– Second Quarter Fiscal 2025 Revenues of $575
million – – Second Quarter Fiscal 2025 Diluted EPS of $1.37 – –
Adjusted Second Quarter Fiscal 2025 Diluted EPS of $1.46 – –
Announces Dividend of $0.57 per Share for Third Quarter Fiscal 2025
–
Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the
“Company”) today reported financial results for its second quarter
ended September 30, 2024.
For the second quarter ended September 30, 2024, revenues were
$575 million, compared with $467 million for the second quarter
ended September 30, 2023. Net income was $94 million, or $1.37 per
diluted share, for the second quarter ended September 30, 2024,
compared with $67 million, or $0.99 per diluted share, for the
second quarter ended September 30, 2023. Adjusted net income for
the second quarter ended September 30, 2024 was $100 million, or
$1.46 per diluted share, compared with $77 million, or $1.11 per
diluted share, for the second quarter ended September 30, 2023.
“We are pleased with our second-quarter results, and we enter
the second half of the year with momentum across all three of our
business lines. While we recognize uncertainties in the macro
environment, our outlook for the second half of fiscal 2025 is
positive, as we continue to see the benefits of our highly
diversified business model,” stated Scott Adelson, Chief Executive
Officer of Houlihan Lokey.
Selected Financial Data
(In thousands, except per share
data)
U.S. GAAP
Three Months Ended September
30,
Six Months Ended September
30,
2024
2023
2024
2023
Revenues by segment
Corporate Finance
$
364,028
$
281,684
$
692,445
$
508,735
Financial Restructuring
131,568
114,670
248,990
238,038
Financial and Valuation Advisory
79,361
70,635
147,131
136,045
Revenues
$
574,957
$
466,989
$
1,088,566
$
882,818
Operating expenses:
Employee compensation and benefits
$
360,637
$
296,542
$
690,753
$
560,025
Non-compensation
83,651
80,170
171,576
159,169
Operating income
130,669
90,277
226,237
163,624
Other income, net
(5,419
)
(3,296
)
(9,725
)
(6,301
)
Income before provision for income
taxes
136,088
93,573
235,962
169,925
Provision for income taxes
42,539
26,542
53,473
41,504
Net income attributable to Houlihan Lokey,
Inc.
$
93,549
$
67,031
$
182,489
$
128,421
Diluted earnings per share attributable to
Houlihan Lokey, Inc.
$
1.37
$
0.99
$
2.67
$
1.89
Revenues
For the second quarter ended September 30, 2024, revenues were
$575 million, compared with $467 million for the second quarter
ended September 30, 2023. For the second quarter ended September
30, 2024, Corporate Finance (“CF”) revenues increased 29%,
Financial Restructuring (“FR”) revenues increased 15%, and
Financial and Valuation Advisory (“FVA”) revenues increased 12%, in
each case, when compared with the second quarter ended September
30, 2023.
Expenses
The Company’s employee compensation and benefits expenses,
non-compensation expenses, and provision for income taxes during
the periods presented and described below are on a GAAP and an
adjusted basis.
U.S. GAAP
Adjusted (Non-GAAP) *
Three Months Ended September
30,
($ in
thousands)
2024
2023
2024
2023
Expenses:
Employee compensation and benefits
$
360,637
$
296,542
$
353,599
$
287,200
% of Revenues
62.7
%
63.5
%
61.5
%
61.5
%
Non-compensation
$
83,651
$
80,170
$
80,879
$
75,345
% of Revenues
14.5
%
17.2
%
14.1
%
16.1
%
Per full-time employee (1)
$
32
$
30
$
31
$
29
Provision for income taxes
$
42,539
$
26,542
$
45,610
$
30,329
% of Pre-tax income
31.3
%
28.4
%
31.3
%
28.4
%
*
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.
U.S. GAAP
Adjusted (Non-GAAP) *
Six Months Ended September
30,
($ in
thousands)
2024
2023
2024
2023
Expenses:
Employee compensation and benefits
$
690,753
$
560,025
$
669,468
$
542,933
% of Revenues
63.5
%
63.4
%
61.5
%
61.5
%
Non-compensation
$
171,576
$
159,169
$
161,209
$
150,989
% of Revenues
15.8
%
18.0
%
14.8
%
17.1
%
Per full-time employee (1)
$
65
$
60
$
61
$
57
Provision for income taxes
$
53,473
$
41,504
$
83,849
$
55,828
% of Pre-tax income
22.7
%
24.4
%
31.2
%
28.7
%
*
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 $361 million
for the second quarter ended September 30, 2024, compared with $297
million for the second quarter ended September 30, 2023. Adjusted
employee compensation and benefits expenses were $354 million for
the second quarter ended September 30, 2024, compared with $287
million for the second quarter ended September 30, 2023. This
resulted in an adjusted compensation ratio of 61.5% for both the
second quarter ended September 30, 2024 and the second quarter
ended September 30, 2023. The increase in GAAP and adjusted
employee compensation and benefits expenses was a result of an
increase in revenues for the quarter when compared with the same
quarter last year.
