February 2025 Investor Presentation 2 Disclaimers Forward-Looking Information This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation may be forward-looking statements. The words "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" and other expressions that are predictions of or indicate future ...

Core Insights - Houlihan Lokey, Inc. (HLI) shares increased by 5.4% following the release of its fiscal fourth-quarter results on May 7, 2025, driven by growth in corporate finance, financial and valuation advisory, and financial restructuring businesses, although higher expenses partially offset these gains [1] Financial Performance - HLI reported adjusted earnings per share (EPS) of $1.96 for fiscal Q4 2025, exceeding the Zacks Consensus Estimate by 21.7% and reflecting a 54% year-over-year increase [1] - Total revenues for the quarter rose by 28% year over year to $666.4 million, surpassing the Zacks Consensus Estimate by 6.4% [2] - Income before provision for income taxes increased by 27.3% year over year to $150.3 million [3] - Total operating expenses grew by 26.2% year over year to $527.2 million, attributed to higher employee compensation and benefits, as well as non-compensation expenses [3] - The adjusted compensation expense ratio remained stable at 61.5% [3] Segment Performance - Corporate Finance segment revenues surged by 43.5% year over year to $412.7 million, benefiting from improved average transaction fees and an increase in the number of closed transactions, with Managing Directors up by 7.6% and closed transactions up by 21.5% [3] - Financial Restructuring revenues improved by 5.9% year over year, supported by an increase in closed transactions and average transaction fees, with Managing Directors and closed transactions rising by 5.6% and 8.6%, respectively [4] - Financial and Valuation Advisory segment revenues increased by 15.1% year over year, driven by a rise in the number of fee events, with Managing Directors up by 7.7% [5] Full-Year Update - For fiscal 2025, total revenues increased by 24.8% year over year to $2.4 billion, while total operating expenses rose by 21.7% to $1.9 billion [6] - Adjusted EPS for the full year rose by 40.1% year over year to $6.29 [6] Financial Position - As of March 31, 2025, HLI had cash and cash equivalents of $971 million, up from $721.2 million at the end of fiscal 2024 [7] - Total assets increased to $3.8 billion from $3.2 billion at the end of fiscal 2024 [7] - Total equity rose to $2.2 billion from $1.8 billion at the end of fiscal 2024 [7] Dividend Update - HLI announced a 5% increase in its cash dividend to 60 cents per share, payable on June 15, 2025, to shareholders of record as of June 2 [9]

Company Overview - As of March 31, 2025, the company had a team of 1,893 financial professionals across 35 offices globally, serving over 2,000 clients annually[19]. - The company employs a total of 2,702 people as of March 31, 2025, reflecting a slight increase from 2,601 in 2024[38]. - Approximately 1,100 present and former employee shareholders collectively own about 24% of the company's equity, promoting a culture of broad employee ownership[35]. Business Segments - The Corporate Finance segment had 240 Managing Directors focusing on mid-cap transactions, which are considered an attractive and underserved market segment[20]. - The M&A business is recognized as one of the most prolific sell-side advisors, consistently selling more companies valued under $1 billion than any competitor[23]. - The Financial Restructuring group, with 57 Managing Directors, is one of the largest in the investment banking industry, focusing on complex restructuring and liability management transactions globally[28]. - The Financial and Valuation Advisory group, consisting of 42 Managing Directors, is known for its expertise in valuation and financial opinions, serving a wide range of clients[33]. Market Presence and Competition - The company has established a significant presence in major industry segments, including technology, healthcare, and financial services, and continues to expand its capabilities through internal promotions and acquisitions[21]. - The company competes with various investment banking firms, including bulge-bracket firms and boutique firms, based on industry knowledge and client relationships[39]. Regulatory Compliance - Regulatory compliance is a significant aspect of the company's operations, with oversight from the SEC and FINRA, ensuring adherence to financial regulations[41]. - The company is subject to various compliance regulations, including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act, to mitigate reputational risks[57]. International Operations and Currency Risk - The company operates through various subsidiaries across Europe, Asia Pacific, the Middle East, and South America, providing regulated and unregulated financial advisory services[46][51][52][56]. - The company maintains cash and cash equivalents primarily in U.S. Dollars, Pound Sterling, Euros, and Yen, facing foreign currency risk due to potential currency movements[206][208]. - For the years ended March 31, 2025, 2024, and 2023, the net impact of foreign currency fluctuations on other comprehensive income was $3.3 million, $(3.8) million, and $(19.5) million, respectively[209]. - As of March 31, 2025, the company had foreign currency forward contracts with an aggregate notional value of $75.0 million and SEK 79.0 million, reflecting a gain in other operating expenses[211]. - The company has been impacted by changes in exchange rates, with potential future impacts increasing as international expansion continues[212]. - The company’s European operations are supported by HLE GmbH, established to mitigate Brexit impacts, and is approved by the German regulatory authority[48][49]. Financial Management - The company regularly reviews accounts receivable and maintains an allowance for credit losses to cover potential losses[207]. - As of March 31, 2025, the HL Voting Trust controls approximately 74.9% of the total voting power of the company, classifying it as a "controlled company" under NYSE rules[60][61].

