Moelis & Company Reports Fourth Quarter and Full Year 2018 Financial Results; Declares Special Dividend of $1.25 Per Share and Increases Regular Quarterly Dividend to $0.50 Per Share

Moelis & Company (NYSE: MC) today reported financial results for the fourth quarter and fiscal year ended December 31, 2018. The Firms fourth quarter revenues of $238.3 million increased 41% over the prior year period and represented our largest quarter of revenues since inception. The Firm reported fourth quarter 2018 GAAP net income of $56.0 million, or $0.72 per share (diluted). On an Adjusted basis, the Firm reported net income of $52.0 million or $0.77 per share (diluted) for the fourth quarter of 2018, which compares with $34.1 million of net income or $0.52 per share (diluted) in the prior year period.

The Firms fiscal year 2018 revenues of $885.8 million represented an increase of 29% over the prior year and our largest annual revenues on record. GAAP net income for the period was $208.0 million, or $2.78 per share (diluted), compared with $126.5 million or $0.78 per share in the prior year period. On an Adjusted basis, the Firm reported net income of $202.3 million for fiscal year 2018 as compared with $145.6 million in the prior year. On a per share basis, the Firm reported record Adjusted net income of $3.00 per share (diluted) for fiscal year 2018, up 31% from the $2.29 per share (diluted) reported in the prior year period.

Our record fourth quarter and full year 2018 results are a testament to the power of our differentiated business model, and the innovative and strategic advice we are providing to our clients. Through our continued focus on global connectivity, our best-in-class bankers delivered growth across all products during the year, with particular strength in M&A and Recapitalization & Restructuring. We continue to work on an increasing number of complex situations around the world as we deepen our investment in talent through hiring and internal development, said Ken Moelis, Chairman and Chief Executive Officer.

We achieved our third consecutive fiscal year of revenue and adjusted earnings per share growth organically and with no acquisitions. We have consistently delivered not only top line growth, but also earnings growth through our focus on cost discipline and our capital-light model, which has resulted in consistent and strong cash flow. We declared our second special dividend related to our 2018 performance and increased our regular quarterly dividend for the fourth time over the past three years. Coupled with increased levels of open market share repurchases in 2018, we returned record levels of capital to shareholders during the year, and as always, we will evaluate the best way to return all of our excess capital to shareholders.

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The Firms revenues and net income can fluctuate materially depending on the number, size and timing of completed transactions on which it advised as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

Currently 78% of the operating partnership (Moelis & Company Group LP) is owned by the corporate partner (Moelis & Company) and is subject to corporate U.S. federal and state income tax. The remaining 22% is owned by other partners of Moelis & Company Group LP and is primarily subject to tax at the partner level (except for certain state and local and foreign income taxes). The Adjusted results included herein remove the impact of compensation expenses specifically related to the Firms IPO awards, and apply the corporate tax rate to all earnings under the assumption that 100% of the Firms fourth quarter and full year 2018 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. A reconciliation between our GAAP results and our Adjusted results is presented in the Appendix to this press release.

GAAP and Adjusted (non-GAAP) Selected Financial Data (Unaudited)

   
U.S. GAAP Adjusted (non-GAAP)*
Three Months Ended December 31,
($ in thousands except per share data)   2018     2017    

2018 vs. 2017 Variance

  2018     2017  

2018 vs. 2017 Variance

 
Revenues $ 238,294 $ 169,167 41% $ 238,294 $ 169,167 41%
Income (loss) before income taxes 68,222 187,277 N/M 68,903 53,535 29%
Provision for income taxes   12,217   192,927   N/M   16,911   19,407 -13%
Net income (loss) 56,005 (5,650 ) N/M 51,992 34,128 52%
 
Net income (loss) attributable to noncontrolling interests   16,789   19,163   N/M     N/M
Net income (loss) attributable to Moelis & Company $ 39,216 $ (24,813 ) N/M $ 51,992 $ 34,128 52%
 
Diluted earnings per share $ 0.72 $ (0.72 ) N/M $ 0.77 $ 0.52 48%
 
N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
 
 
U.S. GAAP Adjusted (non-GAAP)*
Twelve Months Ended December 31,
($ in thousands except per share data)   2018   2017  

