EX-99.1 2 q2fy24-ex991.htm EX-99.1 Document
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Houlihan Lokey Reports Second Quarter Fiscal 2024 Financial Results

– Second Quarter Fiscal 2024 Revenues of $467 million –
– Second Quarter Fiscal 2024 Diluted EPS of $0.99 –
– Adjusted Second Quarter Fiscal 2024 Diluted EPS of $1.11 –
– Announces Dividend of $0.55 per Share for Third Quarter Fiscal 2024 –

LOS ANGELES and NEW YORK - October 26, 2023 - Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its second quarter ended September 30, 2023.
For the second quarter ended September 30, 2023, revenues were $467 million, compared with $490 million for the second quarter ended September 30, 2022. Net income was $67 million, or $0.99 per diluted share, for the second quarter ended September 30, 2023, compared with $61 million, or $0.87 per diluted share, for the second quarter ended September 30, 2022. Adjusted net income for the second quarter ended September 30, 2023 was $77 million, or $1.11 per diluted share, compared with $83 million, or $1.19 per diluted share, for the second quarter ended September 30, 2022.
“We finished our second fiscal quarter with better results than our prior quarter. We continue to see improvements in the availability of debt capital and confidence in the earnings outlook for our clients, all of which bodes well for a steady recovery of the M&A markets. However, the recent geopolitical crises may impact our cautious optimism. Regardless, we believe we are well positioned to handle most economic environments, and we will continue to invest in professionals, acquisitions, industries and geographies where we believe we can create long term shareholder value,” stated Scott Beiser, 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,
2023202220232022
Revenues by segment
Corporate Finance$281,684 $315,016 $508,735 $578,967 
Financial Restructuring114,670 97,694 238,038 176,532 
Financial and Valuation Advisory70,635 76,827 136,045 152,682 
Revenues
$466,989 $489,537 $882,818 $908,181 
Operating expenses:
Employee compensation and benefits$296,542 $309,859 $560,025 $575,594 
Non-compensation80,170 90,307 159,169 165,646 
Operating income
90,277 89,371 163,624 166,941 
Other expense, net(3,296)5,104 (6,301)6,853 
Income before provision for income taxes
93,573 84,267 169,925 160,088 
Provision for income taxes26,542 23,537 41,504 28,576 
Net income attributable to Houlihan Lokey, Inc.$67,031 $60,730 $128,421 $131,512 
Diluted earnings per share attributable to Houlihan Lokey, Inc.
$0.99 $0.87 $1.89 $1.90 

Revenues

For the second quarter ended September 30, 2023, revenues were $467 million, compared with $490 million for the second quarter ended September 30, 2022. Revenues decreased primarily as a result of a decrease in the average transaction fee on closed transactions in our Corporate Finance (“CF”) business. For the second quarter ended September 30, 2023, CF revenues decreased (11)%, Financial Restructuring (“FR”) revenues increased 17%, and Financial and Valuation Advisory (“FVA”) revenues decreased (8)%, in each case, when compared with the second quarter ended September 30, 2022.

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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. GAAPAdjusted (Non-GAAP) *
Three Months Ended September 30,
($ in thousands)2023202220232022
Expenses:
Employee compensation and benefits$296,542 $309,859 $287,200 $301,063 
% of Revenues63.5 %63.3 %61.5 %61.5 %
Non-compensation$80,170 $90,307 $75,345 $72,358 
% of Revenues17.2 %18.4 %16.1 %14.8 %
Per full time employee (1)
$30 $38 $29 $30 
Provision for income taxes$26,542 $23,537 $30,329 $32,084 
% of Pre-tax income28.4 %27.9 %28.4 %27.9 %
*Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.
(1)Calculated using the average of the number of full time employees at the beginning of the reporting period and the end of the reporting period.
U.S. GAAPAdjusted (Non-GAAP) *
Six Months Ended September 30,
($ in thousands)2023202220232022
Expenses:
Employee compensation and benefits$560,025 $575,594 $542,933 $558,530 
% of Revenues63.4 %63.4 %61.5 %61.5 %
Non-compensation$159,169 $165,646 $150,989 $131,932 
% of Revenues18.0 %18.2 %17.1 %14.5 %
Per full time employee (1)
$60 $69 $57 $55 
Provision for income taxes$41,504 $28,576 $55,828 $57,289 
% of Pre-tax income24.4 %17.9 %28.7 %26.5 %
*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 $297 million for the second quarter ended September 30, 2023, compared with $310 million for the second quarter ended September 30, 2022. Adjusted employee compensation and benefits expenses were $287 million for the second quarter ended September 30, 2023, compared with $301 million for the second quarter ended September 30, 2022. This resulted in an adjusted compensation ratio of 61.5% for both the second quarter ended September 30, 2023 and the second quarter ended September 30, 2022. The decrease in GAAP and adjusted employee compensation and benefits expenses was a result of a decrease in revenues for the quarter when compared with the same quarter last year.

