HLI — Houlihan Lokey, Inc.

Summary of Houlihan Lokey's Q3 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenues: $717 million, up 13% year-over-year.
• Adjusted Earnings Per Share (EPS): $1.94, an 18% increase compared to the same quarter last year.
• Corporate Finance Revenues: $474 million, a 12% increase, with 177 transactions closed (up from 170).
• Financial Restructuring Revenues: $156 million, a 19% increase, with 41 transactions closed.
• Financial and Valuation Advisory Revenues: $87 million, a 6% increase, with 1,103 fee events (up from 1,015).
• Adjusted Compensation Expense Ratio: 61.5%, consistent with the previous year.
• Cash and Investments: Approximately $1.2 billion, with share repurchases of about 418,000 shares.

2. Strategic Updates and Business Highlights

• Acquisitions: Closed the acquisition of Mellon Capital's real estate advisory business and announced a controlling interest in O'Dare Partners, enhancing European presence and capabilities.
• Workforce Expansion: Hired six new managing directors and expanded teams in Europe.
• M&A Activity: Stronger investor sentiment and expectations of declining interest rates are driving an increase in private equity activity and liquidity exploration among portfolio companies.
• Recognition: Named the most active M&A investment bank and financial restructuring investment bank globally for 2025.

3. Forward Guidance and Outlook

• Corporate Finance: Positive outlook for fiscal 2027, with continued growth expected in M&A activity.
• Financial Restructuring: Anticipated revenue pressures as the market improves, but geopolitical events may create new restructuring opportunities.
• Overall Outlook: Confidence in future performance bolstered by strong visibility into deal activity and backlog.

4. Bad News, Challenges, or Points of Concern

• Restructuring Activity: While currently strong, there are concerns about potential revenue declines in restructuring as market conditions improve.
• Geopolitical Risks: Ongoing geopolitical events could impact market stability and create uncertainty.
• Market Conditions: The firm acknowledges pockets of opportunity but notes that visibility into consistent new restructuring opportunities is limited.

5. Notable Q&A Insights

• Restructuring Outlook: Management indicated that while restructuring activity may decline, there are still opportunities driven by specific sectors or geographies.
• Corporate Finance Growth: The firm sees strong growth in corporate finance, particularly in private equity, and expects this trend to continue into the next fiscal year.
• Geographical Growth: The U.S. remains the largest market, but European operations are growing rapidly, supported by recent acquisitions.
• Capital Solutions: The firm is in early stages of building out its capital solutions business, with strong demand across various sectors.
• Market Share: Management expressed confidence in their ability to continue gaining market share in the middle market, regardless of broader M&A market conditions.

Overall, Houlihan Lokey reported solid financial performance in Q3 2026, with strategic expansions and a positive outlook for the future, despite some concerns regarding restructuring activity and geopolitical risks.