Moelis & Company

Good afternoon and welcome to the Mollis & Company earnings conference call for the first quarter of 2023. To begin, I'll turn the call over to Mr. Matt Soukroof. Please proceed.

Good afternoon and thank you for joining us for Mollis & Company's first quarter 2023 financial results conference call. On the phone today are Ken Mollis, 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 factor section of Molson 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 gap 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.mullis.com. I will now turn the call over to Ken.

Good afternoon, everyone. Our first quarter adjusted revenues of $185 million were down 38% from the prior year. The decrease in revenues is primarily attributed to a significant slowdown in the global M&A market, which experienced a 46% decline in completed transactions during the same period. Despite seeing more activity in M&A at the beginning of the year, the impact of the recent banking crisis has elongated processes again. I'm often asked what we would have done differently if we go back to the great financial crisis of 2007 and 2008 when we founded the firm. And my answer is always the same. We were extremely aggressive, and I wish we had been more aggressive in adding talent to our business during that unique moment in time. The current dislocation in the banking market has once again given us the opportunity to expand our franchise for the long term. As we've consistently pointed out for the last several years, our most significant areas of white space have been technology, industrials, and healthcare. where we have historically been underweight relative to the size and potential of these sectors. For context, technology and industrials have produced the two largest global fee pools, each totaling approximately $30 billion since 2018, and healthcare represents approximately 20% of U.S. GDP. These markets are enormous, and the need for high-quality advice is significant. This is the reason that in the last two quarters we have announced 22 managing director hires who are leaders in their specialty. As you might have seen in our announcement earlier today, we have significantly expanded our technology investment banking franchise with the hiring of 11 managing directors, many of whom have worked together for a number of years. They build on our core technology capabilities and expand the breadth and depth of our subsector coverage. With the addition of these senior hires, we now have 25 technology-focused managing directors and have doubled the size of our technology investment banking team. Additionally, we continue to invest in other areas that are key strategic importance to the firm. We hired one managing director in our private funds advisory group, who joined in April, and two managing directors who will join over the coming months, one focused on industrials and one focused on capital structure advisory. We've positioned the firm with an unlevered balance sheet to seize on just these types of opportunities. Unlike many industries, however, our investments go directly through our income statement. As a result, our compensation ratio and pre-tax margin will fall outside the bounds of our target range until the market improves and these new hires become fully productive. We are thrilled with the MDs who have joined. These investments greatly enhance our capabilities, and I've never been more optimistic about the firm's future. I'll pass it over to Joe now.