Houlihan Lokey(HLI)2024-02-07 16:00Revenue and Financial Performance - Total revenues for the three months ended December 31, 2023, were $511.1 million, a 12% increase compared to $456.5 million in the same period in 2022[131][132] - Revenues for the nine months ended December 31, 2023 were $1.39 billion, a 2% increase compared to $1.36 billion in the same period in 2022[136] - Corporate Finance revenues for the three months ended December 31, 2023 were $310.5 million, a 6% increase from $291.7 million in the same period in 2022, driven by higher average transaction fees[144] - Financial Restructuring revenues for the three months ended December 31, 2023 were $128.6 million, a 30% increase from $98.8 million in the same period in 2022, driven by higher average transaction fees[148] - Financial and Valuation Advisory revenues for the three months ended December 31, 2023 were $72.1 million, a 9% increase from $65.9 million in the same period in 2022, driven by an increase in the number of Fee Events[152] Operating Expenses and Compensation - Operating expenses for the three months ended December 31, 2023, were $414.6 million, up 11% from $372.3 million in the same period in 2022[131][133] - Employee compensation and benefits expense increased by 12% to $324.0 million for the three months ended December 31, 2023, compared to $289.3 million in the same period in 2022[131][133] - Non-compensation expenses rose by 9% to $90.6 million for the three months ended December 31, 2023, compared to $83.0 million in the same period in 2022[131][133] - Operating expenses for the nine months ended December 31, 2023 were $1.13 billion, a 2% increase from $1.11 billion in the same period in 2022, with employee compensation and benefits expense rising to $884.1 million, also a 2% increase[137] - Corporate expenses for the three months ended December 31, 2023 were $54.3 million, a 4% increase from $52.2 million in the same period in 2022, driven by higher compensation expenses[156] Income and Taxes - Income before provision for income taxes increased by 23% to $102.6 million for the three months ended December 31, 2023, compared to $83.6 million in the same period in 2022[131] - Net income attributable to Houlihan Lokey, Inc. was $70.8 million for the three months ended December 31, 2023, a 12% increase from $63.1 million in the same period in 2022[131] - Provision for income taxes for the three months ended December 31, 2023 was $31.8 million, reflecting an effective tax rate of 31.0%, up from $20.6 million and 24.6% in the same period in 2022 due to increased state and foreign taxes[135] - Provision for income taxes for the nine months ended December 31, 2023 was $73.3 million, reflecting an effective tax rate of 26.9%, up from $49.1 million and 20.2% in the same period in 2022 due to increased state and foreign taxes[139] Assets and Liabilities - Total assets as of December 31, 2023, were $2.96 billion, slightly down from $2.97 billion as of March 31, 2023[115][117] - Corporate Finance segment assets increased to $1.09 billion as of December 31, 2023, up from $1.02 billion as of March 31, 2023[115] - Financial and Valuation Advisory segment assets rose to $179.0 million as of December 31, 2023, compared to $165.4 million as of March 31, 2023[115] - As of December 31, 2023, the company had $464.8 million of cash in foreign subsidiaries, down from $475.0 million as of March 31, 2023[160] Cash Flow and Financing - Operating cash flows for the nine months ended December 31, 2023, resulted in a net inflow of $103.1 million, driven by net income of $199.2 million, a 2% increase from the previous year[167][168] - Investing activities for the nine months ended December 31, 2023, resulted in a net outflow of $55.7 million, primarily due to purchases of property and equipment[168] - Financing activities for the nine months ended December 31, 2023, resulted in a net outflow of $214.4 million, mainly due to dividends paid and employee tax obligations on share-based awards[168] - The company's cash, cash equivalents, and restricted cash decreased by $158.9 million to $555.9 million as of December 31, 2023, a 1% increase from the previous year[167] - The company has a syndicated revolving line of credit allowing borrowings of up to $100.0 million, with an uncommitted expansion option to increase the total credit facility to $200.0 million, maturing on August 23, 2025[163] - As of December 31, 2023, the company had no principal outstanding under the HLI Line of Credit and expects to continue compliance with loan covenants, including maintaining a minimum consolidated EBITDA of $150 million and a consolidated leverage ratio of less than 2.00 to 1.00[163] Other Income and Expenses - Other (income)/expense, net was $(6.0) million for the three months ended December 31, 2023, compared to $0.6 million in the same period in 2022[131][134] - Other (income)/expense, net was $(12.3) million for the nine months ended December 31, 2023, compared to $7.4 million in the same period in 2022, primarily due to increased interest and dividend income[138] Legal and Compliance - The company agreed to pay a civil monetary penalty of $15.0 million to the SEC as part of a settlement related to compliance with records preservation requirements[166] Foreign Currency and International Exposure - The net impact of foreign currency fluctuations on other comprehensive income was $25,574 for the three months ended December 31, 2023, and $8,665 for the nine months ended December 31, 2023[179] - The company had one foreign currency forward contract outstanding as of December 31, 2023, with a notional value of $2.0 million, resulting in a net gain of $11 during the three months ended December 31, 2023[181] - The company's international expansion increases exposure to foreign currency risks, with potential impacts on revenues, expenses, and the value of assets and liabilities in foreign subsidiaries[182]