2018 vs. 2017 Variance

  2018   2017

2018 vs. 2017 Variance

 
Revenues $ 885,840 $ 684,615 29% $ 885,840 $ 684,615 29%
Income (loss) before income taxes 238,452 350,351 N/M 242,052 219,844 10%
Provision for income taxes   30,448   223,827   N/M   39,764   74,285 -46%
Net income (loss) 208,004 126,524 N/M 202,288 145,559 39%
 
Net income (loss) attributable to noncontrolling interests   67,324   97,124   N/M     N/M
Net income (loss) attributable to Moelis & Company $ 140,680 $ 29,400   N/M $ 202,288 $ 145,559 39%
 
Diluted earnings per share $ 2.78 $ 0.78   N/M $ 3.00 $ 2.29 31%
 
N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
 

Revenues

We earned revenues of $238.3 million in the fourth quarter of 2018, as compared with $169.2 million in the prior year period, representing an increase of 41% and our largest quarter of revenues on record. This compares favorably with an 11% decrease in the number of global completed M&A transactions in the same period1. Our strong performance through the first nine months of 2018 continued into the fourth quarter where we experienced continued growth in M&A and strength in restructuring activity as compared with the prior year period. The increase in quarterly revenues was driven by an increase in transaction closings, including higher average fees earned per completed transaction as compared with the prior year period.

For the year ended December 31, 2018, revenues were a record $885.8 million as compared with $684.6 million in 2017, or an increase of 29%. The increase in full year revenues reflects growth across all products including Capital Markets and Private Funds Advisory, with significant strength in our M&A and Restructuring activity over the prior year period. We completed a greater number of transactions during the year, and earned higher average fees per completed transaction as compared with the prior year period.

We continued to execute on our strategy of organic growth through internal talent development. In early 2019 we promoted five of our advisory professionals to Managing Director: Chris Foss (U.S./M&A), Gavin Kolt (U.S./Equity Capital Markets), Paul Mann (U.S./Financial Institutions), Cyril Tabet (MENA/Regional) and Kevin Voelte (U.S./Oil & Gas). We have a robust pipeline of Managing Director hires for 2019.

______________________________

1 Source: Thomson Financial as of January 4, 2019; includes all transactions greater than $100 million in value

Expenses

The following tables set forth information relating to the Firms operating expenses. Expenses for 2017 only are reported net of client expense reimbursements.

   
U.S. GAAP Adjusted (non-GAAP)*
Three Months Ended December 31,
($ in thousands)   2018       2017    

2018 vs. 2017 Variance

  2018       2017    

2018 vs. 2017 Variance

 
Expenses
Compensation and benefits $ 137,876 $ 99,156 39 % $ 136,963 $ 98,177 40 %
% of revenues 57.9 % 58.6 % 57.5 % 58.0 %
Non-compensation expenses $ 37,263 $ 31,350 19 % $ 37,263 $ 31,350 19 %
% of revenues 15.6 % 18.5 % 15.6 % 18.5 %
Total operating expenses $ 175,139 $ 130,506 34 % $ 174,226 $ 129,527 35 %
% of revenues 73.5 % 77.1 % 73.1 % 76.6 %
 
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)

 

  U.S. GAAP   Adjusted (non-GAAP)*
Twelve Months Ended December 31,
($ in thousands)   2018       2017    

2018 vs. 2017 Variance

  2018       2017    

2018 vs. 2017 Variance

 
Expenses
Compensation and benefits $ 513,863 $ 401,384 28 % $ 509,302 $ 397,170 28 %
% of revenues 58.0 % 58.6 % 57.5 % 58.0 %
Non-compensation expenses $ 145,196 $ 118,949 22 % $ 145,196 $ 118,949 22 %
% of revenues 16.4 % 17.4 % 16.4 % 17.4 %
Total operating expenses $ 659,059 $ 520,333 27 % $ 654,498 $ 516,119 27 %
% of revenues 74.4 % 76.0 % 73.9 % 75.4 %
 
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
 

Total operating expenses on a GAAP basis were $175.1 million for the fourth quarter and $659.1 million for the full year ended December 31, 2018. On an Adjusted basis, operating expenses were $174.2 million for the fourth quarter of 2018 as compared with $129.5 million in the prior year period and $654.5 million for fiscal year 2018 as compared with $516.1 million in 2017. The increase in operating expenses for the full year is associated with increased revenues, which drove increased compensation and benefits expenses, as well as higher non-compensation expenses.