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ITJTQ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advi ...

Revenue Growth - Fiscal Year 2025 revenues reached a record $2.39 billion, up 25% from $1.91 billion in Fiscal Year 2024[2] - Fourth Quarter Fiscal 2025 revenues were $666 million, an increase of 28% compared to $520 million in the same quarter of Fiscal Year 2024[2] - Corporate Finance segment revenues increased by 38% year-over-year for Fiscal Year 2025, totaling $1.53 billion[8] - Fourth Quarter Corporate Finance revenues were $413 million, a 43.7% increase from $288 million in the same quarter of Fiscal Year 2024[21] - Financial Restructuring revenues increased to $165 million for Q4 2025, up from $155 million in Q4 2024, driven by a higher number of closed transactions[23] - Financial and Valuation Advisory revenues rose to $89 million in Q4 2025, compared to $77 million in Q4 2024, attributed to improvements in M&A markets[25] - Revenues for the quarter ended March 31, 2025, were $666.4 million, a 28% increase from $520.5 million in the same quarter of 2024[37] - The company reported an increase in revenues for the year ended March 31, 2025, reaching $2,389,416 thousand, a 25% increase from $1,914,404 thousand in the previous year[38] Earnings Performance - Fiscal Year 2025 diluted EPS was $5.82, compared to $4.11 for Fiscal Year 2024, representing a 41.5% increase[3] - Adjusted Fiscal Year 2025 diluted EPS was $6.29, up from $4.49 in Fiscal Year 2024, marking a 40.1% increase[3] - Net income for the year ended March 31, 2025, was $399.7 million, compared to $280.3 million for the year ended March 31, 2024, representing a 43% increase[37] - Adjusted operating income for the three months ended March 31, 2025, was $171,307 thousand, up 43% from $119,416 thousand in the prior year[38] - Net income (adjusted) for the three months ended March 31, 2025, was $136,307 thousand, a 55% increase compared to $87,763 thousand in the same period of 2024[38] - Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted) for the three months ended March 31, 2025, was $1.96, up 54% from $1.27 in the same period of 2024[38] Expenses and Compensation - Employee compensation and benefits expenses for Fiscal Year 2025 were $1.52 billion, up from $1.21 billion in Fiscal Year 2024, resulting in a GAAP compensation ratio of 63.8%[15] - Adjusted non-compensation expenses for Fiscal Year 2025 were $329 million, compared to $314 million in Fiscal Year 2024, reflecting an increase in operating expenses[16] - Employee compensation and benefits expenses (adjusted) for the three months ended March 31, 2025, were $409,850 thousand, an increase of 28% from $320,077 thousand in the same period of 2024[38] - Non-compensation expenses (adjusted) for the three months ended March 31, 2025, were $85,265 thousand, a slight increase from $80,963 thousand in the same period of 2024[38] Tax and Dividends - The provision for income taxes for Fiscal Year 2025 was $132 million, with an effective tax rate of 24.8%, down from 28.2% in Fiscal Year 2024[17] - The provision for income taxes (adjusted) for the three months ended March 31, 2025, was $44,199 thousand, compared to $37,438 thousand in the same period of 2024[38] - The company announced a 5% increase in the quarterly dividend to $0.60 per share[1] - The company declared a quarterly cash dividend of $0.60 per share, payable on June 15, 2025[27] Transaction Activity - The number of closed transactions in Corporate Finance increased to 147 in Q4 2025, up from 121 in Q4 2024, reflecting a strong market environment[22] - The number of managing directors in Financial Restructuring increased to 57 in 2025 from 54 in 2024, indicating growth in leadership capacity[24] - The average transaction fee on closed transactions in Financial Restructuring increased, although this does not indicate a consistent trend[23] Future Outlook - The company plans to host a conference call on May 7, 2025, to discuss its full year and fourth quarter fiscal 2025 results[28]

