HLI Houlihan Lokey Inc

– First Quarter Fiscal 2025 Revenues of $514 million –

– First Quarter Fiscal 2025 Diluted EPS of $1.30 –

– Adjusted First Quarter Fiscal 2025 Diluted EPS of $1.22 –

– Announces Dividend of $0.57 per Share for Second Quarter Fiscal 2025 –

Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its first quarter ended June 30, 2024.

For the first quarter ended June 30, 2024, revenues were $514 million, compared with $416 million for the first quarter ended June 30, 2023. Net income was $89 million, or $1.30 per diluted share, for the first quarter ended June 30, 2024, compared with $61 million, or $0.90 per diluted share, for the first quarter ended June 30, 2023. Adjusted net income for the first quarter ended June 30, 2024 was $84 million, or $1.22 per diluted share, compared with $62 million, or $0.89 per diluted share, for the first quarter ended June 30, 2023.

“Our first quarter fiscal 2025 benefited primarily from improving M&A activity, with revenues up 24% versus the first quarter last year. Our Corporate Finance business had its strongest first quarter ever; our Financial Restructuring business had its second-strongest first quarter; and our Financial and Valuation Advisory business is seeing increased momentum in line with the market recovery. Although macro uncertainties still exist, we are optimistic about this fiscal year given continued improvements in M&A and capital markets activity,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey.

Selected Financial Data

(In thousands, except per share data)

U.S. GAAP

Three Months Ended June 30,

 

2024

 

 

 

2023

 

Revenues by segment

 

 

 

Corporate Finance

$

328,417

 

 

$

227,051

 

Financial Restructuring

 

117,422

 

 

 

123,368

 

Financial and Valuation Advisory

 

67,770

 

 

 

65,410

 

Revenues

$

513,609

 

 

$

415,829

 

Operating expenses:

 

 

 

Employee compensation and benefits

$

330,116

 

 

$

263,483

 

Non-compensation expenses

 

87,925

 

 

 

78,999

 

Operating income

 

95,568

 

 

 

73,347

 

Other income, net

 

(4,306

)

 

 

(3,005

)

Income before provision for income taxes

 

99,874

 

 

 

76,352

 

Provision for income taxes

 

10,934

 

 

 

14,962

 

Net income

$

88,940

 

 

$

61,390

 

 

 

 

 

Diluted earnings per share attributable to Houlihan Lokey, Inc.

$

1.30

 

 

$

0.90

 

 

Revenues

For the first quarter ended June 30, 2024, revenues were $514 million, compared with $416 million for the first quarter ended June 30, 2023. For the first quarter ended June 30, 2024, Corporate Finance (“CF”) revenues increased 45%, Financial Restructuring (“FR”) revenues decreased (5)%, and Financial and Valuation Advisory (“FVA”) revenues increased 4% when compared with the first quarter ended June 30, 2023.

Expenses

The Company’s employee compensation and benefits expenses, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis.

 

U.S. GAAP

 

Adjusted (Non-GAAP) *

 

Three Months Ended June 30,

($ in thousands)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Expenses:

 

 

 

 

 

 

 

Employee compensation and benefits

$

330,116

 

 

$

263,483

 

 

$

315,869

 

 

$

255,733

 

% of Revenues

 

64.3

%

 

 

63.4

%

 

 

61.5

%

 

 

61.5

%

Non-compensation

$

87,925

 

 

$

78,999

 

 

$

80,330

 

 

$

75,644

 

% of Revenues

 

17.1

%

 

 

19.0

%

 

 

15.6

%

 

 

18.2

%

Per full-time employee (1)

$

34

 

 

$

30

 

 

$

31

 

 

$

29

 

Provision for income taxes

$

10,934

 

 

$

14,962

 

 

$

38,239

 

 

$

25,499

 

% of Pre-tax income

 

10.9

%

 

 

19.6

%

 

 

31.2

%

 

 

29.2

%

*

Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.

(1)

Calculated using the average of the number of full-time employees at the beginning of the reporting period and the end of the reporting period.

