Moelis & Company (MC) Posts Q2 Loss as Revenues Plunge Y/Y
Moelis & Company MC incurred a second-quarter 2023 adjusted loss per share of 4 cents, wider than the Zacks Consensus Estimate loss of 2 cents. The bottom line compared unfavorably with earnings of 57 cents reported in the prior-year quarter.
Results were adversely impacted by lower revenues due to soft industry-wide capital markets performance. Further, an increase in expenses acted as a headwind. Yet, the company’s solid liquidity position was a positive.
Net loss (GAAP basis) was $8.3 million or 17 cents per share against a net income of $104.7 million or $1.52 per share.
Revenues Decline, Expenses Rise
Total revenues (GAAP basis) tanked 26% year over year to $179.9 million. The fall was primarily due to a lower number of completed transactions. The top line lagged the Zacks Consensus Estimate of $184.5 million.
Total operating expenses (GAAP basis) were $189.5 million, up 5%. The rise was due to an increase in both compensation and benefits costs and non-compensation expenses. Our estimates for total operating expenses were $181 million.
Other expenses (GAAP basis) were $5.6 million in the reported quarter compared with $3 million in the prior-year quarter.
As of Jun 30, 2023, the company had cash and liquid investments of $194.8 million, with no debt or goodwill.
Share Repurchase Update
In the reported quarter, the company did not repurchase any shares.
Our View
Moelis & Company’s global expansion initiatives and diverse operations across sectors and industries bode well. However, heightened geopolitical and macroeconomic uncertainties will continue to adversely impact the company’s financials.
Currently, Moelis & Company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Investment Banks
Raymond James’ RJF third-quarter fiscal 2023 (ended Jun 30) adjusted earnings of $1.85 per share missed the Zacks Consensus Estimate of $2.10 by a considerable margin. The bottom line, however, was up 15% from the prior-year quarter.
A muted investment banking (IB) performance hurt the Capital Markets segment’s results. Also, RJF recorded bank loan provision for credit losses during the quarter on the deteriorating macroeconomic outlook. Further, expenses increased during the quarter.
Yet, higher interest rates and a rise in loan demand acted as tailwinds, which led to a substantial jump in net interest income (NII). The performance of the Private Client Group was robust. The acquisitions over the past years supported RJF’s financials to some extent.
Jefferies Financial Group Inc.’s JEF second-quarter fiscal 2023 (ended May 31) adjusted earnings per share of 29 cents lagged the Zacks Consensus Estimate of 33 cents. The bottom line also compared unfavorably with 46 cents earned in the prior-year quarter.
JEF’s results were adversely impacted by lower revenues on dismal asset management and advisory businesses. However, a decline in expenses and better-than-expected capital markets performance acted as tailwinds.
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