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Houlihan Lokey Reports Third Quarter Fiscal 2025 Financial Results

1. HLI reported $634M in Q3 2024 revenues, up from $511M YoY. 2. Net income rose to $95M, or $1.39 per diluted share, from $71M. 3. Corporate Finance revenues surged 36% due to favorable market conditions. 4. HLI remains optimistic for the fiscal year and sees positive fiscal 2026 outlook. 5. Regular quarterly dividend of $0.57 per share was declared.

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Strong revenue growth and net income increases usually lead to positive investor sentiment. Past performance shows that solid earnings typically boost stock prices.

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HLI
LOS ANGELES & NEW YORK--(BUSINESS WIRE)--Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its third quarter ended December 31, 2024. For the third quarter ended December 31, 2024, revenues were $634 million, compared with $511 million for the third quarter ended December 31, 2023. Net income was $95 million, or $1.39 per diluted share, for the third quarter ended December 31, 2024, compared with $71 million, or $1.04 per diluted share, for the third quarter ended December 31, 2023. Adjusted net income for the third quarter ended December 31, 2024 was $114 million, or $1.64 per diluted share, compared with $84 million, or $1.22 per diluted share, for the third quarter ended December 31, 2023. “We are pleased with our results for the third quarter as well as our performance year to date, as we continue to see momentum across our business lines. Given the stronger macro environment, we remain optimistic about the balance of this fiscal year, and our outlook for fiscal 2026 is positive,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey. Selected Financial Data (In thousands, except per share data) U.S. GAAP Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 2024 2023 Revenues by segment Corporate Finance $ 421,602 $ 310,512 $ 1,114,047 $ 819,247 Financial Restructuring 130,942 128,565 379,932 366,603 Financial and Valuation Advisory 81,884 72,053 229,015 208,098 Revenues $ 634,428 $ 511,130 $ 1,722,994 $ 1,393,948 Operating expenses: Employee compensation and benefits $ 402,971 $ 324,039 $ 1,093,724 $ 884,064 Non-compensation 95,355 90,551 266,931 249,720 Operating income 136,102 96,540 362,339 260,164 Other income, net (9,016 ) (6,035 ) (18,741 ) (12,336 ) Income before provision for income taxes 145,118 102,575 381,080 272,500 Provision for income taxes 49,816 31,772 103,289 73,276 Net income attributable to Houlihan Lokey, Inc. $ 95,302 $ 70,803 $ 277,791 $ 199,224 Diluted earnings per share attributable to Houlihan Lokey, Inc. $ 1.39 $ 1.04 $ 4.05 $ 2.93 Revenues For the third quarter ended December 31, 2024, revenues were $634 million, compared with $511 million for the third quarter ended December 31, 2023. For the third quarter ended December 31, 2024, Corporate Finance (“CF”) revenues increased 36%, Financial Restructuring (“FR”) revenues increased 2%, and Financial and Valuation Advisory (“FVA”) revenues increased 14%, in each case, when compared with the third quarter ended December 31, 2023. Expenses The Company’s employee compensation and benefits expenses, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis. U.S. GAAP Adjusted (Non-GAAP) * Three Months Ended December 31, ($ in thousands) 2024 2023 2024 2023 Expenses: Employee compensation and benefits $ 402,971 $ 324,039 $ 390,173 $ 314,345 % of Revenues 63.5 % 63.4 % 61.5 % 61.5 % Non-compensation $ 95,355 $ 90,551 $ 83,002 $ 82,129 % of Revenues 15.0 % 17.7 % 13.1 % 16.1 % Per full-time employee (1) $ 35 $ 34 $ 31 $ 31 Provision for income taxes $ 49,816 $ 31,772 $ 56,734 $ 36,584 % of Pre-tax income 34.3 % 31.0 % 33.3 % 30.3 % * 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) * Nine Months Ended December 31, ($ in thousands) 2024 2023 2024 2023 Expenses: Employee compensation and benefits $ 1,093,724 $ 884,064 $ 1,059,641 $ 857,278 % of Revenues 63.5 % 63.4 % 61.5 % 61.5 % Non-compensation $ 266,931 $ 249,720 $ 244,211 $ 233,118 % of Revenues 15.5 % 17.9 % 14.2 % 16.7 % Per full-time employee (1) $ 101 $ 95 $ 92 $ 88 Provision for income taxes $ 103,289 $ 73,276 $ 140,583 $ 92,412 % of Pre-tax income 27.1 % 26.9 % 32.0 % 29.3 % * 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 $403 million for the third quarter ended December 31, 2024, compared with $324 million for the third quarter ended December 31, 2023. Adjusted employee compensation and benefits expenses were $390 million for the third quarter ended December 31, 2024, compared with $314 million for the third quarter ended December 31, 2023. This resulted in an adjusted compensation ratio of 61.5% for both the third quarter ended December 31, 2024 and the third quarter ended December 31, 