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Houlihan Lokey's (HLI) Shares Up Since Q4 Earnings Beat
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Houlihan Lokey, Inc. (HLI - Free Report) shares have gained 1.9% since it reported its fiscal fourth-quarter results on May 8, 2024. The quarterly results gained from growth in its financial restructuring business. The company expects this business to continue its growth trajectory on the back of increasing demand from companies and disruption in technology. Higher expenses partially offset the positives.
HLI reported fiscal fourth-quarter 2024 adjusted earnings per share (EPS) of $1.27, which outpaced the Zacks Consensus Estimate by 5.8%. The bottom line advanced 14.4% year over year.
Total revenues improved 16.9% year over year to $520 million in the quarter under review. The top line beat the Zacks Consensus Estimate by 3.7%.
Houlihan Lokey, Inc. Price, Consensus and EPS Surprise
Stable corporate finance and financial and valuation advisory segments and a growing financial restructuring business fueled the company’s results.
The company hired 11 managing directors and promoted 14 directors in the quarter.
Total operating expenses increased 18% year over year to $417.8 million. The year-over-year rise was due to higher employee compensation and benefits and non-compensation expenses.
Adjusted compensation expense ratio remained stable at 61.5%, while the adjusted non-compensation expense ratio deteriorated 30 bps.
Segmental Update
Corporate Finance: Revenues advanced 12.1% year over year in the fiscal fourth quarter. The segment benefited from improved average transaction fees on closed transactions driven by the timing and size of transactions in the quarter. This was offset by a deterioration in the number of closed transactions. Managing Directors rose 2.8%, while closed transactions fell 13.6% year over year in the quarter.
Financial Restructuring: The unit’s revenues improved 29.1% year over year in the quarter under review. The segment benefited from improved average transaction fees on closed transactions. Managing Directors and closed transactions declined 5.3% and 7.9%, respectively, in the fiscal fourth quarter.
Financial and Valuation Advisory: The segment’s revenues improved 14% year over year in the quarter under review due to a rise in the number of fee events. Improving M&A markets affecting service lines within this segment led to an improvement in the number of fee events. Managing Directors remained stable during the quarter.
Full-Year Update
Total revenues increased 5.8% year over year to $1.9 billion in the fiscal 2024.
Total operating expenses rose 5.7% year over year to $1.6 billion in fiscal 2024.
Adjusted EPS fell 1.1% year over year in fiscal 2024.
Financial Update (as of Mar 31, 2024)
Houlihan Lokey exited the fiscal fourth quarter with cash and cash equivalents of $721.2 million, which rose from $714.4 million in fiscal 2023-end. Total assets of $3.2 billion increased from $3 billion at 2023-end.
Operating lease liabilities of $415.4 million increased from $374.9 million at the end of fiscal 2023.
Total equity of $1.8 billion rose from $1.6 billion at fiscal 2023-end.
Dividend Update
HLI increased its cash dividend by 3.5% to 57 cents per share. The dividend will be paid out on Jun 15, 2024, to shareholders of record as of Jun 3.
Here are some other Finance sector players that have reported first-quarter results so far. The bottom-line results of Morgan Stanley (MS - Free Report) , American Express Company (AXP - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) beat the respective Zacks Consensus Estimate.
Morgan Stanley reported first-quarter 2024 earnings of $2.02 per share, which surpassed the Zacks Consensus Estimate of $1.69. The figure also compared favorably with earnings of $1.70 per share reported in the year-ago quarter. MS’ net revenues of $15.14 billion beat the consensus estimate of $14.47 billion. The top line grew 4% year over year.
The Institutional Securities (IS) segment, which mainly runs its capital markets operations, posted revenues of $7.02 billion, which grew 3% year over year. Specifically, the company’s equity underwriting income jumped 113% and fixed income underwriting income was up 37%. On the other hand, advisory business was still a weak point, with advisory revenues declining 28%. Thus, total IB fees (in the IS segment) grew 16% to $1.45 billion.
American Express’ first-quarter 2024 EPS of $3.33 beat the Zacks Consensus Estimate by 12.1%. The bottom line climbed 38.8% year over year. Total revenues net of interest expense amounted to $15.8 billion, which beat the consensus estimate by 0.3%. The top line improved 10.6% year over year in the quarter under review. Network volumes of $419 billion rose 5% year over year in the first quarter.
AXP’s total interest income of $5.8 billion increased 31% year over year. Provision for credit losses escalated 20% year over year to $1.3 billion. The U.S. Consumer Services segment’s pre-tax income of $1.6 billion advanced 43% year over year. The Commercial Services segment recorded a pre-tax income of $878 million in the quarter under review, which rose 39% year over year. The International Card Services segment reported a pre-tax income of $252 million, which rose 33% year over year.
Goldman Sachs reported first-quarter 2024 EPS of $11.58, which surpassed the Zacks Consensus Estimate of $8.54. Also, the bottom line increased 16.3% from the year-earlier quarter. Net earnings of $4.13 billion rose 27.8% from the year-ago quarter. Net revenues of $14.21 billion increased 16.3% from the year-ago quarter. Also, the top line surpassed the consensus estimate of $12.89 billion.
Provision for credit losses was $318 million against a net provision benefit of $171 million in the first quarter of 2023. The Asset & Wealth Management division of GS generated revenues of $3.79 billion in the reported quarter, up 17.8% year over year. Firmwide assets under supervision were a record $2.85 trillion, up from $2.67 trillion reported in the prior quarter. The Global Banking & Markets division has recorded revenues of $9.73 billion, which increased 15.2% year over year.
