8-K
HOULIHAN LOKEY, INC. (HLI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
May 12, 2020
| Houlihan Lokey, Inc. |
|---|
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-37537 | 95-2770395 |
|---|---|---|
| (State or Other Jurisdiction of<br><br>Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
10250 Constellation Blvd.
5th Floor
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
310-788-5200
Registrant’s telephone number, including area code:
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, par value $0.001 | HLI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On May 12, 2020, Houlihan Lokey, Inc. issued a press release announcing its financial results for the fiscal year and the fourth fiscal quarter ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information in Item 2.02 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 2.02, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press Release dated May 12, 2020.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | May 12, 2020 | Houlihan Lokey, Inc. | |
|---|---|---|---|
| By: | /s/ J. Lindsey Alley | ||
| Name: J. Lindsey Alley | |||
| Position: Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated May 12, 2020 |
Exhibit
Houlihan Lokey Reports Fiscal Year and Fourth Quarter 2020 Financial Results
– Record Fiscal Year 2020 Revenues of $1,159 million –
– Fiscal Year 2020 Diluted EPS of $2.80 –
– Adjusted Fiscal Year 2020 Diluted EPS of $3.20 –
– Fourth Quarter Fiscal 2020 Revenues of $303 million –
– Fourth Quarter Fiscal 2020 Diluted EPS of $0.90 –
– Adjusted Fourth Quarter Fiscal 2020 Diluted EPS of $0.96 –
– Announces Dividend of $0.31 per Share for First Quarter Fiscal 2021 –
LOS ANGELES and NEW YORK - May 12, 2020 - Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its fiscal year and fourth quarter ended March 31, 2020. For the fiscal year, revenues grew 7% to a fiscal year record of $1,159 million, compared with $1,084 million for the fiscal year ended March 31, 2019. For the fourth quarter ended March 31, 2020, revenues increased 4% to $303 million, compared with $291 million for the fourth quarter ended March 31, 2019.
Net income increased 16% to $184 million, or $2.80 per diluted share, for the fiscal year ended March 31, 2020, compared with $159 million, or $2.42 per diluted share, for the fiscal year ended March 31, 2019. Adjusted net income for the fiscal year ended March 31, 2020 grew 11% to $211 million, or $3.20 per diluted share, compared with $189 million, or $2.87 per diluted share, for the fiscal year ended March 31, 2019.
Net income was $59 million, or $0.90 per diluted share, for the fourth quarter ended March 31, 2020, compared with $45 million, or $0.69 per diluted share, for the fourth quarter ended March 31, 2019. Adjusted net income for the fourth quarter ended March 31, 2020 was $63 million, or $0.96 per diluted share, compared with $56 million, or $0.86 per diluted share, for the fourth quarter ended March 31, 2019.
“Concluding a fiscal year of record performance is a point of pride for all within our organization. It remains a tremendous accomplishment, but needless to say, our attention quickly turned to the onset of the COVID-19 crisis and the pronounced drop-off in global economic activity. While we enter this period of uncertainty in as strong of a financial and strategic position as we have ever been, challenges, no doubt, lie ahead for us, the economy and the world as a whole. Notwithstanding this rapidly evolving and uncertain environment, we have an advantage in that we built our business to perform during all cycles. Though cyclical disruptions take time to work themselves through our reported results, we are confident that our business will emerge from this crisis stronger than ever.” stated Scott Beiser, Chief Executive Officer of Houlihan Lokey.
Selected Financial Data
| (In thousands, except per share data) | U.S. GAAP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Year Ended March 31, | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenues | $ | 302,694 | $ | 291,378 | $ | 1,159,368 | $ | 1,084,385 | ||||
| Operating expenses: | ||||||||||||
| Employee compensation and benefits | 186,706 | 190,391 | 737,762 | 692,073 | ||||||||
| Non-compensation expenses | 47,333 | 40,436 | 192,005 | 173,215 | ||||||||
| Operating income | 68,655 | 60,551 | 229,601 | 219,097 | ||||||||
| Other (income)/expense, net | (2,259 | ) | (1,922 | ) | (6,046 | ) | (5,223 | ) | ||||
| Income before provision for income taxes | 70,914 | 62,473 | 235,647 | 224,320 | ||||||||
| Provision for income taxes | 11,900 | 17,125 | 51,854 | 65,214 | ||||||||
| Net income attributable to Houlihan Lokey, Inc. | $ | 59,014 | $ | 45,348 | $ | 183,793 | $ | 159,106 | ||||
| Diluted earnings per share | $ | 0.90 | $ | 0.69 | $ | 2.80 | $ | 2.42 |
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Revenues
For the fiscal year ended March 31, 2020, revenues increased to $1,159 million, compared with $1,084 million for the fiscal year ended March 31, 2019. For the fiscal year, Corporate Finance (“CF”) revenues increased 6%, Financial Restructuring (“FR”) revenues increased 11%, and Financial and Valuation Advisory (“FVA”), revenues remained relatively flat when compared with the fiscal year ended March 31, 2019.
