Houlihan Lokey Q2 revenue rises as Corporate Finance climbs 10%

Houlihan Lokey, Inc. (HLI) reported revenue of $692 million for its fiscal second quarter ended Sept. 30, up from $660 million a year earlier, according to a press release filed with the Securities and Exchange Commission on Oct. 28.

Shares fell 2.3% in after-hours trading as of 5:08 p.m. ET, from a regular-session close of $137.30.

Adjusted diluted earnings were $1.85 per share, against $1.84 a year earlier. GAAP diluted earnings were $1.64 per share, against $1.63.

Here's how the company did:

• Revenue: $692 million vs. $660 million a year earlier
• Adjusted EPS: $1.85 per diluted share vs. $1.84 a year earlier
• GAAP EPS: $1.64 per diluted share vs. $1.63 a year earlier

CEO Scott Adelson said, "Improving market conditions resulted in a stronger second quarter." He added, "While we remain cautious due to the volatility of external factors, we expect to see solid performance across our businesses for the remainder of the year."

Segment results

Corporate Finance revenue rose 10% to $481 million. The company said the increase came from a higher average transaction fee on closed transactions, driven by transaction mix and improved market conditions for M&A and capital markets deals. The number of closed transactions declined.

Financial Restructuring revenue fell 12% to $118 million. The company said the decrease was primarily due to fewer closed transactions, driven by the timing of transaction closings, partly offset by a higher average transaction fee.

Financial and Valuation Advisory revenue rose 7% to $93 million, which the company attributed to growth in its non-cyclical businesses.

Expenses

Compensation expenses were $441 million on a GAAP basis, or 63.7% of revenues, compared with 64.2% a year earlier. On an adjusted basis, compensation was $426 million, a ratio of 61.5% in both periods. Non-compensation expenses rose to $97 million from $86 million, which the company said reflected higher rent and other operating expenses.

Dividend and capital returns

The board declared a regular quarterly cash dividend of 70 cents per share on Class A and Class B common stock. It is payable Dec. 15 to stockholders of record at the close of business on Dec. 1.

During the quarter, the company repurchased 397 thousand shares under its share repurchase program. As of Sept. 30, it had $888 million of cash and cash equivalents and investment securities.

The company will host a conference call and live webcast at 5:00 p.m. ET on Oct. 28 to discuss the results.