Moelis & Co (MC) 2014 Q1 法說會逐字稿

Good day and welcome to the Moelis & Company first-quarter 2014 earnings call and webcast. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be opportunities to ask questions. (Operator Instructions) Please note: this event is being recorded.

I would now like to turn the conference over to Kate Pilcher, Head of Investor Relations. Please go ahead.

Thank you and good afternoon. With me today are Ken Moelis, Chairman and Chief Executive Officer; 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 Securities and Exchange Commission. Actual results could differ materially from those currently anticipated.

Our comments today include references to certain non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in the Firm's earnings release, which is posted on our investor relations website at investors.moelis.com.

As a reminder, we are still within our post-IPO quiet period. So we will have an abbreviated Q&A on this call, and we'll move to a full Q&A format on our next call for second-quarter earnings. I will now turn the call over to Ken.

Thanks, Kate. And welcome, everyone, to our first earnings call as a public company. We were happy and enjoyed meeting with many of you during our IPO roadshow. And I am looking forward -- we are looking forward to getting to know those of you that we were not able to meet face-to-face.

On today's call I will first spend a few minutes providing a brief overview of our Firm, the market dynamics that are creating an extraordinary opportunity for Moelis & Company, and key metrics from our first-quarter activity. I will then pass the call over to Joe Simon to provide more details on our financial results.

As most of you know, we successfully completed our IPO in mid-April, and we were thrilled the outcome and were happy to have begun life as a public company. You should know that the GAAP first-quarter 2014 results we issued today are based on our organizational structure prior to our conversion into a public corporation. Going forward post-reorganization and IPO, there will be a few key changes in the way we report. For example, both our tax rate and the equity amortization included in our compensation expenses will change. We believe, therefore, that the adjusted pro forma figures in the release are most representative of our operations going forward, and we will discuss those results on today's call.

As Joe and I review the results, I want to reiterate the four important themes that we believe drive the results for our Firm. First, we have grown rapidly over the past seven years and have built a premier global independent investment bank with an intense, singular focus on clients and relationships.

Second, there are strong secular and cyclical trends working in our favor that will create enormous opportunity for us, we believe. Third, we did have the benefit of seeing these trends and created a firm specifically to address the opportunity with a differentiated one-firm structure, culture, and economic model.

And fourth, we have had extraordinary financial discipline from day one. Since the day we started the Firm, we have approached the business as equity owners. We continue to manage the Firm with an ownership mentality. And with over two-thirds of the Firm held by our own employees, we think that's in the best interest of everyone concerned.

So look, we are pleased to come out of the gate with a strong quarter. Our first-quarter 2014 revenues of $114.5 million were up 91% year over year. Adjusted pro forma net income for the first quarter was $28.9 million, with net income available to holders of Class A common shares of approximately $0.37 per share. This was the strongest first quarter in our Firm's history.

Additionally, on a trailing 12-months basis, our revenues were almost $466 million, which represented the strongest 12-month period in our Firm's history. I think our Firm's first-quarter results are particularly strong when you consider that the number of global completed M&A transactions declined by 16%, and overall global completed M&A dollar volume was relatively flat versus last year.

Remember that when we think about fee events, the trend in number of deals is often more relevant than the trend in dollar value of deals. As I like to say, the fee pool on a $10 billion deal is excellent, and we'd love to be part of it, but the fee pool on 10 $1 billion deals will definitely be greater in the aggregate. So number of transactions is important.

As many of you heard me say on the roadshow last month, we believe there are a number of market forces that are creating a unique opportunity for us at Moelis & Company as well. First and most importantly, our clients want unconflicted advice and the opportunity to sit with an experienced banker whose only focus is giving the right advice to create shareholder value. And that trend continues to get stronger and stronger.

Second, we think the regulatory, political, and social pressures faced by the large financial conglomerates create enormous opportunities for us to hire talent and compete for clients. Third, there are cyclical trends which we believe will benefit the Company. For example, we believe that the improving global economy and growing CEO confidence is starting and will continue to spark a steady rebound in M&A.

