Q4 2019 Earnings Call

I would now like to turn the conference over to Michelle me Okawa head of investor relations, please go ahead.

Good afternoon. And thank you everyone for joining us for moles and Company's fourth-quarter and full-year 2019 Financial results conference call on the phone today or Ken moelis chairman and CEO and Joseph and Chief Financial Officer before we begin I'd like to know 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 and the risk factors section of moles and Company filings with the SEC actual results could differ materially from those currently anticipated The Firm undertakes no obligation to update any forward-looking statements or comments today. If we references to certain adjusted Financial measures, we believe these measures when presented together with comparable gaap measures and useful to investors to compare our results took several periods is the better understand our operating results, the reconciliation of these adjusted Financial measures with irrelevant gaap financial information and other information required by law.

provided in the firm's earning release, which can

We found in our investor relations website and investors. Melissa, I'll now turn the call over to Ken to discuss our year-end results. Thanks, Michelle and good afternoon. Everyone else. We finished 2019 strong learning fourth quarter revenues of $224 million dollars the second half of 2019 was our strongest 6-month period of Revenue since our Inception an a straight to the momentum the company has coming into twenty-twenty our full year 2019 was really a tale of two halves with the first half dragging down our fiscal year results off during the year. We continue to invest in the franchise in order to create long-term value as a result. We're witnessing our highest level of client activity since our Inception. We had an 11:00 News directors to the platform during the year while actively managing our existing and depopulation as part of our ongoing commitment to evaluating our talent base.

We invested in our Junior talent pool and end of the year with our average Banker head count of 9% from the prior year and we continue to run the business with financial discipline which resulted in our non-compensation expenses decreasing versus the prior-year despite adding to our total headcount. And finally, we stayed committed to returning our excess Capital back to our shareholders with a 50% increase in our regular quarterly dividend and a $0.75 special dividend. The regular increase was our seventh and our special dividend was our eighth since going public in 2014, coupled with a record share repurchases of 1.3 million shares. We will have returned approximately $225 million dollars with respect to the 2019 performance year long as we previously have discussed. We've shifted our Capital Management strategy to include a more balanced approach to return and capital via dividends and share repurchases at this point, Georgia.

Take you through our financial results, then I will.

Discuss the current environment and how the firm's position going forward Joe. Thanks Ken. Let's start with a review of revenues. We are in fourth quarter revenues of $224 million down 6% from a record fourth quarter of 2018 full year 2019 revenues of seven forty-seven million were down 16% from the prior-year our 2019 results for five or fewer transaction completions than 2018 partially offset by higher average fees earned completed transaction as compared to the prior-year. We experienced higher average fees and both m&a and restructuring during 2019.

Our restructuring is achieved record revenues for the full year surpassing last year's peak level of activity. This was the fourth consecutive year of growth reflecting our continued market share gains in the strength of the team. We are out of the year as the number one advisor globally and in the US for completed transaction volumes, according to affirmative and advised on six of the year's top ten completed restructuring deals. Globally. Am moving to expenses are full year adjusted compensation expense ratio is 63% as Ken mentioned on a real-time basis. We actively manage our headcount and as a result had 10 mg departure during fiscal 2019, all the costs of hiring and Severance are reflected in our adjusted comp expenses.

our non-compensation

You always 19% for the full year of 2019 through continued expense discipline absolute non-compensation expenses actually declined versus the prior-year. This happened in a. When we grew the exact total employee headcount by 8% looking to the first quarter. We expect non-compensation expenses to be thirty-eight to thirty-nine million as a reminder. We recognized and adjusted net gain of three point five million dollars related to the sale of eight million shares of Mullis Australia during the fourth quarter just gained was the second part of a two-part share transaction that was announced during the third quarter of 2019 and total during 2019. We recognized an adjusted net gain of eight point four million dollars due to the transaction.