Non-compensation expenses were $80 million for the second quarter ended September 30, 2023, compared with $90 million for the second quarter ended September 30, 2022. The decrease in GAAP non-compensation expenses was primarily a result of a decrease in depreciation and amortization and a decrease in other operating expenses for the quarter when compared with the same quarter last year. Adjusted non-compensation expenses were $75 million for the second quarter ended September 30, 2023, compared with $72 million for the second quarter ended September 30, 2022. The increase in adjusted non-compensation expenses was primarily a result of an increase in rent expense.

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The provision for income taxes was $27 million, representing an effective tax rate of 28.4% for the second quarter ended September 30, 2023, compared with $24 million, representing an effective tax rate of 27.9% for the second quarter ended September 30, 2022. The adjusted provision for income taxes was $30 million, representing an adjusted effective tax rate of 28.4% for the second quarter ended September 30, 2023, compared with $32 million, representing an adjusted effective tax rate of 27.9% for the second quarter ended September 30, 2022.

Segment Reporting for the Second Fiscal Quarter

Corporate Finance
CF revenues were $282 million for the second quarter ended September 30, 2023, compared with $315 million for the second quarter ended September 30, 2022, representing a decrease of (11)%. Revenues decreased due to a decrease in the average transaction fee on closed transactions, which was driven by transaction mix, and did not represent a trend in the average transaction fee on closed transactions.
Three Months Ended September 30,Six Months Ended September 30,
($ in thousands)2023202220232022
Corporate Finance
Revenues$281,684 $315,016 $508,735 $578,967 
# of Managing Directors211 210 211 210 
# of Closed transactions (1)
117 114 212 238 

Financial Restructuring
FR revenues increased 17% to $115 million for the second quarter ended September 30, 2023, compared with $98 million for the second quarter ended September 30, 2022. Revenues increased primarily due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions for restructuring transactions.
Three Months Ended September 30,Six Months Ended September 30,
($ in thousands)2023202220232022
Financial Restructuring
Revenues$114,670 $97,694 $238,038 $176,532 
# of Managing Directors60 56 60 56 
# of Closed transactions (1)
31 24 61 40 

Financial and Valuation Advisory
FVA revenues decreased (8)% to $71 million for the second quarter ended September 30, 2023, compared with $77 million for the second quarter ended September 30, 2022. Revenues decreased primarily due to a decrease in the number of Fee Events. The decrease in the number of Fee Events was driven by softness in the M&A markets, which affected one or more of the service lines within our FVA business.
Three Months Ended September 30,Six Months Ended September 30,
($ in thousands)2023202220232022
Financial and Valuation Advisory
Revenues$70,635 $76,827 $136,045 $152,682 
# of Managing Directors40 40 40 40 
# of Fee Events (1)
852 890 1,255 1,404 
(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.

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Balance Sheet and Capital Allocation
The Board of Directors of the Company declared a regular quarterly cash dividend of $0.55 per share of Class A and Class B common stock. The dividend will be payable on December 15, 2023 to stockholders of record as of the close of business on December 1, 2023. As of September 30, 2023, the Company had $525 million of cash and cash equivalents and investment securities, and $31 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 Thursday, October 26, 2023, to discuss its second quarter fiscal 2024 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 October 26, 2023 through November 2, 2023, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13741798. 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. These adjusted items remove the significant accounting impact of one-time or non-recurring charges associated with the Company’s one-time/non-recurring matters, as set forth in the tables at the end of this release.

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 global M&A transactions under $1 billion, the No. 1 M&A advisor for the past eight consecutive years in the U.S., the No. 1 global restructuring advisor for the past nine 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 Refinitiv.

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

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Contact Information
Investor Relations
212.331.8225
IR@HL.com		ORMedia Relations
212.331.8223
PR@HL.com

