Houlihan Lokey, Inc. · NYSE:HLI
Houlihan Lokey — Q1 FY2023 Earnings Presentation
32 slides from Houlihan Lokey's earnings presentation, July 2022
Slide 1: Investor Presentation July 2022
INVESTOR PRESENTATION July 2022
Slide 2: Disclaimers
Disclaimers Forward Looking Information This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation may be forward-looking statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “in
Slide 3: Our Culture
Our Culture Employee DNA Firm’s DNA Ownership and Controls • Analytically Driven • Broad-Based, Long-Term Employee • Partnership Culture • Client Service and Solution Driven Ownership • Not a “Star” Culture • Entrepreneurially Motivated • Sophisticated Corporate Procedures and • Consensual Decision-
Slide 4: Summary Statistics
SUMMARY STATISTICS 1972 33 2,288 ESTABLISHED LOCATIONS GLOBAL WORLDWIDE1 EMPLOYEES1 314 850+ 33 YRS MANAGING EMPLOYEE AVG. TENURE OF DIRECTORS1,2 SHAREHOLDERS 1 MANAGEMENT TEAM $2.3B $572M 2,000+ REVENUES3 PRETAX INCOME3 CLIENTS SERVED ANNUALLY 1. As of June 30, 2022 2. Excludes Corporate MDs. 3. LT
Slide 5: Investment Tenets
Investment Tenets Strong Track Record of Growth and Profitability Long-Tenured Management Team Strong and consistent financial performance since The average tenure of our executive going public. Long history of growing senior leadership team is 33 years. banker headcount. Lower Revenues and Earnings
Slide 6: Strong Financial Performance
Strong Financial Performance • Strong revenue growth since going pubic with all three Revenues $2,270 product lines performing well 13% • 5-year CAGR for product lines: Corporate Finance (30%), $1,525 17% Financial Restructuring (5%), and Financial and Valuation $1,159 12% $1,084 $872 $963 14% 35% A
Slide 7: Strong Partnership Culture with Experienced Leadership
Strong Partnership Culture with Experienced Leadership Long Tenure Results in Collaborative Culture Deep and Experienced Management Team Tenured Management Team Scott L. Beiser Irwin N. Gold 1 33-year average tenure of CEO Executive Chairman Management Team 38 years with Houlihan Lokey 34 years with
Slide 8: Community Involvement
Community Involvement HLI has a matching charitable contribution program for active employees that results in a number of donations to causes around the globe, and a give-a-day program that results in significant participation by our employees in programs local to our offices. Listed below are sever
Slide 9: Market Leader in All Three Business Segments
Market Leader in All Three Business Segments Top Global M&A Firm Top Global Restructuring Firm Top Global Fairness Opinion Firm Investment Banks by Number of Global CY 2021 Global Distressed Debt and Global M&A Fairness Advisors: Announced M&A Deals in CY 2021 Bankruptcy Restructuring Deals or Compl
Slide 10: Market Leading Advisor Across Industries
Market Leading Advisor Across Industries Business Services Consumer, Food, & Retail Energy & Power Houlihan Lokey 36 Houlihan Lokey 29 Houlihan Lokey 27 JP Morgan 25 Goldman Sachs 25 Citi 24 Baird & Co 22 JP Morgan 15 JP Morgan 23 Goldman Sachs 21 Piper Sandler & Co 13 Goldman Sachs 19 Canaccord Gen
Slide 11: Diversified Across Geography, Client, Industry, Banker and Product
Diversified Across Geography, Client, Industry, Banker and Product • More than 2,000 clients served annually • For FY 2022: ‒ No single transaction fee represented more than 2% of our revenues ‒ No individual banker was responsible for more than 2% of our revenues ‒ No single employee shareholder ow
Slide 12: Comprehensive Coverage and Global Scale
Comprehensive Coverage and Global Scale North America Europe and Middle East Asia-Pacific Atlanta Miami Amsterdam Manchester Beijing Osaka Boston Minneapolis Dubai Milan Ho Chi Minh Shanghai Chicago New York Frankfurt Munich Hong Kong Singapore Dallas San Francisco London Paris Mumbai Sydney Houston
Slide 13: Robust Long-Term Growth Opportunities
Robust Long-Term Growth Opportunities We will continue to grow our talent pool through: 1 The development and maturation of bankers & 2 Targeted professional hires & increased operational 3 Acquisitions and joint ventures operational professionals support needs GROWTH WILL BE DRIVEN BY: Corporate Fi
Slide 14: Growth through Hiring and MD Productivity
Growth through Hiring and MD Productivity • HL has increased its Managing Director Headcount by a CAGR of 11% over the last 20 years • In addition to increasing headcount, HL has increased banker productivity since going public History of Growing Managing Director Headcount Revenue Per MD1 289 $7.7
Slide 15: Organic Growth Strengthened by Strategic Acquisitions
Organic Growth Strengthened by Strategic Acquisitions Growth Through Expansion of Products 2000–2009 2010–Present • Private Equity Coverage • Debt and Equity Capital Markets Advisory • Arranger of Leveraged Loans • Distressed M&A • Hedge Fund Coverage • Illiquid Financial Assets Intermediation • Ind
Slide 16: Overview of Business Segments
Overview of Business Segments