I'm taxes, the underlying normalized corporate tax rate for the year was 25% on an adjusted basis. We expect our underlying corporate effective tax rate to remain near the same level, assuming a, a geographical mix of revenues as with prior years. We may receive a tax benefit in the first quarter of 2020 related to the annual vesting of RS used later this month for purposes of quantifying access tax benefit in quarter one the break even share price for this best is approximately $29 a share for each one dollar difference between the vesting and Breakeven price. We expect the impact to eat the F would be approximately $0.01 as Ken mentioned earlier. We bought back over 1.3 million shares, which was nearly double the amount that we repurchased in 2018 will continue to be opportunistic finalizing our share buyback program. Lastly our board declared an increase to our regular quarterly dividend from 50 to 51 cents per share as well as a $0.75 special dividend. We've increased wage.

Give our quarterly dividend and have declared Italy.

Just one special dividend annually since becoming a public company the dollar 26 and dividends will be paid on March 27th to stockholders of record as of February 18th. We finish the year off strong financial position with no debt and 342 million dollars of cash and liquid Investments, and I'll now hand the call back to Ken.

Thanks, Joe. So the m&a Outlook remains strong and our restructuring business continues to grow which positions us very well going forward. We achieved an increase in our average fees earned per completed transaction for the fourth consecutive year and strengthen our managing director population by enhancing our expertise and keep products and sectors and by entering into a new geography and Continental Europe. We recruited the largest and most diverse analyst and Associate class in The Firm history as well as the company Remains the premier company for young Bankers to begin their careers off earlier this year. We announced the internal promotion of five managing directors, and we have a strong hiring pipeline of external hires for 2020 our continued investment and commitment to Talent remains critical to Our Success activity across all of our core products remain strong. Our sponsor related activity increased nearly fifty percent in the second half of the year as private-equity job.

remains an important part of the evidence

Ecosystem over the past twenty years. The number of private-equity firms in existence has increased almost five hold its now reported that they're currently over nine thousand five hundred thousand actually firms and they all need to transact as part of their business model. We view ourselves as a critical part of the sponsor supply chain helping them to put money to work as well as helping a lot of times their Investments since the Inception of our firm Are dedicated sponsored coverage has been a key differentiator driven primarily by our deep relationships and we expect to continue benefiting from this unique positioning but continue to invest in the platform and nurturing our best-in-class talent. I remain confident on the Outlook of the business and with that I'd like to open it up for questions.

We will now begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset off pressing the keys. If at anytime your question has been addressed and you would like to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.

The first question comes from Ken Worthington of JPMorgan. Go ahead.

Hi, good afternoon. I'll start playing bad cop but through the end of 3Q. If I'm correct. I think you were thinking about maintaining your compensation ratio at York Historical 58% plus or minus. And in the December quarter, it seems like you made the decision that the business would benefit if you found what seems like an extra forty million dollars compensation to pay your people. So maybe to start bless you why this decision and if you and if you can go a layer deeper in terms of how you utilize the extra cops so we can feel better about the decision and then to beat the dead horse invasive investors hate the concept of heads you win Tails. I lose and it seems like there's a precedent now that if there's business conditions are weaker that shareholders bear the burden more than employees and I'm sort of hoping you reject that interpretation, but but what are your thoughts?

Okay.

And I do reject that interpretation, but let me start with the The Firm went through two distinctly different halves of a cycle in the first half of 2019. Our run rate of revenues was actually took six hundred million our run rate in the back half of 2019 was north of nine hundred million. Those are two different firms and and and I think

If I could use the analogy, I think if you know the first half viewer an a chemical company or an oil company, let's say and the first half of the year the price of oil was $30 a share but the second half it was $1,000 a share I $100 a barrel. Sorry. I think you might make different capital expenditure decisions. You wouldn't say. Hey, let's average that average average oils 50. So why don't we pay that off know you're in an environment where our run rate at the back half of the year and it became clear to me and that's why it became clear to me in December. We reported it to you as quickly as we came to the conclusion that we were not in an environment that was running both both inside of Mullis. And and really the context of the market wage was not reflective of the first half of the year. It is right now. It's a very I think confident and fulsome Market. It's a robust market for all sorts of dialogue.

