Moelis & Co 2Q17 Earnings Call Notes

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Kenneth Moelis – Chairman and CEO

Companies waiting to see what happens with tax before inverting

“there’s a hold waiting to see what happens with tax. I think there were some industries that felt like the U.S. tax rate was not competitive and they were looking to do inversions for a few years. I think there’s a feeling now and a hope that’s worth waiting for. It’s sizable enough that we may solve our own tax problem. So not to do an unnatural act here while waiting to see what happens. Look, if that goes on another year, maybe they will run out of patience. But I think, for the time being, there is a feeling that, that particular problem might get solved.”

Outlook for retail and restructuring

“I think there’s a fundamental need to rationalize. People want to get larger to fight online and to fight Amazon and retail specifically. And there’ll be restructurings as well. Now the last time I was asked this, this would retail step in for energy? And the answer is I don’t believe it’s going to be as big an opportunity as energy. Energy was a very, very large user of capital in the leverage world. So I think retail will undergo both, but I don’t think it’s worth — I don’t think it’ll be so large that it’ll step in and replace things like energy in the restructuring world. But it will be — yes, there’s a lot of restructuring going on in the retail business, but a lot of those are smaller companies who are just kind of closing stores and shutting down, in some cases. So yes, I do think you’ll see some of both.”

I’m sensing an upturn in the European business

“Yes, I’m sensing a bit of an upturn in European business. I think some of it’s, us, doing better as a group. So I always like when you guys ask us these questions, we only have — we have a small portal into it. But we do — we feel like the general market is getting more upbeat on doing things and we feel like we’re having a better year and have organized Europe and feel much better about our activity there. So yes, I think it’s steady — I wouldn’t expect a spike, but I think — I feel like there’ll be a steady improvement in European corporate activity”