HLI - Earnings call transcript Q4 2024

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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to Houlihan Lokey's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please note this conference call is being recorded today, May 8, 2024. I will now turn the call over to the company. Please go ahead.

Christopher Crain

Thank you, operator, and hello, everyone. www.hl.com have earnings our found release Houlihan website should fiscal quarter on everyone Relations Lokey XXXX Investor year which at now, access fourth to and the section. By the in can be

Before numerous use remind that statements we our as risks of forward-looking encourage financial These with are ended phrases words uncertainties including for not the Form of interpreting to are relying which expect, are include a everyone caution and you forward-looking for similar will We XX-K the such condition. recent subject begin statements, more results actual when exercise remarks, other detailed operating today therefore, is These to discussion to to XXXX, that expect. usually And cause on We future need SEC formal statements. filings, materially regulatory our and we or discussion review the our SEC. should XX, identified will, should could impact could anticipate, differ it from and of we future that filings refer year our guarantees when to performance. results what them. the risks investors you all of March the filed by

is the call, over these Co-Head I'll financial we for Co-President earnings will be A They website. Hosting Beiser, comparable measures GAAP. will some not we will be substitute to in that, hl.com the in in which useful During considered of Executive financial measures Lokey's a measures, remarks, today's Corporate with Alley, Officer and Scott opening These and provide on prepared most have the Lindsey and can we to our should Finance; Officer; measures to of discuss turn or questions. And accordance then Financial Houlihan directly in believe reconciliation release company's Scott Chief the our call presentation we the and call financial non-GAAP GAAP performance. open evaluating the results company. isolation the with Chief call investor available today, Adelson, Scott. of our as

Scott Beiser

our Thank XXXX fourth quarter you, everyone, Welcome, call. Christopher. earnings to fiscal

all, Co-executive employees, growing of The to the firm effort the and the this Scott firm. banking in years but I leading a clients of Crain, pleasure become Alley, to managers its a continuing firm banking last different journey had build today. A who is investment Christopher the the Lindsey for to leadership our how the team. partnership Houlihan let enjoyable assist with world. First intend of have me Lokey and to a well as extraordinary to Adelson, long-term decade I'm handing David partner, over my to years has Scott world-class it incredibly thousands we firm have Lokey been thankful Adelson, the developed of others make XX in in I'm entire ahead. lead CEO as Gold has on Houlihan over best pleased to and title say to it incredibly Irwin the my in remain the Preiser helped officers, capacity shareholders special global our been outstanding be thanks success Scott team to the investment to involved and

million last share We the $X.XX. per earnings update. year. XX% and Revenues Now and same with of share up earnings the up business XX% were ended $XXX the to on quarter quarter per compared adjusted revenues were of to adjusted

year fiscal up our X% ended good a year, versus also challenging with market. revenues last result a We in

business model. firm's One strengths of diversified our is our

in the Finance sluggish year. throughout conditions our otherwise begin of improving relatively with new Valuation Financial Restructuring grew. our year continue that stable, M&A past remain lines optimistic and momentum market market, the and Corporate business and the while were We business three our Financial Advisory will all fiscal Over an year in businesses

reaching Financial in rates for FDA what the gradually business ever the ever the to reentering in steadily XXXX, sponsors improving available have Corporate market, described, was and in and than since Finance few also been marketplace, [Audio higher we FDA. previously restructuring Advisory steadily has As quarterly second in ever market private seen companies. $XX is Overall, an of Gap] the we equity Corporate portfolio trough at highest the in and believe albeit sell revenues after to million in our in Finance revenues the M&A continues be spring our businesses representing the in our last revenues improving. Financing Valuation markets years. and uptick opportunities are Financial

in and size as of a backlog returns pipeline impact further opportunities the does Finance to Corporate grow complete norms, continues frame When of transactions historical time to our performance. Our positive transactions. it have to will on the

acquisition, hear our my like and been Many last mine in Capital the has quarter, hires that, of that Directors offset Q&A. it over current would added and expectations partner recent announce the pleased continue closing Our X levels the managing are Lokey's albeit some Managing planned promotion will mark. to to remains which new a Scott today firm restructuring And to partially hand will join mostly comments. additional of asked CEO. With close Adelson. comments elevated new financial Scott we next were and and by you in introducing to the a high you Houlihan few the by Scott Those XXXX, Scott XX Director fiscal know of quarter, for to leadership this water our Managing of I participate the we call departures. I've these the we you as of level directors In quarterly and Triago levels, to XX years. business. I volatility. In business that Markets a will from through directors, of quarter, reiterate Scott with XX elevated our hired to the at starting

