– Second Quarter Fiscal 2024 Revenues of $467 million –

– Second Quarter Fiscal 2024 Diluted EPS of $0.99 –

– Adjusted Second Quarter Fiscal 2024 Diluted EPS of $1.11 –

– Announces Dividend of $0.55 per Share for Third Quarter Fiscal 2024 –

Houlihan Lokey, Inc. (NYSE:HLI) ("Houlihan Lokey" or the "Company") today reported financial results for its second quarter ended September 30, 2023.

For the second quarter ended September 30, 2023, revenues were $467 million, compared with $490 million for the second quarter ended September 30, 2022. Net income was $67 million, or $0.99 per diluted share, for the second quarter ended September 30, 2023, compared with $61 million, or $0.87 per diluted share, for the second quarter ended September 30, 2022. Adjusted net income for the second quarter ended September 30, 2023 was $77 million, or $1.11 per diluted share, compared with $83 million, or $1.19 per diluted share, for the second quarter ended September 30, 2022.

"We finished our second fiscal quarter with better results than our prior quarter. We continue to see improvements in the availability of debt capital and confidence in the earnings outlook for our clients, all of which bodes well for a steady recovery of the M&A markets. However, the recent geopolitical crises may impact our cautious optimism. Regardless, we believe we are well positioned to handle most economic environments, and we will continue to invest in professionals, acquisitions, industries and geographies where we believe we can create long term shareholder value," stated Scott Beiser, Chief Executive Officer of Houlihan Lokey.

Selected Financial Data

*(In thousands, except per share data)*	U.S. GAAP
	Three Months Ended September 30,					Six Months Ended September 30,
	2023			2022		2023			2022
Revenues by segment
Corporate Finance	$	281,684		$	315,016	$	508,735		$	578,967
Financial Restructuring		114,670			97,694		238,038			176,532
Financial and Valuation Advisory		70,635			76,827		136,045			152,682
Revenues	$	466,989		$	489,537	$	882,818		$	908,181
Operating expenses:
Employee compensation and benefits	$	296,542		$	309,859	$	560,025		$	575,594
Non-compensation		80,170			90,307		159,169			165,646
Operating income		90,277			89,371		163,624			166,941
Other expense, net		(3,296	)		5,104		(6,301	)		6,853
Income before provision for income taxes		93,573			84,267		169,925			160,088
Provision for income taxes		26,542			23,537		41,504			28,576
Net income attributable to Houlihan Lokey, Inc.	$	67,031		$	60,730	$	128,421		$	131,512

Diluted earnings per share attributable to Houlihan Lokey, Inc.	$	0.99		$	0.87	$	1.89		$	1.90

Revenues

For the second quarter ended September 30, 2023, revenues were $467 million, compared with $490 million for the second quarter ended September 30, 2022. Revenues decreased primarily as a result of a decrease in the average transaction fee on closed transactions in our Corporate Finance ("CF") business. For the second quarter ended September 30, 2023, CF revenues decreased (11)%, Financial Restructuring ("FR") revenues increased 17%, and Financial and Valuation Advisory ("FVA") revenues decreased (8)%, in each case, when compared with the second quarter ended September 30, 2022.

Expenses

The Company's employee compensation and benefits expenses, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis.

	U.S. GAAP						Adjusted (Non-GAAP) *
	Three Months Ended September 30,
*($ in thousands)*	2023			2022			2023			2022
Expenses:
Employee compensation and benefits	$	296,542		$	309,859		$	287,200		$	301,063
% of Revenues		63.5	%		63.3	%		61.5	%		61.5	%
Non-compensation	$	80,170		$	90,307		$	75,345		$	72,358
% of Revenues		17.2	%		18.4	%		16.1	%		14.8	%
Per full time employee ⁽¹⁾	$	30		$	38		$	29		$	30
Provision for income taxes	$	26,542		$	23,537		$	30,329		$	32,084
% of Pre-tax income		28.4	%		27.9	%		28.4	%		27.9	%

*		Adjusted figures represent non-GAAP information. See "Non-GAAP Financial Measures" and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.
(1)		Calculated using the average of the number of full time employees at the beginning of the reporting period and the end of the reporting period.

