Houlihan Lokey, Inc. Q3 FY2026 earnings call

• Revenues for the quarter were $717 million with adjusted earnings per share of $1.94, up 13% in revenues and 18% in adjusted earnings per share y-o-y.
• Corporate Finance saw 12% revenue growth, with average fee and new business activity upward. Financial Restructuring had 19% revenue growth due to accelerated transaction timelines, expecting restructuring to face revenue pressures in fiscal 2027 but geopolitical events could drive activity higher. Financial and Valuation Advisory had 6% revenue growth, benefited from improving M&A climate, hired 6 new managing directors, acquired Mellon Capital's real estate advisory business, and announced controlling interest in O'Dare Partners in France.
• Lindsey Alley discussed adjusted compensation expenses, non-compensation expenses, effective tax rate, balance sheet with $1.2 billion cash and investments, and share repurchases.

Corporate Finance produced $474 million of revenue for the quarter, a 12% increase over last year's third quarter. Financial restructuring produced $156 million of revenue for the third quarter, a 19% increase versus the same period last year. Financial and valuation advisory produced $87 million of revenue for the third quarter, a 6% increase versus the third quarter last year.

• Restructuring expected to face revenue pressures in fiscal 2027 but geopolitical events could increase activity.
• Corporate finance optimistic for fiscal 2027 with positive inflection in activity levels.
• Financial and valuation advisory expects solid new business generation into fourth quarter.

• Geopolitical events could drive restructuring activity higher but also introduce variables.
• Restructuring adjusting to improving market environment may face revenue pressures.

Q: Brennan Hawken asked about restructuring outlook and private credit markets impact.

A: Scott Adelson said market improving for M&A, capital plentiful, interest rates likely declining leading to declining restructuring activity but geopolitical events could create opportunities.

Q: James Yaro asked about US vs non-US corporate finance growth.

A: Scott Adelson said US is largest market, European business growing well with acquisitions enhancing presence.

Q: Devin Ryan asked about sponsor engagement and white space.

A: Scott Adelson said sponsor engagement improving, accelerating rate, broad across sectors; white space in all sectors, subsectors, products, and geographies.

Q: Brendan O'Brien asked about restructuring outlook guardrails and capital management.

A: Scott Adelson said restructuring has visibility but cyclical, Lindsey Alley said capital deployment preference remains to invest in acquisitions first.

Q: Ryan Kenny asked about non-comp expenses and DataBank.

A: Lindsey Alley said non-comp expenses slightly higher, DataBank is early with proprietary data monetization in works.

Q: Alexander Bond asked about corporate finance impact of geopolitical events and capital solutions build-out.

A: Scott Adelson said clients looking through geopolitical noise, capital solutions in very early innings growing across fronts.

Q: Nathan Stein asked about M&A cycle inning.

A: Scott Adelson said M&A in early innings, still pent-up demand, well-positioned to capitalize.