Houlihan Lokey(US:HLI)2022-02-08 16:15Financial Data and Key Metrics Changes - The company reported revenues of $889 million for Q3 2022, representing a 65% increase compared to the same quarter last year [10] - Adjusted earnings per share reached $2.90, up 63% from the same quarter a year ago [11] - Adjusted compensation expenses were $547 million, compared to $335 million in the same period last year [38] - The effective tax rate for the quarter was 30%, up from 25.3% in the same quarter last year [45] Business Line Data and Key Metrics Changes - Corporate Finance revenues were $716 million for the quarter, a 134% increase year-over-year, with 230 transactions closed compared to 121 in the same period last year [32] - Financial Restructuring revenues were $89 million, a 50% increase from the same quarter last year, with 21 transactions closed compared to 44 in the same period last year [35] - Financial and Valuation Advisory revenues were $84 million, a 56% increase from the same period last year, with 901 fee events compared to 639 in the same period last year [37] Market Data and Key Metrics Changes - The company maintained its status as the Number 1 global M&A investment banking firm based on the number of transactions closed [13] - The company also ranked as the Number 1 global restructuring advisor based on both the number of transactions closed and the dollar value of restructured debt [13] Company Strategy and Development Direction - The company aims to leverage its strong brand and reputation to attract better talent and potential acquisitions [26] - The integration of GCA is on track, with expectations of realizing potential revenue synergies over the coming years [27] - The company is focusing on expanding its Financial and Valuation Advisory (FEA) business, which has shown consistent growth [28] Management's Comments on Operating Environment and Future Outlook - Management noted that while the M&A market remains strong, growth is expected to level off in 2022, with a slowing rate of new engagement activity [19] - The restructuring business is currently experiencing limited opportunities, but management believes that rising interest rates could drive future activity [29] - The company is optimistic about its long-term growth prospects despite current market challenges [29] Other Important Information - The company ended the quarter with approximately $1.1 billion in unrestricted cash and equivalents [46] - The company repurchased approximately 645,000 shares at an average price of $108.90 per share [48] - A dividend of $0.43 per share is to be paid on March 15 to shareholders of record as of March 2 [49] Q&A Session Summary Question: Can you provide more detail on the contributors to FEA's performance and the jump in fee per event? - Management indicated that the increase in fee per event is due to a focus on building relationships with key clients and doing more complex work, leading to larger fee events [54][55] Question: What is the outlook for the independent advisors in private debt capital raising? - Management sees significant growth potential in this area, with a growing interest from companies and private equity firms to source capital through advisors [60][62] Question: How is the company responding to recent market volatility? - Management noted that volatility has primarily impacted public transactions more than private ones, and they do not foresee significant changes in deal activity at this time [66] Question: What is the current state of the European sponsor market? - Management reported increased deal flow and interaction in Europe, indicating a positive outlook for the region [76][90] Question: Are there signs of increased activity in the restructuring business? - Management acknowledged potential positive macro factors but noted that consistent indicators of increased activity have not yet materialized [78][80] Question: How should investors view the company's cash balance and potential for acquisitions? - Management stated that the primary goal is to find attractive acquisitions, with share repurchases considered if no suitable opportunities arise [135][140]