And additionally, our second large business, the restructuring cycle, driven possibly by higher interest rates as a result of the rebound, could result in a growth opportunity that actually could coincide with an M&A rebound. The most important thing, though, is we believe our differentiated one-firm culture and our economic model put us in a great position to take advantage of these strong secular and cyclical tailwinds.

Our approach is centered on global connectivity and integrated advice, and our whole team is driven by an intense focus on providing the highest level of senior attention to every client, regardless of size or situation. This compelling value proposition is helping us to win new clients and keep clients coming back to us.

In the first quarter of 2014, we continued to broaden and deepen our client base with 110 fee-paying clients compared to 97 in the first quarter of 2013, and 24 clients paying fees greater than or equal to $1 million versus 20 in the same period the year before. We reward our team for driving this success. However, remember that we do not have a direct payout commission structure. Our compensation program is largely discretionary. We accrue a bonus pool on a quarterly basis, but we decide appropriate bonus payments at the end of each year. This allows us the flexibility to link pay with performance, and that allows us to measure both quantitative and qualitative execution terms and process.

This bonus pool is the largest single cost item on our P&L and is largely variable. We believe our discretionary approach to compensation leads to a much stronger long-term alignment with our clients, and we believe that creates value for our shareholders. It is also the key engine for our internal talent development, an important component of our franchise value. In fact, at the beginning of this year we made five internal promotions to Managing Director, which makes our internal promotes almost 25% of our talented MD population.

Over the last seven years we have taken great pride in our ability to build an entrepreneurial business with healthy margins and a scalable platform that will drive value for our clients, our shareholders, and our employees. As our platform continues to mature and we further build our global brand, we expect long-term growth to be driven in part by upside in the European markets, where we have a strong team of over 60 advisory professionals.

We will also drive our growth through targeted sector hiring. For example, in the first quarter this year we brought Perry Hall on board as a Managing Director. His deep retail experience bolsters our capabilities in that sector, and we are seeing clients increase their M&A activity as a means of alternative growth.

And just this Monday we announced that Brian Callaci will join our Chicago office in July to enhance our coverage of the food, beverage, and consumer sector. Brian is a seasoned consumer M&A banker, and we are thrilled he will be joining us.

We also plan to continue disciplined regional expansion. In the first quarter we expanded into Latin America with a new office in Sao Paolo, with the appointment of three industry-leading bankers there: Otavio Guazzelli, Jorio Salgado-Gama, and Erick Alberti. Excuse me for the lousy Spanish accent. The interesting part about that is we took our time expanding into Brazil.

We began that process almost three years ago. And we could have hired a team, but it wouldn't have been a good time for our shareholders to go in. We spent three years evaluating the market and ultimately added this team that we have gotten to know over several years. They are already off to a strong start in terms of origination.

Our approach to Brazil demonstrates our focus on growth opportunities where the cost of entry is reasonable and attractive return on investment is more likely. We truly have a differentiated culture and approach. Our only focus is giving the right advice to help create value for our clients, and our strong financial discipline and ownership mentality leads to an intense focus on creating value for our shareholders as well.

With that, I would like to turn the call over to Joe Simon to discuss the first-quarter results in more detail.

Thanks, Ken. I trust that you have all seen the press release that we issued this afternoon, so I will just take a few minutes to highlight a few key metrics. As Ken touched on, we presented our first-quarter results on an unaudited adjusted pro forma basis. The pro forma financials are presented on a basis consistent with those in our IPO prospectus in order to give you a better perspective on how to interpret our current-quarter financials.

Beginning with the second quarter, our GAAP results will reflect the corporate tax provision attributed to the earnings allocated to the public Company. The pro forma presentation reflects the exercise in full of the underwriter's option to purchase an additional 975,000 shares of Class A common stock from the Firm. It does not factor in the additional cost that we will incur as a US publicly traded company.

