HLI - Earnings call transcript Q2 2025

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan Lokey Second Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, October 30, 2024. I will now turn the call over to the company.

Christopher Crain

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

expect, These performance. we results similar statements subject are by Before from not to that such use and include future statements. of remind phrases them. will which statements, will, need These we words that today we'd formal forward-looking actual of risks relying numerous cause what discussion therefore, uncertainties anticipate, are interpreting to are everyone other and our caution and guarantees forward-looking begin to materially should on exercise on remarks, or we could expect, the usually differ as identified

of our filings, We filed could risks the our September financial condition. with investors to discussion quarter it the filings We operating and the XX, recent Form that detailed more ended XXXX, for is results regulatory you when encourage refer including review all the a XX-Q of for impact SEC. future our SEC to

the today's should financial for will call, financial evaluating non-GAAP which performance. believe investor as GAAP During financial prepared is can our in in in useful These discuss the we measures measures on isolation comparable to available with and considered in most not GAAP. accordance the be A substitute earnings hl.com our be measures, or we directly results company's a presentation measures reconciliation of website. these our release

provide with turn call Chief will Executive Scott Financial Lokey's to and then the Alley, we Officer; the to Lindsey today, questions. some call Hosting remarks, we Chief have Houlihan Scott. over I'll And opening the Officer. call that, They will open and Adelson,

Scott Joseph Adelson

with up last and of everyone, earnings per second adjusted Revenues our were share were million of ended call. earnings We compared welcome, fiscal XX% to the $X.XX. Christopher, adjusted year. per period you, quarter share same XXXX up revenues XX% and quarter $XXX Thank to and earnings the

our a with the with we pleased across in our second of the lines. from benefit an expect record growth Restructuring well and the elevated improvements markets, are experienced leverage for we year to from quarter, of interest Financial all and as improving the and business trend. half to And continues Financial X lines M&A continues for benefit had results Corporate quarter, service services momentum market-neutral environment. our strong to year our and the M&A follow Finance as second by those it still developing affected second Advisory rates. the We half entered of Valuation as Group in this demand

effects fiscal volatility, presidential conflict layers the lower performance. and interest our the potential rates in new our representing continue. Interest to business we on optimistic of elections, Since remain choosing produced outlook. companies the Finance to lower increasing While we number $XXX we Labor Corporate Middle and million quarter. our expect generation trajectory revenues for peaks financial the to half we though Despite the have second business an the experience remains last these continued environment. risks, for feel to for of recognize and complexity high, markets over wider a year's current quarter, market, steady a XX% strong. seen the Day, and particularly we Finance in Ukraine to upward East U.S. Corporate by increase metrics to rates, Key continue of a business add and improve year, the go all for trend of clients' a to posed Geopolitical about recent challenges macro the second environment. may their than it are the time take

lines time is market to experience longer coming transactions. deals of trajectory these this we to to While close positive, continue

while improving, in previous is So at recoveries. slower than so doing pace velocity transaction is it a

Additionally, Finance, by business strength quarter, performed markets the in in acquisition. bolstered very private of the well our successful capital integration Triago within our Corporate capital and

million a $XXX last for XX% markets revenues produced the Restructuring view second elevated. the quarter second versus quarter, the increase our that remain in year, Financial restructuring reinforcing

New driven into was our heightened cap fiscal to strong, market is particularly XXXX. expected and activity business opportunities. of combination by business well middle activity a benefit large This restructuring

healthy as refinancing improve, well to behalf prepared our for of we activity are turn into we market to are some conditions positioned execute activity, continue Additionally, on restructuring to which clients. a

half increase the our Financial be second noncyclical quarter, and year. lines, versus Portfolio million last Valuation. business the Performance first quarter of new to demand the last for the Valuation year, Advisory continues M&A-related generation particularly produced in business starting revenue second a We to by for $XX services same in XX% observed year driven to is compared an period our the rebound. in and uptick

