Moelis & Co (MC) 2022 Q1 法說會逐字稿

Good afternoon, and welcome to the Moelis & Company Earnings Conference Call for the First Quarter of 2022. To begin, I will turn the conference over to Mr. Chett Mandel, Head of Investor Relations.

Good afternoon, and thank you for joining us for Moelis & Company's First Quarter 2022 Financial Results Conference Call. On the phone today are Ken Moelis, Chairman and CEO; 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 SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements.

Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our Investor Relations website at investors.moelis.com. As many of you know, this is my last earnings call with Moelis. Matt Tsukroff will be my replacement and you should contact him if you have any questions.

And with that, I'll turn the call over to Joe.

Thanks, Chett. Good afternoon, everyone. On today's call, I'll go through our financial results, and then Ken will comment further on the business. We achieved adjusted revenues of $298 million in the first quarter, representing an increase of 13% of the prior year period and our largest first quarter of revenues ever. The increase in revenues was primarily attributed to growth in our M&A activity and higher average fees earned on our completed transactions. Moving to expenses. Our first quarter comp ratio was 59%, largely consistent with our comp ratio for the past 2 years. Our first quarter non-comp ratio was 12%. This all combined to produce a quarterly pretax margin of 29%.

Moving to taxes. Our underlying corporate tax rate was 27.1% for the first quarter. Regarding capital allocation, year-to-date, we have repurchased approximately 2.4 million shares, totaling $115 million. Approximately 50% of the buyback was in connection with RSU tax withholding and the other 50% of the buyback was pursuant to open market purchases. In addition, the Board declared a regular quarterly dividend of $0.60 per share. As always, we remain committed to returning 100% of our excess cash. And lastly, we continue to maintain a fortress balance sheet with no funded debt.

And I'll now turn the call over to Ken.

Thanks, Joe, and good afternoon, everyone. Our new business activity remains strong, and we continue to see positive momentum in the franchise. The macro environment has been quite volatile over the past quarter. As I mentioned on our last call, the time to completion of deals has generally elongated. Our M&A platform continues to be the largest driver of activity. There's been no slowdown in clients seeking advice as innovation and disruption continue to fuel transaction dialogues across the world.

Our non-M&A revenues in aggregate remain in line with historical averages. Our restructuring team has begun to have more conversations as there have been some signs of distress in the market and our capital markets franchise is expanding its capabilities. As volatility adversely affects plain vanilla capital markets and market participants, market participants start to require more structure, and that plays directly to our strength. We have built a fully integrated coverage model across all of our products, which allows us to provide innovative solutions to our clients.

And finally, we continue to grow our platform through internal talent development and key external hires. The volatility that we're seeing across the globe will require business leaders everywhere to make difficult decisions. We are in the business of advising clients through difficult decisions. Volatility and rapid change increases the number of decisions that need to be made, and that's why I remain very optimistic about the future of Moelis & Company.

Before we go to questions, I'd just like to thank Chett for all of his contributions. Chett, you've done a great job and everyone at Moelis, we wish you a really good next adventure and hope to be your banker as well.

So with that, we'll open it up.

(Operator Instructions) The first question is from the line of Brennan Hawken with UBS.

Ken, good to hear that you're feeling really, really good about the business. We're starting to -- we heard from another M&A focused firm this morning that there's -- they're seeing some time lines extending. This is similar to the comments that you made on the last quarter call. There's increased uncertainty in the environment. And there's just a little bit of lack of clarity on exactly how some of the geopolitical risks could end up impacting the velocity in so far as M&A and advisory is concerned. What's your view on that? And how do you think that could end up playing out here as we move through the year?

Yes. Well, I agree with that, Brennan. And we're definitely seeing an elongation of process. And I said it on the last call. What I probably didn't understand as well is it probably started elongating even in the fourth quarter. So some of that elongation started as volatility started in the middle of December. And so what that happens -- what happens is people either delay coming to market or it possibly takes an extra week or 2 or a few weeks to come to conclusion on transactions. And so we do see an elongation where when there's a bull market, when values are increasing daily, transactions tend to get done at a greater speed.

