Houlihan Lokey Files Q2 FY25 10-Q

TL;DR

HLI's Q2 FY25 10-Q is in - check financials for latest performance.

AI Summary

Houlihan Lokey, Inc. filed its 10-Q for the period ending September 30, 2024. The filing covers the second quarter of their fiscal year 2025. Key financial data and operational details for this period are presented, reflecting the company's performance in investment banking and financial advisory services.

Why It Matters

This filing provides investors with a detailed look at Houlihan Lokey's financial health and operational performance during the second quarter of fiscal year 2025, crucial for understanding its market position and future prospects.

Risk Assessment

Risk Level: medium — 10-Q filings are standard disclosures for public companies, but the specific financial details and market conditions discussed within can present varying levels of risk.

Key Players & Entities

• HOULIHAN LOKEY, INC. (company) — Filer
• 2024-09-30 (date) — Period of Report
• 2024-11-05 (date) — Filing Date
• 10250 CONSTELLATION BLVD., 5TH FLOOR (address) — Business Address
• LOS ANGELES (location) — City
• 310.553.8871 (phone_number) — Business Phone

FAQ

Key Financial Figures

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

Filing Documents

• hli-20240930.htm (10-Q) — 1297KB
• q2fy25-ex311.htm (EX-31.1) — 10KB
• q2fy25-ex312.htm (EX-31.2) — 10KB
• q2fy25-ex321.htm (EX-32.1) — 5KB
• q2fy25-ex322.htm (EX-32.2) — 5KB
• 0001302215-24-000110.txt ( ) — 7221KB
• hli-20240930.xsd (EX-101.SCH) — 49KB
• hli-20240930_cal.xml (EX-101.CAL) — 67KB
• hli-20240930_def.xml (EX-101.DEF) — 219KB
• hli-20240930_lab.xml (EX-101.LAB) — 629KB
• hli-20240930_pre.xml (EX-101.PRE) — 435KB
• hli-20240930_htm.xml (XML) — 1053KB

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 34 Item 4.

Controls and Procedures

Controls and Procedures 35

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 35 Item 1A.

Risk Factors

Risk Factors 35 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 3. Defaults Upon Senior Securities 36 Item 4. Mine Safety Disclosures 36 Item 5. Other Information 36 Item 6. Exhibits 37

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) September 30, 2024 March 31, 2024 Assets Cash and cash equivalents $ 691,410 $ 721,235 Restricted cash 1,452 619 Investment securities 56,829 38,005 Accounts receivable, net of allowance for credit losses of $ 13,039 and $ 8,767 , respectively 219,133 199,630 Unbilled work in progress, net of allowance for credit losses of $ 4,993 and $ 6,132 , respectively 138,293 192,012 Income taxes receivable 21,832 32,856 Deferred income taxes 87,020 90,064 Property and equipment, net 148,729 136,701 Operating lease right-of-use assets 359,739 344,024 Goodwill 1,177,757 1,127,497 Other intangible assets, net 196,641 197,439 Other assets 113,916 90,677 Total assets $ 3,212,751 $ 3,170,759 Liabilities and stockholders' equity Liabilities: Accrued salaries and bonuses $ 641,370 $ 726,031 Accounts payable and accrued expenses 104,661 114,171 Deferred income 37,956 33,139 Deferred income taxes 7,575 7,505 Operating lease liabilities 431,222 415,412 Other liabilities 32,880 37,751 Total liabilities 1,255,664 1,334,009 Commitments and contingencies (Note 17) Stockholders' equity: Class A common stock, $ 0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 53,403,939 and 52,348,511 shares, respectively 53 52 Class B common stock, $ 0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 16,082,738 and 16,746,676 shares, respectively 16 17 Additional paid-in capital 735,277 739,870 Retained earnings 1,259,950 1,163,419 Accumulated other comprehensive loss ( 38,209 ) ( 66,608 ) Total stockholders' equity 1,957,087 1,836,750 Total liabilities and stockholders' equity $ 3,212,751 $ 3,170,759 See accompanying Notes to Consolidated Financial Statements 1 HOULIHAN LOKEY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITE

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 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 UK Limited, a private limited company registered in England ("HL UK Ltd."), is an indirect subsidiary of HL, Inc. HL UK Ltd. 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 and advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions, including financial sponsors, on a wide variety of matters, including buy-side and sell-side M&A transactions, debt and equity financings in both the private and public markets, and other corporate finance 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 reasons that are outside of our control. In these instances, our fees are generally limited to the f

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 six months ended September 30, 2024 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2025. 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, 2024 (the "2024 Annual Report"). In connection with certain acquisitions, select employees may be entitled to deferred consideration, primarily in the form of retention payments, contingent upon the fulfillment of specific service and/or performance conditions in the future. Accordingly, such deferred consideration is expensed as Acquisition related compensation and benefits in current and future periods. Historically, such Acquisition related compensation and benefits were included as a component of Employee compensation and benefits within our Consolidated Statements of Comprehensive Income. Beginning with this Quarterly Report on Form 10-Q, management has deemed it beneficial for stakeholders to separately disclose Acquisition related compensation and benefits and Employee compensation and benefits within our Consolidated Statements of Comprehensive Income. Reclassifications have been made to prior year financial statements to conform to this new presentation. These reclassifications had no impact on net income, stockhold

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (In thousands, except share data or as otherwise stated) The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the "transaction price"). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company's advisory fees (i.e., the success-related Completion Fees) are considered variable and constrained 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 CF engagements primarily consist of fees generated in connection with advisory services related to mergers and acquisitions, capital markets, and other corporate finance transactions. 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 servi

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) (In thousands, except share data or as otherwise stated) From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of September 30, 2024, we had two foreign currency forward contracts outstanding between the U.S. dollar and the pound sterling with an aggregate notional value of $ 37.0 million. As of September 30, 2023, we had three foreign currency forward contracts outstanding between the U.S. dollar and the pound sterling with an aggregate notional value of $ 35.2 million and two foreign currency forward contracts outstanding between the euro and the pound sterling with an aggregate notional value of 9.4 million. The change in fair value of these contracts represented a net gain/(loss) included in Other operating expenses of $ 2,410 and $( 1,217 ) during the three months ended September 30, 2024 and

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