Group 1: Earnings Performance - Houlihan Lokey reported quarterly earnings of $1.96 per share, exceeding the Zacks Consensus Estimate of $1.61 per share, and up from $1.27 per share a year ago, representing an earnings surprise of 21.74% [1] - The company posted revenues of $666.42 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.42%, compared to year-ago revenues of $520.46 million [2] Group 2: Market Performance - Houlihan Lokey shares have declined approximately 6.2% since the beginning of the year, while the S&P 500 has seen a decline of 4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $1.50 on revenues of $598.13 million, and for the current fiscal year, it is $6.81 on revenues of $2.64 billion [7] Group 3: Industry Outlook - The Financial - Miscellaneous Services industry, to which Houlihan Lokey belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, indicating potential challenges ahead [8] - The estimate revisions trend for Houlihan Lokey is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting it may underperform the market in the near future [6]

Financial Data and Key Metrics Changes - Revenues for Q4 were $666 million, up 28% year-over-year, and adjusted earnings per share were $1.96, up 54% compared to the same quarter last year [6] - For the fiscal year 2025, total revenues reached $2.4 billion, marking a 25% increase from the previous year, the highest annual revenue in the firm's history [6][10] - Adjusted compensation expenses for Q4 were $410 million, compared to $320 million in the same period last year, maintaining an adjusted compensation expense ratio of 61.5% [14][15] Business Line Data and Key Metrics Changes - Corporate Finance revenues were $413 million for the quarter, a 44% increase year-over-year, with 147 transactions closed, up from 121 in the same period last year [12] - Financial Restructuring revenues were $165 million for the quarter, a 6% increase year-over-year, with 38 transactions closed compared to 35 in the same quarter last year [13] - Financial and Valuation Advisory revenues were $89 million for the quarter, a 15% increase from the same period last year, with 1,224 fee events during the quarter [13] Market Data and Key Metrics Changes - The company noted that the average size of transactions and average transaction fees in Corporate Finance continued to grow, indicating a strengthening brand perception and quality of senior hires [7][8] - The capital markets business, now rebranded as Capital Solutions, had a record year, enhancing the platform with diversified, high-growth, and less volatile revenues [8] Company Strategy and Development Direction - The company executed three acquisitions in fiscal year 2025, expanding its industry, geographic, and product reach, which remains a key component of its growth strategy [7] - The management emphasized the importance of maintaining a diversified business model to navigate volatile market conditions effectively [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued elevated levels of restructuring activity, bolstered by recent market events [30] - The company acknowledged the challenges in forecasting due to current market volatility but noted that pitch level activity and deal processes were proceeding at a normal rate [23][24] Other Important Information - The Board approved a 5.3% increase in the quarterly dividend to $0.60 per share, to be paid in June [20] - The company ended the fiscal year with approximately $1.2 billion in unrestricted cash and equivalents, with a significant portion earmarked for accrued bonuses [19] Q&A Session Summary Question: How have revenues been tracking quarter to date amidst volatility? - Management indicated it is too early to provide meaningful indications but noted that pitch level activity and deal processes are moving at a normal rate [23] Question: What is the outlook for restructuring in light of recent events? - Management expects restructuring to remain at elevated levels, with confidence in continued activity [30] Question: How does the outlook differ between middle market and large scale M&A? - Management confirmed that mid-cap volumes are generally more resilient than large-cap volumes, a trend observed in previous cycles [44] Question: What is the state of the bolt-on acquisition pipeline for fiscal year 2026? - Management stated that discussions around acquisition opportunities remain active and are crucial to the strategic direction of the company [46] Question: How is the Capital Solutions business performing? - Management noted that the Capital Solutions Group continues to grow significantly, driven by various market trends [51] Question: What is the capacity for restructuring in a more stressed macro environment? - Management indicated that there is substantial capacity to handle a larger restructuring environment, with revenue per managing director currently lower than during previous economic downturns [55]