Compensation and benefits expenses on a GAAP basis were $137.9 million in the fourth quarter and $513.9 million in the fiscal year ended December 31, 2018, respectively. Adjusted compensation and benefits expenses (which exclude the amortization of IPO awards for the reported periods) were $137.0 million and $509.3 million for the fourth quarter and fiscal year ended December 31, 2018, respectively. This compares with $98.2 million and $397.2 million for the fourth quarter and fiscal year ended December 31, 2017, respectively. The Adjusted compensation and benefits ratio in both the fourth quarter and fiscal year 2018 was consistent at 57.5%.

Non-compensation expenses on a GAAP and Adjusted basis were $37.3 million for the fourth quarter of 2018 as compared with $31.4 million in the same period of the prior year, and the non-compensation expense ratio decreased to 15.6% from 18.5%. For the fiscal year of 2018, GAAP and Adjusted non-compensation expenses were $145.2 million as compared with $118.9 million in the prior year period. Our non-compensation expense ratio decreased to 16.4% in the current year from 17.4% in the prior year period. The decrease in our non-compensation expense ratio in both current year periods primarily resulted from increased revenues, partially offset by the absence of contra expenses related to client reimbursements in 2018.

Other Income

   
U.S. GAAP Adjusted (non-GAAP)*
Three Months Ended December 31,
($ in thousands)   2018     2017  

2018 vs. 2017 Variance

  2018     2017  

2018 vs. 2017 Variance

 
Other income (expenses) $ 1,546 $ 144,840 N/M $ 1,314 $ 10,119 N/M
 
N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
 
U.S. GAAP Adjusted (non-GAAP)*
Twelve Months Ended December 31,
($ in thousands)   2018   2017

2018 vs. 2017 Variance

  2018   2017

2018 vs. 2017 Variance

 
Other income (expenses) $ 4,509 $ 177,728 N/M $ 3,548 $ 43,007 N/M
 
N/M = not meaningful
* See Appendix for a reconciliation of GAAP to Adjusted (non-GAAP)
 

In the fourth quarter of 2018, other income on a GAAP and Adjusted basis was $1.5 million and $1.3 million, respectively, as compared with $144.8 million on a GAAP, and $10.1 million on an Adjusted basis in the prior year period. On both a GAAP and Adjusted basis in the fourth quarter of 2017, we recorded a gain of $9.7 million related to Moelis Australias October 2017 share placement. The re-measurement impacts related to the Tax Cuts and Jobs Act were excluded from our Adjusted results for the fourth quarter of 2017.

For fiscal year 2018, other income on a GAAP and Adjusted basis was $4.5 million and $3.5 million, respectively, as compared with $177.7 million on a GAAP and $43.0 million on an Adjusted basis in the prior year. Other income on both a GAAP and Adjusted basis in fiscal year 2017 included gains of $41.7 million arising from Moelis Australias IPO in April 2017 and subsequent share issuances through the remainder of 2017. The GAAP results for fiscal year 2017 also include $134.7 million of other income related to the estimated re-measurement of the liability pursuant to the Firms Tax Receivable Agreement in connection with the enactment of the Tax Cuts and Jobs Act.

Provision for Income Taxes

The corporate partner (Moelis & Company) currently owns 78% of the operating partnership (Moelis & Company Group LP) and is subject to corporate U.S. federal and state income tax. Income on the remaining 22% continues to be subject to New York City unincorporated business tax and certain foreign income taxes and is accounted for at the partner level through the non-controlling interests line item. For Adjusted purposes, we have assumed that 100% of the Firms fourth quarter and full year 2018 income was taxed at our corporate effective tax rate of 24.5% and 16.4% respectively, versus 36.3% and 33.8% in both prior year periods. The decrease in the tax rate for the full year is primarily attributable to the enactment of the Tax Cuts and Jobs Act in 2017, which reduced the U.S. federal corporate income tax rate from 35% to 21% beginning January 1, 2018, and tax benefits related to the appreciation of the Companys stock price between employee equity grant date and delivery date.

Capital Management and Balance Sheet

Moelis & Company continues to maintain a strong financial position, and as of December 31, 2018, we held cash and liquid investments of $341.6 million and had no debt or goodwill on our balance sheet.