Slide 17: A Houlihan Lokey Model for Growth and Success
A Houlihan Lokey Model for Growth and Success Financial and Valuation Corporate Finance Financial Restructuring Advisory Mergers/Acquisitions Debtor and Creditor Restructuring Financial Opinions Core Services Capital Markets Advisory Distressed M&A Valuation Services Private Funds Placement Liabilit
Slide 18: Corporate Finance Business – M&A
• Our Corporate Finance business is a leader in the Global mid-cap space, which represented approximately 98% of M&A volume in CY 2021 Corporate Finance • Our market share in the Global mid-cap space is approximately 2%, based on the number of closed Corporate Finance transactions we completed in CY
Slide 19: Corporate Finance Business – M&A
• Closed global mid-cap¹ M&A volume has a 5-year (2016–2021) CAGR of 3.6% Corporate Finance • Global Corporate Finance closed transactions has a 5-year (2016-2021) CAGR of 25.6% Business – M&A • We continue to increase market share as a result of companies choosing to use an advisor as well as takin
Slide 20: Corporate Finance Business – Capital Markets
We believe we are one of the largest capital markets Corporate Finance groups at non-balance sheet banks, raising capital for both sponsors and corporate clients. Business – Capital Markets Over 75 dedicated professionals across Raised ~$15 billion and advised on an ten offices in four countries add
Slide 21: Financial Restructuring Business
• Deepest bench in the industry with 55 Managing Directors and 265 total finance professionals as of June 30, 2022 Financial • A true global player, having dedicated resources in 15 offices worldwide and executed Restructuring • transactions in 60 countries since 2000 Extensive experience and flexib
Slide 22: Financial and Valuation Advisory Business
Financial and No. 1 Global M&A Fairness Over the past 40 years, Opinion Advisor over the Houlihan Lokey has established Valuation Advisory Past 20 Years one of the largest worldwide financial and valuation Business advisory practices Services Offered Diversified Revenue Stream Operating Philosophy •
Slide 23: Financial Sponsors Group
Broad and Deep Financial Sponsor Group Financial Sponsors Group • HL has 22 senior officers dedicated to the sponsor community in North America and Europe Houlihan Lokey has one of the largest Financial • Coverage of 1,000+ private equity firms, 250+ credit funds Sponsors Groups focused on mid and l
Slide 24: Financial Overview
Financial Overview
Slide 25: Strong Top-Line Growth & Disciplined Expense
Long history of revenues growth through various market cycles Strong Top-Line Growth & Disciplined Expense • 5-year (FY 2017 to FY 2022) revenues CAGR of 21% $2,270 • Resilient business mix consisting of cyclical $1,525 and countercyclical elements $1,084 $1,159 $872 $963 • Leader in each of our thr
Slide 26: Business Segment Financials
REVENUES BY BUSINESS SEGMENT $2,270 13% 17% $1,525 12% $1,159 $1,084 $963 14% 35% $872 15% 15% 15% 30% 70% 29% 30% 35% $419 $373 53% 18% Business 56% 56% 17% 19% 55% 27% 50% 56% 63% Segment 2017 2018 2019 2020 2021 2022 3-mo. Ended 3-mo. Ended Financials Corporate Finance Financial Restructuring 6/3
Slide 27: Expense, Balance Sheet and Cash Management
Expense, Balance Sheet and CashManagement Operating Expenses Balance Sheet Health Shareholder Return • Compensation • We operate with extremely low We are committed to the following levels of debt principles: ‒ Given our diversified business model, we are able to maintain • We maintain a revolver of
Slide 28: Reconciliation of GAAP to Adjusted Financials
Three Months Ended June 30, (In thousands, except per share data) 2022 2021 Reconciliation Revenues $ 418,644 $ 372,722 Employee compensation and benefits expenses of GAAP to Employee compensation and benefits expenses (GAAP) $ 265,735 $ 232,304 Less: Acquisition related retention payments (8,268) (
Slide 29: Comparable GAAP vs. Adjusted Financial Figures
Comparable GAAP vs. Adjusted Financial Figures GAAP Pre-tax Income GAAP Pre-tax Margin $603 26.8% 26.6% 22.6% $409 20.5% 20.7% 20.3% $218 $224 $236 $178 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Adjusted Pre-tax Income Adjusted Pre-tax Margin $680 29.9% 28.4% 25.3% 24.4% 24.3% 23.7
Slide 30: Comparable GAAP vs. Adjusted Financial Figures (Cont'd)
Comparable GAAP vs. Adjusted Financial Figures (Cont’d) GAAP Pre-tax Margin GAAP Net Income $438 26.8% 26.6% 22.6% $313 20.5% 20.7% 20.3% $172 $184 $159 $108 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Adjusted Pre-tax Margin Adjusted Net Income $485 29.9% 28.4% 25.3% 24.4% 24.3% 23.
Slide 31: Our Vision Our Mission
Our Vision We will be recognized globally for providing the finest financial advice and service to our clients and the best place to work for our colleagues. Our Mission We help our clients achieve superior outcomes by providing thoughtful, caring advice while acting with honor and integrity. We are
Slide 32: HL.com
CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com