Houlihan Lokey, Inc. (NYSE: HLI ) , though based in Los Angeles, operates across the Americas, Europe, the Middle East, and the Asia-Pacific, making its presence very much a global one. An independent investment bank since its foundingThe mission of Grassroots Trading rests on the following principles: providing objective, unbiased, and balanced research, backed by solid data and completely void of emotional influences or preference for companies; focusing on small- to mid-cap companies, offering the Seekin ...

The financial advisory firm's quarterly results significantly surpassed expectations.Houlihan Lokey (HLI -2.31%), an independent financial advisory services firm, announced its fiscal 2025 third-quarter results after the close of trading on Jan. 28. The firm exceeded expectations with an adjusted EPS of $1.64, topping the $1.52 forecast and well above the prior-year period's $1.22. Revenues rose 24% year over year to $634 million, outpacing the $604 million expected. Overall, Houlihan Lokey delivered a stro ...

Investor Presentation January 2025 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 ...

Financial Data and Key Metrics - Revenues for Q3 2025 were $634 million, up 24% YoY, with adjusted earnings per share of $1.64, up 34% YoY [9] - Corporate Finance revenue was $422 million, a 36% increase YoY, driven by improved M&A and financing markets [11] - Financial Restructuring revenue was $131 million, a 2% increase YoY, benefiting from record leverage and higher interest rates [12] - Financial and Valuation Advisory revenue was $82 million, a 14% increase YoY, reflecting an improving M&A climate [13] - Adjusted compensation expenses were $390 million, up from $314 million YoY, with a compensation expense ratio of 61.5% [17] - Adjusted non-compensation expenses were $83 million, slightly up from $82 million YoY, with a ratio of 13.1% [18] Business Line Performance - Corporate Finance closed 170 transactions, up from 117 YoY, though average transaction fees decreased due to transaction mix [15] - Financial Restructuring closed 41 transactions, up from 30 YoY, with a slight decrease in average transaction fees [16] - Financial and Valuation Advisory had 1,005 fee events, up from 926 YoY, showing strength in both cyclical and non-cyclical businesses [17] Market and Geographic Performance - Growth in Corporate Finance was widespread across geographies and industries, driven by both strategic and private equity clients [11] - The company added 17 new managing directors, 14 through acquisitions and 3 through individual hires, indicating strong market expansion [14] Strategic Direction and Industry Competition - The company remains optimistic about fiscal 2026, citing improving M&A market sentiment, increased private equity activity, and strength in restructuring [14] - The acquisition of Waller Helms in December 2024 contributed positively to results, with new partners performing well [13] - The company expects to maintain its long-term compensation expense ratio target of 61.5% [18] Management Commentary on Operating Environment and Future Outlook - Management noted stable interest rates and inflation, with improved confidence following the US election [10] - The restructuring market is expected to remain elevated longer than anticipated, driven by higher interest rates [12] - The company is optimistic about continued growth in fiscal 2026, supported by improving M&A markets and private equity activity [14] Other Important Information - The company had $903 million in unrestricted cash and equivalents at quarter-end, with a significant portion expected to be used for cash bonuses in May 2025 [21] - Adjusted other income and expense produced $9 million in income, primarily due to increased interest income [20] - The adjusted effective tax rate for the quarter was 33.3%, up from 30.3% YoY, with expectations for the full year to settle between 31% and 32% [20] Q&A Session Summary Question: Corporate Finance revenue growth outlook [23] - Management indicated steady progress in Corporate Finance, with growth consistent over the past three quarters [24] - Seasonality in Corporate Finance is expected to follow historical patterns, with the second half of the fiscal year typically stronger [28] Question: Restructuring business growth potential [31] - The restructuring market is expected to remain elevated due to higher interest rates, though growth depends on various factors beyond the company's control [32] Question: Impact of improving M&A environment on hiring and acquisitions [33] - The company expects to continue acquiring talent and companies, regardless of market conditions, and anticipates market share gains [35][37] Question: M&A outlook and potential impacts of regulatory changes [39] - Management believes a more receptive M&A environment is beneficial across all deal sizes, though regulatory changes may create some uncertainty [41][43] Question: Non-compensation expense guidance [44] - Adjusted non-compensation expenses are expected to grow in the high single digits in Q4, consistent with previous guidance [45] Question: Acquisition strategy and feedback from potential targets [47] - The company remains active in acquisition discussions, with a focus on identifying opportunities regardless of market conditions [48][49] Question: Geographic engagement in Corporate Finance [53] - Growth in Corporate Finance is broad-based across regions, with no significant differences in engagement between North America, Europe, and Asia [54] Question: Deal size evolution in Corporate Finance [56] - The company is focused on the mid-cap space, with steady increases in deal size and fees over time [58] Question: Private capital financing outlook [60] - The private capital market is expected to remain strong, with the company well-positioned to capitalize on growth opportunities [62] Question: Competition in capital markets business [64] - While competition is increasing, the company believes it can continue to grow its capital markets business meaningfully [65][66] Question: Restructuring outlook and liability management [69] - Higher interest rates and sick balance sheets are expected to sustain elevated restructuring activity, with a mix of traditional restructuring and liability management [71][72] Question: Sponsor activity in Corporate Finance [74] - Sponsor activity has picked up significantly, with strong momentum expected to continue [75] Question: Transaction velocity and bid/ask spreads [77] - Transaction velocity is improving but has not yet returned to pre-pandemic levels, with time being the primary factor needed for further recovery [78][82] Question: Restructuring revenue growth potential [83] - Restructuring revenue is expected to remain flat in the current market, with potential for growth if M&A markets face pressure [85][86]