On February 5, 2019, the Board of Directors of Moelis & Company declared a special dividend of $1.25 per share and increased the regular quarterly dividend to $0.50 per share. The $1.75 per share will be paid on March 29, 2019 to common stockholders of record on February 19, 2019.

During the fiscal year ended December 31, 2018, we repurchased 185,671 shares of our common stock at an average price of $36.35 per share, for a total cost of $6.7 million. In addition, during fiscal year 2018, we repurchased 533,028 restricted stock units to settle tax liabilities at an average price of $50.14 per share, for a total cost of $26.7 million.

Through February 5th, 2019 we have continued our open market share repurchases through a 10b5-1 program, and have repurchased an additional 94,726 shares of our common stock at an average price of $36.67, for a total cost of $3.5 million.

In order to continue to execute on our capital management strategy, the Board of Directors has authorized the repurchase of up to $100 million of shares of Class A common stock of Moelis & Company and/or Class A partnership units of Moelis & Company Group LP with no expiration date. Under this share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased will be opportunistic and measured in nature and will depend on a variety of factors, including price and market conditions.

Earnings Call

We will host a conference call beginning at 5:00pm ET on Wednesday, February 6, 2019, accessible via telephone and the internet. Ken Moelis, Chairman and Chief Executive Officer, and Joe Simon, Chief Financial Officer, will review our full year and fourth quarter 2018 financial results. Following the review, there will be a question and answer session.

Investors and analysts may participate in the live conference call by dialing 1-877-510-3938 (domestic) or 1-412-902-4137 (international) and referencing the Moelis & Company Fourth Quarter 2018 Earnings Call. Please dial in 15 minutes before the conference call begins. The conference call will also be accessible as a listen-only audio webcast through the Investor Relations section of the Moelis & Company website at www.moelis.com.

For those unable to listen to the live broadcast, a replay of the call will be available for one month via telephone starting approximately one hour after the live call ends. The replay can be accessed at 1-877-344-7529 (domestic) or 1-412-317-0088 (international); the conference number is 10127727.

About Moelis & Company

Moelis & Company is a leading global independent investment bank that provides innovative strategic advice and solutions to a diverse client base, including corporations, governments and financial sponsors. The Firm assists its clients in achieving their strategic goals by offering comprehensive integrated financial advisory services across all major industry sectors. Moelis & Companys experienced professionals advise clients on their most critical decisions, including mergers and acquisitions, recapitalizations and restructurings, capital markets transactions, and other corporate finance matters. The Firm serves its clients from 19 geographic locations in North and South America, Europe, the Middle East, Asia and Australia. For further information, please visit: www.moelis.com or follow us on Twitter @Moelis.

Forward-Looking Statements

This press release contains forward-looking statements, which reflect the Firms 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 Firms filings with the Securities and Exchange Commission. The Firm undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

Adjusted results are a non-GAAP measure which better reflect managements view of operating results. We believe that the disclosed Adjusted measures and any adjustments thereto, when presented in conjunction with comparable GAAP measures, are useful to investors to understand the Firms operating results by removing the significant accounting impact of one-time charges associated with the Firms IPO and assuming all Class A partnership units have been exchanged into Class A common stock. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of GAAP results to Adjusted results is presented in the Appendix.

Appendix

GAAP Consolidated Statement of Operations (Unaudited)

Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information (Unaudited)

 
Moelis & Company
GAAP Consolidated Statement of Operations
Unaudited
(dollars in thousands, except for share and per share data)
   

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2018   2017 2018   2017
 
Revenues $ 238,294 $ 169,167 $ 885,840 $ 684,615
 
Expenses
Compensation and benefits 137,876 99,156 513,863 401,384
Occupancy 4,843 4,431 18,952 17,101
Professional fees 7,182 6,280 25,311 19,954
Communication, technology and information services 7,883 6,537 29,747 25,173
Travel and related expenses 10,468 8,644 42,264 30,634
Depreciation and amortization 1,335 974 4,625 3,544
Other expenses   5,552   4,484     24,297   22,543
Total expenses   175,139   130,506     659,059   520,333
 
Operating income (loss) 63,155 38,661 226,781 164,282
Other income (expenses) 1,546 144,840 4,509 177,728
Income (loss) from equity method investments   3,521   3,776     7,162   8,341
Income (loss) before income taxes 68,222 187,277 238,452 350,351
Provision for income taxes   12,217   192,927     30,448   223,827
Net income (loss) 56,005 (5,650 ) 208,004 126,524
 
