Houlihan Lokey, Inc. · NYSE:HLI
Houlihan Lokey — Q2 2024 Earnings Presentation
33 slides from Houlihan Lokey's earnings presentation, Oct 26, 2023
Slide 1: Investor Presentation October 2023
INVESTOR PRESENTATION October 2023
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 • Partnership Culture • Broad-Based, Long-Term Employee Ownership • Client Service and Solution Driven • Not a “Star” Culture • Sophisticated Corporate Procedures and • Entrepreneurially Motivated • Consensual Decision-
Slide 4: Our Product Knowledge and Industry Expertise Deliver Superior Results
Our Product Knowledge and Industry Expertise Deliver Superior Results Product Expertise Dedicated Industry Groups Corporate Finance Business Services Financial Services Industrials Financial Consumer, Food FinTech Real Estate, Lodging Restructuring and Retail and Leisure Financial and Energy Healthc
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 over 30 years. banker headcount. Lower Revenues and Ear
Slide 6: Strong Financial Performance
Strong Financial Performance • Strong revenue growth with a five-year CAGR of 13% $2,270 Revenues • Fiscal year 2022 experienced record results during 13% $1,809 extremely bullish market conditions $1,525 17% 16% $1,159 12% • Adjusted pre-tax income grew at a CAGR of 12% over the same $1,084 22% $96
Slide 7: Strong Partnership Culture with Experienced Leadership
Strong Partnership Culture with Long Tenure Results in Experienced Leadership Collaborative Culture Deep and Experienced Executive Management Team Tenured Management Team Over 30-year average tenure of Scott L. Beiser CEO Irwin N. Gold Executive Chairman 1 our Executive Management Team and over 25-y
Slide 8: Community Involvement
Community Involvement HL has a matching charitable contribution program for active employees, which 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 seve
Slide 9: Market Leader in All Three Business Segments
Market Leader in All Three Business Segments Top Global M&A Firm1 Top Global Restructuring Firm Top Global Fairness Opinion Firm Investment Banks by Number of Global CY 2022 Global Distressed Debt and Global M&A Fairness Advisors: Announced M&A Deals in CY 2022 Bankruptcy Restructuring Deals or Comp
Slide 10: Market-Leading Advisor Across Industries in the U.S.
Market-Leading Advisor Across Industries in the U.S. Business Services Consumer, Food, & Retail Financial Services1 Houlihan Lokey 32 Houlihan Lokey 21 Houlihan Lokey 26 Goldman Sachs & Co 18 Lincoln International 21 Goldman Sachs & Co 18 William Blair & Co 17 Goldman Sachs 20 Piper Sandler & Co 15
Slide 11: Diversified Across Geography, Client, Industry, Professional and Segment
Diversified Across Geography, Client, Industry, Professional and Segment • More than 2,000 clients served annually • For FY 2023: ‒ No single transaction fee represented more than 2% of our revenues ‒ No individual financial professional was responsible for more than 2% of our revenues ‒ No single e
Slide 12: Comprehensive Coverage and Global Scale
Comprehensive Coverage and Global Scale The Americas Europe and Middle East Asia-Pacific Atlanta Miami Amsterdam Milan Beijing Nagoya Baltimore Minneapolis Antwerp Munich Fukuoka Singapore Boston New York Dubai Paris Gurugram Sydney Chicago San Francisco Frankfurt Stockholm Hong Kong SAR Tokyo Dalla
Slide 13: Robust Long-Term Growth Opportunities
Robust Long-Term Growth Opportunities We will continue to grow our talent pool through: 1 2 3 The development and Targeted professional hires Acquisitions and maturation of financial & & increased operational joint ventures operational professionals support needs GROWTH WILL BE DRIVEN BY: Corporate
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 10% over the last 20 years through internal promotions, opportunistic hirings, and strategic acquisitions. • HL has maintained solid MD productivity through the cycles. Productivity increased in
Slide 15: Organic Growth Strengthened by Strategic Acquisitions
Organic Growth Strengthened by Strategic Acquisitions Growth Through Expansion of Services 2000–2009 2010–Present • Private Equity Coverage • Debt and Equity Capital Markets Advisory • Arranger of Leveraged Loans • Distressed M&A • Hedge Fund Coverage • Transaction Advisory Services • Industry Build
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 HL maintains three Corporate Finance Financial Restructuring Advisory primary service lines Mergers/Acquisitions Debtor and Creditor Restructuring Financial Opinions – Corporate Finance, Core Services Capital Markets Advisory Dist