We have also made certain management adjustments to our pro forma results to take into account changes in our equity compensation plans that occurred upon our IPO, which I will get to in a minute. We combined a detailed account of the adjustments made and a reconciliation to our GAAP financial results in our press release and our 10-Q filing, which will be filed with the SEC by the end of May. Our goal over time is to minimize the number of adjustments we make to our GAAP numbers, but in connection with our IPO, we believe certain adjustments are necessary to better understand our performance.

As Ken mentioned, in the first quarter total revenue was up 91% to $114.5 million. Compensation and benefits expenses on a GAAP basis were $70.4 million, resulting in a compensation expense ratio of 62%.

Following our IPO, we accelerated divesting of equity held by our Managing Directors and subjected our MDs to a minimum 4- to 6-year lockup on their pre-IPO equity. This acceleration, which occurred in April, will initially result in a lower total comp run rate expense if you exclude the one-time acceleration charge. This is due to the lower level of ongoing equity amortization expense that results. The equity amortization component of our comp expenses will then slowly build back up as we grant new annual equity incentive awards.

In order to give you a better idea of our expense profile going forward, we have adjusted our first-quarter 2014 pro forma compensation expense to remove $10.3 million of equity amortization expense related to the accelerated awards. On this adjusted pro forma basis, our comp expenses were $60 million, resulting in a comp ratio of 52% for the first quarter of 2014.

As we said in our roadshow, our targeted long-term adjusted pro forma compensation expense ratio is between 57% and 58% of revenues. And we expect to be in that range in the next few years as annual equity incentive compensation is granted and accumulates in recurring amortization expense.

First-quarter non-comp expenses were $20.1 million, above first-quarter 2013 non-comp expenses of $17 million, largely a function of increased client activity and business expansion. As a percentage of revenue our non-comp expense ratio declined significantly to 18% this year versus 28% in the first quarter of last year. This result demonstrates the operating leverage in our business.

On an adjusted pro forma basis, assuming an effective tax rate of 40%, our first-quarter 2014 provision for taxes was $4.2 million. Our adjusted pro forma net income was $28.9 million, with net income available to holders of Class A common shares of approximately $0.37 per share.

Moving on to the balance sheet, our operations require minimal capital; and in connection with our IPO, we reduced our excess capital through a distribution to our pre-IPO partners. On an adjusted pro forma basis, we ended the quarter with $78.4 million of cash and no debt.

With our capital-light model, we are targeting a roughly 50% dividend payout ratio and intend to pay a quarterly cash dividend of $0.17 per share beginning in the third quarter of this year, subject to Board approval. Over time we intend to repurchase shares in order to keep our fully exchangeable share count of 54.3 million relatively flat.

Now before we turn to questions, a few comments on our long-term financial targets. Please note that we do not intend to update guidance. The key levers to our financial performance our revenue and comp expense.

As we have mentioned, we are targeting a long-term annual compensation expense ratio of between 57% and 58% over the cycle. We also intend to target a non-compensation expense ratio of between 15% and 18% over the cycle. With our global footprint, scalable platform, and strong value proposition for clients, we believe we are well positioned to achieve these long-term targets. And we would now be happy to take any questions.

(Operator Instructions) Alex Blostein of Goldman Sachs.

Good evening, everybody, and congrats on the first quarter. So, Ken, a quick question, I guess, on the broad M&A environment first. We've seen a significant amount of pickup in the cross-border activity year to date. I was wondering, when you speak to your client base, what you are hearing from them is the key driver behind these decisions. And maybe you can speak to your capabilities to benefit from this trend?

Thanks, Alex. We are hearing a lot about cross-border. Some of it happens to be driven by these tax inversions. I have to say, there's a large component where people are looking to take advantage of capital that they have stranded offshore that they can't repatriate. And some of it is just to take advantage of moving corporate headquarters into better tax environments. And some of it is strategic.

