Houlihan Lokey (HLI) investor relations material

Executive summary

• Third quarter fiscal 2026 revenues reached $717 million, up 13% year-over-year, with adjusted EPS of $1.94, and net income rising 22% to $117 million; operating income for the quarter was $161 million.

• Strong performance attributed to improving investor sentiment, expectations of declining interest rates, and a rebound in M&A activity, especially in private equity.

• The firm remains the most active M&A and financial restructuring investment bank globally for 2025, holding top global rankings in each segment.

• Maintained a diversified business model across Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory, with no single client, transaction, or professional accounting for more than 2% of revenues.

• Management highlighted talent expansion, including new hires and two European transactions.

Financial highlights

• Corporate Finance revenues were $474 million for the quarter, up 12% year-over-year, with 177 transactions closed and higher average fees.

• Financial Restructuring revenues reached $156 million, a 19% increase, with 41 transactions and higher average fees.

• Financial and Valuation Advisory revenues were $87 million, up 6% year-over-year, with 1,103 fee events, a 10% increase.

• Compensation expenses for the quarter were $459 million (64.0% of revenues); adjusted compensation expenses were $441 million (61.5% of revenues).

• Effective tax rate for the quarter was 31.3% (GAAP) and 30.6% (adjusted), both down from the prior year.

Outlook and guidance

• Corporate Finance activity is expected to remain strong, with positive inflection in deal activity and backlog supporting optimism for fiscal 2027.

• Restructuring revenues are expected to face pressure in Q4 and fiscal 2027 as market conditions improve, though geopolitical events could drive activity.

• Management expressed optimism due to favorable market conditions and ongoing expansion of talent and capabilities.

• Non-compensation expense growth for Q4 is expected to be consistent with year-to-date trends; high single-digit growth anticipated for fiscal 2027.

• The firm sees significant pent-up demand in M&A, with the current cycle considered to be in early innings.