On July 31, 2024, Houlihan Lokey Inc (HLI, Financial) released its 8-K filing reporting financial results for the first quarter of fiscal 2025, ending June 30, 2024. The investment bank, known for its expertise in mergers and acquisitions, capital markets, financial restructuring, valuation, and strategic consulting, reported revenues of $514 million and diluted earnings per share (EPS) of $1.30, surpassing analyst estimates of $508.67 million in revenue and $1.17 EPS.
Company Overview
Houlihan Lokey Inc is a global investment bank serving corporations, institutions, and governments worldwide. The firm operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory Services. With offices across the United States, Europe, and the Asia-Pacific region, Houlihan Lokey provides independent advice and intellectual rigor to its clients.
Performance Highlights
For the first quarter ended June 30, 2024, Houlihan Lokey reported:
- Revenues of $514 million, up from $416 million in the same quarter last year.
- Net income of $89 million, or $1.30 per diluted share, compared to $61 million, or $0.90 per diluted share, in the prior year.
- Adjusted net income of $84 million, or $1.22 per diluted share, compared to $62 million, or $0.89 per diluted share, in the prior year.
“Our first quarter fiscal 2025 benefited primarily from improving M&A activity, with revenues up 24% versus the first quarter last year. Our Corporate Finance business had its strongest first quarter ever; our Financial Restructuring business had its second-strongest first quarter; and our Financial and Valuation Advisory business is seeing increased momentum in line with the market recovery. Although macro uncertainties still exist, we are optimistic about this fiscal year given continued improvements in M&A and capital markets activity,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey.
Segment Performance
Houlihan Lokey's performance across its three business segments was as follows:
| Segment | Q1 FY25 Revenue | Q1 FY24 Revenue | Change |
|---|---|---|---|
| Corporate Finance | $328 million | $227 million | +45% |
| Financial Restructuring | $117 million | $123 million | -5% |
| Financial and Valuation Advisory | $68 million | $65 million | +4% |
Financial Metrics and Analysis
Key financial metrics for the first quarter include:
- Employee compensation and benefits expenses were $330 million, up from $263 million in the prior year.
- Non-compensation expenses were $88 million, up from $79 million in the prior year.
- Provision for income taxes was $11 million, representing an effective tax rate of 10.9%, down from 19.6% in the prior year.
The increase in employee compensation and benefits expenses was primarily due to higher revenues. Non-compensation expenses rose due to increased information technology and communications expenses, as well as travel, meals, and entertainment expenses. The lower effective tax rate was attributed to increased stock compensation deductions.
Dividend Announcement
The Board of Directors declared a regular quarterly cash dividend of $0.57 per share, payable on September 15, 2024, to stockholders of record as of September 3, 2024.
Conclusion
Houlihan Lokey Inc (HLI, Financial) demonstrated robust performance in the first quarter of fiscal 2025, driven by strong results in its Corporate Finance segment. Despite challenges in the Financial Restructuring segment, the company's overall growth and strategic positioning in the capital markets industry underscore its resilience and potential for continued success.
Explore the complete 8-K earnings release (here) from Houlihan Lokey Inc for further details.