But we do see it. We were involved in a couple of significant cross-border transactions in the first quarter. Actually, Japan into Europe was one of the largest -- Japan into Germany -- deals we were involved in.

So I think, look, we have 15 offices around the world; and I think one of the main reasons we set up the Company as a one-firm firm -- and by that we mean we don't keep P&Ls by country, and we don't have commission structures -- is that we very much want active dialogue between offices and around the world. So I think we can be involved in a significant amount of cross-border activity and always have been.

And yes, I continue to believe it will continue to play a significant role, especially if capital keeps getting stranded outside the United States for tax reasons and arbitrage between tax environments continues to be available.

Got it, thanks. And then a quick numbers question -- I guess it looks like there's a small loss in the equity method investment. I'm assuming it's related to the Australia JV. Can you speak to that for a second and just give us a sense of what happened in the quarter?

I think the Australian JV did have a slow first quarter. I guess I can't -- I have to be very careful here, Alex, I guess, because we are in the quiet period. So I will probably have to be careful of what I say about there.

Look, I think they feel like their year is on track. In any -- look, they are a smaller operation then we are, obviously, by a factor. And as you get smaller in our business, the quarters get lumpier and lumpier, and you can have a bad three months. And as the denominator gets smaller, it just gets more of effect. And I think that's what happened, because we feel very good about the operation. And I think they just had a slow quarter.

Got it. Thanks so much.

Betsy Graseck of Morgan Stanley.

So a big-picture question and then a numbers question. On big picture, just wanted to get your understanding on how you are thinking about the M&A environment as we progress over the rest of this year. Obviously, we've had some pretty big headline numbers, as you just described, in a couple of key sectors.

How do you think this is going to migrate in terms of number of deals? Because the headline's dollars are obviously up significantly year on year, number of deals not up as much. Do you see any kind of migration into more activity as you go into the smaller companies? And then could you give us a sense as to how you are seeing migration industry by industry?

See, I think that the market -- as we've said, I believe the M&A market is steadily improving. There's a lot of confidence, I think, especially in US corporates. So this idea that they are lacking confidence I don't actually believe. I think people feel like they have a very good understanding of their own companies and want to do things.

I think the size is -- there are a lot of large companies, I think, coming together to try to take costs out. Very opportunistic to do cost-synergistic mergers. Especially in a low GDP growth environment, you are going to see that.

But I think the thing that's going to pick up the number of deals in more middle-market transactions -- and I've said this -- is the readmission of asset allocation into private equity. There was a time period there from about 2009 to maybe 2011, maybe even 2012, where I think the asset allocation into private equity and alternatives -- which is, by the way, a lot of -- there's a lot of private equity funds and a lot of money, and it does have a lot of velocity in that money for transactions. So I think during that time period from 2009, 2011, or 2012, people were concerned about getting reallocated money and ability to raise funds.

That has changed rather dramatically, I think, in the past year. And as private equity gets more and more confident that there's funding and desire to be, and there is, a couple of things will happen. The velocity of how they spend their money will pick up. That amount of money going into those funds will pick up. And, by the way, their ability to sell existing portfolio companies will pick up.

And I think we probably underestimate how much of the middle market, if you define the middle market as anywhere from even $500 million to $5 billion, how much of that is driven by private equity or, as I say, private equity provoking a transaction that leads to a strategic -- meaning they might start a transaction that ultimately leads to a strategic winning a bid or overbidding. But it's provocative capital; it's energetic capital. And I think it will move the number of transactions.

Okay. And anything in particular on the industry front? Because we obviously have seen a tremendous amount of activity coming out of the healthcare space. Just wondering if there's any other waves you see coming on an industry basis.

I thought health care -- look, I think health care will continue. Whenever you have sort of a -- like the Affordable Care Act change, the very nature of how you deliver 16% of the economy or so, I think you are going to see people reposition. So I expect that to continue.

