Financial Performance - Third Quarter Fiscal 2026 revenues reached $717 million, a 13% increase from $634 million in the same quarter of the previous year[2] - Net income for the third quarter was $117 million, or $1.70 per diluted share, compared to $95 million, or $1.39 per diluted share, in the prior year[2] - Adjusted net income was $133 million, or $1.94 per diluted share, up from $114 million, or $1.64 per diluted share, year-over-year[2] - Revenues for the three months ended December 31, 2025, were $717,072,000, representing a 13.0% increase from $634,428,000 in the same period of 2024[30] - Net income for the three months ended December 31, 2025, was $116,548,000, up 22.3% from $95,302,000 in the prior year[30] - Adjusted net income for the same period was $132,825,000, compared to $113,535,000 in 2024, reflecting a 16.9% increase[31] - Operating income for the three months ended December 31, 2025, was $160,730,000, a 17.9% increase from $136,102,000 in 2024[30] - The company reported a fully diluted EPS of $1.70 for the three months ended December 31, 2025, compared to $1.39 in the same period of 2024, marking a 22.3% increase[31] Revenue Breakdown - Corporate Finance revenues increased by 12% to $474 million, driven by a higher average transaction fee and an increase in closed transactions[14] - Financial Restructuring revenues rose 19% to $156 million, attributed to an increase in average transaction fees[16] - Financial and Valuation Advisory revenues grew by 6% to $87 million, supported by an increase in the number of Fee Events in the M&A markets[18] Expenses and Liabilities - Compensation expenses for the quarter were $459 million, representing 64.0% of revenues, compared to 63.5% in the same quarter last year[10] - Employee compensation and benefits for the three months ended December 31, 2025, totaled $441,001,000, up from $390,173,000 in 2024, reflecting a 13.0% increase[30] - The company’s total liabilities as of December 31, 2025, were $1,642,988,000, slightly down from $1,644,831,000 as of March 31, 2025[28] Cash and Assets - As of December 31, 2025, the company had $1.18 billion in unrestricted cash and cash equivalents[21] - Cash and cash equivalents increased to $1,056,482,000 from $971,007,000, showing a growth of 8.8%[28] - Total assets as of December 31, 2025, were $3,936,755,000, an increase from $3,819,708,000 as of March 31, 2025[28] Taxation - The effective tax rate for the quarter was 31.3%, down from 34.3% in the prior year, due to decreased state taxes and non-deductible expenses[12] - The tax impact of utilizing the adjusted effective tax rate on non-tax adjustments was reflected in the financials[10] Dividends - The company declared a quarterly cash dividend of $0.60 per share, payable on March 15, 2026[21] Acquisition-Related Costs - The company incurred acquisition-related deferred retention payments, impacting financial results[1] - Legal and professional fees associated with the simplification of the legal entity structure were recorded due to acquisitions[2] - Integration and acquisition-related costs included asset write-offs or impairments[3] - Amortization of intangible assets recognized in purchase accounting from acquisitions was reflected in the financials[4] - Fair value remeasurement of acquisition-related contingent consideration was noted[5] - Adjustments from compensation and non-compensation expenses were aggregated[6] - Prior to fiscal 2026, stock-based compensation tax deductions were excluded when fair value at vesting exceeded grant date fair value[7] - Non-deductible acquisition-related costs for income tax purposes were recognized[8] - Deferred income taxes related to non-deductible expenses from senior management transition in fiscal 2025 were reversed[9]

Core Insights - Houlihan Lokey (HLI) reported quarterly earnings of $1.94 per share, exceeding the Zacks Consensus Estimate of $1.85 per share, and up from $1.64 per share a year ago, representing an earnings surprise of +5.15% [1] - The company achieved revenues of $717.07 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 2.41% and increasing from $634.43 million year-over-year [2] - Houlihan Lokey has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $2.01 on revenues of $736.95 million, and for the current fiscal year, it is $7.81 on revenues of $2.7 billion [7] Industry Context - The Financial - Miscellaneous Services industry, to which Houlihan Lokey belongs, is currently ranked in the top 40% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Houlihan Lokey's stock performance [5][6]

