Q2 2021 Moelis & Co Earnings Call
Corporate tax rate was 26% for the second quarter.
Regarding capital allocation the board declared a regular quarterly dividend of <unk> 60 per share an increase of 9% from the first quarter of 2021, and our second increase since the end of 2020. In addition, we repurchased approximately 400000 shares on the open market during the second quarter and on.
Order to continue to execute on our capital management strategy for board of Directors has authorized an increase of $100 million for the repurchase authorization.
Including today's announcement, our current repurchase capacity stands at approximately $150 million.
As always we remain committed to returning 100% of our excess cash and lastly, we continue to maintain a fortress balance sheet with $281 million of cash and no debt I'll now turn the call over to Ken.
Thanks, Joe and good afternoon, everyone.
Never been more optimistic about our business given the changing dynamics of the M&A market.
Alternative asset managers have seen tremendous inflows of capital over the past year.
This trend is accelerating and these institutions will become a dominant force in increasing the scale velocity and most importantly, the consistency of M&A going forward.
Our holistic approach to client coverage brings a comprehensive and innovative solutions for these clients across their entire portfolio and their investment cycle.
Our approach is completely aligned with what is required by these companies. We believe that the combination of market factors and our model has resulted in Moelis and company.
A period of secular growth.
Our strong financial performance over the last few quarters is the direct result of a deliberate choices. We made over the last 10 years by committing early on to spend the time energy and resources on internal talent development and promotion from within we have created a growing and sustainable or gallon organic talent base.
Combined with the dedication to having 1 P&L and no commission structure, we are a differentiator for differentiated advisory offering an exceptional pipeline of internal talent and a franchise that would be extremely difficult to replicate.
By setting up our platform the way we have since day, 1 and remaining unwavering to that vision, we're able to be more nimble integrated and into areas of high grow faster for that reason the pace of our new business activity remains high and our pipeline is stronger than it has ever been and I remain confident about our ability to continue to gen.
<unk> value for our shareholders for years to come and with that we'll now welcome any questions.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at anytime Youre question. That's been addressed and you would like to withdraw. Your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
Our first question will come from Devin Ryan with JMP Securities. Please go ahead.
Terrific, Yeah, Hi, Ken Hi, Joe.
Clearly a great quarter here love to maybe just digging a little bit more if he ken on the.
On the mix I heard clearly that M&A was a big contributor but debt restructuring capital markets.
Very strong so if you can give any more color on just the contribution it was it kind of the normal breakdown, but just at a higher absolute level or or anything else you could share there and then in terms of the M&A market. Ken If you could just talk maybe a little more between what you're seeing in the middle market, where we are here and you know there's a tremendous activity versus maybe you can kind of.
Larger end of the spectrum.
I think on the breakdown. It was very similar we always say restructuring is 20% to 25% of our total revenues.
It was again it was at the lower end and that wasn't as a result of our low level of restructuring activity. It was more a level of.
Result of very high level of M&A, you know, creating a bigger denominator. So.
Restructuring had a good quarter just on a bigger denominator, because M&A was so large and capital markets.
Is probably high single digits.
But growing rapidly and because the SEC put back.
And delayed a lot of the spec for financings due to the accounting they put in it I'm not sure that the quarter.
It was I think they can do even a larger percentage.
On your point as to which is what I said in my remarks, I believe that the fundamentals of the M&A market are changing right in front of your eyes when people arent recognizing it as much the flows of capital into alternative asset managers, who then do not choose when to.
Execute a transaction you know 10.2030 years ago M&A was a coverage of strategics, who would choose when and where they felt the market was good for them to act.
The amount of capital flowing into a new on industry co op private equity or alternatives or sovereign wealth.
And these these entities. These institutions are getting extremely large and by the way I think as a result of 2020.
<unk> accelerate because they did not.
Lease report the volatility that the public capital markets did you didn't have to suffer through a mark of March 32020.
And these entities have to transact they are on the business of transacting and that's why I said I think we're going into that we have become a secular growth I think M&A is in a secular growth mode.
And lastly, I'd say theres, a whole new asset class I read.