Net income (loss) attributable to noncontrolling interests   16,789   19,163     67,324   97,124
Net income (loss) attributable to Moelis & Company $ 39,216 $ (24,813 ) $ 140,680 $ 29,400
 

Weighted-average shares of Class A common stock outstanding

Basic   47,629,634   34,522,450     43,216,358   30,597,058
Diluted   54,609,318   34,522,450     50,690,528   37,675,511
Net income (loss) attributable to holders of shares of Class A common stock per share
Basic $ 0.82 $ (0.72 ) $ 3.26 $ 0.96
Diluted $ 0.72 $ (0.72 ) $ 2.78 $ 0.78
 
 
Moelis & Company
Reconciliation of GAAP to Adjusted (non-GAAP) Financial Information
Unaudited
(dollars in thousands, except share and per share data)
 
Three Months Ended December 31, 2018
Adjusted Items GAAP   Adjustments

Adjusted

(non-GAAP)

 
Compensation and benefits $ 137,876 ($913 ) (a) $ 136,963
 
Other income (expenses) 1,546 (232 ) (b) 1,314
 
Income (loss) before income taxes 68,222 681 68,903
Provision for income taxes   12,217   4,694   (b)(c)   16,911
Net income (loss) 56,005 (4,013 ) 51,992
 
Net income (loss) attributable to noncontrolling interests   16,789   (16,789 )  
Net income (loss) attributable to Moelis & Company $ 39,216 $ 12,776   $ 51,992
 

Weighted-average shares of Class A common stock outstanding

Basic   47,629,634   13,053,465   (d)   60,683,099
Diluted   54,609,318   13,053,465   (d)   67,662,783

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

Basic $ 0.82 $ 0.86
Diluted $ 0.72 $ 0.77
 
(a)   Expense associated with the amortization of Restricted Stock Units (RSUs) 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) Reflects the netting of $0.2 million of GAAP adjustments made to the amount pursuant to the Company’s Tax Receivable Agreement against provision for income taxes.
 
(c) An adjustment has been made to illustrate the result as if 100% of the Firms income is being taxed at our corporate effective tax rate of 24.5% for the period stated, which includes tax benefits of $1.0 million primarily related to the settlement of share-based awards. Excluding such benefits, our effective tax rate for the period presented would have been 26.1%.
 
(d) Assumes all outstanding Class A partnership units have been exchanged into Class A common stock.
 
 
Three Months Ended December 31, 2017
Adjusted Items GAAP   Adjustments

Adjusted

(non-GAAP)

 
Compensation and benefits $ 99,156 $ (979 ) (a) $ 98,177
 
Other income (expenses) 144,840 (134,721 ) (b) 10,119
 
Income (loss) before income taxes 187,277 (133,742 ) 53,535
Provision for income taxes   192,927     (173,520 ) (b)(c)   19,407
Net income (loss) (5,650 ) 39,778 34,128
 
Net income (loss) attributable to noncontrolling interests   19,163     (19,163 )  
Net income (loss) attributable to Moelis & Company $ (24,813 ) $ 58,941   $ 34,128
 

Weighted-average shares of Class A common stock outstanding

Basic   34,522,450     22,571,923   (c)   57,094,373
Diluted   34,522,450     30,710,091   (c)   65,232,541

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

Basic $ (0.72 ) $ 0.60
Diluted $ (0.72 ) $ 0.52
 
(a)   Expense associated with the amortization of RSUs 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) The adjustment primarily reflects the re-measurement of our deferred tax assets and liabilities in connection with the enactment of the Tax Cuts and Jobs Act. The deferred tax assets primarily consist of step-up in tax basis related to the exchanges of partnership units and deferred equity compensation. The estimated impact of re-measurement of deferred tax assets of $181.0 million was included in our provision for income taxes, and the reduction in the related TRA liability of $134.7 million was included in other income, netting to a total estimated impact of $46.3 million in our GAAP results. We have removed such net impact in our Adjusted results.
 
(c) 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 Firms income is taxed at the corporate effective tax rate of 36.3% for the period stated, which includes the excess tax benefit related to the settlement of share-based awards in accordance with ASU No. 2016-09 of $0.9 million. Excluding such discrete benefit, our effective tax rate for the period presented would have been 38.0%. Due to the GAAP net loss during the period, no dilutive effect of unvested stock-based awards has been added to the GAAP diluted weighted-average shares outstanding. However, the Adjusted results include the full dilutive effect of unvested stock-based awards within the diluted weighted-average shares outstanding.
 
