Houlihan Lokey, Inc. Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>Houlihan Lokey, Inc. filed its quarterly report (10-Q) for the period ending December 31, 2023, detailing financial performance and position.</b>

AI Summary

HOULIHAN LOKEY, INC. (HLI) filed a Quarterly Report (10-Q) with the SEC on February 8, 2024. Houlihan Lokey, Inc. filed a 10-Q report for the period ending December 31, 2023. The filing covers the fiscal quarter and year-to-date period. The company's fiscal year ends on March 31st. The filing was made on February 8, 2024. The report includes financial data for the periods ending December 31, 2023, and December 31, 2022.

Why It Matters

For investors and stakeholders tracking HOULIHAN LOKEY, INC., this filing contains several important signals. This 10-Q filing provides investors with an updated view of Houlihan Lokey's financial health and operational performance during the specified quarter and year-to-date period. The detailed financial statements and disclosures within the report are crucial for understanding the company's current standing and future prospects in the investment banking sector.

Risk Assessment

Risk Level: — HOULIHAN LOKEY, INC. shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q), which is routine for publicly traded companies and does not indicate any unusual or significant events.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the 10-Q to assess Houlihan Lokey's performance and outlook.

Key Numbers

• 2023-12-31 — Period End Date (Conformed period of report)
• 2024-02-08 — Filing Date (Filed as of date)
• 2023-03-31 — Fiscal Year End (Fiscal year end)

Key Players & Entities

• HOULIHAN LOKEY, INC. (company) — Filer name
• 20231231 (date) — Period of report
• 20240208 (date) — Filed as of date
• 10-Q (document) — Form type
• LOS ANGELES (location) — Business address city
• 310.553.8871 (phone) — Business phone

FAQ

Industry Context

Houlihan Lokey operates in the investment banking and financial advisory industry, providing services such as M&A advisory, capital markets, and financial restructuring.

Regulatory Implications

The filing is made in accordance with SEC regulations for quarterly reports (Form 10-Q) under the Securities Exchange Act of 1934.

What Investors Should Do

1. Analyze the financial statements for revenue, net income, and other key performance indicators.
2. Review the Management's Discussion and Analysis (MD&A) section for insights into business trends and outlook.
3. Examine any disclosed risk factors or legal proceedings that may impact the company.

Key Dates

• 2023-12-31: Period End Date — End of the reporting period for the 10-Q filing.
• 2024-02-08: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This filing represents the quarterly update for the period ending December 31, 2023, compared to the same period in the prior year (December 31, 2022).

Key Financial Figures

• $0.001 — stered Class A Common Stock, par value $0.001 HLI New York Stock Exchange Indicate

Filing Documents

• hli-20231231.htm (10-Q) — 1304KB
• q3fy24-ex311.htm (EX-31.1) — 10KB
• q3fy24-ex312.htm (EX-31.2) — 10KB
• q3fy24-ex321.htm (EX-32.1) — 5KB
• q3fy24-ex322.htm (EX-32.2) — 5KB
• 0001302215-24-000005.txt (&nbsp;) — 7191KB
• hli-20231231.xsd (EX-101.SCH) — 49KB
• hli-20231231_cal.xml (EX-101.CAL) — 70KB
• hli-20231231_def.xml (EX-101.DEF) — 215KB
• hli-20231231_lab.xml (EX-101.LAB) — 676KB
• hli-20231231_pre.xml (EX-101.PRE) — 427KB
• hli-20231231_htm.xml (XML) — 1033KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 1 Consolidated Balance Sheets 1 Consolidated Statements of Comprehensive Income 2 Consolidated Statements of Changes in Stockholders' Equity 3 Consolidated Statements of Cash Flows 5

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 33 Item 4.

Controls and Procedures

Controls and Procedures 34

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 34 Item 1A.

Risk Factors

Risk Factors 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 3. Defaults Upon Senior Securities 35 Item 4. Mine Safety Disclosures 35 Item 5. Other Information 35 Item 6. Exhibits 36

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data and par value) December 31, 2023 March 31, 2023 Assets Cash and cash equivalents $ 555,532 $ 714,439 Restricted cash 373 373 Investment securities 35,367 37,309 Accounts receivable, net of allowance for credit losses of $ 9,317 and $ 8,773 , respectively 152,755 182,029 Unbilled work in progress, net of allowance for credit losses of $ 9,941 and $ 5,622 , respectively 174,178 115,045 Income taxes receivable 32,898 17,693 Deferred income taxes 103,472 104,941 Property and equipment, net 130,696 88,345 Operating lease right-of-use assets 356,595 333,877 Goodwill 1,128,610 1,087,784 Other intangible assets, net 199,941 203,370 Other assets 88,491 83,609 Total assets $ 2,958,908 $ 2,968,814 Liabilities and stockholders' equity Liabilities: Accrued salaries and bonuses $ 575,088 $ 765,877 Accounts payable and accrued expenses 100,319 113,421 Deferred income 41,014 40,695 Deferred income taxes 3,269 544 Operating lease liabilities 420,107 374,869 Other liabilities 49,808 60,111 Total liabilities 1,189,605 1,355,517 Commitments and contingencies (Note 17) Stockholders' equity: Class A common stock, $ 0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 52,027,676 and 50,638,924 shares, respectively 52 51 Class B common stock, $ 0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 17,114,509 and 18,048,345 shares, respectively 17 18 Additional paid-in capital 701,996 642,970 Retained earnings 1,121,387 1,033,072 Accumulated other comprehensive loss ( 54,149 ) ( 62,814 ) Total stockholders' equity 1,769,303 1,613,297 Total liabilities and stockholders' equity $ 2,958,908 $ 2,968,814 See accompanying Notes to Consolidated Financial Statements 1 HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) T

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (In thousands, except share data or as otherwise stated) Note 1 — Background Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries: Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly-owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and is a member of Financial Industry Regulatory Authority, Inc. Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly-owned direct subsidiary of HL, Inc. Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K."). The Company offers financial services and financial advice to a broad clientele through more than thirty offices in the United States of America, South America, Europe, the Middle East, and the Asia-Pacific region. The Company earns professional fees by providing focused services across the following three business segments: Corporate Finance ("CF") provides general financial advisory services, advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side M&A transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, and private equity, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement ("Completion Fees"). A CF transaction can fail to be completed for many

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (In thousands, except share data or as otherwise stated) Note 2 — Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the nine months ended December 31, 2023 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2024. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (the "2023 Annual Report"). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated. The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These esti

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (In thousands, except share data or as otherwise stated) Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the engagement as the various services are inputs to the combined output of successfully brokering a specific transaction. Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event, which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court). Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenu

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (In thousands, except share data or as otherwise stated) Fair Value Measurements The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement : Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available, and may incorporate management's own assumptions or involve a significant degree of judgment. The following methods and assumptions were used by the Company in estimating fair value disclosures: Corporate debt securities: All fair value measurements are ob

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