Prytania and Solutions. platform Regarding tech-enabled integrated specializing structured announced we valuation Prytania closing acquisitions, U.K. our the in is acquisition products. will of be recently based into of new in Group. our a a Prytania extend the Portfolio joining highly warm our colleagues Financial We Valuation a complement as welcome of this result business will successful to Valuation transaction. and Advisory all our

that expand insurance the quarter, During highly including breadth will especially sectors by group, sectors, our and industry and Helms, end the new of wealth financial in the close directors. acquisition on The these synergies areas the for management is active to XX calendar professionals, This financial acquisition will acquisition the announced are with depth equity. and strengthen year. our of we the services which Waller track of private XX of new managing create coverage significantly

managing we an Corporate of market, hiring this Finance. continue X active quarter Separately, we particularly advantage as take in directors to hired new

remains for second half the of XXXX fiscal positive. outlook Our

working recovery The unfolds. diligently to our are reap to workforce indicators markets it history, talented diversified strength all M&A continue business highly the We on are and balanced benefits capitalize of encouraging market with and the the strong our sentiment, sustained capital in a restructuring business improving in most we model. as

Lindsey. turn the you, to I'll With over call that,

J. Alley

were Scott. closed quarter, transactions Financial closed this million on Thank million Restructuring last were average last year. quarter Finance for $XXX and We up the in compared fee to and increased. last last up increased. XX% from this quarter, our XX period fee Corporate XXX XX% transactions period versus Revenues quarter, in the to also you, compared same same increase XXX a year, year, for average $XXX the transaction the the year. transaction revenues quarter our same same quarter in closed deals XX the also We

be in from benefited this and past, As revenues our lumpy the some mentioned Financial quarter-to-quarter, business transactions. quarter can Restructuring we've in larger

million Advisory, from increase last the period the XXX the quarter, a We $XX fee the had to for period year. during last Valuation compared For XXX Financial and same XX% in quarter same revenues year. were events

expenses. to Turning

Our million the versus adjusted for for compensation were $XXX million same the quarter $XXX quarter year. expenses last

retention million related deferred acquisitions. Our only $X certain adjustment to payments was for

second ratio. Our XXXX XX.X% for the quarter both adjusted maintain XXXX, we ratio long-term in and target and for expense was of XX.X%, compensation to this fiscal our expect

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

expenses, amortization. adjusted million For $X.X in noncash we out noncompensation acquisition-related the of quarter,

pertaining approximately fees to an Project adjustment our We of also associated had organizational global professional $XXX,XXX as structure streamlining Solo. to with referred

in The income year. approximately in $X.X in improvement other the last was due income. income interest adjusted million category million Our versus and expense same approximately to primarily period net of $X.X increase produced income a of this

Our primarily increased to last The taxes taxes a the the result of tax tax for state to operations. XX.X% and adjusted increase quarter increased was was XX.X% our year. rate in effective due foreign rate effective same compared for quarter

we up the Our XX%, expect between for effective adjusted XXXX end long-term range. and that target high range tax XX% rate is fiscal of at end to our and

Turning the balance to sheet.

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

cash. As our we cash will reminder, deferred to reduce XXXX year sheet in pay November bonuses will our which related a balance fiscal

line questions. we open operator, that, the can With for

Operator

Instructions] And our today James Sachs. question first [Operator with from Yaro Goldman comes

James Yaro

Maybe just trends, obviously starting both on year-on-year best-in-class Finance, which had Corporate and quarter-on-quarter.

about from other fourth how anything than we And here? election? could normal the Is calendar should in quarter? term, view there think trajectory think the about risk there is the in the here, of in seasonality that outlook longer less you then acceleration any from notable term, near your a than As the catalyze perhaps

Scott Joseph Adelson

always. Good Thank question, as you.

external factors we all in and in think Things what positive recognize if Corporate would could look we've election, about and the it's that at improving. statements talking about. improving [indiscernible] of it Finance. just velocity month-over-month, really but recognize what's have are very our it, that there have with around been it's think a the we the of been improvement we Obviously, I or continued in I quarter-over-quarter, number consistent And world, you the see conflicts which affect negatively be also that. to that been

But not still But getting a in we is part, still on that more moving regular in see going things yet. market spite normal we as basis that, to is range continue period of to it close while to shorter things the do along. and an said, elongated

James Yaro

be And operates, quickly on you could thinking to about just the that the potential rationale, maybe help transaction. the understand Maybe add we Prytania more Anything helpful. strategic else very anything that on transaction? should business just the you see? that That's Solutions us where synergies