Scott Joseph Adelson

position want to Lokey and at this and to role. thank Thank I'm be the this you, to entrusting me Scott for of honored Directors Scott. Houlihan Board asked hold important with

decade. over managing a Our executives firm this team of has for been

what out we colleagues We and in goal world. This I to wanted been with the continue the banking shared set happening of path down executing We of have evolution. on at a the firm to can firm's with that finest as long we is remember. creating my in time transition the have as be, same intend independent vision a investment unique for this firm our vision

are two the best world We shareholder business base our the all M&A share of market sluggish number strong three momentum increasing market our a and in around backlog, of record a in from with bankers, of senior category. years emerging lines,

you While this will a for of working Lindsey. new you you, I that, over continued and thank it number had of look role, spending pleasure I've I hand the to to all support Houlihan with time of forward with your with Lokey. And in of

J. Alley

Corporate XX closed in closed year, was increased were closed deals the Restructuring versus for XX the the same revenues increase to Revenues quarter for our the Scott. same in fiscal quarter, last last the compared you, versus significantly. average We period same quarter a quarter XX% a compared year. Financial last when higher year. last transactions same in Thank high year. million average quarter fee Finance XXX quarter, in million for this We up for on but the XX% $XXX the transactions were XXXX. quarter $XXX transaction fee transaction the our quarter to And

revenues we've As the in Financial business, can the be given of quarter-to-quarter. nature Restructuring mentioned past, the in business our lumpy

period period revenues year. were last Valuation had Advisory, from to in same transactions X,XXX favorable XXX timing. In and during benefited year. $XX quarter increase some larger the and for Financial quarter [ This the the XX% ] quarter, the same events a last from million compared We

our With quarter million versus same million were expenses adjusted $XXX period compensation last expenses. to $XXX for higher revenues, for year. the Turning the

In deferred adjustment to was for quarter payments adjusted fiscal and only retention our ratio XX.X%. XXXX, acquisitions. for compensation was $X.X expense fourth both XXXX and Our fiscal the related year million certain

of ratio. We long-term expense target compensation maintain adjusted for expect our XX.X% to our

the last $XX compared of but $XX This last the ratio noncomp the versus an year. On $XX,XXX was an for adjusted adjusted for basis, expense quarter a adjusted year, per last noncompensation were the flat same employee of compared expense our relatively period and for Our XX.X% noncompensation the this expenses to resulted increase last $XX,XXX over quarter ratio with expense year. noncompensation for same million an million adjusted period XX.X% of quarter, same in period quarter.

of our bankers employee of last our For real as travel our our couple expense. contributed in post to fiscal inflation we grown increase significant pandemic, noncompensation return the in noncomp all experienced we technology, has head to and categories. noncompensation also heavily expense The our invested significantly count across estate, increases years, in adjusted

noncompensation expense adjusted employee For in $XXX,XXX in per fiscal year on per X% the employee a XXXX basis, fiscal $XXX,XXX our to fiscal from per grew XXXX. employee

fiscal temper growth that absolute expect We in XXXX. will in noncompensation dollar our expense

For quarter's the and as primarily global refer expenses call. we quarter, first professional to last to which with acquisition-related XXXX which million million quarter of amortization, discussed related fiscal for organizational Triago out costs, to during $X.X our our $X.X structure, $X.X million pertaining the associated of our fees closed on streamlining Project in we adjusted as our Solo noncash we noncompensation acquisition, acquisition-related

calendar are the Solo be expect year will We work of completed more that by end through the Project of bulk halfway than and the XXXX.