Financial Performance - Third Quarter Fiscal 2025 revenues were $634 million, a 24% increase from $511 million in the same quarter of the previous year[2] - Net income for the third quarter was $95 million, or $1.39 per diluted share, compared to $71 million, or $1.04 per diluted share, in the prior year[2] - Adjusted net income for the third quarter was $114 million, or $1.64 per diluted share, up from $84 million, or $1.22 per diluted share, year-over-year[2] - Revenues for the three months ended December 31, 2024, were $634.4 million, a 24.1% increase from $511.1 million in the same period of 2023[32] - Net income for the three months ended December 31, 2024, was $95.3 million, up 34.7% from $70.8 million in the prior year[32] - Adjusted net income for the same period was $113.5 million, representing a 34.9% increase compared to $84.1 million in 2023[33] - Operating income for the three months ended December 31, 2024, was $136.1 million, a 41.1% increase from $96.5 million in the same quarter of 2023[32] - The company reported a fully diluted EPS of $1.39 for the three months ended December 31, 2024, compared to $1.04 in the same period of 2023, marking a 33.7% increase[33] Revenue Breakdown - Corporate Finance revenues increased by 36% to $422 million, driven by a higher number of closed transactions[16] - Financial Restructuring revenues rose by 2% to $131 million, attributed to favorable market conditions for restructuring transactions[18] - Financial and Valuation Advisory revenues grew by 14% to $82 million, supported by an increase in Fee Events and average fees[20] Expenses and Liabilities - Employee compensation and benefits expenses were $403 million, up from $324 million in the same quarter last year, maintaining a compensation ratio of 61.5%[12] - Employee compensation and benefits expenses for the three months ended December 31, 2024, were $390.2 million, up 24.1% from $314.3 million in 2023[32] - The company’s total liabilities increased to $1.40 billion as of December 31, 2024, from $1.33 billion as of March 31, 2024, reflecting a growth of 5.0%[30] Taxation - The provision for income taxes was $50 million, with an effective tax rate of 34.3%, compared to $32 million and 31.0% in the prior year[14] - The adjusted effective tax rate reflects a tax impact on non-tax adjustments identified[34] - All adjustments identified are net of the associated tax impact[34] Assets and Cash Position - Total assets increased to $3.48 billion as of December 31, 2024, from $3.17 billion as of March 31, 2024, reflecting a growth of 9.6%[30] - Goodwill rose to $1.28 billion, up from $1.13 billion, indicating an increase of 13.5%[30] - As of December 31, 2024, the company had $903 million in cash and cash equivalents[22] Dividends - The Board declared a quarterly cash dividend of $0.57 per share, payable on March 15, 2025[22] Share Information - The weighted average shares of common stock outstanding increased to 68.8 million for the three months ended December 31, 2024, from 67.9 million in the same period of 2023[32]