 
Twelve Months Ended December 31, 2018
Adjusted Items GAAP   Adjustments

Adjusted

(non-GAAP)

 
Compensation and benefits $ 513,863 ($4,561 ) (a)(b) $ 509,302
 
Other income (expenses) 4,509 (961 ) (b)(c) 3,548
 
Income (loss) before income taxes 238,452 3,600 242,052
Provision for income taxes   30,448   9,316   (c)(d)   39,764
Net income (loss) 208,004 (5,716 ) 202,288
 
Net income (loss) attributable to noncontrolling interests   67,324   (67,324 )  
Net income (loss) attributable to Moelis & Company $ 140,680 $ 61,608   $ 202,288
 

Weighted-average shares of Class A common stock outstanding

Basic   43,216,358   16,649,446   (e)   59,865,804
Diluted   50,690,528   16,649,446   (e)   67,339,974

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

Basic $ 3.26 $ 3.38
Diluted $ 2.78 $ 3.00
 
(a)   Expense associated with the amortization of RSUs 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) Reflects a reclassification of $1.0 million of other income to compensation and benefits expense associated with enforcement of non-compete provisions.
 
(c) Reflects the netting of $0.1 million of GAAP adjustments made to the amount pursuant to the Company’s Tax Receivable Agreement against provision for income taxes.
 
(d) An adjustment has been made to illustrate the result as if 100% of the Firms income is being taxed at our corporate effective tax rate of 16.4% for the period stated, which includes tax benefits of $21.5 million primarily related to the settlement of share-based awards. Excluding such benefits, our effective tax rate for the period presented would have been 25.3%. Our corporate effective tax rate of 16.4% excludes any benefits or costs relating to the adjustment to the step-up in tax basis in Group LP assets in connection with the partnership unit exchanges and offerings. Such adjustment was a net economic benefit of $1.0 million which is not included in the corporate effective tax rate for the period presented.
 
(e) Assumes all outstanding Class A partnership units have been exchanged into Class A common stock.
 
 
Twelve Months Ended December 31, 2017
Adjusted Items GAAP   Adjustments

Adjusted

(non-GAAP)

 
Compensation and benefits $ 401,384 $ (4,214 ) (a) $ 397,170
 
Other income (expenses) 177,728 (134,721 ) (b) 43,007
 
Income (loss) before income taxes 350,351 (130,507 ) 219,844
Provision for income taxes   223,827   (149,542 ) (b)(c)   74,285
Net income (loss) 126,524 19,035 145,559
 
Net income (loss) attributable to noncontrolling interests   97,124   (97,124 )  
Net income (loss) attributable to Moelis & Company $ 29,400 $ 116,159   $ 145,559
 

Weighted-average shares of Class A common stock outstanding

Basic   30,597,058   25,972,450   (c)   56,569,508
Diluted   37,675,511   25,972,450   (c)   63,647,961

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

Basic $ 0.96 $ 2.57
Diluted $ 0.78 $ 2.29
 
(a)   Expense associated with the amortization of RSUs 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) The adjustment primarily reflects the re-measurement of our deferred tax assets and liabilities in connection with the enactment of the Tax Cuts and Jobs Act. The deferred tax assets primarily consist of step-up in tax basis related to the exchanges of partnership units and deferred equity compensation. The estimated impact of re-measurement of deferred tax assets of $181.0 million was included in our provision for income taxes, and the reduction in the related TRA liability of $134.7 million was included in other income, netting to a total estimated impact of $46.3 million in our GAAP results. We have removed such net impact in our Adjusted results.
 
(c) 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 Firms income is taxed at the corporate effective tax rate of 33.8% for the period stated, which includes the excess tax benefit related to the settlement of share-based awards in accordance with ASU No. 2016-09 of $10.6 million. Excluding such discrete benefit, our effective tax rate for the period presented would have been 38.6%.

Investor Contact:
Michele Miyakawa
Moelis & Company
t:
+ 1 310 443 2344
[email protected]

Media Contact:
Andrea Hurst
Moelis & Company
t:
+ 1 212 883 3666
m: +1 347 583 9705
[email protected]