to prior out million of of and and the generated investment of acquisition-related earn-out $X.X approximately purchase changes to versus income approximately net the as period We $X.X in in value and We with of The P&L, of by of in earn-outs treat our earnouts. all million these last income securities. Our $X.X liability associated the same a expense, improvement adjusted was related our interest value adjusted of one this gain out other income million adjust expense in reduction year. approximately our a price in significant increase produced acquisitions. other any an due primarily category income of income

to adjusted quarter for year. XX% effective tax same for rate the last was quarter the compared XX.X%, Our

due foreign result taxes of increased primarily operations. as Our year-over-year to our increased taxes a

for our between rate adjusted tax effective range XX%. targeted long-term and is Our XX%

to the Turning sheet. balance

approximately end, unrestricted securities. quarter of million and $XXX the of cash equivalents As investment and we had

a X-year a from a share in over invest this unpaid not market. and part will portion this into November. of past of to we issued. In our paid will fiscal our As diluted in cover month reminder, date Shares compensation quarter, accrued the the shares repurchase period fiscal this but any earmarked is significant fully as be month the open for issued count did XXXX XXXX year cash that bonuses

operator, that, and balance to finally, a the be dividend advantage approach to can of in share. And Board able X.X% take prioritizing strength, quarterly we sheet and to And continue opportunities approved repurchases as acquisition to We the liquidity we for our questions. are per increase take this with share $X.XX a line hiring open flexibility conservative to market. to

Operator

first UBS. [Operator Hawken afternoon Instructions] Brennan We this go to of

Brennan Hawken

I wanted to start with restructuring.

back You But spoke benefited a the that quarter. [indiscernible] some take were step is about talk structuring as deal fact could environment though the solid. you outlook there large near-term seems the it a that and for to [indiscernible] pretty timing the

some made. your that competitors comment of have You

You ] hear maturity XXXX. a lot in about well and year this the [

so potential we and growth about established [ of the should this the revenues And how be you thinking restructuring ] year? base

Scott Beiser

Brennan, question. So there. of hear the on sounds equipment your to a you're like I little think some but was we you, It got hard it construction gist

the we've market to over couple what the is really similar last of think quarters. for I restructuring environment seen

the of still it's need do form described, driven there while, environment in As while rate interest described, some the that think of going it's as than stay be are what companies an going capital to markets going opening in a we number past. at we've they've to to of And a level elevated by to some a we've for is experienced higher solutions. still

of it of solution in only before. There's the we of really in the think could components most restructuring globe are a all And disruptors is is just, be that our over still our of not the this global that that United franchise technology note an in necessarily ourselves, other of lot going Europe, is States So had industry continuing. we're only couple general Western but most the volatile of probably the some time. We the our one were parts that in not but years. area still as the isn't for businesses. work, to the firm. do occurring have uptick We're in seeing once and last

is the higher of little And some have that quarters we've so lower than normal. a to we're probably going level probably some been for quarters, than while next a little two. exist to and the we it operating a normal going are year at think But for maybe kind or

Brennan Hawken

or little ] little Corp my moved [ was those maybe better in two Fin historically a some came could though see a FDA Fin could between FDA emergence that Are the of an resilience together. strength game? businesses to a that we the a of little even bit seeing still [ drivers bit For allow historical ] greater have some more And maybe actually waiting even or and to is in you those diverge relationship business a follow-up, divergence FDA unique for lighter. in Corp bit businesses a little

J. Alley

; Yes. don't so, think I Brennan.

I measurement the think short. just is it's period too

tell story. the doesn't quarter one think I

I about change. movement we've is consistent. no kind ] still and of of Corporate structural of sort that talked think the been FDA all [ of There's Finance

Operator

next Devin We Citizens now to of Ryan go JMP.

Alexander Jenkins

Can it I before downturn. position today talk the enhanced offering about market? GCA seeing to closed acquisition, has Ryan. team guess Jenkins, the on is GCA momentum in This Europe Devin for how the Alex and and the in market just right start you the stepping you're your in

Scott Joseph Adelson

do to happy This is Yes, Scott that. Adelson.

So we clearly, of that the of are materially. evolved doing as result a Europe has that type very transaction within business

importance -- result marketplace the changed that our has We as European in transaction. have a fundamentally of gone

emerging are that from behind, an a been prior longer that steps had least count institutions well have doing kind just Europe. it than years standpoint, to we acquisition, of in we was have business for While deal at of we hundreds that at now

Alexander Jenkins

picking dialogues up insight on are I'm you're forward here. where to give but I I a the given get the are in sponsors, your into you of cycle, going sure we generally conversations us guess, just better want having? sense currently can the any from expectations

Scott Joseph Adelson

level dialogues are spectrum. through across been is quickly way and that has there velocity but clearly by The that, be really the steady does their of to sponsor day while. the the up deals a and It sponsor is -- in pick for conversations to of continue continues working the pipeline, how increasing