I think yesterday.
That were up to 900 unicorns.
If you would've asked me 6.7 years ago 565 years ago for years ago, maybe.
What was our coverage for venture capital.
I would've said, they're really not our client base, but when you have 900 unicorns that I think have a market capitalization now 3 trillion dollars that's another asset class.
That will do something some may go public, but some will M&A.
And I believe that's a that's almost a market capitalization equivalent to private equity at this point. So we're seeing just a whole new.
M&A market I believe.
Yeah.
I appreciate the color it's fascinating.
Maybe a follow up for Joe just on expenses.
I heard the comments about the third quarter expectation with travel coming back on is that kind of the right level to be thinking about maybe as kind of a new base. If travel is normalizing or are there other puts and takes in there and then.
On the compensation outlook.
It looks like.
There should be some solid revenue growth on a year I understand how you are accruing for comp over the first few quarters, but is it reasonable to think there is some flexibility as we get towards the end of the year here just given the revenue backdrop or how are you guys thinking about that here at the moment.
So let me talk about comp and then I'll turn it over to you on the expenses side on the comp.
We thought of it that's just to stay where we where theres a lot of time left in the year to figure that out and 2 things I want to be clear first of all 30, we came close to a 34% margin.
I mean, we're getting people who have can you get leverage on the model I'd say 30, getting close to a 34% margin in the second quarter is leverage on the model, we're pretty happy with that leverage.
And I would also point out there is a real war for talent out there now and that's why we didn't change.
That's 1 of the reasons, we didn't change.
It's it's unclear, we'll see what happens over the rest of the year on where the year takes us too, but right now we want to keep the talent that's producing these kind of 34% type margins in place.
Joe I'll turn it over to you on the other expenses.
Yes, so I think it's all our guests in terms of travel we're seeing increased activity.
Our underlying quarterly non comp run rate is probably 30% to 31 at the current travel level.
And so we think that it's prudent to.
Yes that a couple more million dollars per quarter is an out of the.
Out of the out of the band of Reasonableness.
But I don't have any I don't have any magic insight on that.
Understood, Yes, I just wanted to get a little bit of framework. So I appreciate it.
I'll hop back in the queue. Thank you.
Our next question will come from Ken Worthington with Jpmorgan. Please go ahead.
Hi, good afternoon.
So wanted to talk about empty and in head count there that 125 is about the same number that moelis has had over the next couple of years with you guys continuing to be active on the hiring and promotion front, but it seems to be offsetting the attrition that youre generating clearly not having a day.
It could have impact on the revenue growth, but as we think about the outlook for M. D head count over the next few years, what what does that look like just is is now the right time to grow it.
<unk> is now the wrong time to grow and you sort of harvest the decisions that you've made in the past.
And can you talk about the white space that you would like to fill in here you mentioned sort of V. C is that sort of the place that you think you'll you'll look to grow in coming years or there's other other areas that you'd like to allocate your.
Your MDA resources.
So on M D.
I think we know we're not harvesting in fact, we have worked extremely hard to match, our mds to the rapidly changing world of what's what's going on in the world.
And I think 1 of the reasons our revenues are where they are is I think I used the analogy of the last call, but I'll say it again.
You guys might see the same MD count above the water, but below the water.
For like the duck paddling like crazy changing and focusing on sectors that are moving.
We have.
Added 11 M DS.
And the most important thing I can tell you is what I said that we believe our internal talent pool is phenomenal. It takes 789 years for us to take a person from hiring as an associate out of business School.
2 a managing director Moelis and company's only 14 years old so the base of the pyramid.
Didn't get large enough until you know 789 years ago, where we're hiring enough people out of school that when they came to the class a came up we had enough to repeat now we think we're we think we're looking at double digit M DS internally.
By the way we would we are looking to hire and we are hiring externally, but that is the fundamental power of the platform is that they are coming up and you can't go back 10 years and redo that we did it we've hired the people we've trained them.
And there by the way a lot other revenues right now being generated by some of those.
As pre managing directors executive directors, who are already becoming productive. So I'm very excited about our ability to grow our managing director head count by double digits.
