % 17.8 %
Our Adjusted results apply certain adjustments from our GAAP results, including the assumption that 100% of the Firm’s full year 2019 income was
taxed at our corporate effective tax rate. We believe the Adjusted results, when presented together with comparable GAAP results, are useful to
investors to compare our performance across periods and to better understand our operating results.
Source: Company filings
Note:
1. Includes amortization of equity awards granted to employees and MDs in connection with the IPO; includes reclassification associated with the forfeiture of fully vested
awards and enforcement of non-compete provisions and reflects the reclassification of compensation and benefits expense associated with the Firm's gain on its sale of 20.5 [ 14 ]
million shares of Moelis Australia.Quarterly Revenue Summary
QUARTERLY REVENUE (Q1 2013 – Q4 2019) ($MM)
$238
$232
$224
$219 $220
$205 $208
$175 $173 $172 $170
$169
$154 $152 $154
$151
$144
$138
$132 $129 $132
$126 $126
$115
$99 $99 $99
$60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2013 2014 2015 2016 2017 2018 2019
% of Full Year
15% 24% 24% 38% 22% 25% 25% 28% 18% 23% 28% 32% 21% 21% 25% 33% 25% 25% 25% 25% 25% 25% 23% 27% 18% 21% 31% 30%
Revenue 1
Source: Company filings
Note: Management primarily focuses on annual revenue measures as revenues in any quarter may not be indicative of full year results and the results of any period may vary
significantly from quarter to quarter and year to year. For the purpose of understanding the Company’s historical experience for the 9-year period of 2010-2019, revenues on
average were distributed over the four calendar quarters as follows: Q1: 21%; Q2: 24%; Q3: 26%; Q4: 30%. The quarterly revenue data for Q1 2013 through Q4 2019 was
derived from our unaudited financial statements included in our Form 10-Qs and our audited financial statements included in our Form 10-Ks. The quarterly revenue data
for 2010, 2011 and 2012 was prepared on substantially the same basis as the unaudited financial statements in our Form 10-Qs and our audited financial statements in our
Form 10-Ks and includes all normal and recurring adjustments that we consider necessary for a fair presentation of revenue for these periods [ 15 ]
1. Sum of four quarters may not add up to 100% due to roundingShare Count Breakdown
For the Three Months
ended December 31, 2019
(shares in millions)
80.0
4.7 69.3
70.0 10.4
2.6
60.0
51.6
50.0
40.0
30.0
20.0
Basic Class A Class A Partnership Class A Partnership Unvested RSUs and Diluted Class A
Common Shares 1 Units Held by EOs & Units Held by Pre-IPO Options 4 Shares / Exchangeable
MDs 2, 3 Strategic Investor Units
(As Adjusted)
Notes: Data represents weighted-average for the three month period ending December 31, 2019
1. Includes 1.9 million undelivered awards with no remaining service requirement
2. Includes former Managing Directors and Employees
3. In April 2020, all outstanding Class A Partnership Units will be off of lock-up [ 16 ]
4. As calculated under the treasury stock methodHistorical Deal Distribution by
Transaction Size
100% 5%
7% 7% 11% 10%
15%
16%
80% 27% 24%
% of Total Deal Count
29% 33%
28%
23%
60% 20%
23%
16% 18%
21%
40%
56%
49%
20% 43% 41% 41%
36%
0%
Moelis Evercore Greenhill Houlihan Lazard PJT
$100mm - $500mm $500mm - $1.0bn $1.0bn - $5.0bn > $5.0bn
Source: Dealogic
Note: Percentage represents percent of total company deal count; based on completed M&A transactions from 1/1/2017 to 12/31/2019; excludes transactions less than $100
million and those with no transaction value disclosed
[ 17 ]You can also read