Scott Joseph Adelson

are a this is mean our it that opportunity bulk we think business, Yes, technology. just is an be over more area. areas that happy excited really believe we although are initially to business. the they time. businesses, our portfolio valuation that pleased will are much applicable We And And portfolio in there do really which tech-enabled addition valuation we opportunity. that it opportunities may do have be within it I other portfolio really than our components new of wonderful believe superior the And valuation is that. deploy of about similar. It's to we about to have

J. Alley

A clients to geographies. benefit the of it's And focused is lot that business are other non-U.S. on their U.K.-based.

growing nice kind grow in And so continuing business that of it step the is or outside a to business that U.S. a

Operator

And question UBS. Brennan with comes today from Hawken our next

Brennan Hawken

like I'd maybe that to on on last follow PSL. point up

sitting you like I think, FEA percentage what of is in recurring be forma be that helpful this deal, that to little is for the out get pro seen largely going a portion recurring? the that And flushed do So FEA. so that of to this sounds right? revenue we've that expect to bit. It this Is deal, first

Scott Joseph Adelson

and is Yes. is of Thanks over are time the another results, not the portion a That we'll is to today, where it and change recurring like the is is, materially for revenue, scale a the sit answer correct. It that going question. reason yes, And that that you contribute it meaningful in do but that quite bit. believe it at our more will we fashion. we not

J. Alley

the And the it business your be recurring to somewhat was continue to Brennan, question, it way will prior to transaction. answer to a similar

Brennan Hawken

you the[indiscernible. Thank picking for up on

the idea about, was working the some those Okay. had Scott, based that showing continue probably book your that been to look bankers prepared have also something are around actually, guys it's on wanted because I on on you which of you capital into looking some comments good product. and markets and that also that good touched to to be will up But likely in revenue ask restructuring think going restructuring in mandates XXXX. you remarks I

right? So that is

that's here and that, this of you to we where growth the a restructuring business? if better resilience of probably would indication the strength adjust And because business be for year around the just continuing the see

Scott Joseph Adelson

operative reading may that. be little think I the I too a into there was mean right? be, think word I you could much

a there happening the the there's that. frame of later into know, activity happening in that's see restructuring We'll to anything It as just as we or the see like cycle, that have, future. recognize that possibility It you that particular of strong or it, will continuing that the general of something to a continue is is not are quarter, regularly that. time We that in will and due on benefits more statement a in occurring. statement that a in get we is

Brennan Hawken

Got Okay. it.

changing So and the aren't expectations even range restructuring it the came that Is for outlook [indiscernible] of year? above in that just though on timing? your range, you quarter sort average

Scott Joseph Adelson

us is sustaining it's to on. confidence been Correct. good continues give which quarter, in It elevated the was a levels at it

J. Alley

were Yes, strong, other thing is activity longer bodes only well is we kind for quarter levels mentioned that I'd -- of the that say higher higher that this this that the and longer. for

Brennan Hawken

the restructuring higher For longer? basically, activity for

J. Alley

the For restructuring.

Operator

from KBW. Our next question comes Hall today with Aidan

Aidan Hall

in strength Scott, transaction. capital, of private Capital remarks, well the performed prepared business your in Noted Markets the also with the Triago integration

should of as wondering line we thinking Just business finance if any given the additions? just the there's recent about corporate . how to the this contribution be update to

J. Alley

we Yes. you and that capital should between the of that has finance think as markets done sort years in Look, business couple quite I to to market last year. well. XX% the of The our given over of suggest revenues continue XX% corporate think business of any

the We are as M&A starting business, to momentum see in suggested. Scott

the still And looking so recovers, fast sort you're that of how the range business M&A always to sold on depending at market. that likely we've

Aidan Hall

kind little Okay. verticals? utilized it. the integrating I credit platform. technology this specialty broader other granular, touch just maybe And is understand of the Maybe the classes there. of follow-up appreciate PSL. and I how Got in the could you on to color opportunity kind a there. being structured asset just on more or that a across Maybe