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Houlihan Lokey's (HLI) Shares Up Since Q4 Earnings Beat
Houlihan Lokey, Inc. (HLI - Free Report) shares have gained 1.9% since it reported its fiscal fourth-quarter results on May 8, 2024. The quarterly results gained from growth in its financial restructuring business. The company expects this business to continue its growth trajectory on the back of increasing demand from companies and disruption in technology. Higher expenses partially offset the positives.
HLI reported fiscal fourth-quarter 2024 adjusted earnings per share (EPS) of $1.27, which outpaced the Zacks Consensus Estimate by 5.8%. The bottom line advanced 14.4% year over year.
Total revenues improved 16.9% year over year to $520 million in the quarter under review. The top line beat the Zacks Consensus Estimate by 3.7%.
Houlihan Lokey, Inc. Price, Consensus and EPS Surprise
Houlihan Lokey, Inc. price-consensus-eps-surprise-chart | Houlihan Lokey, Inc. Quote
Q4 Performance Details
Stable corporate finance and financial and valuation advisory segments and a growing financial restructuring business fueled the company’s results.
The company hired 11 managing directors and promoted 14 directors in the quarter.
Total operating expenses increased 18% year over year to $417.8 million. The year-over-year rise was due to higher employee compensation and benefits and non-compensation expenses.
Adjusted compensation expense ratio remained stable at 61.5%, while the adjusted non-compensation expense ratio deteriorated 30 bps.
Segmental Update
Corporate Finance: Revenues advanced 12.1% year over year in the fiscal fourth quarter. The segment benefited from improved average transaction fees on closed transactions driven by the timing and size of transactions in the quarter. This was offset by a deterioration in the number of closed transactions. Managing Directors rose 2.8%, while closed transactions fell 13.6% year over year in the quarter.
Financial Restructuring: The unit’s revenues improved 29.1% year over year in the quarter under review. The segment benefited from improved average transaction fees on closed transactions. Managing Directors and closed transactions declined 5.3% and 7.9%, respectively, in the fiscal fourth quarter.
Financial and Valuation Advisory: The segment’s revenues improved 14% year over year in the quarter under review due to a rise in the number of fee events. Improving M&A markets affecting service lines within this segment led to an improvement in the number of fee events. Managing Directors remained stable during the quarter.
Full-Year Update
Total revenues increased 5.8% year over year to $1.9 billion in the fiscal 2024.
Total operating expenses rose 5.7% year over year to $1.6 billion in fiscal 2024.
Adjusted EPS fell 1.1% year over year in fiscal 2024.
Financial Update (as of Mar 31, 2024)
Houlihan Lokey exited the fiscal fourth quarter with cash and cash equivalents of $721.2 million, which rose from $714.4 million in fiscal 2023-end. Total assets of $3.2 billion increased from $3 billion at 2023-end.
Operating lease liabilities of $415.4 million increased from $374.9 million at the end of fiscal 2023.
Total equity of $1.8 billion rose from $1.6 billion at fiscal 2023-end.
Dividend Update
HLI increased its cash dividend by 3.5% to 57 cents per share. The dividend will be paid out on Jun 15, 2024, to shareholders of record as of Jun 3.
Zacks Rank
Houlihan Lokey currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Sector Players
Here are some other Finance sector players that have reported first-quarter results so far. The bottom-line results of Morgan Stanley (MS - Free Report) , American Express Company (AXP - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) beat the respective Zacks Consensus Estimate.
Morgan Stanley reported first-quarter 2024 earnings of $2.02 per share, which surpassed the Zacks Consensus Estimate of $1.69. The figure also compared favorably with earnings of $1.70 per share reported in the year-ago quarter. MS’ net revenues of $15.14 billion beat the consensus estimate of $14.47 billion. The top line grew 4% year over year.
The Institutional Securities (IS) segment, which mainly runs its capital markets operations, posted revenues of $7.02 billion, which grew 3% year over year. Specifically, the company’s equity underwriting income jumped 113% and fixed income underwriting income was up 37%. On the other hand, advisory business was still a weak point, with advisory revenues declining 28%. Thus, total IB fees (in the IS segment) grew 16% to $1.45 billion.
American Express’ first-quarter 2024 EPS of $3.33 beat the Zacks Consensus Estimate by 12.1%. The bottom line climbed 38.8% year over year. Total revenues net of interest expense amounted to $15.8 billion, which beat the consensus estimate by 0.3%. The top line improved 10.6% year over year in the quarter under review. Network volumes of $419 billion rose 5% year over year in the first quarter.
AXP’s total interest income of $5.8 billion increased 31% year over year. Provision for credit losses escalated 20% year over year to $1.3 billion. The U.S. Consumer Services segment’s pre-tax income of $1.6 billion advanced 43% year over year. The Commercial Services segment recorded a pre-tax income of $878 million in the quarter under review, which rose 39% year over year. The International Card Services segment reported a pre-tax income of $252 million, which rose 33% year over year.
Goldman Sachs reported first-quarter 2024 EPS of $11.58, which surpassed the Zacks Consensus Estimate of $8.54. Also, the bottom line increased 16.3% from the year-earlier quarter. Net earnings of $4.13 billion rose 27.8% from the year-ago quarter. Net revenues of $14.21 billion increased 16.3% from the year-ago quarter. Also, the top line surpassed the consensus estimate of $12.89 billion.
Provision for credit losses was $318 million against a net provision benefit of $171 million in the first quarter of 2023. The Asset & Wealth Management division of GS generated revenues of $3.79 billion in the reported quarter, up 17.8% year over year. Firmwide assets under supervision were a record $2.85 trillion, up from $2.67 trillion reported in the prior quarter. The Global Banking & Markets division has recorded revenues of $9.73 billion, which increased 15.2% year over year.