Financial Data and Key Metrics Changes - The company reported revenues of $666 million for the fourth quarter, representing a 28% increase year-over-year, and adjusted earnings per share of 1.96, up 54% compared to the same quarter last year [5] - For the fiscal year 2025, total revenues reached $2.4 billion, marking a 25% increase from the previous year and the highest annual revenue in the firm's history [5][6] - Adjusted compensation expenses for the quarter were $410 million, compared to $320 million for the same period last year, maintaining an adjusted compensation expense ratio of 61.5% [14][15] Business Line Data and Key Metrics Changes - Corporate Finance revenues were $413 million for the quarter, up 44% year-over-year, with 147 transactions closed, an increase from 121 in the same period last year [12] - Financial Restructuring revenues reached $165 million for the quarter, a 6% increase compared to the same period last year, with 38 transactions closed [13] - Financial and Valuation Advisory revenues were $89 million for the quarter, a 15% increase from the same period last year, with 1,224 fee events during the quarter [13] Market Data and Key Metrics Changes - The company noted that its Corporate Finance business outside the U.S. continued to show upward trends in transaction size and fees, with a strong performance in capital markets, now rebranded as Capital Solutions [6][7] - The company highlighted that certain sectors and geographies are more impacted by current market conditions, indicating a bifurcation in the M&A market [22][24] Company Strategy and Development Direction - The company emphasized that acquisitions are a significant driver of growth, having closed three acquisitions in the fiscal year, which expanded its industry, geographic, and product reach [6] - The management expressed confidence in the restructuring business, expecting elevated revenues in fiscal year 2026, supported by a strong fourth quarter performance [9][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in forecasting due to market volatility but noted that pitch activity and deal processes are proceeding at a normal rate [22] - The company is optimistic about its diversified business model's ability to handle volatile market conditions, indicating that it is well-positioned to advise both winners and losers in the current environment [10][11] Other Important Information - The company ended the fiscal year with approximately $1.2 billion in unrestricted cash and equivalents, with a significant portion earmarked for accrued bonuses [18] - The Board approved a 5.3% increase in the quarterly dividend to $0.60 per share, to be paid in June [19] Q&A Session Summary Question: How have revenues been tracking quarter to date amidst volatility? - Management indicated it is too early to provide meaningful indications but noted that pitch activity and deal processes are moving at a normal rate [22] Question: What is the outlook for restructuring given recent events? - Management expects restructuring to remain at elevated levels, with confidence in continued activity in the restructuring arena [28][30] Question: How does the outlook differ between middle market and large scale M&A? - Management confirmed that mid-cap volumes are generally more resilient than large-cap volumes, a trend observed in previous cycles [42] Question: What is the state of the bolt-on acquisition pipeline for fiscal year 2026? - Management stated that there is an active dialogue regarding various opportunities, emphasizing the importance of acquisitions in their strategic direction [45] Question: How is the Capital Solutions business performing? - Management noted that the Capital Solutions Group continues to grow significantly, with various components driving results in the current market environment [50][52] Question: What factors are driving the strong performance in Financial and Valuation Advisory? - Management attributed the growth to less cyclical components like portfolio valuation and a ramp-up in transaction advisory services as M&A activity continues to recover [58]

Investor Presentation May 2025 Disclaimers Forward-Looking Information This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation may be forward-looking statements. The words "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" and other expressions that are predictions of or indicate future events ...

Core Viewpoint - Houlihan Lokey (HLI) is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with earnings expected to be $1.54 per share, reflecting a +21.3% change, and revenues projected at $626.21 million, up 20.3% from the previous year [1][3]. Group 1: Earnings Expectations - The upcoming earnings report is scheduled for May 7, and the stock may rise if the reported numbers exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised down by 3.47% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Houlihan Lokey is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -9.55%, suggesting a bearish outlook from analysts [10][11]. Group 2: Earnings Surprise Prediction - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the premise that recent revisions may provide more accurate insights [6]. - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3, which historically leads to a positive surprise nearly 70% of the time [8]. - Houlihan Lokey's current Zacks Rank is 4, making it challenging to predict an earnings beat conclusively [11]. Group 3: Historical Performance - In the last reported quarter, Houlihan Lokey exceeded the expected earnings of $1.51 per share by delivering $1.64, resulting in a surprise of +8.61% [12]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [13]. Group 4: Market Reactions - An earnings beat or miss may not solely dictate stock movement, as other factors can influence investor sentiment [14]. - While betting on stocks expected to beat earnings increases the odds of success, it is essential to consider other influencing factors before making investment decisions [15]. - Overall, Houlihan Lokey does not currently appear to be a compelling candidate for an earnings beat, and investors should monitor additional factors [16].