And so somewhere in December.

I did not want to average the price of oil and pay as if it was 50. I wanted to recognize we're in. We're in a market that is reflective of what's going on on that day. Not in the package. And the best thing you could do then is is investing your company and our company or people I don't have you know, we don't have plant and property and capex. We have people the difference between by the way 900 million and 600 million. If you were run rating that at a 58% comp ratio is like a hundred and I'm going to script the mass call it a hundred eighty just around the 60 and you're right. We had a little under forty. I think too the the deal flow everybody the average m d in our firm was down significantly. I I read where I am right now. We did not boost back.

The average managing director here was down pretty significantly. I think more than in line with the down revenues because what happens is by the way, your Junior town does not fluctuate a lot of your pay down at the junior level fluctuates very minorly. So there is a large part of this that's warm up at the top. So what we did on that page with that extra money was we used it to go down where our franchises that are hitting on full cylinders in the back half of the Year and that we expect to be going forward and and like a company that that's our capital investment. We invested in a can and I feel very good about it because I think from December to today I probably got more positive on where the market is dead and what the possibilities are and really the best thing we could do, you know, we invested 1% of our entire capitalization in our property plant and Equipment the way we Define it which is our people

And it was worth it.

Lastly let me say one thing. We've never scheduled it out. We've never called it. It's strong. You know, it's not extraordinary. It's managing people. We as I said, we managed a lot of people out cuz it was a tough market. So we use that to manage that causes friction and we managed a lot of people in and it's all in that number. It's a clean number and I I do am I somewhat reject it will see but I do think if you're living in a six hundred billion run rate environment and the market reflected that and that's what it was and that's where the world was. I think we would have found a way to hold. You know, I I I think then you're in the market and you can you can price into that market but I think my oil and Allergy might be good. You can't pretend just cuz the average price isn't close to where the the market is at the time you're protecting your franchise. That's a long answer. I'll move on.

Yep, nope, nope good. I appreciate it. And and I'll try the good cop. So so part of this is is is your

Confidence in 2020 if you can maybe go a layer deeper, what are the themes that you think are playing out that gives you confidence that God business activity this year is is going to be continued to be you know, really good.

I think there's several things. First of all low interest rates continue GDP growth is good low tax rates. I think that finally just took a good five days ago the UK finally separates from Europe and everybody can move on with certainty certainty is what counts it's never it's actually never whether it's good or bad. It's the certainty of what happened, and lastly and I pointed that out at the end of my set remarks the amount of capital being allocated to private equity and illiquid investments in many different categories is is actually kind of stunning the number as well as the scale of each of these firms again 9500 private. They're not all relevant to us off but a lot are and as I look at it, I continue to believe they're in they're in a business of manufacturing really there's nine thousand five hundred firms and and they must they buy

Things and they sell things that's actually their business.

So if you are one of the few firms that is in the deal flow and can provide unique product to to that group. I mean, I think of the name of the group of boutiques or even even counting the big firms. I mean, maybe there's twenty or twenty-five relevant names in the world to provide the kind of flow that these firms need on the scale, but I think we become an incredibly important supply chain operator. I think that's good for margin. We become important in the ecosphere and I think that's continuing is going to continue to drive home the importance of of high intellectual content for m&a and so all that I'm bullish on all that. I don't see a lot of it really changing right now.

Great. Thank you so much.

The next question is from Devin Ryan with JMP Securities, please go ahead.

