|
|
399 PARK AVENUE |
June 15, 2016
VIA EDGAR
Hugh West
Accounting Branch Chief
Office of Financial Services
United States Securities and Exchange Commission
Mail Stop 4720
100 F Street, N.E.
Washington D.C. 20549
|
Re: |
Moelis & Company |
|
|
Form 10-Q for the Quarterly Period Ended March 31, 2016 |
|
|
Filed May 5, 2016 |
|
|
Form 8-K Filed April 27, 2016 |
|
|
File No. 001-36418 |
Dear Mr. West:
Moelis & Company (the “Company”) submits this letter in response to the comment letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated June 7, 2016, concerning the Company’s Form 10-Q for the Quarterly Period ended March 31, 2016 and Form 8-K filed April 27, 2016.
To assist in your review, we have retyped the Staff’s comments (displayed in italics) below, with the Company’s responses set forth immediately below the Staff’s comments.
Form 10-Q for the Quarterly Period Ended March 31, 2016
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 31
Revenues, page 33
Three Months Ended March 31, 2016 versus 2015, page 34
1. We note from your 2015 Form 10-K and September 30, 2015 Form 10-Q that you disclose: (i) the number of clients that you earn revenues from; and (ii) the number of clients that you earn fees from equal to or greater than $1 million. Please revise your future filings to disclose these quantitative drivers of your fees (consistent with your prior filings). Refer to Item 303(b) of Regulations S-K.
In response to the Staff’s comment, the Company will revise its future filings to disclose for each of the periods for which an income statement is presented: (i) the number of clients from whom we earned revenues; and (ii) the number of clients from whom we earned fees equal to or greater than $1 million.
NEW YORK | BEIJING | BOSTON | CHICAGO | DUBAI | FRANKFURT | HONG KONG | HOUSTON | LONDON
LOS ANGELES | MELBOURNE | MUMBAI | PALO ALTO | PARIS | SÃO PAULO | SYDNEY | WASHINGTON DC
Form 8-K filed April 27, 2016
Exhibit 99.1
GAAP and Adjusted Pro Forma Selected Financial Data (Unaudited), page 3
2. We note that you present here and within the appendix (on pages A-2 and A-3) full non-GAAP (“Adjusted Pro Forma”) income statements for the three months ended March 31, 2016 and 2015. This disclosure is inconsistent with the updated non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016 (refer to 102.10). Please review this guidance when preparing your next earnings release and modify your non-GAAP disclosures accordingly.
In response to the Staff’s comment, the Company will modify its non-GAAP disclosures in its future earnings releases to be consistent with the updated non-GAAP Compliance and Disclosure Interpretations issued on May 17, 2016. To achieve this end, the Company will make the following modifications to its future earnings releases:
· All references to “Adjusted Pro Forma” within the report shall be replaced with “Adjusted”, or “Adjusted (non-GAAP)” for tabular headings;
· The GAAP and Adjusted (non-GAAP) Selected Financial Data (page 3) will be revised to include only key line items to reduce the prominence of non-GAAP as compared with our full GAAP income statement; and
· The Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information (pages A-2 and A-3) will be revised to only disclose line items with non-GAAP adjustments.
To assist the Staff in its review and facilitate an expedient resolution, we have included below the non-GAAP tabular information from the first fiscal quarter of 2016 with the modifications we intend to present in our future earnings releases:
|
|
|
GAAP |
|
Adjusted (non-GAAP)* |
| ||||||||||||
|
|
|
Three Months Ended March 31, |
| ||||||||||||||
|
($ in thousands except per share data) |
|
2016 |
|
2015 |
|
2016 vs. 2015 |
|
2016 |
|
2015 |
|
2016 vs. 2015 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenues |
|
$ |
126,364 |
|
$ |
99,412 |
|
27 |
% |
$ |
126,364 |
|
$ |
99,412 |
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income (loss) before income taxes |
|
31,063 |
|
24,261 |
|
28 |
% |
32,437 |
|
25,721 |
|
26 |
% | ||||
|
Provision for income taxes |
|
5,444 |
|
4,300 |
|
27 |
% |
12,813 |
|
10,288 |
|
25 |
% | ||||
|
Net income (loss) |
|
25,619 |
|
19,961 |
|
28 |
% |
19,624 |
|
15,433 |
|
27 |
% | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) attributable to noncontrolling interests |
|
18,649 |
|
14,625 |
|
28 |
% |
— |
|
— |
|
N/M |
| ||||
|
Net income (loss) attributable to Moelis & Company |
|
$ |
6,970 |
|
$ |
5,336 |
|
31 |
% |
$ |
19,624 |
|
$ |
15,433 |