 

Employee compensation and benefits expenses were $330 million for the first quarter ended June 30, 2024, compared with $263 million for the first quarter ended June 30, 2023. Adjusted employee compensation and benefits expenses were $316 million for the first quarter ended June 30, 2024, compared with $256 million for the first quarter ended June 30, 2023. This resulted in an adjusted compensation ratio of 61.5% for both the first quarter ended June 30, 2024 and June 30, 2023. The increase in GAAP and adjusted employee compensation and benefits expenses was primarily a result of an increase in revenues for the quarter when compared with the same quarter last year.

Non-compensation expenses were $88 million for the first quarter ended June 30, 2024, compared with $79 million for the first quarter ended June 30, 2023. Adjusted non-compensation expenses were $80 million for the first quarter ended June 30, 2024, compared with $76 million for the first quarter ended June 30, 2023. The increase in GAAP and adjusted non-compensation expenses was primarily a result of increases in information technology and communications expenses and in travel, meals, and entertainment expenses.

The provision for income taxes was $11 million, representing an effective tax rate of 10.9%, for the first quarter ended June 30, 2024, compared with $15 million, representing an effective tax rate of 19.6%, for the first quarter ended June 30, 2023. The decrease in the Company's tax rate during the quarter ended June 30, 2024 relative to the quarter ended June 30, 2023 was primarily a result of increased stock compensation deductions. The adjusted provision for income taxes was $38 million, representing an adjusted effective tax rate of 31.2% for the first quarter ended June 30, 2024, compared with $25 million, representing an adjusted effective tax rate of 29.2% for the first quarter ended June 30, 2023.

Segment Reporting for the First Quarter

Corporate Finance

CF revenues were $328 million for the first quarter ended June 30, 2024, compared with $227 million for the first quarter ended June 30, 2023, representing a increase of 45%. Revenues increased due to an increase in the number of closed transactions during the quarter, driven by favorable market conditions for M&A and capital markets transactions. Revenues also increased due to an increase in the average transaction fee on closed transactions. The increase in the average transaction fee on closed transactions was driven by transaction mix, and does not represent a trend in the average transaction fee on closed transactions.

 

Three Months Ended June 30,

($ in thousands)

2024

 

2023

Corporate Finance

 

 

 

Revenues

$

328,417

 

$

227,051

# of Managing Directors

 

228

 

 

225

# of Closed transactions (1)

 

116

 

 

95

 

Financial Restructuring

FR revenues decreased (5)% to $117 million for the first quarter ended June 30, 2024, compared with $123 million for the first quarter ended June 30, 2023. Revenues decreased primarily due to a decrease in the average transaction fee on closed transactions and lower retainer fees relative to the same quarter last year, partially offset by an increase in the number of closed transactions. The decrease in average transaction fee on closed transactions was driven by transaction mix, and does not represent a trend in the average transaction fee on closed transactions.

 

Three Months Ended June 30,

($ in thousands)

2024

 

2023

Financial Restructuring

 

 

 

Revenues

$

117,422

 

$

123,368

# of Managing Directors

 

58

 

 

59

# of Closed transactions (1)

 

33

 

 

30

 

Financial and Valuation Advisory

FVA revenues increased 4% to $68 million for the first quarter ended June 30, 2024, compared with $65 million for the first quarter ended June 30, 2023. Revenues increased primarily due to a increase in the number of Fee Events. The increase in the number of Fee Events was driven by expanding our scope of work for existing clients for one or more of the service lines within our FVA business.

 

Three Months Ended June 30,

($ in thousands)

2024

 

2023

Financial and Valuation Advisory

 

 

 

Revenues

$

67,770

 

$

65,410

# of Managing Directors

 

42

 

 

42

# of Fee Events (1)

 

847

 

 

786

(1)

A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of one thousand dollars. References in this press release to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our periodic reports on Forms 10-K and 10-Q.

 

Balance Sheet and Capital Allocation

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.57 per share of Class A and Class B common stock. The dividend will be payable on September 15, 2024, to stockholders of record as of the close of business on September 3, 2024.

As of June 30, 2024, the Company had $485 million of cash and cash equivalents and investment securities, and $33 million of other liabilities.

Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Tuesday, July 30, 2024, to discuss its first quarter fiscal 2025 results. The number to call is 1-877-407-4018 (domestic) or 1-201-689-8471 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available from July 30, 2024 through August 6, 2024, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13747525. A replay of the webcast will be archived and available on the Company’s website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Adjusted net income, total and on a per share basis, and certain adjusted items used to determine adjusted net income, are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results. The adjusted items included in this earnings press release as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these adjusted amounts are not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company’s financial information determined under GAAP. For a description of the Company’s use of these adjusted items and a reconciliation with comparable GAAP items, see the section of this press release titled “Reconciliation of GAAP to Adjusted Financial Information.” Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.

About Houlihan Lokey

Houlihan Lokey, Inc. (NYSE:HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and financial and valuation advisory. Houlihan Lokey serves corporations, institutions, and governments worldwide with offices in the Americas, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm’s commitment to client success across its advisory services. The firm is the No. 1 investment bank for all global M&A transactions, the No. 1 M&A advisor for the past nine consecutive years in the U.S., the No. 1 global restructuring advisor for the past ten consecutive years, and the No. 1 global M&A fairness opinion advisor over the past 25 years, all based on number of transactions and according to data provided by LSEG.

For more information, please visit www.HL.com.

Appendix

Condensed Consolidated Balance Sheets (Unaudited) Condensed Consolidated Statements of Income (Unaudited) Reconciliation of GAAP to Adjusted Financial Information (Unaudited)

 

HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

   

(In thousands, except share data and par value)

June 30, 2024

 

March 31, 2024

Assets

 

 

 

Cash and cash equivalents

$

449,697

 

 

$

721,235

 

Restricted cash

 

619

 

 

 

619

 

Investment securities

 

35,622

 

 

 

38,005

 

Accounts receivable, net of allowance for credit losses

 

192,587

 

 

 

199,630

 

Unbilled work in process, net of allowance for credit losses

 

156,023

 

 

 

192,012

 

Income taxes receivable

 

48,179

 

 

 

32,856

 

Deferred income taxes

 

80,607

 

 

 

90,064

 

Property and equipment, net

 

143,368

 

 

 

136,701

 

Operating lease right-of-use assets

 

362,222

 

 

 

344,024

 

Goodwill

 

1,175,370

 

 

 

1,127,497

 

Other intangible assets, net

 

198,707

 

 

 

197,439

 

Other assets

 

99,915

 

 

 

90,677

 

Total assets

$

2,942,916

 

 

$

3,170,759

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

Liabilities:

 

 

 

Accrued salaries and bonuses

$

491,048

 

 

$

726,031

 

Accounts payable and accrued expenses

 

110,114

 

 

 

114,171

 

Deferred income

 

36,647

 

 

 

33,139

 

Deferred income taxes

 

7,598

 

 

 

7,505

 

Operating lease liabilities

 

435,200

 

 

 

415,412

 

Other liabilities

 

32,831

 

 

 

37,751

 

Total liabilities

 

1,113,438

 

 

 

1,334,009

 

 

 

 

 

Stockholders' equity:

 

 

 

Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 53,053,499 and 52,348,511 shares, respectively

 

53

 

 

 

52

 

Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 16,456,793 and 16,746,676 shares, respectively

 

16

 

 

 

17

 

Additional paid-in capital

 

691,651

 

 

 

739,870

 

Retained earnings

 

1,207,328

 

 

 

1,163,419

 

Accumulated other comprehensive loss

 

(69,570

)

 

 

(66,608

)

Total stockholders’ equity

 

1,829,478

 

 

 

1,836,750

 

Total liabilities and stockholders’ equity

$

2,942,916

 

 

$

3,170,759

 

 

HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

   

 

Three Months Ended June 30,

(In thousands, except share and per share data)

 

2024

 

 

 

2023

 

Revenues

$

513,609

 

 

$

415,829

 

Operating expenses:

 

 

 

Employee compensation and benefits

 

330,116

 

 

 

263,483

 

Travel, meals, and entertainment

 

18,512

 

 

 

16,018

 

Rent

 

19,284

 

 

 

17,403

 

Depreciation and amortization

 

8,856

 

 

 

6,532

 

Information technology and communications

 

16,189

 

 

 

13,548

 

Professional fees

 

8,477

 

 

 

9,557

 

Other operating expenses

 

16,607

 

 