But we are seeing it kind of across the board. Look, energy continues to be a strong place. But I think it's -- I don't want to say every sector is, but I see a pretty broad desire. The conversations, I think, are pretty broad.

And I think you are right; healthcare is the standout in terms of the activity level. But I think behind that, you have a lot of conversations going on. And it's hard to cover every single industry, but I call it a broad-based recovery in M&A conversation.

And then just lastly, on the numbers, obviously headcount is the key driver and variable in driving your revenues. You hired five MDs so far this year.

Could you talk about what your plans are for the rest of the year? Are there any other areas or buildout of coverage in different industry verticals that you are looking into? You highlighted earlier the number of MDs promoted and internal MDs as a percentage of total, which was helpful. Just wondering how you're thinking about buildout from here?

We are. We are seeing, for reasons that go to some of what I was talking about -- regulatory pressure, pressures on the larger competitors -- we are seeing the availability of some talent in a way that I don't think was as obvious a year ago. So that's what led us, I think, to be able to hire five -- you are right; we hired five counting Brazil. We also promoted five.

Look, we are continuing to look. We are interested in healthcare because of what you said, and we are interested in certain geographies. We think getting bigger in Europe in anticipation of a recovery would be attractive.

And I don't want to go into too many very specific sectors, but I would say we could do another two or three or four, but -- something along that order of magnitude from here forward. Sometime around the middle of the summer, you know, you shut down for the year, as it becomes pretty expensive to take some money, and kind of guard and lead, and all that -- much greater than the middle of the summer.

Okay. So maybe you are halfway through your hiring plans for the year?

Yes, that would be -- we might be slightly past halfway through. But as I said, I think things are happening right now to certain of the large companies that might make it more opportunistic to be more aggressive. So I'm going to hedge a little bit on it, because I think things are happening right now in some of those areas that might allow us to do a few more people than we had planned for.

Got it. Thank you.

Brennan Hawken of UBS.

This is actually David Eads filling in for Brennan. A question on comp here -- you guys had a 62% GAAP comp rate this quarter. I realize that there's going to be a lot of noise in that line the rest of the year. But is the 62% a way we could think about how the comp awards for the year would be trending?

This is Joe. With respect to the 62%, again, what we would recommend is that that includes an element that is associated with the equity that we accelerated after the IPO. And so there's a form of a reset going on.

And so what we've done is we've taken that amount out of the first quarter. And we think that the right starting point is the 52% that we are publishing, from which we will grow over the course of the next couple of years as we grant annually incentive equity comp. So I think we are looking at a target of 57% to 58% over a longer term. We start at 52%, and with time that will ultimately emerge, the 57% to 58% rate.

So the 62% included some costs that were over and above what your normalized comp would be? Is that right?

Yes. That's what the $10 million reduction is; ultimately, it's the reset. And now we will basically proceed from this point forward.

Okay. And then on the longer-term target, should we think about that as kind of a through-the-cycle target, where you might be above or below, depending on the cycles and the variance there? Or are you going to stay right in that range?

Well, look, that's our target range. And we intend to hit those numbers.

There are times, if we have -- as I said during the road, we've been in business in seven years, and we're hoping to experience a bull market in M&A. During the last six it hasn't exactly been.

And we would probably go below that. But that is our target, and that's where we're -- I think you can -- that's where we are targeting to come out. And I think there may be slight aboves and slight belows, but that's where we are targeting.

Great. Thanks for all the color.

Ken Worthington of JPMorgan.

Just a couple of numbers questions. And I apologize if this is in the release; I didn't see it. Where did you end the quarter in terms of bankers and MDs?

Hold on, I'm getting the number. We ended the quarter with 317 bankers and 87 MDs.

Okay, great. Thanks. And then just on comp, how much was in compensation this quarter -- the adjusted number, the $60 million and change number -- for payroll and other seasonal expenses? Just as we think about fine-tuning here, how good a number is that?