The alternative to that, and we are seeing that. I don't want to underplay that in the short run. But what's also happening is the volatility, and it's happening in supply chains, in industry energy, it's happening in interest rates, it's happening in technology. It does create decisions. And if you think about the business we're in, we're in the business of advising major institutions on making decisions that are outside their normal course of business. And so the top of the funnel, I think, is large as it's ever been. And so again, it's one of the reasons we never guide short term because these transactions have a life of their own. But I'm very positively inclined as to the number of decisions that will have to be made and our ability to help people make those and the company going forward.

Okay. Just focusing in a little bit on the sponsor market. This is a part of the market that's really important to your franchise and you've had a lot of success there. And so could you maybe comment on what you're seeing in -- among that cohort and whether or not -- I would assume that the trends that you're commenting on would apply to sponsors as well. But are there any parts of the market where you're seeing sponsors more active? Or you're seeing some change in behavior where you're seeing like bigger equity checks as opposed to financing? Is financing getting tighter? What general conditions are sponsors dealing with right now? And how do you see that maybe impacting activity?

I'd say sponsors are pretty aggressive. I don't see withdrawal of anything. I mean, I think the sponsors are as aggressive as ever. Look, the interesting part is the amount of capital going into sponsors is increasing at a very rapid rate in different pockets too. Some of them -- they're going into new lines of business, new strategies. I think I started talking about literally the fact that we're going to see sponsors and private equity disintermediate the banks in transactional credit in the next few years, and I think we saw it in the last few months, as several of the largest buyouts were financed through alternative asset managers almost 100%.

So the one negative that we might be seeing, Brennan, is if you're sitting on a quality asset, and you think -- you might think today, April 27, whatever today is, maybe it was a volatile week and we're going to put off launching the sale of that asset to realize price by a week or 2. That's what I mean by elongation. But look, at the end of it, they are going to want to monetize that asset. So that asset will come to market. It probably won't sit like a strategic could sit with the asset for a year or 2. That's not what happens here.

And secondly, they see lower prices and volatility as an opportunity to put capital to work. So again, I continue to see sponsors being very active on their front foot and very little diminution in the pipeline from sponsors. By the way, not -- sorry, I shouldn't put it in the negative. Our pipeline is above where it was a year ago, and we had a pretty good 12 months following that. So we're seeing a lot of activity.

That -- sorry, Ken, that last comment about your pipeline, it's above where it was a year ago, and that's for sponsor specifically? Or is that firm wide?

No, sorry. In total. In total. I do not have the answer on my…

In total?

In total.

Got it. Got it. So not trying to slice it up or anything.

No.

The next question is from the line of Ken Worthington with JPMorgan.

If we look at the pipeline in the public data and we think about the deals that are supposed to close, it seems to look like that the pipeline of deals to close is slowing. But that doesn't really seem to exactly jive with how you're describing the pipeline, although maybe it's -- the pipeline is extended, so maybe that's sort of how the 2 data points converge. So is that a reasonable explanation here? The pipeline is as strong as ever, but because it's being extended, it's the same number of deals closing over a longer period of time? And then maybe to kind of flesh out the pipeline. Is the nature of the pipeline changing at all, either by geography or sector or participant type? Or is it largely as it was a year ago at this time?

So I think your first point is the right one. The pipeline -- pipelines are gross fees that you have in backlog. Those are in different stages of completion. And again, I don't know the numbers you're looking at. So Ken, I don't see the public numbers. In fact, now that Chett leaving us, you can call him and ask him to interpret that from outside. But the -- but that would be consistent with what I call an elongation of a process if that were to happen. And we might have been awarded the assignment to go sell company X, and that company could have planned to push off the market last week. And they could have decided, "Hey, we're going to wait another week or 2 to see how the markets come out and to see the market settle down." That's just a 2- or 3-week elongation. That's what happens in volatility.

We're pretty confident all of that is coming to market. So we feel very good about the pipeline. In terms of the makeup of it, it's -- as opposed to this time last year, it's definitely down in backlog on restructuring. And in M&A, we would consider it a better pipeline because it's up in sell sides, which -- in M&A, sell side is a better probability of closure, meaning you have the asset. There could be 5 bidders, but you know you're going to sell it. When you have a buy side, there could be 5 bidders, so you're not sure you're going to transact, whereas if you are the seller, you usually -- you're pretty sure you're going to transact.