Core Insights - The company reported revenues of $717 million and adjusted earnings per share of $1.94 for Q3 fiscal 2026, marking a 13% increase in revenues and an 18% increase in adjusted earnings per share compared to the previous year [1] - The positive results are attributed to improving investor sentiment, stronger company performance, and expectations of declining interest rates, which are expected to further support M&A recovery [1] - Private equity activity has accelerated, with more portfolio companies exploring liquidity options [1] Financial Performance - Corporate Finance generated $474 million in revenue, a 12% increase year-over-year, with both average fees and new business activity on the rise [5][11] - Financial Restructuring produced $156 million in revenue, reflecting a 19% increase compared to the same quarter last year [6][11] - Financial and Valuation Advisory revenues reached $87 million, a 6% increase from the previous year, with a notable rise in fee events [6][12] Business Developments - The company closed 177 transactions in Corporate Finance this quarter, up from 170 in the same period last year, with an increase in average transaction fees [11] - Recent acquisitions, including the real estate advisory business of Mellon Capital and a controlling interest in O'Dare Partners, are expected to enhance the company's capabilities and footprint in Europe [7][8] - The company was recognized as the most active M&A investment bank and the most active financial restructuring investment bank globally for 2025 [9] Market Outlook - The outlook for Corporate Finance remains positive, with expectations of continued growth in M&A activity, particularly in the private equity sector [21] - Restructuring is anticipated to face revenue pressures as the market improves, but geopolitical events may create new opportunities for restructuring activity [6][18] - The company is focused on expanding its workforce and capabilities across various geographies and sectors, with a strong emphasis on independent, high-quality advice [9][60] Capital Management - The company ended the quarter with approximately $1.2 billion in cash and investments and repurchased around 418,000 shares [15] - The capital deployment strategy prioritizes strategic acquisitions over share repurchases, with a strong acquisition pipeline in place [41][43] - The adjusted effective tax rate for the quarter was 30.6%, down from 33.3% in the same quarter last year, primarily due to decreased state taxes [14]