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted earnings per share |
|
$ |
0.31 |
|
$ |
0.25 |
|
24 |
% |
$ |
0.35 |
|
$ |
0.28 |
|
25 |
% |
N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
Moelis & Company
Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information
Unaudited
(dollars in thousands, except share and per share data)
|
|
|
Three Months Ended March 31, 2016 |
| |||||||
|
Adjusted items |
|
GAAP |
|
Adjustments |
|
Adjusted |
| |||
|
|
|
|
|
|
|
|
| |||
|
Compensation and benefits |
|
74,668 |
|
(1,374 |
)(a) |
73,294 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Income (loss) before income taxes |
|
31,063 |
|
1,374 |
|
32,437 |
| |||
|
Provision for income taxes |
|
5,444 |
|
7,369 |
(b) |
12,813 |
| |||
|
Net income (loss) |
|
25,619 |
|
(5,995 |
) |
19,624 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net income (loss) attributable to noncontrolling interests |
|
18,649 |
|
(18,649 |
) |
— |
| |||
|
Net income (loss) attributable to Moelis & Company |
|
$ |
6,970 |
|
$ |
12,654 |
|
$ |
19,624 |
|
|
|
|
|
|
|
|
|
| |||
|
Weighted-average shares of Class A common stock outstanding |
|
|
|
|
|
|
| |||
|
Basic |
|
20,376,718 |
|
33,870,710 |
(b) |
54,247,428 |
| |||
|
Diluted |
|
22,402,820 |
|
33,870,710 |
(b) |
56,273,530 |
| |||
|
Net income (loss) attributable to holders of shares of Class A common stock per share |
|
|
|
|
|
|
| |||
|
Basic |
|
$ |
0.34 |
|
|
|
$ |
0.36 |
| |
|
Diluted |
|
$ |
0.31 |
|
|
|
$ |
0.35 |
| |
(a) Expense associated with the amortization of RSU’s and stock options granted in connection with the IPO. In accordance with GAAP, amortization expense of RSUs and stock options granted in connection with the IPO will be recognized over the five year vesting period; we will continue to adjust for this expense due to the one-time nature of the grant.
(b) Assumes all outstanding Class A partnership units have been exchanged into Class A common stock. Accordingly, an adjustment has been made such that 100% of the Firm’s income is taxed at the corporate effective tax rate of 39.5% for the period presented.
|
|
|
Three Months Ended March 31, 2015 |
| |||||||
|
Adjusted items |
|
GAAP |
|
Adjustments |
|
Adjusted |
| |||
|
|
|
|
|
|
|
|
| |||
|
Compensation and benefits |
|
55,393 |
|
(1,460 |
)(a) |
53,933 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Income (loss) before income taxes |
|
24,261 |
|
1,460 |
|
25,721 |
| |||
|
Provision for income taxes |
|
4,300 |
|
5,988 |
(b) |
10,288 |
| |||
|
Net income (loss) |
|
19,961 |
|
(4,528 |
) |
15,433 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net income (loss) attributable to noncontrolling interests |
|
14,625 |
|
(14,625 |
) |
— |
| |||
|
Net income (loss) attributable to Moelis & Company |
|
$ |
5,336 |
|
$ |
10,097 |
|
$ |
15,433 |
|
|
|
|
|
|
|
|
|
| |||
|
Weighted-average shares of Class A common stock outstanding |
|
|
|
|
|
|
| |||
|
Basic |
|
19,730,182 |
|
34,407,005 |
(b) |
54,137,187 |
| |||
|
Diluted |
|
20,948,966 |
|
34,407,005 |
(b) |
55,355,971 |
| |||
|
Net income (loss) attributable to holders of shares of Class A common stock per share |
|
|
|
|
|
|
| |||
|
Basic |
|
$ |
0.27 |
|
|
|
$ |
0.29 |
| |
|
Diluted |
|
$ |
0.25 |
|
|
|
$ |
0.28 |
| |
(a) Expense associated with the amortization of RSU’s and stock options granted in connection with the IPO. In accordance with GAAP, amortization expense of RSUs and stock options granted in connection with the IPO will be recognized over the five year vesting period; we will continue to adjust for this expense due to the one-time nature of the grant.
(b) Assumes all outstanding Class A partnership units have been exchanged into Class A common stock. Accordingly, an adjustment has been made such that 100% of the Firm’s income is taxed at the corporate effective tax rate of 40.0% for the period presented.
We acknowledge that:
· The Company is responsible for the adequacy and accuracy of the disclosure in the filings;
· Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and
· The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We welcome any questions you may have and thank you for your attention to our filings. We request that should you require further clarification or additional information, please direct any question or comments regarding the foregoing to the undersigned at (212) 883-3837 or Joe.Simon@moelis.com.
|
|
Sincerely, |
|
|
|
|
|
|
|
|
/s/ Joseph Simon |
|
|
Joseph Simon |
|
|
Chief Financial Officer |
cc: Michael Angelaras, Deloitte & Touche LLP