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01/10 19:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong financial performance with revenue and EPS growth, a dividend increase, and successful acquisitions. Despite some uncertainties and muted sponsor activity, the company has a solid restructuring business and a positive outlook. The Q&A section highlighted resilience in restructuring and optimism for post-Labor Day activity, although management was cautious. Overall, the positive financial results, dividend hike, and strategic growth efforts outweigh the concerns, suggesting a likely positive stock price movement.
Revenues $605 million, up 18% year-over-year. The increase was attributed to solid performance across all three business lines and the benefits of a diversified business model.
Adjusted Earnings Per Share (EPS) $2.14, up 75% year-over-year. The significant increase was due to strong revenue growth and operational efficiencies.
Corporate Finance Revenues $399 million, up 21% year-over-year. Growth was driven by steady improvement in transaction size and average fee per transaction, despite muted activity from the financial sponsor community.
Financial Restructuring Revenues $128 million, up 9% year-over-year. The increase was supported by persistently higher interest rates, macroeconomic uncertainty, and overleveraged companies.
Financial and Valuation Advisory (FVA) Revenues $79 million, up 16% year-over-year. Growth was attributed to strong performance in noncyclical service lines and improving M&A market conditions, particularly in the U.S.
Adjusted Compensation Expenses $372 million, up from $316 million year-over-year. The increase was primarily due to deferred retention payments related to certain acquisitions.
Adjusted Non-Compensation Expenses $94 million, up from $80 million year-over-year. The increase was driven by the Houlihan Lokey ONE Conference and other acquisition-related adjustments.
Adjusted Effective Tax Rate Negative 0.8%, down from 31.2% year-over-year. The decrease was due to a policy change excluding the impact of stock-based compensation vesting on the adjusted effective tax rate.
Unrestricted Cash and Investment Securities $867 million. The cash position declined due to fiscal 2025 bonus payments and share repurchases.
Corporate Finance Revenue: $399 million in Q1 2026, a 21% increase compared to Q1 2025. Closed 125 transactions, up from 116 in the same period last year. Average transaction fee increased.
Financial Restructuring Revenue: $128 million in Q1 2026, a 9% increase compared to Q1 2025. Closed 35 transactions, up from 33 in the same period last year. Average transaction fee increased.
Financial and Valuation Advisory Revenue: $79 million in Q1 2026, a 16% increase compared to Q1 2025. 957 fee events, up 13% from 847 in Q1 2025.
Geographic Performance: U.S. revenues and activity levels outpaced EMEA, with this trend expected to continue through the summer.
Inaugural Houlihan Lokey ONE Conference: Hosted in New York with over 4,000 attendees and 400 companies participating, showcasing the firm's global scope and one-firm approach.
Hiring and Talent Acquisition: Hired 3 new managing directors in Q1 2026. Strong hiring market for senior talent attracted to the firm's global platform and growth track record.
Expense Management: Adjusted compensation expenses were $372 million, maintaining a 61.5% ratio. Adjusted non-compensation expenses increased to $94 million, driven by the Houlihan Lokey ONE Conference.
Acquisition Strategy: Robust pipeline of acquisition opportunities to expand workforce across industry, service line, and geography.
Project Solo: Streamlining global organizational structure to improve operational efficiency.
Market Volatility: The company acknowledges a dynamic and volatile macro environment, which poses challenges to market forecasts and decision-making.
Tariffs and Inflation: Potential headwinds from tariffs and inflation could impact the company's momentum in fiscal 2026.
Muted Financial Sponsor Activity: Despite improvements in transaction size and fees, muted activity from the financial sponsor community remains a challenge.
Persistently Higher Interest Rates: Higher interest rates contribute to elevated restructuring activity but also create macroeconomic uncertainty.
Regional Disparities: Revenues and activity levels in the U.S. outpace those in EMEA, with the regional dynamic expected to persist, potentially limiting growth in certain markets.
Increased Expenses: Adjusted non-compensation expenses increased, driven by events like the Houlihan Lokey ONE Conference, which could strain financial resources.
Overleveraged Companies: The presence of overleveraged companies continues to support restructuring activity but indicates financial instability in the market.
Corporate Finance Revenue Growth: Corporate Finance produced $399 million of revenue in the first quarter, a 21% increase over last year's first quarter. The company is cautiously optimistic that this momentum will continue through fiscal 2026, while remaining mindful of potential headwinds such as tariffs and inflation.
Financial Restructuring Revenue Outlook: Financial Restructuring produced $128 million in revenues for the first quarter, a 9% increase over last year's first quarter. The company expects to continue to see elevated restructuring revenues throughout fiscal 2026, supported by persistently higher interest rates, macro uncertainty, and overleveraged companies.
Financial and Valuation Advisory (FVA) Revenue Growth: FVA produced $79 million in revenues for the first quarter, a 16% increase versus the first quarter last year. The company expects continued year-over-year growth throughout the remainder of the fiscal year, driven by growth in noncyclical service lines and improving M&A market conditions, particularly in the U.S.
Regional Revenue Dynamics: Revenues and activity levels in the U.S. are expected to continue outpacing those in EMEA through the summer.
Hiring and Workforce Expansion: The company continues to see a strong hiring market for senior talent and plans to expand its workforce through organic hires and strategic acquisitions across industry, service line, and geography.
Acquisition Opportunities: The pipeline of acquisition opportunities remains robust, and the company is confident in leveraging both organic hires and strategic acquisitions to expand its capabilities.
Market Adaptation and Resilience: Despite volatility in global markets, companies are adapting to decision-making in this environment. The company remains confident in its ability to help clients navigate the environment and capitalize on new opportunities.
Share Repurchase: In the first quarter, the company issued approximately 1.1 million shares to employees as part of fiscal 2025 year-end compensation and repurchased approximately 800,000 shares during May through withhold to cover.
The earnings call summary indicates strong financial performance across multiple sectors with optimistic guidance. There is a notable increase in corporate finance and restructuring revenues, alongside robust acquisition opportunities. The Q&A highlights ongoing momentum in corporate finance and a resilient restructuring backlog, despite some slowdown. While management avoided specifics in certain areas, the overall sentiment remains positive. The company's strong cash position and decreased tax rate further bolster financial health. Given these factors and the absence of a market cap, the stock price is likely to experience a positive movement in the short term.
The earnings call shows strong financial performance with revenue and EPS growth, a dividend increase, and successful acquisitions. Despite some uncertainties and muted sponsor activity, the company has a solid restructuring business and a positive outlook. The Q&A section highlighted resilience in restructuring and optimism for post-Labor Day activity, although management was cautious. Overall, the positive financial results, dividend hike, and strategic growth efforts outweigh the concerns, suggesting a likely positive stock price movement.
The earnings call reveals strong financial performance with a significant revenue and EPS increase, alongside successful acquisitions. Share repurchases and a dividend hike further boost sentiment. Despite some uncertainties in the Q&A, the overall outlook remains positive, with restructuring expected to stay elevated and an active bolt-on pipeline. The company's robust financial health and strategic initiatives indicate potential for stock price appreciation, likely falling within the 2% to 8% range.
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