 

15,941

 

Total operating expenses

 

418,041

 

 

 

342,482

 

Operating income

 

95,568

 

 

 

73,347

 

Other income, net

 

(4,306

)

 

 

(3,005

)

Income before provision for income taxes

 

99,874

 

 

 

76,352

 

Provision for income taxes

 

10,934

 

 

 

14,962

 

Net income

$

88,940

 

 

$

61,390

 

 

 

 

 

Weighted average shares of common stock outstanding:

Basic

 

65,031,216

 

 

 

63,806,156

 

Fully diluted

 

68,501,059

 

 

 

68,000,392

 

Earnings per share attributable to Houlihan Lokey, Inc.

 

 

 

Basic

$

1.37

 

 

$

0.96

 

Fully diluted

$

1.30

 

 

$

0.90

 

 

HOULIHAN LOKEY, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION (UNAUDITED)

   

 

Three Months Ended June 30,

(In thousands, except share and per share data)

 

2024

 

 

 

2023

 

Revenues

$

513,609

 

 

$

415,829

 

 

 

 

 

Employee compensation and benefits expenses

 

 

 

Employee compensation and benefits expenses (GAAP)

$

330,116

 

 

$

263,483

 

Less: Acquisition related retention payments

 

(14,247

)

 

 

(7,750

)

Employee compensation and benefits expenses (adjusted)

 

315,869

 

 

 

255,733

 

 

 

 

 

Non-compensation expenses

 

 

 

Non-compensation expenses (GAAP)

$

87,925

 

 

$

78,999

 

Less: Acquisition related legal structure reorganization

 

(500

)

 

 

—

 

Less: Integration and acquisition related costs

 

(3,554

)

 

 

—

 

Less: Acquisition amortization

 

(3,541

)

 

 

(3,355

)

Non-compensation expenses (adjusted)

 

80,330

 

 

 

75,644

 

 

 

 

 

Operating income

 

 

 

Operating income (GAAP)

$

95,568

 

 

$

73,347

 

Plus: Adjustments (1)

 

21,842

 

 

 

11,105

 

Operating income (adjusted)

 

117,410

 

 

 

84,452

 

 

 

 

 

Other income, net

 

 

 

Other income, net (GAAP)

$

(4,306

)

 

$

(3,005

)

Plus: Change in acquisition earnout liability fair value

 

(828

)

 

 

—

 

Other income, net (adjusted)

 

(5,134

)

 

 

(3,005

)

 

 

 

 

Provision for income taxes

 

 

 

Provision for income taxes (GAAP)

$

10,934

 

 

$

14,962

 

Plus: Impact of the excess tax benefit for stock vesting

 

21,921

 

 

 

7,299

 

Less: Reversal of deferred tax asset

 

(1,690

)

 

 

—

 

Adjusted provision for income taxes

 

31,165

 

 

 

22,261

 

Plus: Resulting tax impact (2)

 

7,074

 

 

 

3,238

 

Provision for income taxes (adjusted)

 

38,239

 

 

 

25,499

 

 

 

 

 

Net income

 

 

 

Net income (GAAP)

$

88,940

 

 

$

61,390

 

Plus/(less): Adjustments (3)

 

(4,635

)

 

 

568

 

Net income (adjusted)

$

84,305

 

 

$

61,958

 

 

 

 

 

Fully diluted shares outstanding

 

 

 

Fully diluted shares outstanding (GAAP)

 

68,501,059

 

 

 

68,000,392

 

Plus: Impact of unvested GCA retention and deferred share awards

 

622,396

 

 

 

1,472,899

 

Fully diluted shares outstanding (adjusted)

 

69,123,455

 

 

 

69,473,291

 

 

 

 

 

Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP)

$

1.30

 

 

$

0.90

 

Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted)

$

1.22

 

 

$

0.89

(1)

The aggregate of adjustments from employee compensation and benefits and non-compensation expenses.

(2)

Reflects the tax impact of utilizing the adjusted effective tax rate on the non-tax adjustments identified above.

(3)

Consists of all adjustments identified above net of the associated tax impact.

 

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Investor Relations 212.331.8225 IR@HL.com OR Media Relations 212.331.8223 PR@HL.com