And I'm, hoping that.
That's that's that's internal promotion plus a few externals plus maybe some.
Leavers book, but I'm very excited about what we have going on inside the firm.
And the second part of the question was sort of the white space to fill in so lots of internal talent, where are they getting assigned where do you want to.
Direct them to help build their careers and build moelis is revenue.
Ken you'd be it's so strong across the board and what's happening is.
A lot of it is coming from sizable transactions out of these alternative asset managers.
And the way you have to cover them. They want they want you to cover them in a holistic way. So when we say white space first of all just executing on 360 million on revenue.
And theres more to be done I mean, we have raised our average fee we have tried to limit.
The work there is theres a lot more work I think we could be doing we're trying to in order to maintain a good margin like this we're trying to select the best possible things we can work on.
But I would say that we want to continue to cover. These these entities that I think are growing way faster than the market.
And they cover all.
Most of these alternative asset managers now have.
Credit funds real estate funds all of the sectors. That's 1 of the reasons why we went into secondaries I know you saw it in the middle.
Middle of the year, we hired a very prominent managing director in.
Secondary transactions in funds, we just added more distribution. This morning to our capital markets and I'd say I'm trying to give you the feeling I think the white space is uncovering an asset class that might go from 3 trillion to 5 trillion over the next 5 years I think it will which is alternative asset manager.
And as you said, Oh Lastly, you mentioned the venture capital groups and I agree with you that I don't.
Think anybody is quite yet set perfectly to cover that 3 trillion dollars of assets because of how rapidly. It has shown up and yes, I do want to figure out how to cover that better.
Awesome. Thank you very much.
Our next question will come from Richard Ramsden with Goldman Sachs. Please go ahead.
Hi, Good afternoon, guys. So Ken could you talk a little bit about the dynamic in the strategic M&A market and I guess.
Specifically I'm interested in whether or not you've seen any shifts in terms of the geographic skew in terms of activity and then linked to that I know President Biden recently signed an executive order, which I think has heightened the focus on antitrust enforcement.
I think that we will have much of an impact in terms of the near term pipeline for M&A transactions. Thanks a lot.
So again I've always said this win win something shocks to the system in the U S rebound quicker than anybody.
Almost scary, how well the U S overcomes a volatility and reemerge as and I think again, we're seeing the U S lead the charge out of the Covid year.
But I will tell you we've had a lot of strength down in Brazil, we've had strength in Europe, we've even had transactions in China and actually Australia is doing very well, which is people forget about our Australia business.
But the U S. If youre looking for that.
The U S. As it is at a peak and just.
Leading the way out of our out of the Covid year.
2 the Biden executive order look we're watching that carefully I do think there'll be transactions that are affected by that I would look at our revenues and say 99% of them would not have been affected every 1 of them.
But let's just say 99% of the first half probably would've gone forward anyway, even if those.
Decorative orders turned into some type of more active legislation or policy.
But I do think there'll be some large transactions that might have happened it won't and again it'll be a little like the dog that didn't bark I'm not sure, we'll know which ones.
It didn't happen, but I think there will be a for ya.
Okay, and then secondly can you just talk a little bit about the capital return philosophy as you've said you've increased the dividend twice I think you bought back $100 million of stock in the first half of the year alone.
Shortly you will see a special dividend for capital return mechanism.
How attractive do you think that is and is not something that we should think about when we model capital returns for you on the second half of the year.
Yes.
And we did 2 specials of $2 I believe in the last 7 or 8.7 months.
So we've been returning a lot of capital I said, we'd look to all look I think we always said, we would look to all methods.
We were active as as we saw on what we talked about today on the call I think we've got active when we saw the whole dynamic of the M&A market become I think it's both our effectiveness and our model and how it's working and also the.
The realization that the M&A market has fundamentally changed and I think we'll go through secular growth I know a lot of people keep asking that always ask.
Where are we in a cycle well if alternative asset managers continue to grow their fund their assets under management by double digits. Then we're not going to cycle. Those are those are those those managers are not going to sit on their hands. It's just not what they do for a living is not their business.