For the fourth quarter ended March 31, 2020, revenues increased to $303 million, compared with $291 million for the fourth quarter ended March 31, 2019. For the fourth quarter ended March 31, 2020, CF revenues increased 8%, FR revenues increased 3%, and FVA revenues decreased (8)% when compared with the fourth quarter ended March 31, 2019.
Expenses
The Company’s employee compensation and benefits, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis.
| U.S. GAAP | Adjusted (Non-GAAP) * | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year Ended March 31, | ||||||||||||
| (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Expenses: | ||||||||||||
| Employee compensation and benefits | $ | 737,762 | $ | 692,073 | $ | 706,019 | $ | 660,388 | ||||
| % of Revenues | 63.6 | % | 63.8 | % | 60.9 | % | 60.9 | % | ||||
| Non-compensation expenses | $ | 192,005 | $ | 173,215 | $ | 176,476 | $ | 164,136 | ||||
| % of Revenues | 16.6 | % | 16.0 | % | 15.2 | % | 15.1 | % | ||||
| Provision for Income Taxes | $ | 51,854 | $ | 65,214 | $ | 71,078 | $ | 75,310 | ||||
| % of Pre-Tax Income | 22.0 | % | 29.1 | % | 25.2 | % | 28.5 | % | ||||
| * | Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers. | |||||||||||
| --- | --- | |||||||||||
| U.S. GAAP | Adjusted (Non-GAAP) * | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended March 31, | ||||||||||||
| (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Expenses: | ||||||||||||
| Employee compensation and benefits | $ | 186,706 | $ | 190,391 | $ | 184,415 | $ | 177,123 | ||||
| % of Revenues | 61.7 | % | 65.3 | % | 60.9 | % | 60.8 | % | ||||
| Non-compensation expenses | $ | 47,333 | $ | 40,436 | $ | 45,063 | $ | 38,864 | ||||
| % of Revenues | 15.6 | % | 13.9 | % | 14.9 | % | 13.3 | % | ||||
| Provision for Income Taxes | $ | 11,900 | $ | 17,125 | $ | 11,230 | $ | 21,236 | ||||
| % of Pre-Tax Income | 16.8 | % | 27.4 | % | 15.1 | % | 27.5 | % | ||||
| * | Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers. | |||||||||||
| --- | --- |
Year Ended March 31, 2020 versus March 31, 2019
Employee compensation and benefits expenses were $738 million for the fiscal year ended March 31, 2020, compared with $692 million for the fiscal year ended March 31, 2019. Adjusted employee compensation and benefits expenses were $706 million for the fiscal year ended March 31, 2020, compared with $660 million for the fiscal year ended March 31, 2019. This resulted in an adjusted compensation ratio of 60.9% for both the fiscal years ended March 31, 2020 and 2019. The increase in GAAP and adjusted employee compensation and benefits expenses was primarily a result of an increase in revenues for the year when compared with last year.
Non-compensation expenses were $192 million for the fiscal year ended March 31, 2020, compared with $173 million for the fiscal year ended March 31, 2019. Adjusted non-compensation expenses were $176 million for the fiscal year ended March 31,
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2020, compared with $164 million for the fiscal year ended March 31, 2019. The increase in GAAP and adjusted non-compensation expenses was primarily driven by higher operating expenses associated with the growth of the Company.