Mr. Rainier line is open Oh Hey Joe. How are you? It's first question following on the line of the last one on the environment. So you've heard the comment about sponsor activity up 50% What is that relative to is that you're a year or is that revenues? And then just if you can can a little more context wage, I think the Outlook that you providing, you know is quite bullish but are we getting back to an environment that is similar to pre kind of things falling off a cliff at the end of June in the beginning of nineteen or or is it actually feel like it's accelerating from you know that prior. I'm just trying to get more context around that I know you probably want to be overly quantitative here, but anything else would be helpful.

yeah, it's

Fifty percent, I believe that's the six months over the over the over the six months, but I think the you know, the the amount of money in the matter allocation Thursday, it's just going to continue to you know, I'm not sure that we're going to have as many public companies. I think the amount of public companies will shrink and there'll be a lot of liquidity and and companies who choose to stay private life and and and buy and sell themselves four or five six times in the private markets. I think that's going to be it's a phenomenon that's already happening. I just think it'll become much more frequent that that'll happen. Look it's hard. You're asking me, you know, how many angels on the head of a pin? It's I believe it's back to at least that good and then we'll find out how you know look through things like the coronavirus out there that who knows it seems like it's under control. So I can't I can't predict everything but for right now and by the way, I don't want to right now that's not affecting birth.

Anything in the deal environment?

But I think that the the desire to do things the the need for Capital to be allocated the interest page where credit is it feels as good as it's ever been. I I would like to Hope and think that it's better than it was at the end of 2018 before the drop off but, you know hard not to commit to that I it has that feeling though. Okay, great and a good contact and then follow up here on just Capital Management and I heard in the comments about you know bit more balanced on her purchases vs dividend and we look at the stock you threw out a lot of last year was trading in cuz of the low 30s and and I think you took advantage of that, you know, obviously you traded a bit higher here recently. But but how are you thinking about that balance? I understand that you're going to be dynamic in in your Capital allocation. So as the stock is recovering.

How were you thinking of?

Just how much you want to shift towards your purchases versus dividends and just from the outside how we should think about that. Well, we were very active and in the market in our program at December and and a lot of January we tend to be pretty conservative in our ten be five program. It's just one of those things we have to make a locked in decision and you're not allowed to touch it which way just doesn't appeal to me in a lot of ways. I like a bit of a control freak on that. So but we were in the market continuously we're going to assess this this obviously the markets have kind of changed really pretty nice in in recent Times Obviously will be free to do what we want to do post this earnings announcement and look I think if you looked at our year-end cash figure out the fact that we have no debt the fact that we have over a hundred million dollars of Australian liquid stock that we can access we are.

We have a lot of Firepower and you know, I think we probably could have done more special and we chose to just stay capable of doing both if that makes sense and um will make those decisions as things unfold.

Okay, great last Quick One just to be clear here on because of Prior line of questioning on the comp ratio. Is it still reasonable to be modeling you 58% or lower wage in a you know, Revenue backdrop that you know obviously is more like the back half of last year than the first half.

Yes, the next question is from Richard ramsden with Goldman Sachs, please. Go ahead.

Hi, good afternoon. This is South ceremony on for Richard today this year, you've reached record levels of restructuring even in a pretty benign credit environment. And we also saw a reduction in The Benchmark interest rate this year. Can you elaborate on some of your expectations for the restructuring environment in 2020? And then to what degree has some of the Cadence of restructuring activity changed over the past few months?

So I expect our restructuring group to continue to gain market share. It was number one ranked this year. They did a spectacular job. It doesn't feel like the economy is going to give us a spiked up. There may be some small amounts of growth, you know, but we're talking about natural growth of the market just because the size of the market God bigger. There's so much out there. I don't sense a GDP problem that would cause us to have a Leap Frog right now, but I expect will continue to wage gain market share of the way. We have stayed focused on it. Maybe maybe grow marginally, you know again, that's a sort of a macro course. I want to stay away from that.

all I know is

Sooner or later the cycle does have a bit of an issue and there's a lot of paper out there. I think we're in a one to 2% default market. We've been that way for five years. Now. I'm going back in time. We've always gotten the 3/4 in in in the 2007-8 cycle. We got into the high single-digits and default. So I I I know that's going to happen someday not high, but you can get into mid single-digits in a downturn and it'll become a tremendous. You know, it'll do a a tremendous jump and that's a long way of saying I don't expect anything spectacular in this year barring an event that I have not foreseen. I think it'll just be steady improvement in our market share.