So I think we got active in buying back the stock early in the year. We've continued through this quarter.
And.
We will continue to focus on all different methods as you as Joe said, we have no debt and $281 million of cash on the balance sheet and so I wouldn't rule out any method that we can get our capital back to our shareholders.
Okay. Thanks, that's very helpful.
Yeah.
Our next question will come from Steven <unk> with Wolfe Research. Please go ahead.
Good afternoon. This is Brendan O'brien filling in for Steven.
<unk>.
So Ken I know you mentioned the restructuring.
On restructuring activity was strong on the quarter, but on a recent industry conference you said that.
Industry restructuring activity has slowed down dramatically I guess, how much of the restructuring activity and revenues in the quarter was related to Covid mandates.
And how would you compare the pace of new mandates today relative to say 2019.
Well look.
I don't know what you define as a COVID-19 mandate because COVID-19 has been with US now for 16 months or 17 months. So almost everything you're working on you know started our M&A might be COVID-19 mandates.
I would say everybody always has idiosyncratic.
Backlog in everything I mean I watch.
M&A some people have a idiosyncratic back back log we.
Happy to go into 2021 with a very good backlog of restructurings and I think they will we will continue to be in the range I believe of 20% to 25% of our revenue restructuring through the end of this year now I do know and our team has told me that the pitches.
Pitching for new.
Restructurings throughout the world is dropping off rather dramatically as capital becomes.
Relatively free and equity markets are at all time peaks and you would expect that so I I like our backlog remained strong for the rest of the year because of the deals that we happen to have but I do know and I said I think I've said it.
That the number of opportunities.
Opportunities to pitch new.
Restructurings has gone.
Gone down significantly.
Now I will say this by the way.
Somebody once had a famous quote bull markets its stairs up an elevator down.
Every time, we've ever gone into a restructuring market from 2009 to 2000.1998 to 2020 to 1994.
Nobody nobody ever has in their 5 year projections, a catastrophe, but they happen in the elevator and it goes down quick so.
Again, everybody asked me on what do I think about 2022, we're maintaining our whole team we would even improve it theres a lot of leverage in the system. There's a lot of companies out there.
And I don't know what will happen, but I know something always does happen and when it happens. It happens quickly. So again there are not a lot of pitches right now, but when they are they usually come very quickly as COVID-19 did last year.
That's great color. Thank you.
So I guess switching over to productivity I know back when you went public you initially outlined.
That range of about 69 million.
But given the optimization do you M. D day is some of the feed on Manson dynamics, you mentioned earlier as well as reduce travel on the.
Benefits of productivity.
How are you sort of thinking about maybe like a new range for where do you see productivity they get to considering the last couple of quarters you've done.
Above that.
$8 million to $9 million range.
6 to 9 months, well look let me go back and say this I have never from the time I went we went on our IPO I have never used productivity per MD I think it's a terrible statistic.
I I get left out because I said I could I can tell you our revenues on I can tell you our M. D. So I guess I can tell you what our revenue per MD is but it's a meaningless number.
I don't know why that it's where our system where company.
And I'll tell you what our.
What we're really trying to do is producing a 30 plus marching right now that's not even what we were hoping we were hoping for 25 per cent margin, but.
But we produce revenue throughout the system.
And I don't have a target on that I would ask you to just take our managing directors and divide it by whatever whatever our trailing 12 months run rate is and you can have your own number but I think the system provides leverage as.
Our clients want to stay in contact with the system and look to look to stay on contracts, where a huge feeder of that base.
Base of asset managers that we were talking about and I think I look at it systematically and I really have never talked about our revenue per MD productivity number.
Great. Thanks for taking my questions.
Our next question will come from a non-GAAP cilia with Morgan Stanley. Please go ahead.
Yeah.
Hi, Ken Hi, Joe.
I mean, I know you said that M&A is in a secular growth mode and you also said your pipelines I record levels, which is pretty impressive just given the level of completions coming through.
Is it.
Too early here to get a read through into 'twenty, 2 because I'm sort of assuming that the majority of these deals in the pipeline should get completed by year end.