Non-compensation expenses were $84 million for the second
quarter ended September 30, 2024, compared with $80 million for the
second quarter ended September 30, 2023. Adjusted non-compensation
expenses were $81 million for the second quarter ended September
30, 2024, compared with $75 million for the second quarter ended
September 30, 2023. The increase in GAAP and adjusted
non-compensation expenses was primarily a result of an increase in
other operating expenses and information technology and
communication expenses for the quarter when compared with the same
quarter last year.
The provision for income taxes was $43 million, representing an
effective tax rate of 31.3% for the second quarter ended September
30, 2024, compared with $27 million, representing an effective tax
rate of 28.4% for the second quarter ended September 30, 2023. The
increase in the Company’s GAAP tax rate was primarily a result of
increased state taxes and increased taxes due to foreign
operations. The adjusted provision for income taxes was $46
million, representing an adjusted effective tax rate of 31.3% for
the second quarter ended September 30, 2024, compared with $30
million, representing an adjusted effective tax rate of 28.4% for
the second quarter ended September 30, 2023.
Segment Reporting for the Second Fiscal Quarter
Corporate Finance
CF revenues were $364 million for the second quarter ended
September 30, 2024, compared with $282 million for the second
quarter ended September 30, 2023, representing an increase of 29%.
Revenues increased primarily due to an increase in the average
transaction fee on closed transactions, which was driven by
transaction mix, and does not represent a trend in the average
transaction fee on closed transactions.
Three Months Ended September
30,
Six Months Ended September
30,
($ in
thousands)
2024
2023
2024
2023
Corporate Finance
Revenues
$
364,028
$
281,684
$
692,445
$
508,735
# of Managing Directors
224
211
224
211
# of Closed transactions (1)
131
117
247
212
Financial Restructuring
FR revenues increased 15% to $132 million for the second quarter
ended September 30, 2024, compared with $115 million for the second
quarter ended September 30, 2023. Revenues increased primarily due
to an increase in the average transaction fee on closed
transactions, which was driven by transaction mix, and does not
represent a trend in the average transaction fee on closed
transactions.
Three Months Ended September
30,
Six Months Ended September
30,
($ in
thousands)
2024
2023
2024
2023
Financial Restructuring
Revenues
$
131,568
$
114,670
$
248,990
$
238,038
# of Managing Directors
58
60
58
60
# of Closed transactions (1)
33
31
66
61
Financial and Valuation
Advisory
FVA revenues increased 12% to $79 million for the second quarter
ended September 30, 2024, compared with $71 million for the second
quarter ended September 30, 2023. Revenues increased due to an
increase in the number of Fee Events and an increase in the average
fee per Fee Event, driven by improvements in the M&A markets,
which impacted one or more of the service lines within our FVA
business.
Three Months Ended September
30,
Six Months Ended September
30,
($ in
thousands)
2024
2023
2024
2023
Financial and Valuation
Advisory
Revenues
$
79,361
$
70,635
$
147,131
$
136,045
# of Managing Directors
41
40
41
40
# of Fee Events (1)
903
852
1,316
1,255
(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 December 15, 2024 to
stockholders of record as of the close of business on December 2,
2024. As of September 30, 2024, the Company had $748 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 Wednesday, October 30, 2024, to discuss its
second quarter fiscal 2025 results. The number to call is
1-844-825-9789 (domestic) or 1-412-317-5180 (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 October 30, 2024 through November 6, 2024, by
dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international)
and entering the passcode 10193284. 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)
September 30, 2024
March 31, 2024
Assets
Cash and cash equivalents
$
691,410
$
721,235
Restricted cash
1,452
619
Investment securities
56,829
38,005
Accounts receivable, net of allowance for
credit losses
219,133
199,630
Unbilled work in process, net of allowance
for credit losses
138,293
192,012
Income taxes receivable
21,832
32,856
Deferred income taxes
87,020
90,064
Property and equipment, net
148,729
136,701
Operating lease right-of-use assets
359,739
344,024
Goodwill
1,177,757
1,127,497
Other intangible assets, net
196,641
197,439
Other assets
113,916
90,677
Total assets
$
3,212,751
$
3,170,759
Liabilities and stockholders' equity
Liabilities:
Accrued salaries and bonuses
$
641,370
$
726,031
Accounts payable and accrued expenses
104,661
114,171
Deferred income
37,956
33,139
Deferred income taxes
7,575
7,505
Operating lease liabilities
431,222
415,412
Other liabilities
32,880
37,751
Total liabilities
1,255,664
1,334,009
Stockholders' equity:
Class A common stock, $0.001 par value.
