Moelis & Company Q4 Earnings Call Highlights

Core Insights - Moelis & Company reported record fourth-quarter revenues of $488 million, an 11% increase year-over-year, and full-year adjusted revenues rose 28% to $1.54 billion, driven by a 35% growth in M&A and a record-setting year for capital markets [2][5][4] Financial Performance - The adjusted compensation ratio improved to 61.1% in Q4 from 69% the previous year, contributing to an adjusted pre-tax margin of 28.6% in Q4, up from 16.4% in 2024 [12][14] - Adjusted EPS reached $2.99, reflecting a 64% increase from $1.82 in 2024, attributed to revenue growth and reduced expense ratios [15][4] - The firm ended the period with $849 million in cash and no debt, and declared a quarterly dividend of $0.65 while authorizing up to $300 million in share buybacks [18][17] M&A and Market Outlook - Management anticipates a constructive transaction environment in 2026, driven by strong equity market performance and active strategic pursuits for larger transformational deals [6][3] - The M&A market is expected to see continued mega-cap activity, with easing valuation disconnects and improved financing conditions potentially broadening momentum into the middle market [7][6] Capital Structure Advisory - The firm sees a long runway for liability management assignments due to leverage across many companies, with expectations for flat to up growth in capital structure advisory for 2026 [8][6] - Management noted that while geopolitical uncertainty remains a concern, boards may proceed with transactions unless significant shocks occur [9][10] Talent and Business Development - Moelis added 21 managing directors in 2025, indicating ongoing investment in talent and capabilities, with a focus on building its Private Capital Advisory business [19][22] - The PCA team is integrated with industry bankers, and while current revenue from PCA is limited, significant growth is expected as the firm moves into 2026 [23][22]