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 $95 million for the third quarter ended December 31, 2024, compared with $91 million for the third quarter ended December 31, 2023. The increase in GAAP non-compensation expenses was primarily a result of an increase in rent expense and depreciation and amortization expense, partially offset by a decrease in professional fees. Adjusted non-compensation expenses were relatively flat at $83 million for the third quarter ended December 31, 2024, compared with $82 million for the third quarter ended December 31, 2023. The provision for income taxes was $50 million, representing an effective tax rate of 34.3% for the third quarter ended December 31, 2024, compared with $32 million, representing an effective tax rate of 31.0% for the third quarter ended December 31, 2023. The adjusted provision for income taxes was $57 million, representing an adjusted effective tax rate of 33.3% for the third quarter ended December 31, 2024, compared with $37 million, representing an adjusted effective tax rate of 30.3% for the third quarter ended December 31, 2023. The increase in the Company’s GAAP and adjusted effective tax rates during the third quarter ended December 31, 2024, relative to the third quarter ended December 31, 2023, was primarily a result of increased state taxes and non-deductible expenses. Segment Reporting for the Third Fiscal Quarter Corporate Finance CF revenues were $422 million for the third quarter ended December 31, 2024, compared with $311 million for the third quarter ended December 31, 2023, representing an increase of 36%. Revenues increased due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions for M&A and capital markets transactions. This increase was partially offset by a decrease in the average transaction fee on closed transactions, which was driven by transaction mix, and does not represent a trend in the average fee on closed transactions. Three Months Ended December 31, Nine Months Ended December 31, ($ in thousands) 2024 2023 2024 2023 Corporate Finance Revenues $ 421,602 $ 310,512 $ 1,114,047 $ 819,247 # of Managing Directors 238 219 238 219 # of Closed transactions (1) 170 117 417 329   Financial Restructuring FR revenues were $131 million for the third quarter ended December 31, 2024, compared with $129 million for the third quarter ended December 31, 2023, representing an increase of 2%. Revenues increased due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions for restructuring transactions. This increase was partially offset by a decrease in the average transaction fee on closed transactions, which was driven by transaction mix and does not represent a trend in the average fee on closed transactions. Three Months Ended December 31, Nine Months Ended December 31, ($ in thousands) 2024 2023 2024 2023 Financial Restructuring Revenues $ 130,942 $ 128,565 $ 379,932 $ 366,603 # of Managing Directors 57 52 57 52 # of Closed transactions (1) 41 30 107 91   Financial and Valuation Advisory FVA revenues were $82 million for the third quarter ended December 31, 2024, compared with $72 million for the third quarter ended December 31, 2023, representing an increase of 14%. Revenues increased due to an increase in the number of Fee Events and an increase in the average fee per Fee Event, driven by improvements in the M&A markets, which impacted one or more of the service lines within our FVA business. Three Months Ended December 31, Nine Months Ended December 31, ($ in thousands) 2024 2023 2024 2023 Financial and Valuation Advisory Revenues $ 81,884 $ 72,053 $ 229,015 $ 208,098 # of Managing Directors 42 41 42 41 # of Fee Events (1) 1,005 926 1,804 1,704 (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 March 15, 2025 to stockholders of record as of the close of business on March 3, 2025. As of December 31, 2024, the Company had $903 million of cash and cash equivalents and investment securities, and $66 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, January 28, 2025, to discuss its third 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 January 28, 2025 through February 4, 2025, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 10195795. 