In This Article:
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Total Revenue: $575 million, up 23% year-over-year.
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Adjusted Earnings Per Share (EPS): $1.46, up 32% year-over-year.
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Corporate Finance Revenue: $364 million, a 29% increase year-over-year.
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Financial Restructuring Revenue: $132 million, a 15% increase year-over-year.
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Financial and Valuation Advisory Revenue: $79 million, a 12% increase year-over-year.
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Adjusted Compensation Expenses: $354 million, with a compensation expense ratio of 61.5%.
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Adjusted Non-Compensation Expenses: $81 million, a 7% increase year-over-year, with an expense ratio of 14.1%.
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Adjusted Effective Tax Rate: 31.3%, up from 28.4% year-over-year.
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Unrestricted Cash and Equivalents: Approximately $748 million at quarter end.
Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Houlihan Lokey Inc (NYSE:HLI) reported a 23% increase in revenues to $575 million and a 32% rise in adjusted earnings per share to $1.46 compared to the same period last year.
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Corporate Finance revenues increased by 29% year-over-year, driven by improvements in the M&A markets and strong new business generation.
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Financial Restructuring revenues rose by 15% year-over-year, with strong new business activity in both large cap and middle market opportunities.
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The Financial and Valuation Advisory segment saw a 12% increase in revenues, supported by growth in non-cyclical business lines and a rebound in M&A-related services.
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The company successfully integrated recent acquisitions, such as Triago and Prytania Solutions, enhancing its capabilities in private capital and tech-enabled valuation services.
Negative Points
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Despite improvements, the transaction velocity in Corporate Finance remains slower than in previous recoveries, with longer timelines to close deals.
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Interest rates, although lower than recent peaks, remain high, posing challenges to clients' financial performance.
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Geopolitical volatility, including potential conflicts in the Middle East and Ukraine, and the upcoming U.S. presidential elections add complexity to the business outlook.
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The adjusted effective tax rate increased to 31.3% from 28.4% in the same quarter last year, primarily due to higher state and foreign taxes.
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Adjusted non-compensation expenses rose by 7% year-over-year, impacting the overall expense ratio.
Q & A Highlights
Q: Can you discuss the outlook for Corporate Finance and any potential risks to seasonality in the fourth quarter? A: Scott Adelson, CEO, noted that Corporate Finance has been improving consistently, with more companies going to market. However, external factors like geopolitical conflicts and the U.S. election could impact this trend. The transaction closing period remains longer than usual but is gradually shortening.