Great. Thank you for that. And then Additionally you noted that the European backdrop is looking a little bit more constructive particularly the conclusion of brexit. Can you discuss your aspirations for building up both your UK as wage or Continental European businesses? And then as you look at the current environment, how are you? Thinking about competitive Dynamics? Both are some of your local bulge brackets and then also some of you the the pier independent advisors that are thinking about growing region as well.

We're going to be careful with Europe. I think it feels better because you can make decisions based on what happened. It's done and and decision-making is always very difficult for people when things are not done, and now you can make your decision. I think there'll be some people who think that the UK is undervalued and tremendous Opportunity, by the way, they'll be people who think the UK is in trouble because they left the European Union wage. But each of those people now can make a decision based on their point of view and that usually triggers and by the way, same thing for Germany France and and the Continental Europe. So I think people companies individuals private Equity. They can all make a better decision and come up with a point of view on our build out there. We're going to be careful. It's it is a tough month. It's been a tough market for a long time some of our account management in the prior-year was in Europe that wage.

That we changed out as we talked about over twenty.

Nineteen so but we're going to be very careful and I don't think you'll you know, you won't see us go pell-mell into a big expansion strategy, but we want to hire great people Bank the clients need a relevant to us and you know, we don't have to be all things to everybody. We do not have to compete with every bulge bracket or a bank in Europe and we won't we'll pick our spots off.

Okay, great. Thank you.

The next question is from Matt code with autonomous research, please go ahead.

Hey guys. Thanks for taking the question one more on restructuring just to be a little nuanced here one of your peers mentioned on up to in public activity from the energy sector. I'm just curious if you guys are seeing that same trend.

Yes, last year was a big big. I mean, you know, especially oil field services and I and I think if oil stays down here around 50, you're going to see a continued March of companies in that sector, so I don't know what time frame they were talking about, but it's been pretty busy. I'd say for the last year and no downtown. I think energy has not had a rebound in the price of oil has been under pressure and I think we're continuing to see the same thing.

Hi.

And then just kind of expanding on your sponsor activity comment. I think we all see the dry powder numbers and it's easy for us to understand month and that that Capital has to be deployed over time. But I feel like what's kind of overlooked is the recent Equity Market recovery the good marks from PE firms and the necessary realizations that they that they have to occur over time. So I'm I'm kind of curious if you could like characterized sell-side activities from from your sponsor clients, right? So everybody talks about dry powder, but there's the other side of that which is the full powder whatever the other I don't even know what the price out once they've got people have to sell. So the beauty that this Market is it's it's not even again you go back ten twenty years ago. M&a was kind of an animal spirits cycle Market companies wanted to do things or today. Yep.

Have these 9,000 private Equity firms and their business there are manufacturer of purchasing and selling and and see.

Everybody focuses on dry powder but selling is the other side of that and I think I mentioned this about a year ago when we were down on ourselves side a private equity. And what happens is I think I related it to the Art Market. You don't put your good stuff on the market. If you're not sure that there's going to be an underlying bit. There's a real feeling right now and am and you're correct about it. There is an underlying bid for Quality assets at very high multiples with great credit and a lot of capital and so it's a good time people want to put their best life outside on the market and monetize. And again, that's not the end of the game unlike Corporate America where sometimes you know sale is the end. If you're a private Equity shop. Can you sell a premier asset? The next thing you do is go fund raised start a new fund and you're back in the cycle and we want to be part of that cycle straight straight through and yeah, I think you're seeing dead.

A significant amount of the high-quality assets coming into the market now on the south side.