Authorized 1,000,000,000 shares; issued and outstanding 53,403,939
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 16,082,738
and 16,746,676 shares, respectively
16
17
Additional paid-in capital
735,277
739,870
Retained earnings
1,259,950
1,163,419
Accumulated other comprehensive loss
(38,209
)
(66,608
)
Total stockholders’ equity
1,957,087
1,836,750
Total liabilities and stockholders’
equity
$
3,212,751
$
3,170,759
HOULIHAN LOKEY, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended September
30,
Six Months Ended September
30,
(In thousands, except share and per
share data)
2024
2023
2024
2023
Revenues
$
574,957
$
466,989
$
1,088,566
$
882,818
Operating expenses:
Employee compensation and benefits
353,599
287,200
669,468
542,933
Acquisition related compensation and
benefits
7,038
9,342
21,285
17,092
Travel, meals, and entertainment
13,570
14,151
32,082
30,169
Rent
15,174
19,013
34,458
36,416
Depreciation and amortization
7,444
7,086
16,300
13,618
Information technology and
communications
17,755
14,328
33,944
27,876
Professional fees
9,677
10,859
18,154
20,416
Other operating expenses
20,031
14,733
36,638
30,674
Total operating expenses
444,288
376,712
862,329
719,194
Operating income
130,669
90,277
226,237
163,624
Other income, net
(5,419
)
(3,296
)
(9,725
)
(6,301
)
Income before provision for income
taxes
136,088
93,573
235,962
169,925
Provision for income taxes
42,539
26,542
53,473
41,504
Net income
$
93,549
$
67,031
$
182,489
$
128,421
Weighted average shares of common stock
outstanding:
Basic
65,822,690
64,551,353
65,429,115
64,180,642
Fully diluted
68,422,600
67,867,381
68,450,866
67,881,623
Earnings per share attributable to
Houlihan Lokey, Inc.
Basic
$
1.42
$
1.04
$
2.79
$
2.00
Fully diluted
$
1.37
$
0.99
$
2.67
$
1.89
HOULIHAN LOKEY, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED FINANCIAL INFORMATION
(UNAUDITED)
Three Months Ended September
30,
Six Months Ended September
30,
(In thousands,
except share and per share data)
2024
2023
2024
2023
Revenues
$
574,957
$
466,989
$
1,088,566
$
882,818
Employee compensation and benefits
expenses
Employee compensation and benefits
expenses (GAAP)
$
360,637
$
296,542
$
690,753
$
560,025
Less: Acquisition related compensation and
benefits
(7,038
)
(9,342
)
(21,285
)
(17,092
)
Employee compensation and benefits
expenses (adjusted)
353,599
287,200
669,468
542,933
Non-compensation expenses
Non-compensation expenses (GAAP)
$
83,651
$
80,170
$
171,576
$
159,169
Less: Acquisition related legal structure
reorganization
(705
)
—
(1,205
)
—
Less: Integration and acquisition related
costs
—
(1,465
)
(3,554
)
(1,465
)
Less: Acquisition amortization
(2,067
)
(3,360
)
(5,608
)
(6,715
)
Non-compensation expenses (adjusted)
80,879
75,345
161,209
150,989
Operating income
Operating income (GAAP)
$
130,669
$
90,277
$
226,237
$
163,624
Plus: Adjustments (1)
9,810
14,167
31,652
25,272
Operating income (adjusted)
140,479
104,444
257,889
188,896
Other income, net
Other income, net (GAAP)
$
(5,419
)
$
(3,296
)
$
(9,725
)
$
(6,301
)
Plus: Change in acquisition earnout
liability fair value
—
816
(828
)
816
Other income, net (adjusted)
(5,419
)
(2,480
)
(10,553
)
(5,485
)
Provision for income taxes
Provision for income taxes (GAAP)
$
42,539
$
26,542
$
53,473
$
41,504
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
42,539
26,542
73,704
48,803
Plus: Resulting tax impact (2)
3,071
3,787
10,145
7,025
Provision for income taxes (adjusted)
45,610
30,329
83,849
55,828
Net income
Net income (GAAP)
$
93,549
$
67,031
$
182,489
$
128,421
Plus/(less): Adjustments (3)
6,739
9,564
2,104
10,132
Net income (adjusted)
$
100,288
$
76,595
184,593
138,553
Fully diluted shares
outstanding
Fully diluted shares outstanding
(GAAP)
68,422,600
67,867,381
68,450,866
67,881,623
Plus: Impact of unvested GCA retention and
deferred share awards
458,865
1,132,423
532,840
1,257,446
Fully diluted shares outstanding
(adjusted)
68,881,465
68,999,804
68,983,706
69,139,069
Diluted EPS attributable to Houlihan
Lokey, Inc. (GAAP)
$
1.37
$
0.99
$
2.67
$
1.89
Diluted EPS attributable to Houlihan
Lokey, Inc. (adjusted)
$
1.46
$
1.11
$
2.68
$
2.00
(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.
View source
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Investor Relations 212.331.8225 IR@HL.com
OR
Media Relations 212.331.8223 PR@HL.com
Houlihan Lokey (NYSE:HLI)
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