Scott Joseph Adelson

recognize it and are will applicability over into that for will of amount meaningful us technology, an we think area and be particularly And on additive think any I play too we But an utilizes it details it's technology that Yes. business that area that, I this already think think only really be mean, out. that there will of to is how time. to a good is that is we our we early get what already doing. really we

Operator

JMP. next Ryan with our comes And today from Devin question Citizens

Alexander Jenkins

growing out or think senior been dynamics X This so, the should nice over to quarters in Devin over the is year just competitive basically going could for you've obviously, single last down Ryan. head Maybe the Alex a or you about on so. I in little talent but on environment quarter, Congrats it count guess Jenkins the this just how on low the a went digits. next and forward MD touch quarter. start bit we framing filling and

Scott Joseph Adelson

couple think our MD you count things. piece of of when is That's that people. about a I It think from it. obviously our process X head promoting of perspective, it's annual

in we to the are You we hired people have the now market X acquire we -- and have fairly stated we and that, as right do the in and quarter, then new certainly and additional we individuals, looking acquisitions.

being as But hope. we've winds as overall, we people some good as other said wind over some also a it we a cases, has growing of Now do there netting -- before, been ways But and in both fit have acquisitions number up in that number number. don't might time. up that

Alexander Jenkins

X and for might day? it election as Okay. these that. Hopefully, you And election, businesses. All have is you this question sentiment speak generally What election? small of right. on just I the takes of obviously, once you answer into appreciate are with head their business? follow-up. happen we get lot And . past this puts the what activity the to administrations we to but to then Can a maybe relates a as that last work your

Scott Joseph Adelson

continue of will there's that on transactions beneficial really to and our bet possibilities well pretty waiting, kind our to that be statements move in and believe individuals you things regardless of I people -- can deploying in capital is them. is that to you see that, each both if going that no about seen that think that move think side And we what on think to results you're longer set happen. equation to have of seeing And I what's and to both continuing I forward. forward will, sides

J. Alley

our not peers same space, transactions [indiscernible] to our we to publicly lot mean that of have. in pressures to regulatory a have the I traded that, mid-cap in Yes. add think the the I just tend on

in impact have a the topic an big is on doesn't And really us. that selection so that

across is The the other industry. highly we're diversified

from industrial, So may and health person. the XYZ be care other in the benefit win the election

industry And theme we're, enough someone so better underlying us not across I think, if for one there's diversified wins. where what's

government most is split. think lot lot important I capital with I be for because entrepreneurs. probably is, minimum, deal is gains a at a going And of us, the the we think our of people then And think probably to to what the happens clients topic to third

And idea coming huge in gains so of not election. the is probably movement into this risk capital a

that's about all thinking mix in that we're and the to what election. So the bowl

Scott Joseph Adelson

The sitting well, have we geographic as other said, world Lindsey our obviously, would it's what United also here but election, a in thing are I we States right? out so to mix add there. And big the on fixated very a

Operator

from comes And Research. Wolfe next O'Brien Brendan question our today with

Brendan O'Brien

to wanted allocation. capital I to touch start, guess on I just

You quite guys or few year have done deals two. over a past the

to of the there how to and to done get to and recently return what whether on bit deals take sense the thinking is looking Just need breather focus today, capital wanted any around pipeline like that influencing acquisition here all your is integrating as a buybacks. that a is you've a

Scott Joseph Adelson

I the in -- do -- I'll as term that of hit use dialogue the when take to in, used have they earlier. before, continue we to they our we this we Lindsey mean acquisitions, part will stated strategy, Yes. lumpy a let and is Lindsey a come piece. But are it's when always

so on been that are will them. And constantly while the in I good we think continue are that looking our But to we a few short work organization that and beneficial to doesn't there it that when at have mean will shareholders, we things continue doing fit find we and will order, pace. a recently be

that process so will continue. And

J. Alley

Yes.

been in or months sort pipeline months, affected years, for fact hasn't of of had the It's M&A, announced of deals X terms that X it's the of pipeline. either In as here that X the robust the closed or thinking of we've overall as frankly. kind last

our share X. acquisitions then changed second and our allocation, terms our all and maintaining think I And done I'd we've pretty think would be balance priority, a position is of dividend in any. is capital -- good third. has don't I We In job say

have repurchases, few We in withhold being the do to the cover making May. transactions and the year we but also share throughout a X haven't been big in we quite open market that

market. to generally on acquisitions come balance these share flat as so about. flexibility our having go frankly, like count open And kept our we to sheet And that keep we think, without to I