Now that's usually where you want to be. So I feel like the backlog pipeline I commented on being as good if -- and that's if everybody decides to go to market and the volatility doesn't get to the point where people keep pushing it off. So those are the -- that's the combination of events that's going on.

Okay. If -- in your conversations with clients, there seems to be a number of factors that may be contributing to the extension. We've got rising rates. We've got inflation. We've got supply chain. We've got Russia. And I assume this -- each factor may be contributing differently depending on the sector and the geography of the clients. Is there one or is any one of those a bigger factor in dialogue with CEOs and decision-making than the others? Or are they just sort of all factors that are being combined together? So I think about it like as we get resolutions to these different factors over time, which should we be paying more attention to in terms of maybe shrinking the time for these deals to kind of come to market?

I think when you put it all together, the fundamental driver is all those activities resulting in price volatility. Now you could see interest rates, but we don't see that yet. Interest rates do not seem to be driving any transactions to non-closure. Capital is available and rates are still historically low enough to fund transactions. So -- but I think when you aggregate the issues that you talked about, what's happening is, and all you have to do is look back a couple of days is you're having some very significant price volatility, price volatility, changes, people's desire to go in or market and find the discovery of price for the asset that they have. If it's a quality asset, they want to discover the price in an environment where somebody is willing to pay for that quality asset.

And you could also get into a situation where you've launched the transaction 5 months ago, you have indications of value from 5 months ago. You're coming down to the finality of it and the comparable companies or comparable prices have changed enough that your buyer and seller no longer agree on where the outcome of the transaction closes that. So look, it's a long way of saying. It's -- those activities you're talking about, they've happened pretty significantly. Interest rates have changed pretty rapidly. Russia invaded Ukraine pretty quickly. And so these things had sharp implications to prices. And I would really attribute most of what we're talking about to the volatility of price and value.

Okay. Okay. Perfect. Just maybe last question. You operated at 59% comp ratio this quarter. At -- planning for the best or hoping for the best planning for the worst, at what level -- what revenue level this year would that comp ratio start to move higher? How should we think about the downside protection to that comp ratio?

At this point, we're pretty confident that that comp ratios get on under a pretty wide range of outcomes in and around what we're expecting, seeing, planning for. So I'd just say I'm confident that 59%. Barring some catastrophe, I think it covers a lot of outcomes in the range of expectation. 59% is going to be fine.

The next question is from the line of Devin Ryan.

Great, Ken and Joe. I want to come back to the conversation you're just having on with the confluence of factors impacting M&A, but maybe hit it from the restructuring angle because you did mention some pockets of stress or at least you're starting to see those. Can you maybe talk a little bit about where that is? And then as we think about rates kind of normalizing here, a couple of hundred basis points isn't much for a healthy company, but for a company that's less healthy and all the other dynamics that may go along with that, what is your expectation in the market for how maybe the restructuring opportunity could evolve just based on kind of the implications of what higher rates mean for kind of the broader economy?

So we're not seeing a restructuring boom yet. But you're right. There's a lot of paper out there. There's a lot of issuers. And look, even without rate movements, just operational issues that are individually expected, 1% or 2% of companies have their own particular issues. Later on 200, 300 basis points of rates. And yes, we're going to see it. I would say right now, the restructuring team is working, I think, more on liability management, kind of shifting around those obligations in a market that doesn't need to go through or get near more of them. I'm just speaking in the aggregate. More of them are how to address liability management as -- but not in the context of the next chapter 11 could be around the corner.

I do think, look, there's a lot of paper, you only need 1% or 2% to get effective. I mean if we had a 2% default rates, all the restructuring teams throughout Wall Street would be at 100% capacity because of the number of -- the large amount of paper out there. So as I said, I think the restructuring business is warming up in the bullpen, and I expect we'll get a full -- they're going to be called in. And it's just a matter of what confluence of things triggers it. But it's going to -- I think it's going to happen. I think you have too much -- there's too much change and people lay out their Excel spreadsheets, and they do transactions based on pretty predictable or an attempt to predict 5 years of cash flows. Well, when you had supply chains, interest rates, energy costs, technological influences, moving this rapidly, it would be unusual if 1% or 2% of those models didn't turn out to be wrong.