Operator

We'll go Worthington next JPMorgan. of now to Ken

Unknown Analyst

is in [ on ] [ Michael I touch for guess, just Ken Cho first, This to ] today. Worthington wanted MD I productivity.

talent just to So well. that some you as other you've as hires Clearly, well, but your was and to GCA talked been key adding bolt-ons one base.

over that's So about per a business we the the today? to up of corporate [ and revenue period. MD counts is or ] the should the average going upside think upgraded If revenue considerably [ couple are MD MD talent finance half of last [ about about think half than with up COVID ] less if trending [indiscernible] we the at years. bit of little activity ], per peak How that larger picks given [indiscernible] amount the

J. Alley

[ good response loaded a mean I bear is question. ]. Corporate quick is That's my for Finance

relative We revenues where have a very to are. high count [indiscernible]

during did You're as seeing traveling. think we see in was it getting productivity productivity. they I levels as tough high during that's because Do no COVID? one COVID,

but our is and tell in improvements. improvements COVID-level that tell. some will productivity you productivity, early you a But relative transaction think low I all that I seeing help argument are are see we the could average too make we'll we it to on think see expectations basis that that size So will it's

get will that a help I size, out us out caps expectations certainly in hard size But -- and productivity think if some average a markets are ever of that tell. is it back. where the little win is transaction drive the the to average once momentum behind fee caps us

Unknown Analyst

other of having are particular sectors of seeing And kind sectors then versus sponsor around topic just a where that conversation. there as you're mean of of much? quick follow-up the out pick kind acceleration overall you'd in more terms in [ an geographies some not activity up ] geos any or of on today in call I the and

Scott Joseph Adelson

I can particularly Again, not I weak. Scott are particularly in point can't really. or Adelson, to any there's I mean -- something that that strong sectors

Unknown Executive

geography. And

Scott Joseph Adelson

there's least And still no there right level some geography different at scale and been I mean, at now, Europe, And U.S. Asian is think the has just but that our and and U.S. difference. Europe. business a I discernible than between ebbs flows

Operator

next to Goldman at James go now Sachs. Yaro We

James Yaro

maybe parts this could provide you of Finance, if environment non-M&A in Corporate for on going are outlook forward. just these some On and color performing businesses the how those the

Scott Joseph Adelson

business, we growth within Sure. feeling to we another grow is year, corporate And That's nicely, I finance think going periods that growth conjunction the of individuals meaningful and our addition quite to markets in the where on and good discussed, we areas the continued impact think The the the in capital with continues area a of us. strong have to and has as in have those to that business for business. of about are obviously, come. Capital earlier with be will non-M&A Markets Triago a area PFG acquisition

James Yaro

And maybe strong of results any sort then closed. little one maybe now just Any the you going Triago forward. for a acquisition. bit to a trajectory give contribution ability to the that's our there's about business on then And talked

the about how that perhaps when stand-alone was sponsor grow you just beyond a to business rest of thinking the and able you're the synergies of business be how it your entity? with franchise So might

Scott Joseph Adelson

are to So sponsor obviously, synergies do believe stakes, on integrated and GP good but and our secondaries offer set that, large about directs, execute good general LP the feeling we an in ability advice that ranges primary very very we stakes of ahead. is of Obviously, the solution between that. from that a have we them very relationships, are on it, financings to that need opportunity really we about something we feeling lies

group, of not that that disclose. particular of contribution the something In we terms that's

Operator

go Ryan Morgan Kenny to now with next We Stanley.

Ryan Kenny

in it comment would M&A of environment. size more the lag? just realism strategic? timing around the color the the M&A Is more is there recovery helpful. and pace So of you Is being environment, on around that release more Can realistic pipeline? be on press sluggish unpack as sponsors the a the and the of it my around the specifically question around the the Any bit

Scott Beiser

Yes.

we're environment. have bottom But describe of And a are, yet when as the seen. did terms And use. were guess, And said environment under we robust kind I we quality would slugging negative in continued is and slow all one a get it frame to is the terms for think time continually we're they normal the of don't hired about purposely are not actually that you the the it we've environment longer on terms sure that couple would I Everything want if positive been or when be year when more close and an say, at to where ago. well. robust years average size. get as probably like in we we when of when we're we kind also environment. it about the from or We've still was two of kind we'll along, we in we change depressant in on mandates making, two, are that you in and think think I'd able I called probably were the words The that but mandate engaged discuss grow We in is you to believe year we we're not period. of look ago. today number the our as we year business not we we ago what think clients that last of I a that fingers we a of headcount, be measures than think progress. started could snap to but of a taking than you that a were thing it, that say, time of we that almost