Brendan O'Brien

default management and for there's wanted can that that [indiscernible] and activity sponsors. touch to have among sponsor hits bifurcation How my on companies the moderated. sponsor normalized activity defaults between portfolio liability the rates That's is increase corporate great. we continuing default corporate a I And data M&A like follow-up, see, levels? with see as activity been rates to pretty and And it's to to in a much has do abate management From liability need been before sponsor-backed companies these I pressures stress sponsor activity? headwind

Scott Joseph Adelson

not driver -- I your with that some sentiments something I that's don't been mean, a I there. has -- while has that there disagree been not of that,

portfolio deal sponsorship entire of You most running fund sheet they're and number individual of got their managing that will, not keeping a to partner growing in who that that successful with And particular they're still exiting private may you problem be and X equity firm, that effect particular, that portfolio the remember, is that we an balance but of for a -- sick is companies. if operations. that the on have focused deal from --

seen. I you're would say something I have that's think not we So that mean -- I that

Operator

from next JPMorgan. our [Operator question with Worthington Kenneth Instructions] comes And today

Unknown Analyst

on to wanted This the restructuring. is taking I mentioned were you to know longer some on Ken. click of [ double that Alex for close. Bernstein processes ] I

those going to interest the to different years, ahead I a to to abate today, in that on than months the pipeline had past cycle environment. different and think as your XX that build thoughts wanted This the impacts restructuring we've pipeline us in and continues Obviously, over types XX strong like starting get rate is, significant and rates ago. of that's to abate. Wanted rise part quarter And they the how your handful attractive. building help continues was look of blocks to timing you're due through continuing due that or seeing. to did say rate the to opportunities the

Scott Joseph Adelson

healthy to sure predominantly frame, the understanding make clarifying question on to rates. interest I is you're more or when believe and side. the relating talking understanding, I'm I want your time your Yes. business an a Am restructuring elongated business the I really relating that to question Corporate about is Finance correctly?

Unknown Analyst

right. That's

Scott Joseph Adelson

are indication levels still we an think environment. in think out seen that activity And an continue continue that dealt form the that are as of number I to quarter this expect and I interest a And we've need foreseeable we And elevated that see to another. rate Yes. and for we some the sheets have balance still that or stated there with be to in sick future. there are

Unknown Analyst

balance sheet the now to thinking a of some And start broadly. how markets you a just that elevated had market was of the as in there's, closed going side, forward continues much that changing wave more To way of by on that are going debt seeing handful making in Capital public this markets refinancing the X was? about and year, to system quarters. the level credit at of grow. business? expensive be lot flowing maybe Does private more at Then of past largely on And a that what then business the the and through its through public in pretty Markets lot capital fact that To that that the of extent, of funding was driven impact activity significant the looking to the activity you you're as to that market broad rates. was markets were course, looks

Scott Joseph Adelson

has that been that and private significantly, benefited have we something very and capital, an have, as and clearly, that, busy. classes growth, anytime asset have not that be continues believe we the Yes. to busy, continue to obviously, there, I solutions largest see capital been that's Private we soon. group from fortunate we group we out mean subsiding grow

J. Alley

capital our a business. size, huge transaction public opening is up average on our isn't private given just impact having the And markets

available of market them. that primarily generally sort middle middle option are just So to the market, and not the public It's remember, small. of we're too the markets in

market. And so the we It's we don't that on business. and the a impact think opening, huge has bank even capital opening but our private welcome public market is

Operator

Concludes to over remarks. for our back like question-and-answer any to Scott session. turn the I closing Adelson would conference

Scott Joseph Adelson

fiscal want earnings to look all for discuss XXXX, everyone quarter participating when thank winter. you We I this call. second XXXX forward our updating our to you results much. coming for on in fiscal quarter our progress Thank we very third

Operator

The conference has Thank today's presentation. attending for now concluded. you

now disconnect. You may

Houlihan Lokey (HLI) 30 Oct 242025 Q2 Earnings call transcript