Got it. So I mean just to put a fine point on it, like in that scenario, you still can have a relatively healthy M&A backdrop, but you're starting to see just stress around the edges for the companies that maybe weren't in a great spot to start with. And this is just the final blow. Is that a way to think about it?

Yes. Look, in a normal stress market, I think we will see that. And look, the last hyper distressed was the '08, '09 market and M&A did kind of dry up for a while. The opposite happened in the COVID distressed market. My guess is this market will result in both markets operating. And I'll tell you, I come back to the fact that there's a new market for M&A that is -- it's not a new market, but it's so substantially impacted by the flows into private equity and the activity of those firms that they will continue to transact. There may be some strategics that don't want to transact for a while. But I do think the firms that are in the business of transacting for private capital will transact. And then you will have both -- you can have both markets healthy. Hard to call the restructuring market healthy, but you could have both markets busy at the same time.

Yes. Okay. Great. And just a quick follow-up here on the capital markets business. So I appreciate this has been a focus of expanding the footprint there, and we're also coming off of a phenomenal year for that business in 2021. So just trying to think about what -- this is maybe a question to answer, but like what normalized looks like? Is it right to think about that business growing off of 2021 just because you're expanding the footprint? Or are conditions just it was kind of like 4 great quarters in a row for that business?

So it's just a little bit of a high bar for the near term and then you kind of resume growth off of that. I'm just trying to think about how -- and then the last piece of it is I also understand that you guys are not just connected to kind of broader capital raising or capital markets. You can be active in maybe more dislocated markets in that value. So I'm just trying to get a little more color there because it's a question we get from investors.

Yes. I'm very bullish on capital markets. The growth -- I think the growth could be -- is substantial. It is -- I'm expecting it to grow this year. And by the way, that is with a headwind of having a much smaller spec capital market activity. Yes, I just think the ability -- there are large pools of capital. They like structured finance. Those require real handholding, much more so than trading floors and the way the world was structured or is structured. I think we could -- I'm very bullish on that business. I'll just leave that I expect it to grow this year. And I would hope it would become -- continue to grow. Let's just leave it that way. We have large growth plans for capital markets.

Got it. Is there any way to kind of size out that business, whether it's revenues or percentage or anything else just to help us?

I think that's getting to be -- I'd say, in the first quarter, I think it's getting to be close -- it was close to 15% of the business. I think I'm right about that. Joe might stop me if I'm wrong.

Yes. That's right. That's right.

The next question is from James Yaro with Goldman Sachs.

So your revenue this quarter was significantly higher than the Dealogic and website data. I would expect this reflects continued growth outside of traditional M&A. You obviously just cited the 15% for capital markets. When you think about your non-M&A businesses, would you say these perhaps have more great -- have greater durability versus M&A revenue or perhaps more countercyclicality? And thus, are they something we can view as a bit more sticky when we plug in your revenue run rate going forward?

Again, I never really try to bridge to the public markets. So I don't have a great answer other than to say we advise on a lot of -- as I said, there's a lot of decision-making going on in boards that might not result in the transaction that can be measured the way you're measuring, and I like that. I think more and more under the complexities of the world were being brought in to advise on things that you might not consider traditional M&A but do involve the future of the company and how they're positioning themselves. That could be the answer.

But I will say that I think our M&A was extremely strong this quarter. I don't know why it didn't show in the numbers you're looking at. But again, I would ask you to contact Joe afterwards and go through what it is we're missing. Other than, I do think we're doing things inside of corporate strategic activity that may be more broad than is generally recognized. When I say broad, it just doesn't result in a definitive transaction of purchasing an asset X or selling asset X, and maybe that's not listed.

Okay. That makes sense. Maybe just turning to a world in which we did see sort of a deeper economic recession. To what extent do you think your restructuring business could offset a decline in M&A revenue? And then if we just dig in a little bit on the capital advisory business, do you think that's something that could perform well if we did enter a more troubled economic backdrop?

So I think the restructuring business could do that because I think the size of the market is gigantic. Now I don't have it on my fingertips, but there's been a lot of issuance. There's just a lot of paper out there. And the way we've set up the company, remember, we do not divide up the restructuring team from the general corporate finance team. That's why we don't break it out. So again, when the market was much smaller back in '09, we had 96% of the bankers had -- we're working on a restructuring with the restructuring team, getting a lot of leverage out of that expertise. So I do think we could -- I think we did revenue of something like $300 million of restructuring back in '09 and '10.