We don't have a.
I mean, some of our pipeline in 2022, but it's really too early to get a read other than my my gut feel which is.
There is nothing that says assets won't continue to flow to the to the.
Alternatives, they will continue to execute transactions by sell whatever so I expect 2022 to be a great year, but you know I don't have any unique crystal ball into that other than our pipeline is at all time record highs and some of that will flow into 2022, but but it's just my sense of where.
The secular growth of capital and what those people are going to do with their capital.
Okay great.
Then maybe I just wanted to follow up on the comment on pretax margins.
At record levels, you are well above 25%.
That you've been targeting in the past.
Yeah other than hiring are there any areas you would want to invest in or in any investments that you want them, but you might want to accelerate here just given.
How strong the environment is right now.
I think it would be all around hiring.
Coverage it would be all normal course of business I think.
We put some money into distribution, which was kind of a new.
But I don't think that has that has more leverage on it then we're not going to have to hire too many more people in there, but I think it would just be general.
Coverage general banker hiring.
Got it thank you.
Our next question will come from Michael Brown with K B W. Please go ahead.
Great. Thank you, operator, Hey, Ken and Joe.
Hi.
So in the your presentation I saw that comment that's a capital markets advisory has seen a record first half.
Obviously 2020 had a really strong second half so when we think about.
That comparable period is it possible for that business to be above 2020, I understand it's a smaller piece of the revenues, but clearly an area that you are investing in and I guess from stack regulatory environment could certainly impact how things play out from here, but you know based on what you know today, just kind of interested in your thoughts.
On how that could play out for the rest of the year.
Yeah.
Yes, I would hope so I would hope it would be.
Larger you know we had hired that team and they really just started with us on some of the new team.
September of last year. So they didn't have a long lead time coming into the fourth quarter.
That and the fact that a lot of the pipes and some of the capital markets around spec transactions were pushed out there were a lot of transactions.
That were pushed out of this quarter and probably will happen in the back half of the year. So again I suspect it will be a very strong back half of the year for capital markets.
Okay.
Yeah.
On your comment earlier, you mentioned a war on talent.
All.
Wines across wall Street and related.
So it appears that you're really across the board.
East side of the.
On the pyramid there.
What are you doing to kind of proactively retain talent are there actions that you need to do here.
Okay.
I don't know if that's me, but you're fading.
You got me or is it every day.
I'm going to answer the question, what I think you said because I think some of it.
David.
I would say, it's a war for talent because I think some of the periodicals actually do report that it is a war on talent, but it's really we're not fighting the war on talent, where we're fighting a war for talent.
<unk>.
We are trying to do all sorts of we.
We are hiring as many people as we can to in the junior ranks, especially to take the burden off you can imagine.
I think on this 360 million on revenue, we had over 180 fee events.
Can imagine.
That's it's a lot of revenue on that on the talent, they're doing a great job.
We are doing things there.
There are numerous though and I don't want to go into the mall, maybe check could do it offline, but we we are trying to make life better easier hire more people.
Give protected time off all the things.
That you would try and still satisfy clients and make sure we get great work product.
We are we are doing that and thats 1 of the reasons why we did not change our comp ratio yet.
Or may not I mean, it's it's a time to keep your talent, there's enough happening out there and 1 of the key things you want to do is have a great motivated set of workers.
Okay, great. Thanks, Ken hopefully a couple of things.
Can you hear me, Okay. I guess the other piece of that question was just in terms of what you're seeing in the market and I. Just was curious to hear if some other players have kind of reached a level of maybe becoming somewhat irrational with guarantees or what youre seeing in terms on.
What's needed to learn bankers away.
When competitors irrationality is only when they hire somebody you stopped bidding on and then all of a sudden they seem irrational. So I will say that it's in the eyes of a holder, but it's not it's funny. The MD talent has always had a value in it and I'd say, there's still a war for talent at the MD level The war.
That I think is most active right now is for below the MDA level, which is obviously everybody wants a higher grade managing director and that happens every year.