The provision for income taxes was $52 million, representing an effective tax rate of 22.0% for the fiscal year ended March 31, 2020, compared with $65 million, representing an effective tax rate of 29.1% for the fiscal year ended March 31, 2019. The decrease in the Company’s tax rate during the year ended March 31, 2020, relative to the year ended March 31, 2019, was primarily a result of the vesting of stock that occurred in April and May 2019, as well as decreased state tax expense. The adjusted provision for income taxes was $71 million, representing an adjusted effective tax rate of 25.2% for the fiscal year ended March 31, 2020, compared with $75 million, representing an adjusted effective tax rate of 28.5% for the fiscal year ended March 31, 2019. The decrease in the Company’s adjusted effective tax rate was primarily a result of decreased state tax expense. The decrease in state tax expense was the result of a favorable state apportionment true-up that occurred in the fourth quarter of fiscal 2020. Historically over the last several years, we have not experienced favorable true-ups of this magnitude and we do not expect to continue to receive them in the future.
Quarter Ended March 31, 2020 versus March 31, 2019
Employee compensation and benefits expenses were $187 million for the fourth quarter ended March 31, 2020, compared with $190 million for the fourth quarter ended March 31, 2019. The decrease in GAAP employee compensation and benefits expenses was due to a reduction in acquisition related retention bonus payments accrued during the quarter. Adjusted employee compensation and benefits expenses were $184 million for the fourth quarter ended March 31, 2020, compared with $177 million for the fourth quarter ended March 31, 2019. This resulted in an adjusted compensation ratio of 60.9% for the fourth quarter ended March 31, 2020, versus 60.8% for the fourth quarter ended March 31, 2019. The increase in adjusted employee compensation and benefits expenses was primarily a result of an increase in revenues.
Non-compensation expenses were $47 million for the fourth quarter ended March 31, 2020, compared with $40 million for the fourth quarter ended March 31, 2019. Adjusted non-compensation expenses were $45 million for the quarter ended March 31, 2020, compared with $39 million for the fourth quarter ended March 31, 2019. The increase in GAAP and adjusted non-compensation expenses was primarily driven by higher operating expenses associated with the growth of the Company.
The provision for income taxes was $12 million, representing an effective tax rate of 16.8% for the fourth quarter ended March 31, 2020, compared with $17 million, representing an effective tax rate of 27.4% for the fourth quarter ended March 31, 2019. The adjusted provision for income taxes was $11 million, representing an adjusted effective tax rate of 15.1% for the fourth quarter ended March 31, 2020, compared with $21 million, representing an adjusted effective tax rate of 27.5% for the fourth quarter ended March 31, 2019. The decrease in the effective tax rate and adjusted effective tax rate was a result of decreased state tax expense. The decrease in state tax expense was the result of a favorable state apportionment true-up that occurred this quarter. Historically over the last several years, we have not experienced favorable true-ups of this magnitude and we do not expect to continue to receive them in the future.
Segment Reporting for the Fourth Quarter
Corporate Finance
CF revenues increased 8% to $156 million for the fourth quarter ended March 31, 2020, compared with $144 million for the fourth quarter ended March 31, 2019. Revenues increased primarily due to an increase in the number of closed transactions, partially offset by a decrease in the average transaction fee on closed transactions. Notwithstanding the quarterly increase in CF revenues, toward the end of the quarter we experienced a reduction of transaction closings and decreased new business activity due to the COVID-19 pandemic, and we expect this slowdown to continue for some time.
| Three Months Ended March 31, | Year Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||
| Corporate Finance | ||||||||
| Revenues | $ | 156,081 | $ | 144,440 | $ | 646,788 | $ | 607,333 |
| # of Managing Directors | 123 | 108 | 123 | 108 | ||||
| # of Closed transactions ^(1)^ | 84 | 64 | 309 | 284 |
Financial Restructuring
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FR revenues increased 3% to $103 million for the fourth quarter ended March 31, 2020, compared with $100 million for the fourth quarter ended March 31, 2019. Revenues increased primarily due to an increase in the number of closed transactions and a slight increase in the average transaction fee. As a result of the COVID-19 pandemic, we experienced an increase in FR new business activity in the last part of the fourth quarter ended March 31, 2020, and we expect such increased level of activity to continue for some time.
| Three Months Ended March 31, | Year Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||
| Financial Restructuring | ||||||||
| Revenues | $ | 103,079 | $ | 99,601 | $ | 352,517 | $ | 317,774 |
| # of Managing Directors | 45 | 44 | 45 | 44 | ||||
| # of Closed transactions ^(1)^ | 29 | 27 | 99 | 81 |
Financial and Valuation Advisory
FVA revenues decreased (8)% to $44 million for the quarter ended March 31, 2020, compared with $47 million for the fourth quarter ended March 31, 2019. Revenues decreased primarily as a result of a reduction in the average fee per fee event. As a result of the COVID-19 pandemic, we experienced a reduction in transaction closings and a decrease in new business activity toward the end of the fourth quarter, and we expect this slowdown to continue for some time.