Could we double that? Yes, I do believe it's possible. I'm not trying to make any predictions here, but -- or more because we could have -- I think we could have 95% of the company if it was a deep recession and everybody needed that advice, we would move our talent over there and operate as a team like we always do. And I think that's one of the parts of our model that is exceptional. Nobody has a blockage or a fence around their business. So yes, I think it could get to be a very large number in an environment that -- it was a very large number, by the way at the beginning of COVID. It came and went quickly.

But in the 3-month time frame that it was active, it was very active. And to capital markets, I continue to believe as plain vanilla financing and most capital markets are set up to do plain vanilla better than they are highly structured. We are doing -- we're setting up to do highly structured. And I think in a deep -- if there was a deep downturn, I know things would go structure. The one thing I know is in the downturn, plain vanilla, fully distributed regular-way financings are much harder to do, and everybody wants to put some structure in, and we've got a great, large integrated team around that. So I think that would do well in that environment as well.

Okay. That's really helpful. And then just one other quick one. You've seen a lot of different cycles. And I know you said that interest rates have not affected the M&A dialogue so far or the M&A completion so far. But when you look back historically, at what level of interest rates do you think that would start to affect the M&A backdrop? Or do you think the world is just different, and that's not really the right way to think about it?

A little of both, by the way. I don't have a great answer on when because the Feds only moved 25 basis points and yet it feels like they've moved 250. I mean the market is so anticipatory. So I don't -- maybe the markets already anticipated 6 rate hikes. So it's the anticipation as much as the actual hike. But I do think, again, there's a fundamental change in the business, and that is that there is enormous amount of firms out there that are in the business of transacting, and they will transact. So again, 15, 20 years ago, if rates went up 300 or 400 basis points, and there was a downturn, a significant amount of the strategics would decide they've got to take care of their own business. This is no -- their stocks at all-time lows. Their shareholders don't want them to do M&A, maybe they would do stock repurchases.

And that would put a chill on the largest part of the market, 90% of the market. I would just say that there is a part of the market that if valuations went down significantly, I think would turn the engines on and significantly ramp up M&A. And by the way, they have enough money now to actually make a difference in our business. So yes, I think it's a different business. I think it's a little of both of what you said. It's a different business, and I don't have a great answer of when it will actually create that moment.

The next question is from the line of Jim Mitchell of Seaport Global.

Sorry, I was on mute. Ken, maybe just one more question on financial sponsors. I understand the story there and the flows. But if we look back to 2019, there was worries about a recession. The financial sponsors were pricing in a recession their valuation models, activity really pulled back. Why is it now different as we start to worry about a recession if the Fed goes too far. It just sounds to me that you feel that the flows are there and activity is going to happen no matter what, but it does -- it wasn't that long ago that we did have a pretty significant pullback in financial sponsor activity.

Well, yes, I wish you give me the material to study for this test in ahead of time. So I'm not going to try to remember.

Sorry. I apologize.

I think, if I remember, the Fed really made a move at the end of '18, right? I think they really crushed the markets at the end of '18 and made an indication that they were going to raise. There was some -- there was a real downturn. Again, you -- I think it recovered pretty quickly, if I remember. I didn't think -- I thought it was coming back pretty quick at the end of '19. But if I remember, there was a pretty hard move by the Fed indicating that they were going to shut the economy down and then they changed. I also think, by the way, the markets have changed a lot even from '19. I mean it's 3 years later.

And I believe the amount of momentum and aggressiveness in the alternative asset category in private equity. By the way, they came through COVID because they had no reported volatility. I'll give a lot of the volatility might happen, but it was in private. I think the allocation of capital to these markets accelerated. Just look, go back and look at some of the leading private equity firms and look at the fundraising they were doing in 2018 or 2019 -- early 2019 and look at it today. I'll bet they don't resemble each other. I would bet the size and scope of those markets are extremely different today. But I don't have -- again, you didn't give... I'll do the homework for the next call.