I would say that I think about it as fixed and variable. So there's obviously a bonus provision. And then in fixed, there are salary benefits, and there's some residual equity from those awards that we didn't accelerate. So it's probably about 50%/50% with respect to the adjusted pro forma number.

Okay, great, thanks.

Glenn Schorr of ISI.

A question on the sponsor side of the business, and maybe it's a two-parter. One is: do you see them coming in for an increased percentage of deal activity? And then, more importantly, you have seen some of the banks pull back a little bit on the lending side, just seeing pricing and terms getting back towards peak levels. And I'd just love any perspective you have there -- if that's going to be a limiting factor on their contribution to activity levels, or it's not quite as bad as the peaks. Thanks.

Look, I don't know if you were on before. I did say the sponsors are coming back in, and we see them -- I think a lot of is going to be driven by the ability to reload the gun if they spend. Our sense is that institutions around the world are reallocating to alternatives, especially private equity, illiquid alternatives.

And that will give them renewed confidence to go out and do two things that are important to us: sell portfolio companies, especially on the middle-market side; and participate in larger transactions and be a little more aggressive. Now, you brought up an interesting thing. We are seeing some regulatory pressure on loans beyond a certain leverage ratio.

It's kind of a new phenomenon. Again, since we don't make those loans, we see them in the market. And I can't say I have an opinion yet as to what effect they will have. But we are -- there is a transaction or so that I've been involved with where, all of a sudden, the inability to go above a certain ratio of credit before a loan is automatically criticized under some of the new regulations could have an effect. And it's something to watch, but I'm not sure I have a good opinion on it yet, because usually capital markets are pretty effective at getting around that and providing capital to do economic transactions.

Yes, and I guess there's not that many getting done at six times leverage, either. So that's helpful.

Maybe last one, again on the sponsor side, is: I've seen times where -- those companies have a tough time in the market when people are on the bandwagon of that rates are going up, thinking that it's going to slow deal activity. I'm not sure I agree with that, but I'm curious to get your thought on just literally the absolute level of rates and its impact on levered transactions.

I think in the leverage market, rates are so much lower than -- most of the people who have been successful in that market over the last 20 or 30 years -- a lot of those participants have been around a long time. As I saw one say, they could remember paying a quarterly coupon on some financing 30 years ago that was equal to the annual coupon of today.

So I think the leverage finance rates down at these levels -- they can move, and I don't think they are going to intimidate any of the private equity guys out of doing a transaction, because these rates are so unusually low. I, for one, by the way, don't think rates are going to move that dramatically. And probably the only -- I can say this now, because we are public, and it's behind us, but I do think the IPO market window might not stay open for some of these companies. And we might see more M&A vis-a-vis the ability to take a portfolio of companies public, given what I think I saw happen to the IPO market right as we were attempting to enter it and exit it.

I hear you. Thanks, Ken.

Vincent Hung.

You said in your presentation that 42% of MDs have been MDs at Moelis has selected in three years. And so in terms of the revenue growth that you experienced this year, how much of this comes from the 42%?

Well, look. First of all, let me make sure you are clear on this. So they have the MD title because some of those are internal promotes. So we use that they have been MDs for three years or less; some of them have been with us and got promoted, so they are new to the platform as well as MDs.

Look, I think a lot of it. The fact is we are about to come on our seventh-year anniversary as a firm. The brand and our ability to get ourselves in Board rooms showing up is improving every day, as people see what we are capable of.

And the way we operate the Firm is we put teams -- we really encourage people to pitch and advise their clients in teams -- so to bring M&A expertise, sector expertise, regional. It's why we don't pay a commission structure. We'd rather have three people in a room delivering all the expertise that we can versus the other, which is often somebody trying to protect their direct -- their payout.