And in the rare enough that even whenever they come up there's a war for that kind of talent.
On this what's different about what's going on now it's throughout the permit it's up and down the whole structure of everybody's company. So I assume others are having it and thats really where its happening.
Okay, great. Thanks for the color Ken.
Yeah.
Our next question will come from Brennan Hawken with UBS. Please go ahead.
Hey, there thanks for taking my questions.
Ken.
Interested to circle back on some of the comments on the metaphor of the Ducks feats went on under the water in the processes.
And success that you've had around talent development.
Can you talk about how.
What specifically do you guys have a processing place is it more loss, a fair and up to various team leads to drive that and.
In the decade or 15 years that you guys have.
And at this how have you refined that process like how much of the success that you've had recently.
Guess is result of design.
Versus maybe refinement in talent selection.
And whatnot, how do you think what do you attribute the success to.
And how a system of ties.
Hopefully that makes it.
Look I appreciate that question, because I think thats under <unk>.
Talked about answers so let me.
Boris from you with a real answer that I think fundamentally changes our model from everybody else's first of all we do have an internal training program. That's extensive people are evaluated on them, replacing themselves and training and their comp is on it when I talk about not being on commission I'm going to say 2 things.
There may be investment banking.
Advanced investment banking, but I think it's important to know first of all if you're on commission structures. Then then if you don't get paid for training youre not going to train.
We evaluate people on that we evaluate on how much they go to campus and help recruit.
And it's fundamentally part of it and by the way I'm not sure if anybody else has put from <unk>.
I think from when we were a very small for them I forgot 1 when you get promoted we send you back for executive.
Training at I think we do we do it I know, we do it with the warrant MBA program.
We used to send people back for 3 day as I think we're now going to for days.
We have the board of directors meet with them down there we have senior management interact all the time, but we we spend money on that that's in our income statement and it's not cheap and we we do it we train people on presentation skills from very early on so its systematized and let me say 1 fundamentally last thing because everybody says when I say, we have a <unk>.
And it's not a commission.
Nobody seems to care, but.
Brendan if you had a commission and you were covering industrials, let's say you were covering the auto business and I told you that I had a really intelligent brilliant executive director and could you help them.
Your first thought would be no I need to get that guy out of my system.
Forbid I introduce them to my.
The executives at the companies I'm covering and they like him.
Wood Disintermediation Commission.
Why would I ever introduce a smart energetic.
Person to my accounts.
And so the fact that we have 1 P&L and we actually evaluate you on that is very important and you can't get over that I, you know I wouldn't if I you know.
I've never heard of a commission sales we wanted to.
Hey on their accounts over to anybody so our model is systematized for this it took a long time to show up.
Because the base of the pyramid is never as big as the growth at the top.
And now you know I look back 6 or 7 years ago, we probably were hiring a 80 to 100 people.
Now they are starting to show up and that is a fundamental change and Thats why I think youre seeing.
So much productivity because some of it's coming from E D's, who had been with US a long time and.
I'm very excited about the pipeline that's coming up through the system as a result of that I hope that wasn't too long an answer but it's it's fundamental to our success.
Right no. Thanks, Thanks for that color Ken I appreciate it.
And.
This is Mike.
Invite another long answer but.
Let me give a shot anyway.
So from my perspective right Ken.
Ken This is clearly your Swan song right.
The firm Bears you name it and you've put a lot of blood sweat and tears into it but I do run into investors that get concerned about key man risk.
What is it that you can tell us about the succession planning process within Moelis and what is involved in that process and how we can do to help allay concerns around key man risk at the farm.
You're worried about Joe you that worried about Joe.
Of course.
Yes.
Hey, look we talk about it a lot and.
I want to say 1 thing for you on Covid I think unveiled this you know my main job as the firm is meeting clients.
Putting our flag out there.
That's really what I did.
For for 14 years.
Incessantly and really.
At this point nobody if youre doing a software deal they don't they want our software banker if youre doing a.
Consumer deal you on our consumer banker, but I realize I always thought my role was to put the flag out there and meet people and get them comfortable.
I'll tell you Brendan Covid I didn't get a chance to do that.