And they're not going to public lastly very few of these very few want to go public. I mean, I think it'll be interesting to see what the public policy part of this will be. Am I suspect you just see a continuing decrease in public market companies. The private Market has become so much more efficient structurally Finance capital structure and that that's why I'm that's why we have focused so hard on private Equity. I think it's it's a structural thing that has changed pretty dramatically.

Awesome. Thanks guys. The next question is from Michael Brown with KBW, please go ahead.

Hi, thanks for taking my question. So can I appreciate the color on the on the environment? And you know, you mentioned that you're seeing a high-level activity right now when we look at the public data, it shows some recent momentum in in your public pipeline, but it's a not necessarily quite to the level that that you're you're kind of alluding to so could you just give us a little more often? Is it more of a trend in the you know early deal flaw or in conversations with clients just to help us square that

What we're working on?

I i i the funny part is I don't I don't ever see that pipeline. I know after the fact my I are people always tell me this is what the pipe whatever numbers you use but I don't look at that cuz I don't I have the the numbers that I see so I don't have to look at what some third parties do it. So I don't I don't really know the number you're talking about. But I know what I see and are we have things like what we're working on and then also there's a trend of submissions. We have a we have a committee new Business Review Committee. And so, you know, we can offer. Tell you what a great day off and I just open up the submissions and account how many we have that's that's the level of detailed I'm kidding but that is one way, you know, if I see we have ten or fifteen if I'm like, okay, that's probably pretty good and you can see them and track them on a real I could see them and those submissions have been doing very well and increase

Okay, great. And then just one last one for me was there any?

Impact from the revenue recognition standard this quarter anything material.

Joe know there was nothing material pulled forward.

Okay, thank you. Sure. The next question is from monongah with Morgan Stanley, please. Go ahead.

Hi, good afternoon. So you you mentioned that there were ten mg departures in 2019. Are there any specific Industries in markets that you moved away from and am you know as we look at into twenty-twenty there any markets or industries that you are reallocating resources to?

I'd say 2019 was individual specific. So it was I can't really point out anything. You know, we have 126 managing directors and we look at them as you know individuals and it's hard. I I never really try to guess sectors it's tough because if a sector is having a trouble in m&a, it usually means we're moving in and restructuring. So, you know, unless it sector just becomes irrelevant which very rarely happens. It's it's it's individuals. I do think from a top-down. Where are we looking to expand? I've said this over and over I I continue to believe Health Care will drive become a significantly larger part of the economy. We think we we can get much bigger in in healthcare or media franchise is a spectacular franchise for us and we'd like to continue to wage.

push that into

Some, you know more of the tech side and the digital media aspects and then again, I don't know whether you call it a sector but we have really revamped and put a lot of effort including I know some of you asked me about the fact that we've had we are putting a lot of resources into sponsor coverage and and see that if you call it a we call it a sector. We think it's a place to put a lot of effort.

Got it. And then you mentioned that the average fee rate was higher the squad and has been going higher for a few years. I was just wondering is that just because you're on larger and larger deals or is there anything else going on there?

I think it's it's large deals and discipline. I mean one of the I mentioned is new Business Review Committee. We we instituted that about three or four years ago. And one of the reasons was to to be discipline, you know, again, we managed as I say our our people manage their clients and then it's up to us to manage people. And what do you manage people with the time and resources and not one of the things that can happen is if you're not disciplined you spend a lot of time on and and Junior resources on transactions that aren't worth but the possible fee and it gets so we we have been disciplined around it and put some of our best people on monitoring that and making sure that the assignment and the fee structure are correct and it's it's worth it's done very well.

All right. Thank you.

Again, if you have a question, please press * then 1 the next question is from Brennan Hawken with UBS, please go ahead.

Hi, Sabrina Hyundai. Thanks for taking the question. So there was a lot of put some takes as far as the side some recruiting and some South Koreans in in 2019. Can you how should we think about how that movement is going to impact your productivity here in twenty twenty-five, you know, assuming that you're since you feel good about the business can it seems as though the back half Revenue pace is the right way to think about things. So, you know, if we just take that backdrop as long as an operating assumption how will those adjustments feed through into the productivity line that we all model?

