Yahoo Finance Houlihan Lokey Inc (HLI) (Q4 2024) Earnings Call Transcript Highlights: Strong Growth and ...
Quarterly Revenue: $520 million, up 17% year-over-year.
Annual Revenue: Increased by 6% compared to the previous year.
Adjusted Earnings Per Share (EPS): $1.27, a 14% increase from the same quarter last year.
Corporate Finance Revenue: $288 million for the quarter, up 12% year-over-year.
Financial Restructuring Revenue: $155 million for the quarter, up 29% from the same period last year.
Financial and Valuation Advisory Revenue: $77 million, a 14% increase from the same period last year.
Adjusted Compensation Expenses: $320 million for the quarter, compared to $274 million for the same period last year.
Adjusted Noncompensation Expenses: $81 million for the quarter, an increase of $13 million over the same period last year.
Adjusted Effective Tax Rate: 29.9% for the quarter, up from 28% the previous year.
Quarterly Dividend: Increased by 3.5% to $0.57 per share.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Houlihan Lokey Inc reported a revenue increase of 17% in the fourth quarter and a 6% increase for the fiscal year, indicating strong financial performance despite market challenges.
Adjusted earnings per share rose by 14% compared to the same quarter last year, reflecting efficient operations and profitability.
The company's diversified business model has allowed for stability in Corporate Finance and Financial and Valuation Advisory businesses, with significant growth in the Financial Restructuring business.
Houlihan Lokey Inc successfully closed the Triago acquisition, adding 7 Managing Directors to its Capital Markets business, which is expected to enhance the firm's service offerings and market reach.
The firm's pipeline of opportunities and backlog in Corporate Finance continues to grow, suggesting potential for future revenue growth as market conditions improve.
Negative Points
Despite overall growth, the market for M&A remains sluggish, which could impact the pace of recovery and future revenue growth in the Corporate Finance sector.
The company noted an increase in adjusted noncompensation expenses by $13 million compared to the same period last year, indicating rising operational costs that could affect profit margins.
Houlihan Lokey Inc faces quarterly volatility in its Financial Restructuring business, which could lead to unpredictable financial results.
The adjusted effective tax rate increased to 29.9% from 28% in the same quarter last year, primarily due to increased taxes from foreign operations, which could impact net earnings.
The firm did not repurchase any shares in the open market during the quarter, reflecting a conservative approach to share repurchases that may affect shareholder returns.
Q & A Highlights
Q: Can you discuss the near-term outlook for restructuring given the current environment? A: (Scott Lee Beiser - CEO & Director) The market for restructuring is expected to remain at elevated levels for a while, driven by companies needing solutions in a higher interest rate environment. The restructuring business is anticipated to be volatile, but the operating level is expected to stay consistent for the next year or two.
Q: How has the GCA acquisition impacted your position and offerings in the European market? A: (Scott Joseph Adelson - Co-President, Senior MD of Corporate Finance Group & Director) The GCA acquisition has significantly enhanced our importance and presence in Europe, elevating our deal count and fundamentally changing our business dynamics in the region.
Q: Are there any emerging divergences or unique drivers in the Financial and Valuation Advisory (FDA) business compared to Corporate Finance? A: (J. Lindsey Alley - MD & CFO) No structural changes are observed between FDA and Corporate Finance. The movements in both sectors are consistent, and one quarter's data is not indicative of a long-term trend.
Q: What are the current dialogues with financial sponsors, and what are the expectations going forward? A: (Scott Joseph Adelson - Co-President, Senior MD of Corporate Finance Group & Director) Conversations with sponsors are increasing, indicating a growing interest and activity in the market. The expectation is for continued improvement in deal velocity and sponsor engagement.
Q: How are clients reacting to the changes in the Fed futures curve, and what impact does it have on the M&A pipeline? A: (Scott Lee Beiser - CEO & Director) Clients are more influenced by the availability of capital rather than the cost. The availability of capital is currently good, which supports transaction activities despite the valuation adjustments due to interest rate changes.
Q: Can you provide insights into the performance and outlook for non-M&A parts of Corporate Finance? A: (Scott Joseph Adelson - Co-President, Senior MD of Corporate Finance Group & Director) The capital markets business is growing, and with recent acquisitions like Triago, there is a positive outlook for significant growth in non-M&A areas of Corporate Finance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