Right. It sounds like you think though, they are a lot more resilient. That's I appreciate the color. Maybe pivoting to the buyback, I think you did…

And then one more -- can I say one other thing, Jim? Also look at the -- they're being -- those companies, go back to the valuation of those public companies. I'll bet that's significantly different. The private equity environment is these entities as growth companies, hence, they're going to deliver growth. Hence, they're going to transact. That's -- and there's a lot of changes besides just how do they feel. I think that the whole thought process on what these companies are, how are they valued and what can they be has changed, and they're going to go try to fulfill that mission.

Right, right. No, I appreciate that. And just maybe on the buyback, I think year-to-date, if you include April, your 2.4 million shares, I think that's more than all of last year. Does that affect at all how you think about specials versus buybacks? Or are you sort of signaling you're going to be doing more buybacks less specials? Or what's the thought process?

Look, we're committed -- as I said, we're committed to returning our excess capital as quickly as we can figure out what the best way to do it. This time, we went into the market pretty aggressively between, I think, we'd sometime in the let's call at the beginning of the year. And the reason is, look, we just felt like we're -- again, we felt the valuation was there. We're trading at a little over 8x PE. I think there are steel companies that trade as a higher multiple.

And so our feeling was we don't see this as the cyclical -- we feel like we're in a secular growth industry that is being valued as it was 15 years ago as if these cycles will take you out. Again, that's -- so we went in aggressively. We will make that decision with the Board depending on a series of factors. But what we're going to do is return the capital, our excess capital to you quickly and aggressively as soon as we can in a 100%.

The next question is from the line of Manan Gosalia with Morgan Stanley.

I was wondering if you could give some color on what you're seeing in the different subsegments of deals, small, mid and large. I know that smaller deals tend to decline faster, given that buyers and sellers can be a little bit more nimble there. So we saw that during COVID. Is that something that you're seeing right now? Or has it been pretty consistent across the board?

I'm not sure I agree with the -- that assumption. I know that assumption is kind of out there. COVID was an availability of capital problem. Literally, the beginning COVID -- smaller deals will suffer in an availability. The first availability becomes an issue for smaller companies as capital dries up. And it's totally available right now. So I don't see the same situation. I actually think if any transaction is having trouble -- large transactions are so under focused by the DOJ and the administration.

Then I do think there are -- the transaction that's under pressure is probably the large transaction that would have been attempted 2 or 3 years ago. That's just not being attempted today, not because of capital, not because of price, just because of peers are getting hung out there in the market. So I can't say that I see -- and I know I've read in some of your reports that you think the midsize or smaller are under pressure. I don't see that yet. I think they're going along in about the same manner.

Got it. That's helpful. And Joe, sorry if I missed this, but did you talk about non-comp expenses? Should we expect that ramps up from here as travel ramps up?

I think that we feel pretty comfortable that -- I mean, I'm only looking kind of a quarter forward, but I would say that kind of 37 million areas is a reasonable landing point. So not looking for a whole lot of growth from here.

The next question is from Michael Brown with KBW.

So restructuring was traditionally 20% to 25% of revenue in a normalized environment. I know it's hard to nail down. It was really normal anymore. But my question is, is that still the right way to think about the contribution of that business, just given the growth that you experienced in the nontraditional M&A businesses? And you flagged the growth that you've seen in the capital markets business. So I just wanted to see if that's still the right way to think about the business.

I think it will be over the long term. In the first quarter, it's not, it's below that. It's probably mid-teens. I think I said on the last call that the fourth quarter did not have a large amount of new business. I think over the long haul, it will be back into the 2025. The only thing that could cause it to become a lower percentage is the rise of capital markets as just a larger part of the business, creating a larger denominator for restructuring to get up to 20% to 25%.

But yes, I do think -- I don't think there's anything fundamental that has changed in the business. We had a year last year where there was so much money put into the market that it was low interest, 0 interest rates. The government just flushing money into the system. I think it was a very abnormal year for restructurings. By the end of it, it was very abnormal and very unusual.

And what is the dedicated MD headcount in restructuring today? And just given the opportunity set that you see -- that you flagged in terms of the potential for a lot of restructuring activity to come down the pike, do you see a need to add more talent there, perhaps at the MD level or to build out the pyramid more?