Appendix

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

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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data and par value)September 30, 2023March 31, 2023
Assets
Cash and cash equivalents$493,929 $714,439 
Restricted cash373 373 
Investment securities31,214 37,309 
Accounts receivable, net of allowance for credit losses152,243 182,029 
Unbilled work in process, net of allowance for credit losses133,787 115,045 
Income taxes receivable22,549 17,693 
Deferred income taxes106,343 104,941 
Property and equipment, net119,394 88,345 
Operating lease right-of-use assets363,719 333,877 
Goodwill1,086,438 1,087,784 
Other intangible assets, net196,652 203,370 
Other assets74,912 83,609 
Total assets$2,781,553 $2,968,814 
Liabilities and Stockholders' Equity
Liabilities:
Accrued salaries and bonuses$552,673 $765,877 
Accounts payable and accrued expenses95,125 113,421 
Deferred income37,370 40,695 
Deferred income taxes349 544 
Operating lease liabilities419,421 374,869 
Other liabilities30,539 60,111 
Total liabilities1,135,477 1,355,517 
Stockholders' equity:
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 51,565,992 and 50,638,924 shares, respectively52 51 
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 17,427,625 and 18,048,345 shares, respectively17 18 
Additional paid-in capital638,404 642,970 
Retained earnings1,087,326 1,033,072 
Accumulated other comprehensive loss(79,723)(62,814)
Total stockholders’ equity1,646,076 1,613,297 
Total liabilities and stockholders’ equity$2,781,553 $2,968,814 
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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)2023202220232022
Revenues$466,989 $489,537 $882,818 $908,181 
Operating expenses:
Employee compensation and benefits296,542 309,859 560,025 575,594 
Travel, meals, and entertainment14,151 12,370 30,169 23,420 
Rent19,013 13,285 36,416 25,075 
Depreciation and amortization7,086 19,475 13,618 38,618 
Information technology and communications14,328 13,183 27,876 24,173 
Professional fees10,859 9,598 20,416 16,067 
Other operating expenses14,733 22,396 30,674 38,293 
Total operating expenses376,712 400,166 719,194 741,240 
Operating income90,277 89,371 163,624 166,941 
Other (income)/expense, net(3,296)5,104 (6,301)6,853 
Income before provision for income taxes93,573 84,267 169,925 160,088 
Provision for income taxes26,542 23,537 41,504 28,576 
Net income$67,031 $60,730 128,421 131,512 
Weighted average shares of common stock outstanding:
Basic64,551,353 63,422,701 64,180,642 63,350,545 
Fully diluted67,867,381 69,800,028 67,881,623 69,316,792 
Earnings per share attributable to Houlihan Lokey, Inc.
Basic$1.04 $0.96 $2.00 $2.08 
Fully diluted$0.99 $0.87 $1.89 $1.90 

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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)2023202220232022
Revenues$466,989 $489,537 $882,818 $908,181 
Employee compensation and benefits expenses
Employee compensation and benefits expenses (GAAP)$296,542 $309,859 $560,025 $575,594 
Less: Acquisition related retention payments(9,342)(8,796)(17,092)(17,064)
Employee compensation and benefits expenses (adjusted)287,200 301,063 542,933 558,530 
Non-compensation expenses
Non-compensation expenses (GAAP)$80,170 $90,307 $159,169 $165,646 
Less: Integration and acquisition related costs(1,465)(2,325)(1,465)(2,325)
Less: Acquisition amortization(3,360)(15,624)(6,715)(31,389)
Non-compensation expenses (adjusted)75,345 72,358 150,989 131,932 
Operating income
Operating income (GAAP)$90,277 $89,371 $163,624 $166,941 
Plus: Adjustments (1)
14,167 26,745 25,272 50,778 
Operating income (adjusted)104,444 116,116 188,896 217,719 
Other (income)/expense, net
Other (income)/expense, net (GAAP)$(3,296)$5,104 $(6,301)$6,853 
Less: Warrant revaluation— (1,014)— (2,264)
Plus/(less): Change in acquisition earnout liability fair value816 (2,841)816 (2,841)
Other (income)/expense, net (adjusted)(2,480)1,249 (5,485)1,748 
Provision for income taxes
Provision for income taxes (GAAP)$26,542 $23,537 $41,504 $28,576 
Plus: Impact of the excess tax benefit for stock vesting— — 7,299 8,102 
Plus: Release of the provision for an uncertain tax position as a result of the successful closure of a state audit— — — 5,762 
Adjusted provision for income taxes26,542 23,537 48,803 42,440 
Plus: Resulting tax impact (2)
3,787 8,547 7,025 14,849 
Provision for income taxes (adjusted)30,329 32,084 55,828 57,289 
Net income
Net income (GAAP)$67,031 $60,730 $128,421 $131,512 
Plus: Adjustments (3)
9,564 22,053 10,132 27,170 
Net income (adjusted)76,595 82,783 138,553 158,682 
Fully diluted shares outstanding
Fully diluted shares outstanding (GAAP)67,867,381 69,800,028 67,881,623 69,316,792 
Plus: Impact of unvested GCA retention and deferred share awards1,132,423 — 1,257,446 — 
Fully diluted shares outstanding (adjusted)68,999,804 69,800,028 69,139,069 69,316,792 
Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP)$0.99 $0.87 $1.89 $1.90 
Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted)$1.11 $1.19 $2.00 $2.29 
(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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