| Three Months Ended March 31, | Year Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||
| Financial and Valuation Advisory | ||||||||
| Revenues | $ | 43,534 | $ | 47,337 | $ | 160,063 | $ | 159,278 |
| # of Managing Directors | 30 | 33 | 30 | 33 | ||||
| # of Fee Events ^(1)^ | 624 | 605 | 1,385 | 1,377 | ||||
| (1) | A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of $1,000. References in this press release to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our periodic reports on Forms 10-K and 10-Q. | |||||||
| --- | --- |
COVID-19 Update
The COVID-19 pandemic has had a substantial negative effect on the global markets, and has created uncertainty, volatility and dislocation among a wide variety of sectors. The scale, scope and duration of the impact of the COVID-19 pandemic on our business, revenues and operating results is unpredictable and depends on many factors outside of our control. We note that revenues during the fourth quarter ended March 31, 2020 were negatively impacted by the COVID-19 pandemic and we expect it to continue to have an adverse effect on our business, revenues and operating results in the short term. However, while our CF revenues will be adversely impacted for an indeterminable period of time by the economic effects of COVID-19, we have seen an increase in the demand for services in our FR business.
Balance Sheet and Capital Allocation
The Board of Directors of the Company declared a regular quarterly cash dividend of $0.31 per share of Class A and Class B common stock. The dividend will be payable on June 15, 2020 to stockholders of record as of the close of business on June 5, 2020.
As of March 31, 2020, the Company had $516 million of cash and cash equivalents and investment securities, and $37 million of loans payable and other liabilities.
The Company has a syndicated revolving line of credit with the Bank of America, N.A. and certain other financial institutions party thereto, which allows for borrowings of up to $100 million (the “2019 Line of Credit”). As of March 31, 2020, no principal was outstanding under the 2019 Line of Credit.
Investor Conference Call and Webcast
The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Tuesday, May 12, 2020, to discuss its full year and fourth quarter fiscal 2020 results. The number to call is 1-877-407-4018 (domestic) or 1-201-689-8471 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available
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from May 12, 2020 through May 19, 2020, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13702412#. A replay of the webcast will be archived and available on the Company’s website.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors (including the significant effect that the COVID-19 pandemic has had on our business and is expected to continue to have on our business) which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures
Adjusted net income, total and on a per share basis, and certain adjusted items used to determine adjusted net income, are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results. These adjusted items remove the significant accounting impact of one-time or non-recurring charges associated with the Company’s one-time/non-recurring matters, as set forth in the tables at the end of this release.
The adjusted items included in this earnings press release as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these adjusted amounts are not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company’s financial information determined under GAAP. For a description of the Company’s use of these adjusted items and a reconciliation with comparable GAAP items, see the section of this press release titled “Reconciliation of GAAP to Adjusted Financial Information.” Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.
About Houlihan Lokey
Houlihan Lokey (NYSE:HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and valuation. The firm serves corporations, institutions, and governments worldwide with offices in the United States, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm’s commitment to client success across its advisory services. Houlihan Lokey is the No. 1 M&A advisor for the past five consecutive years in the U.S., the No. 1 global restructuring advisor for the past six consecutive years, and the No. 1 global M&A fairness opinion advisor over the past 20 years, all based on number of transactions and according to data provided by Refinitiv (formerly Thomson Reuters).
For more information, please visit www.HL.com.
