EX-99.1 2 d455729dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Houlihan Lokey Reports Certain Revised Financial Information

LOS ANGELES and NEW YORK – May 25, 2023 – Houlihan Lokey, Inc. (NYSE: HLI) (“Houlihan Lokey” or the “Company”), the global investment bank, today reported certain revised financial information for the fiscal year and fourth fiscal quarter ended March 31, 2023.

On May 9, 2023, Houlihan Lokey announced financial results for the fiscal year and fourth fiscal quarter ended March 31, 2023. Subsequent to this announcement, staff of the Securities and Exchange Commission’s (the “SEC”) Division of Enforcement proposed a potential settlement with Houlihan Lokey to resolve an investigation of Houlihan Lokey’s compliance with records preservation requirements related to business communications sent over off-channel electronic messaging platforms. The SEC has conducted similar investigations of other financial institutions as part of a widely publicized industry sweep that has already included publicly announced settlements with 14 firms to date, with civil penalties ranging from $7.5 million to $125 million each, and aggregating over $1.2 billion. Houlihan Lokey has notified the SEC’s Division of Enforcement of its present intention to agree to a settlement to resolve the investigation that includes a $15 million civil penalty. The potential settlement is subject to the negotiation of definitive documentation, which is expected to include terms consistent with previously announced settlements between other firms and the SEC, and any formal offer, proposed civil penalty, and additional terms submitted by the Company would be subject to approval by the Commission. As a result of the foregoing, while finalizing its financial statements for inclusion in its Annual Report on Form 10-K for the fiscal year ended March 31, 2023, Houlihan Lokey determined that it should recognize a $15 million accrual in other (income)/expense, net for the fourth fiscal quarter and fiscal year ended March 31, 2023 relating to the anticipated settlement with the SEC.

The effect of the accrual reduced net income, as originally reported on May 9, 2023, of $75 million and $269 million to $60 million and $254 million for the fourth fiscal quarter and fiscal year ended March 31, 2023, respectively, and reduced earnings per fully diluted share as originally reported of $1.10 and $3.98 to $ 0.88 and $3.76 for the fourth fiscal quarter and fiscal year ended March 31, 2023, respectively, in each case as calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”).

The accrual had no impact on the amounts of revenue, as reported in the previously released financial results. The full amount of the $15 million accrual recorded in other (income)/expense, net has been added back to adjusted earnings per fully diluted share such that the amounts of adjusted earnings per fully diluted share of $1.11 and $4.54 for the fourth fiscal quarter and fiscal year ended March 31, 2023, respectively, included in the previously released financial results remain unchanged.

Adjusted earnings per fully diluted share, and certain adjusted items used to determine adjusted earnings per fully diluted share, are presented and discussed in this 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 non-recurring charges associated with the Company’s non-recurring matters, as set forth in the tables at the end of this release.

The adjusted items included in this 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 financial and valuation advisory. The firm serves corporations, institutions, and governments worldwide with offices in the Americas, 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 investment bank for global M&A transactions under $1 billion, the No. 1 M&A advisor for the past eight consecutive years in the U.S., the No. 1 global restructuring advisor for the past nine consecutive years, and the No. 1 global M&A fairness opinion advisor over the past 25 years, all based on number of transactions and according to data provided by Refinitiv.

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 share and per share data)

    2023     2022     2023     2022  

Revenues

    $ 444,767     $ 471,166     $ 1,809,447     $ 2,269,958  

Employee compensation and benefits expenses

         

Employee compensation and benefits expenses (GAAP)

    $ 282,937     $ 293,580     $ 1,147,879     $ 1,408,634  

Less: Acquisition related retention payments

      (9,407 )      (3,812 )      (35,070 )      (12,609 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Employee compensation and benefits expenses (adjusted)

      273,530       289,768       1,112,809       1,396,025  

Non-compensation expenses

         

Non-compensation expenses (GAAP)

    $ 71,206     $ 78,977     $ 319,830     $ 248,460  

Less: Integration and acquisition related costs

      —         (3,793 )      (2,325 )      (21,598 ) 

Less: Acquisition amortization

      (3,215 )      (15,807 )      (44,971 )      (33,937 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-compensation expenses (adjusted)

      67,991       59,377       272,534       192,925  

Operating income

         

Operating income (GAAP)

    $ 90,624     $ 98,609     $ 341,738     $ 612,864  

Plus: Adjustments (1)

      12,622       23,412       82,366       68,144  
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (adjusted)

      103,246       122,021       424,104       681,008  

Other (income)/expense, net

         

Other (income)/expense, net (GAAP)

    $ 10,322     $ 7,921     $ 17,738     $ 8,926  

Less: Warrant revaluation

      —         —         (2,264 )      —    

Less: SPAC wind-down write-off

      —         —         (2,742 )      —    

Plus/(less): Change in acquisition earnout liability fair value

      738       (7,613 )      (2,103 )      (7,613 ) 

Less: Accrual of proposed civil penalty

      (15,000 )      —         (15,000 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Other (income)/expense, net (adjusted)

      (3,940 )      308       (4,371 )      1,313  

Provision for income taxes

         

Provision for income taxes (GAAP)

    $ 20,642     $ 25,515     $ 69,777     $ 165,614  

Plus: Impact of the excess tax benefit for stock vesting

      —         —         8,102       6,922  

Plus: Release of the provision for an uncertain tax position as a result of the successful closure of a state audit

      —         —         5,762       —    

Plus: Release of valuation allowance

      5,881       —         5,881       —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted provision for income taxes

      26,523       25,515       89,522       172,536  

Plus: Resulting tax impact (2)

      3,441       8,496       23,628       21,644  
  

 

 

    

 

 

    

 

 

    

 

 

  

Provision for income taxes (adjusted)

      29,964       34,011       113,150       194,180  

Net income

         

Net income (GAAP)

    $ 59,660     $ 65,173     $ 254,223     $ 438,324  

Plus: Adjustments (3)

      17,562       22,529       61,102       47,191  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (adjusted)

      77,222       87,702       315,325       485,515  

Net income attributable to noncontrolling interest

      —         —         —         (573 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to Houlihan Lokey, Inc. (GAAP)

      59,660       65,173       254,223       437,751  

Net income attributable to Houlihan Lokey, Inc. (adjusted)

      77,222       87,702       315,325       484,942  

Fully diluted shares outstanding

         

Fully diluted shares outstanding (GAAP)

      68,107,465       67,461,779       67,586,263       68,259,708  

Plus: Impact of unvested GCA retention and deferred share awards

      1,591,157       —         1,927,786       —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Fully diluted shares outstanding (adjusted)

      69,698,622       67,461,779       69,514,049       68,259,708  

Diluted EPS attributable to Houlihan Lokey, Inc. (GAAP)

    $ 0.88     $ 0.97     $ 3.76     $ 6.41  

Diluted EPS attributable to Houlihan Lokey, Inc. (adjusted)

    $ 1.11     $ 1.30     $ 4.54     $ 7.10  

 

(1)

The aggregate of adjustments from employee compensation and benefits and non-compensation expenses.

(2)

Reflects the tax impact of utilizing the adjusted effective tax rate on the non-tax adjustments identified above.

(3)

Consists of all adjustments identified above net of the associated tax impact.

Contact Information

Investor Relations

212.331.8225

IR@HL.com

Public Relations

212.331.8223

PR@HL.com