Houlihan Lokey Inc. ((HLI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Houlihan Lokey Inc. exuded a generally positive sentiment, highlighting robust revenue and earnings growth primarily driven by the Corporate Finance and Financial and Valuation Advisory segments. Despite this strong performance, the modest growth in Financial Restructuring and rising expenses provided a counterbalance to the upbeat narrative.
Strong Revenue and Earnings Growth
The quarter saw Houlihan Lokey achieving revenues of $634 million, marking a remarkable 24% increase from the same period last year. This was complemented by adjusted earnings per share reaching $1.64, reflecting a substantial 34% rise.
Corporate Finance Performance
A standout performer was the Corporate Finance segment, which recorded a revenue of $422 million, translating to a 36% year-over-year increase. This growth was underscored by the closure of 170 transactions, a notable rise from the 117 transactions closed the previous year.
Financial and Valuation Advisory Growth
The Financial and Valuation Advisory segment also contributed to the growth narrative with $82 million in revenue, marking a 14% increase from the previous year, showcasing the company’s diverse revenue streams.
Successful Acquisitions and Hiring
The strategic acquisition of Waller Helms and the addition of 17 new managing directors, mostly through acquisitions, underscore Houlihan Lokey’s commitment to bolstering its leadership and capabilities.
Modest Decrease in Average Transaction Fees
Despite an increase in transaction volume, both the Corporate Finance and Financial Restructuring segments saw a decrease in average transaction fees due to a shift in transaction mix.
Flat Growth in Financial Restructuring
The Financial Restructuring segment reported a modest 2% growth, registering $131 million in revenue, which indicates a steady, albeit slow, progression.
Increased Adjusted Compensation Expenses
Adjusted compensation expenses rose significantly to $390 million, attributed to deferred retention payments, reflecting the company’s investment in talent retention.
Higher Adjusted Effective Tax Rate
The quarter saw an increase in the adjusted effective tax rate to 33.3%, up from 30.3% in the previous year, impacting overall profitability.
Positive Outlook for Fiscal 2026
Houlihan Lokey maintains a positive outlook for fiscal 2026, buoyed by improving M&A market sentiment and increased activity in private equity, signaling continued growth potential.
In conclusion, Houlihan Lokey’s earnings call painted a picture of strong financial health and strategic growth initiatives, driven by standout performances in key segments. Despite some challenges, the company remains optimistic about future growth, underpinned by an improving market environment and strategic acquisitions.