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Contact Information
| Investor Relations<br><br>212.331.8225<br><br>IR@HL.com | OR | Public Relations<br><br>212.331.8223<br><br>PR@HL.com |
|---|
Appendix
Condensed Consolidated Balance Sheet (Unaudited)
Condensed Consolidated Statement of Income (Unaudited)
Reconciliation of GAAP to Adjusted Financial Information (Unaudited)
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| As of March 31, | ||||||
|---|---|---|---|---|---|---|
| (In thousands, except share data and par value) | 2020 | 2019 | ||||
| Assets | ||||||
| Cash and cash equivalents | $ | 380,373 | $ | 285,746 | ||
| Restricted cash | 373 | 369 | ||||
| Investment securities | 135,389 | 125,258 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 80,912 | 70,830 | ||||
| Unbilled work in process, net of allowance for doubtful accounts | 39,821 | 71,891 | ||||
| Receivable from affiliates | — | 8,631 | ||||
| Income taxes receivable | 4,282 | — | ||||
| Deferred income taxes | 6,507 | 2,854 | ||||
| Property and equipment, net | 42,372 | 31,034 | ||||
| Operating lease right-of-use asset | 135,240 | — | ||||
| Goodwill and other intangibles, net | 812,844 | 794,604 | ||||
| Other assets | 38,890 | 34,695 | ||||
| Total assets | $ | 1,677,003 | $ | 1,425,912 | ||
| Liabilities and Stockholders' Equity | ||||||
| Liabilities: | ||||||
| Accrued salaries and bonuses | $ | 420,376 | $ | 404,717 | ||
| Accounts payable and accrued expenses | 53,883 | 55,048 | ||||
| Deferred income | 26,780 | 27,812 | ||||
| Income taxes payable | — | 7,759 | ||||
| Deferred income taxes | 664 | 8,058 | ||||
| Loans payable to former shareholders | 1,393 | 2,047 | ||||
| Loan payable to non-affiliate | 3,283 | 6,610 | ||||
| Operating lease liabilities | 154,218 | — | ||||
| Other liabilities | 32,024 | 22,532 | ||||
| Total liabilities | 692,621 | 534,583 | ||||
| Stockholders' equity: | ||||||
| Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 46,178,633 and 38,200,802 shares, respectively | 46 | 38 | ||||
| Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 19,345,277 and 27,197,734 shares, respectively | 19 | 27 | ||||
| Additional paid-in capital | 649,954 | 645,090 | ||||
| Retained earnings | 377,471 | 276,468 | ||||
| Accumulated other comprehensive (loss) | (43,108 | ) | (30,294 | ) | ||
| Total stockholders' equity | 984,382 | 891,329 | ||||
| Total liabilities and stockholders' equity | $ | 1,677,003 | $ | 1,425,912 |
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Three Months Ended March 31, | Year Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except share and per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenues | $ | 302,694 | $ | 291,378 | $ | 1,159,368 | $ | 1,084,385 | ||||
| Operating expenses: | ||||||||||||
| Employee compensation and benefits | 186,706 | 190,391 | 737,762 | 692,073 | ||||||||
| Travel, meals, and entertainment | 9,185 | 10,173 | 41,945 | 42,862 | ||||||||
| Rent | 10,239 | 10,060 | 44,693 | 38,672 | ||||||||
| Depreciation and amortization | 5,011 | 3,666 | 17,291 | 14,475 | ||||||||
| Information technology and communications | 7,427 | 5,439 | 26,904 | 21,512 | ||||||||
| Professional fees | 5,210 | 4,887 | 21,704 | 23,035 | ||||||||
| Other operating expenses | 10,261 | 6,211 | 39,468 | 32,659 | ||||||||
| Total operating expenses | 234,039 | 230,827 | 929,767 | 865,288 | ||||||||
| Operating income | 68,655 | 60,551 | 229,601 | 219,097 | ||||||||
| Other (income)/expense, net | (2,259 | ) | (1,922 | ) | (6,046 | ) | (5,223 | ) | ||||
| Income before provision for income taxes | 70,914 | 62,473 | 235,647 | 224,320 | ||||||||
| Provision for income taxes | 11,900 | 17,125 | 51,854 | 65,214 | ||||||||
| Net income attributable to Houlihan Lokey, Inc. | $ | 59,014 | $ | 45,348 | $ | 183,793 | $ | 159,106 | ||||