Financial Data and Key Metrics Changes - The company reported revenues of $717 million for Q3 2026, representing a 13% increase year-over-year, and adjusted earnings per share of $1.94, up 18% compared to the same period last year [5][11] - Adjusted compensation expenses were $441 million for the quarter, compared to $390 million in the same period last year, maintaining an adjusted compensation expense ratio of 61.5% [12][14] Business Line Data and Key Metrics Changes - Corporate Finance generated $474 million in revenue, a 12% increase year-over-year, with 177 transactions closed, up from 170 in the same period last year [7][11] - Financial Restructuring produced $156 million in revenue, a 19% increase year-over-year, with 41 transactions closed, consistent with the same quarter last year [8][11] - Financial and Valuation Advisory revenues were $87 million, a 6% increase year-over-year, with 1,103 fee events, up 10% from 1,005 in the same period last year [12] Market Data and Key Metrics Changes - The company noted an acceleration in private equity activity, with more portfolio companies exploring liquidity options due to improving investor sentiment and expectations of declining interest rates [5][10] - The European market is experiencing significant growth, bolstered by recent acquisitions, which are expected to enhance the company's footprint in France and overall European operations [9][28] Company Strategy and Development Direction - The company aims to expand its workforce and capabilities in key markets, particularly in Europe, where it sees potential for growth comparable to its U.S. corporate finance business [9][10] - Recent acquisitions, including a controlling interest in Audere Partners, are part of the strategy to strengthen the company's position in Europe and enhance its Capital Solutions capabilities [9][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the M&A recovery, citing improving market conditions and a positive outlook for fiscal year 2027 [5][10] - The company acknowledged potential revenue pressures in restructuring due to an improving market environment but noted that geopolitical events could drive restructuring activity levels higher [8][54] Other Important Information - The company ended the quarter with approximately $1.2 billion in cash and investments and repurchased approximately 418,000 shares as part of its share repurchase program [14][15] - The adjusted effective tax rate for the quarter was 30.6%, down from 33.3% in the same quarter last year, primarily due to decreased state taxes [14] Q&A Session Summary Question: Outlook for restructuring activity - Management indicated that while the market is improving for M&A, there is a structural decline in restructuring activity, though pockets of opportunity may arise due to geopolitical events [18][19] Question: Corporate finance revenue expectations - Management confirmed that corporate finance is strengthening, with increasing M&A activity, particularly in private equity, and good visibility for continued growth [21][22] Question: U.S. vs. non-U.S. growth outlook - Management highlighted that while the U.S. remains the largest market, European operations are growing significantly, supported by recent acquisitions [28][29] Question: Sponsor engagement and market pressures - Management noted a steady improvement in sponsor engagement, with broad-based activity across sectors, despite external pressures [42][44] Question: Capital management and acquisition pipeline - Management stated a strong acquisition pipeline and a preference for strategic acquisitions over share repurchases, while also considering share buybacks as appropriate [57][60] Question: Non-compensation expenses outlook - Management indicated that non-compensation expenses are expected to grow in line with year-to-date trends, with some increases in rent due to acquisitions [64][66] Question: Data bank product strategy - Management discussed the potential for monetizing proprietary data, indicating that it is still in early stages but viewed as a valuable asset for future growth [68][69] Question: Impact of geopolitical uncertainty on activity levels - Management noted that clients are increasingly willing to look past geopolitical noise and continue with business, indicating resilience in the market [74][75] Question: Capital Solutions group build-out - Management described the Capital Solutions group as still in early innings, with significant growth potential across various sectors [76][77] Question: Advisory cycle positioning - Management agreed that the advisory cycle is in early stages, with substantial pent-up demand still present in the market [86][90]

Financial Data and Key Metrics Changes - The company reported revenues of $717 million for Q3 2026, representing a 13% increase year-over-year, and adjusted earnings per share of $1.94, up 18% compared to the same period last year [5][11] - The adjusted effective tax rate for the third quarter was 30.6%, down from 33.3% in the same quarter last year, primarily due to decreased state taxes and non-deductible expenses [14] Business Line Data and Key Metrics Changes - Corporate Finance generated $474 million in revenue for the quarter, a 12% increase year-over-year, with 177 transactions closed, up from 170 in the same period last year [7][11] - Financial Restructuring produced $156 million in revenue, a 19% increase year-over-year, with 41 transactions closed, consistent with the same quarter last year [8][11] - Financial and Valuation Advisory revenues were $87 million, a 6% increase year-over-year, with 1,103 fee events, up from 1,005 in the same period last year [12] Market Data and Key Metrics Changes - The company noted an acceleration in private equity activity, with more portfolio companies exploring liquidity options due to improving investor sentiment and expectations of declining interest rates [5] - The company is experiencing strong growth in its European business, bolstered by recent acquisitions, which are expected to enhance its market presence in France [9][28] Company Strategy and Development Direction - The company aims to expand its workforce and capabilities in key markets, particularly in Europe, where it sees significant growth potential [9][28] - The strategy includes a focus on independent, high-quality advice to clients and a commitment to creating shareholder value [10] - The company is actively pursuing acquisitions to strengthen its Capital Solutions capabilities and enhance its market position [9][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the M&A recovery, citing improving market conditions and increased deal activity [5][10] - There is a recognition of potential revenue pressures in Financial Restructuring as the market improves, but geopolitical events may create new opportunities [8][54] - The company believes it is in the early stages of the advisory cycle, with significant pent-up demand expected to drive future growth [87][90] Other Important Information - The company ended the quarter with approximately $1.2 billion in cash and investments and repurchased approximately 418,000 shares as part of its share repurchase program [14][15] - The company is focused on maintaining a balance between cash for acquisitions and share repurchases, with a strong preference for strategic acquisitions [57][58] Q&A Session Summary Question: Outlook for restructuring activity - Management indicated that while restructuring activity may decline due to improving market conditions, there are still pockets of opportunity driven by geopolitical events [18][19] Question: Corporate finance revenue expectations - Management confirmed that corporate finance is experiencing strong growth, with increasing M&A activity, particularly in private equity [21][22] Question: U.S. vs. non-U.S. growth outlook - Management highlighted that while the U.S. remains the largest market, the European business is growing significantly, aided by recent acquisitions [28][31] Question: Sponsor engagement and market pressures - Management noted a steady improvement in sponsor engagement, with broad-based growth across sectors, despite some external pressures [42][44] Question: Capital management and acquisition pipeline - Management stated that the acquisition pipeline is strong, and they will continue to evaluate share repurchases while maintaining flexibility for acquisitions [56][60] Question: Non-compensation expenses outlook - Management indicated that non-compensation expenses are expected to grow in line with year-to-date trends, with some increases in specific areas like rent [64][66] Question: Data bank product strategy - Management discussed the potential for monetizing proprietary data, indicating that it is an important area of focus for future growth [68][69] Question: Impact of geopolitical uncertainty on activity levels - Management acknowledged the presence of geopolitical noise but noted that clients are increasingly willing to proceed with business despite uncertainties [74][75] Question: Capital Solutions group build-out - Management indicated that the Capital Solutions group is still in early stages of development, with significant demand across various fronts [76][77] Question: Advisory cycle positioning - Management agreed that they are in the early innings of the advisory cycle, with a strong position to capitalize on future growth opportunities [86][90]