Well our hope is and this is the reason we do it that it should go up. We we hope we have changed bodies and put better better and more productive people in the spot and look when we don't do we don't get we don't do this and move people out in a in a in an instant. So it's usually done every three or four years where you kind of get serious and and really the first half downturn focuses your mind on it. And so you do it and I I think that if we did it, right we should have a higher productivity lets you know, we're hoping that's that's what we did.

Okay, let me let me ask.

The question is different works the time departures that you will manage your way through what sort of quantum or lag were they behind your phone num average pro TV rights so that we can at least use that as maybe an input we want to think about this analytically.

No, look significantly I'd say but I that's why we did what we did but that's really hard to do. You know, we run a one firm in a statement. We don't pay commission. And so we work as a team on projects. So going to that number it's an overall thing really it's you know off and again, there are people's lives involved. So I don't want to say too much other than we think we've improved our go-to-market the quality of the product that we're going to Market and and we wouldn't do it. I didn't think it was significant. Okay, and then circling back to the price of oil example that you gave in the beginning of the Q&A. It seems as though that that implies that some of the pay out here in the in the in 2019 was based on pending Revenue. So, you know, if if really this was an investment and we're using Thursday.

Capitol Cafe

And price of oil example, then in that oil company shareholders would benefit from capital investment that's already made and then monetization of the price of the oil higher price point so you then is it shouldn't it be reasonable to assume that once the revenues that you guys are working on right now are actually monetized at the the ratio should be should not be below the prior range of the $50.58. The good news is I never read an oil company. So I'm not exactly sure how they would work there. So I'll give you what what we thought we did not prepay. I don't want to we didn't prepay. We invested in the talent base. We didn't look like who's got a revenue. There's we didn't do it. I owe you and say you got something coming in. We said we just thought it was worth again. I gave you the numbers, you know, the difference in the 900 million red meat company in a six hundred million is like a hundred and eighty million of,

most of which goes to a manager

And we took about thirty five or so and and put it in there. It was to keep the team. It was to make sure that team is on the field and that I'm not going to I was going to try to go back to 8G but I'll just screw that up is we want this team on the field motivated, but we did not prepay revenues. Now if we do really suck it should there be some leverage in the copper a show? Look maybe maybe going back to 2018, you know, we had a great year. Maybe maybe they could maybe we should do more if we have a choice like that where we outperformed it. I'm willing to think about that going forward, but I don't want you to think that we prepaid I don't I don't do it that way.

Okay, maybe maybe walking away from the oil example is better for both of us then can you help us think about cuz when you all came public and and can be very clear and and talking about the comp ratio of 57 to 58 and you know, this year was a good Revenue year really like regardless of the detergents of run rate, you know, you talking about South Park 750 million bucks of Revenue. So that's a that's your second best Revenue year ever and so the idea that that would be a departure from the compressor was just confusing to investors. And so what what level of comfort can you give that that's the right way to think about things in you know in in all but the most really I you know rough, you know in in most Revenue environments and and anything that isn't really quite extraordinary

Well, all I can do is tell you that you know, if you look back since we went public we were we were completely disciplined on it. We intend to be disciplined on it. We're one of the few firms. It is not taken extraordinary charges on an employee base and different times. We're transparent about it. We ran it through. I'm not going to convince you till we run the firm at that long. So I'll just you know, I think we can have to run the firm at our copper a show and that'll be the best proof that I have. But you know, you're right right now it's it's talk other than 2014 to today. We were extremely disciplined and we never used any method of you know, you can look at our income said it was clean. I don't think we used any

Text shortcuts to try to get around it and and we intend to go back to that.

Okay, Ken. Thanks for the color.

This concludes our question-and-answer session. I would like to turn the conference back over to Ken moelis for any closing remarks. No just want to thank everybody for the time on the call and I look forward to an exciting twenty-twenty. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Thursday

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