| Weighted average shares of common stock outstanding: | ||||||||||||
| Basic | 62,011,301 | 61,645,670 | 62,152,870 | 62,213,414 | ||||||||
| Fully diluted | 65,590,918 | 65,419,798 | 65,725,516 | 65,846,132 | ||||||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.95 | $ | 0.74 | $ | 2.96 | $ | 2.56 | ||||
| Fully diluted | $ | 0.90 | $ | 0.69 | $ | 2.80 | $ | 2.42 |
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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION
(UNAUDITED)
| Three Months Ended March 31, | Year Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenues | $ | 302,694 | $ | 291,378 | $ | 1,159,368 | $ | 1,084,385 | ||||
| Employee compensation and benefits | ||||||||||||
| Employee compensation and benefits (GAAP) | $ | 186,706 | $ | 190,391 | $ | 737,762 | $ | 692,073 | ||||
| (Less)/plus: Pre-IPO grant vesting | (6,055 | ) | (5,902 | ) | (24,324 | ) | (24,319 | ) | ||||
| (Less)/plus: Acquisition related retention payments | 3,764 | (7,366 | ) | (7,419 | ) | (7,366 | ) | |||||
| Employee compensation and benefits (adjusted) | 184,415 | 177,123 | 706,019 | 660,388 | ||||||||
| Non-compensation expenses | ||||||||||||
| Non-compensation expenses (GAAP) | $ | 47,333 | $ | 40,436 | $ | 192,005 | $ | 173,215 | ||||
| (Less)/plus: Secondary offering related costs | — | — | (665 | ) | (498 | ) | ||||||
| (Less)/plus: Acquisition related costs | — | — | (579 | ) | (1,929 | ) | ||||||
| (Less)/plus: Acquisition amortization | (2,270 | ) | (1,572 | ) | (7,454 | ) | (6,034 | ) | ||||
| (Less)/plus: HL Finance setup costs | — | — | — | (619 | ) | |||||||
| (Less)/plus: London office buildout | — | — | (6,831 | ) | — | |||||||
| Non-compensation expenses (adjusted) | 45,063 | 38,864 | 176,476 | 164,136 | ||||||||
| Operating income | ||||||||||||
| Operating income (GAAP) | $ | 68,655 | $ | 60,551 | $ | 229,601 | $ | 219,097 | ||||
| (Less)/plus: Adjustments ^(1)^ | 4,561 | 14,841 | 47,272 | 40,764 | ||||||||
| Operating income (adjusted) | 73,216 | 75,392 | 276,873 | 259,861 | ||||||||
| Other (income)/expense, net | ||||||||||||
| Other (income)/expense, net (GAAP) | $ | (2,259 | ) | $ | (1,922 | ) | $ | (6,046 | ) | $ | (5,223 | ) |
| Less/(plus): Reduction of acquisition earnout liabilities | 1,220 | — | 1,220 | 719 | ||||||||
| Other (income)/expense, net (adjusted) | (1,039 | ) | (1,922 | ) | (4,826 | ) | (4,504 | ) | ||||
| Provision for income taxes | ||||||||||||
| Provision for income taxes (GAAP) | $ | 11,900 | $ | 17,125 | $ | 51,854 | $ | 65,214 | ||||
| (Less)/plus: Impact of the Tax Cuts and Jobs Act | — | (1 | ) | — | (1,313 | ) | ||||||
| (Less)/plus: Impact of the excess tax benefit for stock vesting | — | — | 7,605 | — | ||||||||
| Normalized provision for income taxes | 11,900 | 17,124 | 59,459 | 63,901 | ||||||||
| (Less)/plus: Resulting tax impact ^(2)^ | (670 | ) | 4,112 | 11,619 | 11,409 | |||||||
| Provision for income taxes (adjusted) | 11,230 | 21,236 | 71,078 | 75,310 | ||||||||
| Net income | ||||||||||||
| Net income (GAAP) | $ | 59,014 | $ | 45,348 | $ | 183,793 | $ | 159,106 | ||||
| (Less)/plus: adjustments^(3)^ | 4,011 | 10,731 | 26,828 | 29,950 | ||||||||
| Net income (adjusted) | 63,025 | 56,078 | 210,621 | 189,055 | ||||||||
| Diluted EPS (GAAP) | $ | 0.90 | $ | 0.69 | $ | 2.80 | $ | 2.42 | ||||
| Diluted EPS (adjusted) | $ | 0.96 | $ | 0.86 | $ | 3.20 | $ | 2.87 |
Note: Figures may not sum due to rounding.
| (1) | The aggregate of adjustments from employee compensation and benefits and non-compensation expenses. |
|---|---|
| (2) | Reflects the tax impact of utilizing the normalized effective tax rate on the non-tax adjustments identified above. |
| --- | --- |
| (3) | Consists of all adjustments identified above net of the associated tax impact. |
| --- | --- |
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