Houlihan Lokey Inc. ((HLI)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Houlihan Lokey’s latest earnings call paints a picture of robust growth, with the company reporting significant increases in both revenues and earnings. The sentiment during the call was largely positive, driven by strong performances in Corporate Finance and international markets. However, there were some concerns about a slowdown in restructuring activities and a decrease in average transaction fees. Overall, the positive aspects of the earnings call outweighed the challenges, reflecting a strong financial position for the company.
Strong Revenue and Earnings Growth
Houlihan Lokey reported impressive financial results, with revenues reaching $659 million and adjusted earnings per share hitting $1.84. This marks a 15% increase in revenues and a 26% rise in adjusted earnings per share compared to the same period last year, showcasing the company’s strong financial performance.
Corporate Finance Business Growth
The Corporate Finance segment was a major contributor to the company’s success, generating $439 million in revenues, a 21% increase from the previous year. The segment also closed 171 transactions, significantly up from 131 transactions in the same period last year, highlighting the robust growth in this area.
Non-U.S. Business Expansion
Houlihan Lokey saw notable growth in its international operations, particularly in the EMEA and Asia Pacific regions. The company’s brand continues to gain momentum outside the U.S., contributing to its overall revenue growth.
Improved Adjusted Effective Tax Rate
The company reported a decrease in its adjusted effective tax rate, which fell to 29.7% from 31.3% in the same quarter last year. This improvement positively impacts the company’s net earnings.
Strong Capital Solutions Performance
The capital solutions business continued to perform well, significantly contributing to the revenues of the Corporate Finance segment. This area remains a key driver of the company’s financial success.
Decreased Average Transaction Fees
Despite the overall growth, the Corporate Finance and Financial Restructuring segments experienced a decrease in average transaction fees on closed deals, which is a point of concern for the company.
Slowdown in New Restructuring Business Formation
There was a noted slowdown in new restructuring business activity, attributed to easing interest rates and an improving macroeconomic environment. This slowdown poses a challenge to the company’s restructuring segment.
Forward-Looking Guidance
Looking ahead, Houlihan Lokey remains optimistic about the second half of fiscal 2026. The company expects continued growth driven by improving market conditions, easing interest rates, and a strong acquisition pipeline. Despite rising adjusted compensation expenses, the company maintains a stable compensation expense ratio and ended the quarter with a solid cash position.
In conclusion, Houlihan Lokey’s earnings call reflects a strong financial performance with significant growth in key areas, despite some challenges. The company’s positive outlook for the future, supported by favorable market conditions and strategic initiatives, reinforces its position as a leader in the financial services industry.