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) December 31, 2024 March 31, 2024 Assets Cash and cash equivalents $ 799,340 $ 721,235 Restricted cash 1,452 619 Investment securities 103,538 38,005 Accounts receivable, net of allowance for credit losses 166,687 199,630 Unbilled work in process, net of allowance for credit losses 202,716 192,012 Income taxes receivable — 32,856 Deferred income taxes 83,428 90,064 Property and equipment, net 140,105 136,701 Operating lease right-of-use assets 355,937 344,024 Goodwill 1,280,304 1,127,497 Other intangible assets, net 222,113 197,439 Other assets 120,142 90,677 Total assets $ 3,475,762 $ 3,170,759 Liabilities and stockholders' equity Liabilities: Accrued salaries and bonuses $ 719,301 $ 726,031 Accounts payable and accrued expenses 123,129 114,171 Deferred income 40,500 33,139 Income taxes payable 5,501 — Deferred income taxes 7,711 7,505 Operating lease liabilities 433,032 415,412 Other liabilities 66,047 37,751 Total liabilities 1,395,221 1,334,009 Stockholders' equity: Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 54,015,734 and 52,348,511 shares, respectively 54 52 Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 16,129,101 and 16,746,676 shares, respectively 16 17 Additional paid-in capital 851,854 739,870 Retained earnings 1,314,974 1,163,419 Accumulated other comprehensive loss (86,357 ) (66,608 ) Total stockholders’ equity 2,080,541 1,836,750 Total liabilities and stockholders’ equity $ 3,475,762 $ 3,170,759   HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)     Three Months Ended December 31, Nine Months Ended December 31, (In thousands, except share and per share data) 2024 2023 2024 2023 Revenues $ 634,428 $ 511,130 $ 1,722,994 $ 1,393,948 Operating expenses: Employee compensation and benefits 390,173 314,345 1,059,641 857,278 Acquisition related compensation and benefits 12,798 9,694 34,083 26,786 Travel, meals, and entertainment 17,942 17,325 50,024 47,494 Rent 22,259 19,002 56,717 55,418 Depreciation and amortization 9,561 6,657 25,861 20,275 Information technology and communications 16,945 15,443 50,889 43,319 Professional fees 11,744 14,853 29,898 35,269 Other operating expenses 16,904 17,271 53,542 47,945 Total operating expenses 498,326 414,590 1,360,655 1,133,784 Operating income 136,102 96,540 362,339 260,164 Other income, net (9,016 ) (6,035 ) (18,741 ) (12,336 ) Income before provision for income taxes 145,118 102,575 381,080 272,500 Provision for income taxes 49,816 31,772 103,289 73,276 Net income $ 95,302 $ 70,803 $ 277,791 $ 199,224 Weighted average shares of common stock outstanding: Basic 65,831,122 64,411,668 65,563,605 64,258,216 Fully diluted 68,760,959 67,886,301 68,558,325 67,896,302 Earnings per share attributable to Houlihan Lokey, Inc. Basic $ 1.45 $ 1.10 $ 4.24 $ 3.10 Fully diluted $ 1.39 $ 1.04 $ 4.05 $ 2.93   HOULIHAN LOKEY, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION (UNAUDITED)     Three Months Ended December 31, Nine Months Ended December 31, (In thousands, except share and per share data) 2024 2023 2024 2023 Revenues $ 634,428 $ 511,130 $ 1,722,994 $ 1,393,948 Employee compensation and benefits expenses Employee compensation and benefits expenses (GAAP) $ 402,971 $ 324,039 $ 1,093,724 $ 884,064 Less: Acquisition related compensation and benefits (12,798 ) (9,694 ) (34,083 ) (26,786 ) Employee compensation and benefits expenses (adjusted) 390,173 314,345 1,059,641 857,278 Non-compensation expenses Non-compensation expenses (GAAP) $ 95,355 $ 90,551 $ 266,931 $ 249,720 Less: Acquisition related legal structure reorganization (3,619 ) (2,603 ) (4,824 ) (2,603 ) Less: Integration and acquisition related costs (4,668 ) (4,259 ) (8,222 ) (5,724 ) Less: Acquisition amortization (4,066 ) (1,560 ) (9,674 ) (8,275 ) Non-compensation expenses (adjusted) 83,002 82,129 244,211 233,118 Operating income Operating income (GAAP) $ 136,102 $ 96,540 $ 362,339 $ 260,164 Plus: Adjustments (1) 25,151 18,116 56,803 43,388 Operating income (adjusted) 161,253 114,656 419,142 303,552 Other income, net Other income, net (GAAP) $ (9,016 ) $ (6,035 ) $ (18,741 ) $ (12,336 ) Plus/(less): Change in acquisition earnout liability fair value — — (828 ) 816 Other income, net (adjusted) (9,016 ) (6,035 ) (19,569 ) (11,520 ) Provision for income taxes Provision for income taxes (GAAP) $ 49,816 $ 31,772 $ 103,289 $ 73,276 Plus: Impact of the excess tax benefit for stock vesting — — 21,921 7,299 Less: Reversal of deferred tax asset — — (1,690 ) — Less: Non-deductible acquisition related costs (1,462 ) (679 ) (1,462 ) (679 ) Adjusted provision for income taxes 48,354 31,093 122,058 79,896 Plus: Resulting tax impact (2) 8,380 5,491 18,525 12,516 Provision for income taxes (adjusted) 56,734 36,584 140,583 92,412 Net income Net income (GAAP) $ 95,302 $ 70,803 $ 277,791 $ 199,224 Plus/(less): Adjustments (3) 18,233 13,304 20,337 23,436 Net income (adjusted) $ 113,535 $ 84,107 298,128 222,660 Fully diluted shares outstanding Fully diluted shares outstanding (GAAP) 68,760,959 67,886,301 68,558,325 67,896,302 Plus: Impact of unvested GCA retention and deferred share awards 334,677 968,515 454,494 1,148,657 Fully diluted shares outstanding (adjusted) 69,095,636 68,854,816 69,012,819 69,044,959 Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP) $ 1.39 $ 1.04 $ 4.05 $ 2.93 Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted) $ 1.64 $ 1.22 $ 4.32 $ 3.22 (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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