And as people come here and they learn the -- part of it is a new person we hire finds out that we have great bankers in India, Hong Kong, Dubai, and what they're capable of. And as they all come together to bring that to the benefit of their client, I do think you are seeing the maturation of it.

Can I tell you how much is the 42%? I don't think I can do that. Can I tell you that I'm seeing the maturation and the momentum of that being successful every day? Yes. But I don't think I could tell you how it goes right to that 42%.

Okay. And the next question is: can you just give us a bit of color as to how your restructuring business has been doing year to date?

It's doing, I think, fairly well in a -- it is doing very well. The interesting part is it's a low default rate market. As I said, it's hard to default on zero interest rates.

So I think people -- there's a lot of issuance of paper. And so even in a low default market, there's a lot to do because there's so much paper out there that's been issued over the last three or four years. I think the Group -- I don't have the exact rankings, but I think they continue to be in the top one, two, or three, depending on who and how you rank them.

It's a great Group. We have not -- if anything, we have invested more in the Group. We think that the level of issuance over the last three years -- and as I think Glenn Schorr asked the question -- the reach, in terms of leverage now higher and higher, we do think it some point that is going to be a very, very large business, at some point really turn up. But for now I'd say they're doing very well in what is a lower default rate market than we would have maybe expected had rates not been driven to a zero-interest rate environment by the Fed.

Okay. And there's been a lot of publicity recently about the so-called one-man-band kiosks, this new brand of boutique investment bank that seems to be muscling in on certain large deals. Do you see these guys as any sort of threat to your business?

Yes. Well, look, they are all a threat to tomorrow's business, today's business. These are good bankers, and they have relationships. And when you have a fragmentation of the industry -- which is, I think, a little bit happening from the large competitors -- people have great relationships. And those relationships have built over a number of years. And I think they are going to find a way -- people want to deal with their relationship banker. Look, I think -- and these are good bankers, too.

I think over a long period of time, though, I do believe most companies want to deal with an institutional relationship. And that is over a longer period of time. There's more depth to be had when you can get the information globally, when you can ask somebody about what their office in, again, Europe thinks is going on.

So I do think it's -- over time it's important to have a global footprint to deliver the information that a corporate Board and a corporate management team over a long period of time will want. But, look, I think these excellent bankers that are coming out and their clients desire their personal opinions -- I think just proves the point that advice is a very different product.

People ask me this all the time. It's a very different product than capital or sales and trading. It's a very different thing. And people want advice from a relationship they're comfortable with and they trust. So, yes, I think on any single piece of business on any single day, those people have a very good chance of continuing their relationship with their clients.

Okay. And then just lastly, the IPO has helped bring you guys a lot of helpful publicity. Has this in any way increased the brand recognition for you guys? Have you seen any increase in discussions from new clients?

That's really hard. We talked about that the other day, because nobody ever calls you up and says, hey, we read about your IPO. Can we hire you? It just sort of happens.

We actually think we can discern one or two things we might not have been in the room on. I can't specifically tell you those.

But I think it's actually more in the recruiting side. And that was one of the reasons why we went public. We think having illiquid currency and being able to compensate somebody who's leaving behind unvested stock in a prior employer -- and us now having a path to liquidity on the replacement of that equity is a real value-add in our discussions.

And so I think we are seeing it more on the banker side, that we can discern. But I believe it's happening a little bit on just general clients.

Okay, great. Thank you.

And this concludes our question-and-answer session. I would like to turn the conference back over to Ken Moelis for any closing remarks.

Look, I want to thank everybody for your time this afternoon. It was kind of a historic event for us, our first call. And I was told we are in the quiet period, so I can't freelance as much as I wanted to. So the next call will be a little more open.

I want to reiterate that I think we have the best culture and structure on Wall Street to take advantage of delivering high-quality advice and service to clients. I think the markets have some great secular and cyclical tailwinds. And we're going to try very hard to take advantage of those.

I appreciate all the support you've given us, and I look for to speaking with you all soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.