Nobody would take my meeting you couldn't go anywhere and zoom calls arent really the greatest for that.
And our trailing 12 month revenues is up above anything we've ever done on our quarters I'll tell you what makes you almost feel like youre not needed forget for.
It gets Swan song. So I want you know, we talk about and we have a lots of discussions over how we would.
Succession plan, if I was hit by a bus but I was just wondering on my birthday was 2 days ago I turned 63 I'm in great Health I've never had more fun and what we're doing because the most fun part of my job now is watching young people, we hired out of school.
Really Dom.
Dominate industries create their own franchises.
Just tell you the firm is so much wider.
When you do $360 million in a quarter believe me that's not me and.
I'm, having fun doing it and we do have a plan and I have no plans to go anywhere I really don't want it's become more and more fun.
As Ive seen young people really take charge it's actually.
I've had more from this year almost than ever before to see the talent and what they're capable of doing so I mean, we do I want you know internally, we do talk about it.
I am in good health and I am enjoying it and I think we're not really thinking about it right now.
Actively.
Yeah.
Yeah, No that's fair happy belated birthday, Ken Thank you.
And then I'm, sorry, I just want to sneak 1 last 1 and then Joe.
You referenced the $30 million to $31 million non comp at the current rate <unk> was a little lower than that.
Does that imply that you guys have reversed some of that provision oriented noise that we had in <unk> in this quarter, which is out of that run rate.
Exactly right, Yeah, bad debt and no basically trending exactly where it does every year about to $2.5 million a year and we're at 1.3 for the first half.
We went the path that we took was much more volatile we had a little over 3 on the first quarter EMEA on a reversal in the second.
Great Thanks for that.
Sure.
Again, if you have a question. Please press Star then 1 our next question will come from Jeff Hardy with Piper Sandler. Please go ahead.
Good afternoon, guys very nice quarter.
So this has been touched on a few times, but I don't want to go back to I mean, we used to look at at MD count, but the thing that really stood out to me was the banker count going up to 670 net that was a sizable increase and we're seeing the trend of bankers per MD continuing to climb as well.
Touched on a bit but can you talk a bit about the efficiency of non M. D client coverage and kind of that productivity and as we look forward should we kind of keep thinking that the bankers per M. D. Kind of continues to go up or is maybe some of the increase just a function of you've got a lot of promotions kind of.
To make over the next couple of years.
So I think some of that goes to the changing nature of the environment.
Again, 10 to 20 years ago to get into a big strategic boardroom they'd want to see somebody that looked and felt like me.
When you have all this money and alternative capital some of it is actually decisions are being made by.
People, who are 30 to 40 years old.
And in those asset managers, they actually run significant assets and do the M&A themselves and I feel like this whole idea of maybe you just touched on it revenue per MD I think we have vice presidents.
Who are experts in their field, who we're talking to people of their age or slightly you know, they're not they're not Ceos of general motors anymore, they're run, but theyre running.
On M&A portfolio, that's every bit as big if not bigger.
And so those people are very very effective.
And having those people.
It's becoming more and more a key to winning the business of these institutions.
The market is changing.
And I think the way we're doing it in holistically covering those people from at each at each segment you'd be surprised how young some of those decision makers are on significant M&A transactions now.
And are willing to deal with what they perceive as an expert that 20 years ago, you wouldn't have thought would make it into a corporate boardroom, but different different type of transactions right now.
Yeah.
Okay, and just looking at the revenue strength I mean, it's always nice to see is there anything to highlight as far as kind of deals haven't closed in July that might have helped revenues being pulled into the quarter to and.
And from <unk>.
On the pull forward Joe you on a go through the pull forward.
It was it was maybe for transactions I think an aggregated to something around 20 million, it's nothing out of the ordinary.
Okay. Thank you.
Sure.
This concludes our question and answer session I would like to turn the conference back over to Ken Moelis for any closing remarks.
Well thanks for your time, we appreciate your support and we'll see you in 3 months.
And feel free to call Chad if you want any more insight into some of these questions. Thanks a lot.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.