	U.S. GAAP						Adjusted (Non-GAAP) *
	Six Months Ended September 30,
*($ in thousands)*	2023			2022			2023			2022
Expenses:
Employee compensation and benefits	$	560,025		$	575,594		$	542,933		$	558,530
% of Revenues		63.4	%		63.4	%		61.5	%		61.5	%
Non-compensation	$	159,169		$	165,646		$	150,989		$	131,932
% of Revenues		18.0	%		18.2	%		17.1	%		14.5	%
Per full time employee ⁽¹⁾	$	60		$	69		$	57		$	55
Provision for income taxes	$	41,504		$	28,576		$	55,828		$	57,289
% of Pre-tax income		24.4	%		17.9	%		28.7	%		26.5	%

*		Adjusted figures represent non-GAAP information. See "Non-GAAP Financial Measures" and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.
(1)		Calculated using the average of the number of full time employees at the beginning of the reporting period and the end of the reporting period.

Employee compensation and benefits expenses were $297 million for the second quarter ended September 30, 2023, compared with $310 million for the second quarter ended September 30, 2022. Adjusted employee compensation and benefits expenses were $287 million for the second quarter ended September 30, 2023, compared with $301 million for the second quarter ended September 30, 2022. This resulted in an adjusted compensation ratio of 61.5% for both the second quarter ended September 30, 2023 and the second quarter ended September 30, 2022. The decrease in GAAP and adjusted employee compensation and benefits expenses was a result of a decrease in revenues for the quarter when compared with the same quarter last year.

Non-compensation expenses were $80 million for the second quarter ended September 30, 2023, compared with $90 million for the second quarter ended September 30, 2022. The decrease in GAAP non-compensation expenses was primarily a result of a decrease in depreciation and amortization and a decrease in other operating expenses for the quarter when compared with the same quarter last year. Adjusted non-compensation expenses were $75 million for the second quarter ended September 30, 2023, compared with $72 million for the second quarter ended September 30, 2022. The increase in adjusted non-compensation expenses was primarily a result of an increase in rent expense.

The provision for income taxes was $27 million, representing an effective tax rate of 28.4% for the second quarter ended September 30, 2023, compared with $24 million, representing an effective tax rate of 27.9% for the second quarter ended September 30, 2022. The adjusted provision for income taxes was $30 million, representing an adjusted effective tax rate of 28.4% for the second quarter ended September 30, 2023, compared with $32 million, representing an adjusted effective tax rate of 27.9% for the second quarter ended September 30, 2022.

Segment Reporting for the Second Fiscal Quarter

Corporate Finance

CF revenues were $282 million for the second quarter ended September 30, 2023, compared with $315 million for the second quarter ended September 30, 2022, representing a decrease of (11)%. Revenues decreased due to a decrease in the average transaction fee on closed transactions, which was driven by transaction mix, and did not represent a trend in the average transaction fee on closed transactions.

	Three Months Ended September 30,				Six Months Ended September 30,
*($ in thousands)*	2023		2022		2023		2022
Corporate Finance
Revenues	$	281,684	$	315,016	$	508,735	$	578,967
# of Managing Directors		211		210		211		210
# of Closed transactions ⁽¹⁾		117		114		212		238

Financial Restructuring

FR revenues increased 17% to $115 million for the second quarter ended September 30, 2023, compared with $98 million for the second quarter ended September 30, 2022. Revenues increased primarily due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions for restructuring transactions.

	Three Months Ended September 30,				Six Months Ended September 30,
*($ in thousands)*	2023		2022		2023		2022
Financial Restructuring
Revenues	$	114,670	$	97,694	$	238,038	$	176,532
# of Managing Directors		60		56		60		56
# of Closed transactions ⁽¹⁾		31		24		61		40

Financial and Valuation Advisory

FVA revenues decreased (8)% to $71 million for the second quarter ended September 30, 2023, compared with $77 million for the second quarter ended September 30, 2022. Revenues decreased primarily due to a decrease in the number of Fee Events. The decrease in the number of Fee Events was driven by softness in the M&A markets, which affected one or more of the service lines within our FVA business.

	Three Months Ended September 30,				Six Months Ended September 30,
*($ in thousands)*	2023		2022		2023		2022
Financial and Valuation Advisory
Revenues	$	70,635	$	76,827	$	136,045	$	152,682
# of Managing Directors		40		40		40		40
# of Fee Events ⁽¹⁾		852		890		1,255		1,404

(1)

A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of one thousand dollars. References in this press release to closed transactions should be understood to be the same as transactions that are "effectively closed" as described in our periodic reports on Forms 10-K and 10-Q.