Slide 18: Corporate Finance
• Integrated Platform combining Industry Coverage, Product Corporate Finance Expertise, and Global Reach Industry Groups Product Specialists Business Services Mergers & Acquisitions Consumer, Food, and Retail Balanced and insightful mergers and acquisitions advice Energy Capital Markets Financial Se
Slide 19: Corporate Finance
• Houlihan Lokey’s Corporate Finance group closes more deals Corporate Finance than any other firm anywhere in the world The Global #1 Advisor Market-Leading Advisor Across Industries 2022 M&A Advisory Rankings All Global Business Services Transactions 2022 M&A Advisory Rankings Advisor All U.S. Con
Slide 20: Corporate Finance Mergers & Acquisitions
• Our Corporate Finance business is a leader in the Global mid-cap space, which represented approximately 99% of M&A volume in CY 2022 Corporate Finance • Our market share in the Global mid-cap space is approximately 1%, based on the number of closed Corporate Finance transactions we completed in CY
Slide 21: Corporate Finance Capital Markets
We believe we have one of the largest capital markets groups at non-balance-sheet banks, raising capital for both sponsors Corporate Finance and corporate clients. Capital Markets More than 90 dedicated professionals Raised ~$26 billion and advised on an additional across 11 offices in five countrie
Slide 22: Financial Restructuring
• Deepest bench in the industry with 57 Managing Directors and 310 total finance professionals as of March 31, 2023 Financial • A true global player, having dedicated resources in 18 offices worldwide and executed transactions in more than 60 countries since 2000 • Extensive experience and flexibili
Slide 23: Financial and Valuation Advisory
No. 1 Global M&A Over the past 50 years, Houlihan Financial and Fairness Opinion Lokey has established one of the Advisor over the Past largest worldwide financial and Valuation Advisory 25 Years valuation advisory practices Services Offered Diversified Revenue Stream Operating Philosophy • Transact
Slide 24: Financial Sponsors Group
Broad and Deep Financial Sponsor Group Financial Sponsors Group • HL has 25 senior officers dedicated to the sponsor community in North America and Europe as of FYE 2023 Houlihan Lokey has one of the largest Financial • Coverage of 1,000+ private equity firms, 250+ credit funds and Sponsors Groups f
Slide 25: Financial Overview
Financial Overview
Slide 26: Strong Top-Line Growth & Disciplined Expense
Long history of revenues growth through various market cycles Strong Top-Line Growth & Disciplined Expense • Resilient business mix consisting of cyclical $2,270 and countercyclical elements $1,809 $1,525 • Leader in each of our three business $1,084 $1,159 $908 $883 segments with ample growth oppor
Slide 27: Business Segment Financials
REVENUES BY BUSINESS SEGMENT $2,270 13% $1,809 17% 16% $1,525 12% 22% $1,159 $1,084 $963 14% 35% 15% $908 $883 15% 30% 70% 17% 15% 29% 30% 19% 27% 62% Business 55% 56% 56% 53% 64% 58% Segment Financials 2018 2019 2020 2021 2022 2023 6-mo ended 6-mo ended 9/30/2022 9/30/2023 Corporate Finance Financi
Slide 28: Expense, Balance Sheet and Cash Management
Expense, Balance Sheet and Cash Management 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 o
Slide 29: Reconciliation of GAAP to Adjusted Financials
Three Months Ended September 30, Six Months Ended September 30, (In thousands, except per share data) 2023 2022 2023 2022 Reconciliation Revenues $ 466,989 $ 489,537 $ 882,818 $ 908,181 Employee compensation and benefits expenses Employee compensation and benefits expenses (GAAP) $ 296,542 $ 309,859
Slide 30: Comparable GAAP vs. Adjusted Financial Figures
Comparable GAAP vs. Adjusted Financial Figures GAAP Pre-tax Income GAAP Pre-tax Margin $604 26.8% 26.6% 22.6% $409 20.7% 20.3% $324 17.9% $218 $224 $236 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Adjusted Pre-tax Income Adjusted Pre-tax Margin $680 29.9% 28.4% 25.3% 24.4% 24.3% 23.7
Slide 31: 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 20.7% 20.3% 17.9% $254 $172 $184 $159 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Adjusted Pre-tax Margin Adjusted Net Income 29.9% 28.4% $485 25.3% 24.4% 24.3% 23.
Slide 32: 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 33: Corporate Finance, Financial Restructuring, Financial and Valuation Advisory
CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com