Financial Data and Key Metrics Changes - The company reported revenues of $717 million for Q3 2026, representing a 13% increase compared to the same period last year [4] - Adjusted earnings per share were $1.94, up 18% year-over-year [4] - The adjusted effective tax rate for the quarter was 30.6%, down from 33.3% in the same quarter last year [13] Business Line Data and Key Metrics Changes - Corporate Finance generated $474 million in revenue, a 12% increase year-over-year, with 177 transactions closed, up from 170 in the same period last year [5][10] - Financial Restructuring produced $156 million in revenue, a 19% increase compared to the same period last year, with 41 transactions closed, consistent with the previous year [5][10] - Financial and Valuation Advisory revenues were $87 million, a 6% increase year-over-year, with 1,103 fee events, up 10% from 1,005 in the same period last year [11] Market Data and Key Metrics Changes - The company noted an acceleration in private equity activity, with more portfolio companies exploring liquidity options due to improving investor sentiment and expectations of declining interest rates [4] - The European business is experiencing significant growth, bolstered by recent acquisitions, which are expected to enhance the company's footprint in the region [8][30] Company Strategy and Development Direction - The company aims to expand its workforce and capabilities in key markets, particularly in Europe, where it sees potential for growth comparable to its U.S. corporate finance business [8] - Recent acquisitions, including a controlling interest in Audere Partners, are part of the strategy to strengthen the company's position in France and enhance its Capital Solutions capabilities [8][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong visibility into deal activity and backlog, particularly in Corporate Finance [5] - The restructuring business may face revenue pressures as the market improves, but geopolitical events could create new opportunities for restructuring activity [6][18] Other Important Information - The company ended the quarter with approximately $1.2 billion in cash and investments [13] - Share repurchases totaled approximately 418,000 shares during the quarter, with ongoing evaluations of balance sheet flexibility for future acquisitions [14] Q&A Session Summary Question: Outlook for restructuring activity - Management acknowledged that while the market is improving for M&A, there are still pockets of opportunities for restructuring, but visibility into consistent new opportunities is unclear [18][19] Question: Corporate finance revenue expectations - Management confirmed that Corporate Finance is seeing strong growth, with good visibility into continued activity levels, particularly in private equity [21][22] Question: U.S. vs. non-U.S. growth outlook - Management highlighted that while the U.S. remains the largest market, the European business is growing well, and recent acquisitions will enhance growth potential in that region [28][30] Question: Sponsor engagement and activity levels - Management noted a steady improvement in sponsor engagement, with activity levels increasing across various sectors, despite some external geopolitical factors [41][43] Question: Capital management and acquisition pipeline - Management indicated a strong acquisition pipeline and a preference for using excess cash for strategic acquisitions, while also considering share repurchases [56][59]