分组1 - Houlihan Lokey reported quarterly earnings of $1.64 per share, exceeding the Zacks Consensus Estimate of $1.51 per share, and up from $1.22 per share a year ago, representing an earnings surprise of 8.61% [1] - The company achieved revenues of $634.43 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 7.57%, compared to $511.13 million in the same quarter last year [2] - Over the last four quarters, Houlihan Lokey has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] 分组2 - The stock has gained approximately 4% since the beginning of the year, outperforming the S&P 500's gain of 2.2% [3] - The current consensus EPS estimate for the upcoming quarter is $1.59 on revenues of $612.24 million, and for the current fiscal year, it is $5.74 on revenues of $2.29 billion [7] - The Zacks Industry Rank for Financial - Miscellaneous Services is currently in the bottom 49% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Earnings Release and Estimates - Houlihan Lokey is scheduled to release fiscal Q3 2025 results on Jan 28, 2025, with a Zacks Consensus Estimate of $1.51 EPS and $592.2 billion in revenues [1] - The Q3 2025 EPS estimate indicates 23.8% YoY growth, while revenue estimates suggest 15.9% YoY growth [2] - For fiscal 2025, the Zacks Consensus Estimate for revenues is $2.3 billion, implying 19% YoY growth, and EPS is $5.74, implying 27.8% YoY growth [3] Earnings Performance and Trends - The company's bottom line beat estimates in three of the trailing four quarters, with an average surprise of 6.6% [4] - The Earnings ESP for Q3 2025 is -3.97%, with the Most Accurate Estimate of $1.45 lower than the Zacks Consensus Estimate of $1.51 [7] - HLI currently carries a Zacks Rank of 3 [7] Business Segment Performance - The top line is likely to benefit from improved fee revenues due to enhanced advisory services [8] - The Financial Restructuring segment is expected to drive overall revenues, benefiting from opportunities in large-cap and middle markets [9] - The Corporate Finance segment is expected to benefit from improving M&A sentiment and the integration of the Triago acquisition [10] - The Financial and Valuation Advisory segment is expected to benefit from non-cyclical services like portfolio valuation and a rebounding M&A market [10] Operating Expenses and Margins - Elevated operating expenses, including higher travel, meals, entertainment, rent, professional fees, and IT costs, are likely to affect margins [11] Stock Performance - HLI's stock has surged 51.9% in the past year, outperforming the industry's growth of 24.6% and the S&P 500's gain of 25.5% [12] - Peer companies like Community Financial System and Moody's Corporation have gained 33.2% and 24.4%, respectively, over the same period [12] Conclusion - Growth in key business segments and recent acquisitions continue to drive Houlihan Lokey's growth [15] - Current shareholders might consider holding their positions, while potential investors may wait for a more favorable entry point [15]

Core Viewpoint - Houlihan Lokey (HLI) shares experienced a 4.2% increase, closing at $175.31, following a notable trading volume, contrasting with a 5.5% decline over the past four weeks [1] Group 1: Company Strengths - Houlihan Lokey's competitive advantages include its global presence and a credible team of financial professionals, making it a leader in Corporate Finance, Financial Restructuring, and Financial Valuation Advisory services [2] - The company's independent and conflict-free business model enhances its reputation by prioritizing client interests [3] Group 2: Recent Developments - Riccardo Cazzoli has been appointed as managing director in the Consumer Group, which is recognized for excellence in mergers and acquisitions, capital-raising, and valuation advisory services [3] Group 3: Financial Performance Expectations - The upcoming quarterly earnings report is expected to show earnings of $1.51 per share, reflecting a year-over-year increase of 23.8%, with revenues projected at $592.21 million, up 15.9% from the previous year [4] - The consensus EPS estimate for the quarter has been revised slightly higher over the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [5] Group 4: Industry Context - Houlihan Lokey is part of the Zacks Financial - Miscellaneous Services industry, where another company, LendingClub (LC), saw a 5.7% increase in its stock price, although it has returned -13.3% over the past month [5]

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a growth stock that can live up to its true potential can be a tough task.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, it's pretty easy to find cutting-edge growth stocks w ...

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Sty ...