Balance Sheet and Capital Allocation

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.55 per share of Class A and Class B common stock. The dividend will be payable on December 15, 2023 to stockholders of record as of the close of business on December 1, 2023. As of September 30, 2023, the Company had $525 million of cash and cash equivalents and investment securities, and $31 million of other liabilities.

Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Thursday, October 26, 2023, to discuss its second quarter fiscal 2024 results. The number to call is 1-877-407-4018 (domestic) or 1-201-689-8471 (international). A live webcast will be available in the Investor Relations section of the Company's website. A replay of the conference call will be available from October 26, 2023 through November 2, 2023, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13741798. A replay of the webcast will be archived and available on the Company's website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words "assumes," "believes," "estimates," "expects," "guidance," "intends," "plans," "projects," and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company's control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company's filings with the Securities and Exchange Commission. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Adjusted net income, total and on a per share basis, and certain adjusted items used to determine adjusted net income, are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company's operating results. These adjusted items remove the significant accounting impact of one-time or non-recurring charges associated with the Company's one-time/non-recurring matters, as set forth in the tables at the end of this release.

The adjusted items included in this earnings press release as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these adjusted amounts are not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company's financial information determined under GAAP. For a description of the Company's use of these adjusted items and a reconciliation with comparable GAAP items, see the section of this press release titled "Reconciliation of GAAP to Adjusted Financial Information." Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.

About Houlihan Lokey

Houlihan Lokey, Inc. (NYSE:HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and financial and valuation advisory. Houlihan Lokey serves corporations, institutions, and governments worldwide with offices in the Americas, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm's commitment to client success across its advisory services. The firm is the No. 1 investment bank for global M&A transactions under $1 billion, the No. 1 M&A advisor for the past eight consecutive years in the U.S., the No. 1 global restructuring advisor for the past nine consecutive years, and the No. 1 global M&A fairness opinion advisor over the past 25 years, all based on number of transactions and according to data provided by Refinitiv.

For more information, please visit www.HL.com.

Appendix

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Income (Unaudited)

Reconciliation of GAAP to Adjusted Financial Information (Unaudited)

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

*(In thousands, except share data and par value)*	September 30, 2023			March 31, 2023
Assets
Cash and cash equivalents	$	493,929		$	714,439
Restricted cash		373			373
Investment securities		31,214			37,309
Accounts receivable, net of allowance for credit losses		152,243			182,029
Unbilled work in process, net of allowance for credit losses		133,787			115,045
Income taxes receivable		22,549			17,693
Deferred income taxes		106,343			104,941
Property and equipment, net		119,394			88,345
Operating lease right-of-use assets		363,719			333,877
Goodwill		1,086,438			1,087,784
Other intangible assets, net		196,652			203,370
Other assets		74,912			83,609
Total assets	$	2,781,553		$	2,968,814

Liabilities and Stockholders' Equity
Liabilities:
Accrued salaries and bonuses	$	552,673		$	765,877
Accounts payable and accrued expenses		95,125			113,421
Deferred income		37,370			40,695
Deferred income taxes		349			544
Operating lease liabilities		419,421			374,869
Other liabilities		30,539			60,111
Total liabilities		1,135,477			1,355,517

Stockholders' equity:
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 51,565,992 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 17,427,625 and 18,048,345 shares, respectively		17			18
Additional paid-in capital		638,404			642,970
Retained earnings		1,087,326			1,033,072
Accumulated other comprehensive loss		(79,723	)		(62,814	)
Total stockholders' equity		1,646,076			1,613,297
Total liabilities and stockholders' equity	$	2,781,553		$	2,968,814

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

	Three Months Ended September 30,					Six Months Ended September 30,
*(In thousands, except share and per share data)*	2023			2022		2023			2022
Revenues	$	466,989		$	489,537	$	882,818		$	908,181
Operating expenses:
Employee compensation and benefits		296,542			309,859		560,025			575,594
Travel, meals, and entertainment		14,151			12,370		30,169			23,420
Rent		19,013			13,285		36,416			25,075
Depreciation and amortization		7,086			19,475		13,618			38,618
Information technology and communications		14,328			13,183		27,876			24,173
Professional fees		10,859			9,598		20,416			16,067
Other operating expenses		14,733			22,396		30,674			38,293
Total operating expenses		376,712			400,166		719,194			741,240
Operating income		90,277			89,371		163,624			166,941
Other (income)/expense, net		(3,296	)		5,104		(6,301	)		6,853
Income before provision for income taxes		93,573			84,267		169,925			160,088
Provision for income taxes		26,542			23,537		41,504			28,576
Net income	$	67,031		$	60,730		128,421			131,512