No, because as I said, you'd be amazed at how we put teams together on restructuring. We move -- again, it's a little technical, but I know there are some models in which restructuring gets the restructuring revenue and the M&A department gets an M&A revenue. We have a single bonus pool. And so we can move -- we will move the entire media team. Now I'm just making -- I'm the saying. That team would move over in a heartbeat and work alongside the restructuring team and fill it out. So we -- that team is expandable to 5 to 6 fold and it's pretty significant. I'm thinking we probably have 15 managing directors that you would call experts in it. Joe, correct me if I'm wrong.

But the -- but it would expand to a -- it would expand to a 100 very quickly, and it did. Look, we just went through this. But COVID hit on March, whatever, 12 or 13, we shut down. By April 1, I would say there were 100 Managing Directors on Teams organized with restructuring, doing the work and maximizing that event. So no, I think we would see a radical expansion of the manpower without us having to go outside.

The next question is from Brennan Hawken with UBS.

Double dip in this one, Ken. So you commented before on the attractive multiple in Moelis shares driving a bit more buyback activity for you. If we -- should we assume that, that will remain a capital allocation decision of choice if the stock remains at these attractive levels and therefore, maybe less capital allocated to a special? How should we think about that for the rest of this year?

Well, yes, some of that is at math, Brennan. We have $115 million less to do a special with because we bought a bunch of stock. So mathematically, you can only use your capital once. If I can -- if you figure out a way for me to do both, I'll happy to do it. We're going to make that decision based on where the market is. Look, we're going to make that decision along with the Board. But it is -- if you're asking is it a decision, have we changed fundamentally? No. We made a decision based on market conditions, quality of where we think the market is. All those things led us to believe this was a very good use of capital, and we'll make that decision on a real-time basis.

Okay. So you have continued to assess. Got it. I was tempted to make a joke about how you could add leverage.

In context, by the way, I just want to note, one of the problems is you enter these blackout periods. So people, why did you do this on Tuesday or Thursday? You don't have 100% flexibility. So I just want to put that in there that we have to make these decisions in and around the periods in which we're open to do it. So…

Sure. Thanks for the caveat. Also just kind of curious to put a finer point on this. So I know you don't watch the public data. You made that clear both in this call and the last call, but the -- I'll just let you know, the public data basically suggests that Moelis is likely to see a revenue air pocket either in the next quarter or 2. It sounds like you do not -- the data you're watching does not suggest that, that is the case. Am I paraphrasing that in a fair way? Or would you adjust that?

We have a backlog that is larger than we had -- pipeline, not a backlog. We have a pipeline that's larger than at this point last year. We then had 12 months of the -- if I could replicate the 12 months we had post that pipeline, I would 100% do it. If there's any sense of -- all I worry about is trying to be accurate by quarter in a time when it's volatile. So I don't sense a revenue -- what did you call it? A revenue. Did you call…

Air pocket. Air pocket.

Air pocket. No, we sent extremely busy organization with a very large pipeline. And -- but I'm not going to -- I don't want to get down to predicting what happens to the markets in the next 2 weeks and whether or not people decide to put off executing these transactions for 3 months. And Brennan, that's one of the reasons why we aggressively bought the stock. That doesn't really matter to us if we're sitting with a larger backlog than we had, and we think our franchise and brand is better than it's ever been. We think our go-to-market strategy is right on with capital markets. we think restructuring has been suboptimal in terms of its ability to generate for us.

So I -- again, I -- the reason I don't look at it is because I really look at -- I almost look at the company and think are we executing? And if we have a backlog that's bigger than last year pipeline, sorry, I'm not lot use the backlog word, a pipeline that's bigger than last year. And by the way, we continue to be -- our biggest problem is still hiring and bringing in the quality talent we want to execute on what we think is the available market. So that's what I look at. And again, to look at the public data, I think Matt now and Joe, I'm not saying don't go over it with them. I just don't manage the company based on -- it would be like trying to fly an airplane with data that somebody else is telling you how high your airplane is. It doesn't matter to me.

(Operator Instructions) There are no additional questions lining at this time. I will now turn the conference over to management for any concluding remarks.

No, just want to thank everybody. Thank you, again, Chett, for all your hard work, and we look forward to talking to you in the next call. Appreciate it.

That concludes the Moelis & Company Q1 2022 Earnings Conference Call. Thank you for your participation. You may now disconnect your lines.