What happened
Shares of Moelis & Company (MC +1.83%) climbed nearly 12% on Oct. 31 after the investment bank delivered solid third-quarter results.
So what
Moelis & Company's revenue rose 12% year over year to $231.7 million. The investment bank was paid more on average for the deals it completed in the third quarter compared to the year-ago period. Notably, the gains came despite a sluggish overall merger and activity environment.
"Our record third-quarter performance was a result of positive momentum across all products, with our overall average fees increasing meaningfully," Chairman and CEO Ken Moelis said in a press release. "We earned higher M&A average fees on both middle-market transactions, and deal values greater than $5 billion, and restructuring had its strongest quarter ever, demonstrating the depth and breadth of our platform."
Better still, Moelis & Company's profitability also improved during the quarter. The investment firm's non-GAAP (adjusted) net income leapt 22% to $51.7 million, or $0.76 per share. That was significantly above the $0.51 in adjusted earnings per share Wall Street had expected.
Moelis & Company grew its profits at an impressive clip in the third quarter. Image source: Getty Images.
Now what
Moelis is positioning itself for continued growth by expanding its leadership ranks. The firm hired several new managing directors, who should help to bring in more deals in key areas such as financial technology, media, and telecommunications.
Moreover, the investment bank is in a strong financial position with more than $160 million in cash and investments and no debt. This fortresslike balance sheet combined with its profitable operations and favorable growth prospects should allow Moelis & Company to continue to pay investors a hefty dividend, which currently yields 5.6% on an annualized basis.