Investor Presentation January 2026 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 ev ...

Core Insights - Houlihan Lokey, Inc. has appointed Mark Ward as a Managing Director in its Business Services Group to enhance its IT services coverage in Europe [1][2] Group 1: Appointment and Role - Mark Ward will be based in the Manchester and London offices, focusing on expanding the firm's IT services coverage across Europe [2] - He will collaborate with Malte Abrams, Managing Director and Head of IT Services, Europe, to deepen sector expertise and enhance client reach [2] Group 2: Experience and Expertise - Mr. Ward brings over 14 years of investment banking and corporate finance experience, previously serving as a Managing Director at DC Advisory [3] - His expertise includes IT consulting, software development, data analytics, and managed service providers, with a strong background in executing complex M&A and corporate finance transactions [3] Group 3: Strategic Importance - The appointment is seen as a strategic move to strengthen Houlihan Lokey's European IT Services platform amid accelerating sector consolidation [4] - The firm aims to leverage Mr. Ward's extensive sector expertise to support clients in a dynamic and competitive market [4] Group 4: Business Services Group Performance - Houlihan Lokey's Business Services Group is recognized for superior service in M&A advisory, capital-raising, restructuring, and financial advisory services [4] - In 2025, the group was ranked as the No. 1 business services M&A advisor for all global transactions, completing 92 deals [4]

Core Viewpoint - Houlihan Lokey (HLI) has a strong track record of exceeding earnings estimates and is well-positioned for future earnings growth, particularly with an average surprise of 17.75% over the past two quarters [1]. Earnings Performance - In the last reported quarter, Houlihan Lokey achieved earnings of $1.84 per share, surpassing the Zacks Consensus Estimate of $1.69 per share by 8.88% [2]. - In the previous quarter, the company reported earnings of $2.14 per share against an expected $1.69 per share, resulting in a surprise of 26.63% [2]. Earnings Estimates and Predictions - Estimates for Houlihan Lokey have been trending upward, influenced by its history of earnings surprises [4]. - The company currently has a positive Earnings ESP of +2.19%, indicating that analysts are optimistic about its earnings prospects [7]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat in the upcoming report [7]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [5]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [6].

Core Insights - Houlihan Lokey is acquiring a controlling stake in Audere Partners, a French advisory firm, expected to close in Q1 2026, enhancing its position in France and expanding its team to around 80 professionals [2][6] - The firm has also acquired Mellum Capital's real estate capital advisory business, increasing its presence in Munich and London [3][6] - These acquisitions are aimed at strengthening Houlihan Lokey's EMEA business, which now has approximately 550 financial professionals, and are expected to boost advisory fees as deal activity increases [4][6] Financial Performance - Houlihan Lokey's return on invested capital (ROIC) stands at 13.1%, significantly above the industry average of 5.6%, indicating efficient capital usage [5][6] - The company has a solid balance sheet with a current ratio of 1.3 and zero debt, showcasing financial strength [5][6] - It has consistently beaten earnings estimates over the past four quarters, with an average surprise of 16.5%, and maintains a healthy pre-tax margin of 21.6% [5][6] Market Position - Houlihan Lokey's shares have increased by approximately 1.8% over the past year, outperforming the industry, which has seen a decline of around 15% [7][8] - The company trades at a price-to-earnings ratio of 24.4, slightly above the industry average of 23.2, suggesting limited growth potential at current valuations [9]