J. Alley

about was to macro way think than is, another Ryan, the more micro. commentary it

of in levels and harder. probably I peers environment much think we And our their have activity macro momentum deals business. makes have seen yet this improved, getting us sluggish seen many closed that reasonable have

us that. for control to And so hard

any and so months us of longer us I it out I expected. and just think of have are quarters would of think than it's most we ago, -- thought And or come we taken

year, we guess think than year, better So I environment. being it's last given to going just we're that macro is think the realistic anyone's look just but this

Ryan Kenny

And the on the has curve macro, when meaningfully since this is rate call curve ] last the [ the year. cuts fixed pricing futures in moved Fed

How aren't Is change? the two. clients or not hikes one because about that are on at priced there any we're on? it Now or pipeline your really thinking any having impact

Scott Beiser

of capital. being Yes. been That that actually and aggressive cost more thing. I -- many today, capital about and it's is our availability mean, has it capital it. I've times, the really, this people is clients deploying much said to about are available very And good than the a of

valuations, the of about it it. makes In availability cost but in really terms a of much difference terms obviously it in levels of is more is pricing, than activity the

Operator

We Chubak go next Wolfe Steven of Research. now to

Brendan O'Brien

O'Brien Brendan for guess I'll is touch This in start, I Steven. sponsors. to on filling So

much you [ that to much is focused ]. ] past and but activity couple to While between sense been SMID-cap relative more might know on divergence be activity, billion two I be activity what has it, buckets? data or a the wanted of trends driving just to for as to stronger, this SMID-cap these get been plus [ data tend is apparent of resilient $X publicly available subdued that years. has the that, more from dynamic One call

Scott Joseph Adelson

still Yes, globally, much a are focused are that time. small value of And any is relatively we place of doesn't than getting take tremendous vast are denominator, of that given the of have field around [ of world a the deals deals total if are more overall I think [ of those very there large-cap the mid-cap about number ], way and of that M&A a market ] number time and number volume of overall the and that period impact small total it fact the you of that will, on deals share we preponderance we handful the in we are deals think deals.

Scott Beiser

healthy on marketplace, the point we're press transactions more to dollar the you're that times, completed be your investors probably view the more a of value the make less done, has focused I much number and sways gets what analysts at importance or that and think of of to or may the announced transactions probably or on that's more trending key maybe we in that always it want us. of the And focused

or actually you dispoyancy deals maybe healthy what don't larger-cap which we this So of is versus the experience described, is, call meaningful between whatever juncture, to ], mid-cap at see the you [ any deals. there it, the difference want

Brendan O'Brien

for time follow-up, I and And then to my just wanted cycle. complete to touch deal the deals on the

So view, macro the your elongated. the normalization time in to prepared you global just economic a remarks what time in the certainty it frame want drive close as or of remains or lines else? get on rate more I noted your could backdrop sense just to is anything trajectory deal to that

Scott Joseph Adelson

say, by to Right quarter really are see to still that buyer's week clearly incremental week pick literally in is cause mean will -- have the equilibrium, velocity to of we of start able buyers on, environment market shift like It results. point. but up. leverage changing you that to in where but to array one point. is endless to like I at wait this it that is an a see that things begins it that drag to see are that piece that buyers I'd more still now, to we And information. I'd one at this as that are

Operator

Mr. back to it this for to no things I'd appears further have turn questions you, afternoon. like gentlemen, closing Beiser, And comments. we sir,

Scott Beiser

call We've thank look the CEO fiscal enjoyable, you to to finally, today's discuss we quarter coming with employees we together my end when summer. look is that It updating our Houlihan our I time forward firm's and And at will to truly made everyone results as you continuing forward I all this of have over XXXX our all success this journey progress years. on a first made for possible. Lokey.

Operator

much joining Beiser. you, Call. and that you Earnings Again, a for all conclude Lokey and Mr. XXXX thank will us. Houlihan Fiscal We day. Thank so of Bye. wish Fourth great today's Year Quarter remainder Ladies gentlemen, your you

Houlihan Lokey (HLI) 8 May 242024 Q4 Earnings call transcript