Weighted average shares of common stock outstanding:
Basic		64,551,353			63,422,701		64,180,642			63,350,545
Fully diluted		67,867,381			69,800,028		67,881,623			69,316,792
Earnings per share attributable to Houlihan Lokey, Inc.
Basic	$	1.04		$	0.96	$	2.00		$	2.08
Fully diluted	$	0.99		$	0.87	$	1.89		$	1.90

HOULIHAN LOKEY, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION
(UNAUDITED)

	Three Months Ended September 30,						Six Months Ended September 30,
*(In thousands, except share and per share data)*	2023			2022			2023			2022
*Revenues*	$	466,989		$	489,537		$	882,818		$	908,181

*Employee compensation and benefits expenses*
Employee compensation and benefits expenses (GAAP)	$	296,542		$	309,859		$	560,025		$	575,594
Less: Acquisition related retention payments		(9,342	)		(8,796	)		(17,092	)		(17,064	)
Employee compensation and benefits expenses (adjusted)		287,200			301,063			542,933			558,530

*Non-compensation expenses*
Non-compensation expenses (GAAP)	$	80,170		$	90,307		$	159,169		$	165,646
Less: Integration and acquisition related costs		(1,465	)		(2,325	)		(1,465	)		(2,325	)
Less: Acquisition amortization		(3,360	)		(15,624	)		(6,715	)		(31,389	)
Non-compensation expenses (adjusted)		75,345			72,358			150,989			131,932

*Operating income*
Operating income (GAAP)	$	90,277		$	89,371		$	163,624		$	166,941
Plus: Adjustments ⁽¹⁾		14,167			26,745			25,272			50,778
Operating income (adjusted)		104,444			116,116			188,896			217,719

*Other (income)/expense, net*
Other (income)/expense, net (GAAP)	$	(3,296	)	$	5,104		$	(6,301	)	$	6,853
Less: Warrant revaluation		—			(1,014	)		—			(2,264	)
Plus/(less): Change in acquisition earnout liability fair value		816			(2,841	)		816			(2,841	)
Other (income)/expense, net (adjusted)		(2,480	)		1,249			(5,485	)		1,748

*Provision for income taxes*
Provision for income taxes (GAAP)	$	26,542		$	23,537		$	41,504		$	28,576
Plus: Impact of the excess tax benefit for stock vesting		—			—			7,299			8,102
Plus: Release of the provision for an uncertain tax position as a result of the successful closure of a state audit		—			—			—			5,762
Adjusted provision for income taxes		26,542			23,537			48,803			42,440
Plus: Resulting tax impact ⁽²⁾		3,787			8,547			7,025			14,849
Provision for income taxes (adjusted)		30,329			32,084			55,828			57,289

*Net income*
Net income (GAAP)	$	67,031		$	60,730		$	128,421		$	131,512
Plus: Adjustments⁽³⁾		9,564			22,053			10,132			27,170
Net income (adjusted)		76,595			82,783			138,553			158,682

*Fully diluted shares outstanding*
Fully diluted shares outstanding (GAAP)		67,867,381			69,800,028			67,881,623			69,316,792
Plus: Impact of unvested GCA retention and deferred share awards		1,132,423			—			1,257,446			—
Fully diluted shares outstanding (adjusted)		68,999,804			69,800,028			69,139,069			69,316,792

Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP)	$	0.99		$	0.87		$	1.89		$	1.90
Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted)	$	1.11		$	1.19		$	2.00		$	2.29

(1)		The aggregate of adjustments from employee compensation and benefits and non-compensation expenses.
(2)		Reflects the tax impact of utilizing the adjusted effective tax rate on the non-tax adjustments identified above.
(3)		Consists of all adjustments identified above net of the associated tax impact.

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Houlihan Lokey Reports Second Quarter Fiscal 2024 Financial Results