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spk08: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan-Loki's fourth quarter fiscal year 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, May 12, 2022. I will now turn the call over to Christopher Crane, Houlihan-Loki's general counsel. Please go ahead.
spk04: Thank you, operator, and hello, everyone. By now, everyone should have access to our fourth quarter and fiscal year 2022 earnings release, which can be found on the Houlihan-Loki website at www.hl.com in the investor relations section. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. And therefore, you should exercise caution when interpreting and relying on them. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. We encourage investors to review our regulatory filings, including the Form 10-K for the year ended March 31, 2022, when it is filed with the SEC. During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release and our investor presentation on the HL.com website. Hosting the call today, we have Scott Beiser, Houlihan Loki's chief executive officer, and Lindsay Alley, chief financial officer of the company. They will provide some opening remarks, and then we'll open the call to questions. With that, I'll turn the call over to Scott.
spk05: Thank you, Christopher. Welcome everyone to our fourth quarter and full fiscal year 2022 earnings call. We are pleased to report another record year for the firm. We ended the fiscal year with $2.27 billion in revenues, up 49% from fiscal 21's revenues of $1.53 billion. This is our 10th straight year of annual revenue growth. Corporate finance achieved just under $1.6 billion in revenues, up nearly 100% year over year. Financial and valuation advisory reported $284 million in revenues, up just over 50% from last year. And financial restructuring reported $393 million in annual revenues, down 27% year over year, but the second highest annual result in its history. Our adjusted earnings were a record $7.10 per share, up 54% from an adjusted $4.62 per share last year. In addition to strong financial results of the year, we had several notable accomplishments that are worth highlighting. We remain number one in the relevant league tables for all three of our product lines. We successfully completed the acquisition of GCA, further increasing our global scale and reach. With the completion of GCA and the addition of over 500 new employees, the firm now has approximately 2,300 employees 295 of which are managing directors operating out of 35 offices worldwide. We also hired 13 managing directors during fiscal year 2022 and in early April promoted 29 employees to managing directors, our largest class ever. We head into fiscal year 2023 with strong activity levels in our corporate finance and FBA businesses and early signs of improving market conditions and financial restructuring. While our fiscal 2022 full year results were very strong, the fourth quarter for fiscal year 2022 was weaker than we anticipated only a few months ago. For the quarter, we achieved $471 million in revenues, down 6% from the $501 million recorded a year ago. Adjusted earnings per share were $1.30, down from $1.51 last year. Corporate finance revenues for the quarter were down 7% versus the same period last year, and down materially from the prior quarter's extraordinary results. FEA continued to achieve strong results. Its revenues grew 23% for the fourth quarter compared to the same quarter last year. Financial restructuring ended the year stronger than we anticipated, but was down relative to a very strong record fourth quarter last year, which is driven by COVID-related restructurings. With respect to our corporate finance business, there were several factors that led to the relative softness in our fourth quarter. First, as we suggested on last quarter's call, the timing on transaction closings in our third quarter benefited that quarter to the detriment of our fourth quarter. Second, we started to see a slowdown in deal closings as the market reacted to the buildup and invasion of Ukraine in mid-February, which lasted through the end of the quarter. Third, and overlaying all of this, we believe the market is still assessing the impact of higher inflation and higher interest rates, and we believe, on the margin, this is extending the time it takes to close transactions and maybe delaying certain closings. FEA did not experience the same softness as corporate finance in our fourth fiscal quarter, and FEA's prospects remain quite strong entering fiscal year 2023. We've experienced slowdowns similar to this one over the last few decades, and while each trigger event is different, the impact on our business trends, our business tends to follow similar patterns. First, the timing to close active transactions stretches out, allowing buyers and sellers to reassess the marketplace. If the negative trends stabilize, like what happened in the summer of calendar 2020 with COVID, the market comes back quickly and current lower revenues are made up for in subsequent quarters. If the negative trends persist, certain deals are put on hold and may eventually go away, resulting in prolonged softness in the M&A markets. As we sit here near the middle of May, almost halfway through our first fiscal quarter, we are still seeing strong new deal activity in both corporate finance and FBA and good momentum going into fiscal year 2023. However, we are facing headwinds that did not exist at this time last year, namely increased geopolitical risk, inflation, and rising interest rates. If these headwinds get worse, we may see increased pressure on revenues in our corporate finance and FEA businesses in subsequent quarters, and likely increased activity in our financial restructuring business. Given where we are in the year, any new restructuring activity is likely to more meaningfully impact fiscal year 2024 revenues, given the typical length of a restructuring. Whenever we complete a year, we reflect on our strategy going forward. For over a decade, our general business strategy has not changed. Stay true to our needing, focus on growth, and build a firm that is highly diversified across industry, geography, banker, product, and economic climate. In fiscal year 2022, we significantly increased our presence in technology, diversifying into arguably one of the most important drivers of growth in the world economies over the next several years. In fiscal year 2022, we increased our non-US business to represent 26% of total revenues, up from 22% a year ago. Our non-M&A business remains at approximately 50% of revenues, as we have seen continued strong growth in FBA, capital markets, private funds placement, and continued strength in our core financial restructuring business. In fiscal year 2022, we added almost 100 new managing directors to the firm. And in fiscal year 2022, no single client, no single banker, and no single transaction represented more than 2% of our revenues for the fiscal year. We remain committed to this business strategy and believe fiscal year 2022 was one of our most successful to date. Finally, given our success this year and the strength of the platform heading into the new fiscal year, effective Q1 of fiscal year 2023, we are raising our quarterly dividend 23% to 53 cents per share, up from 43 cents per share for the previous quarter. The board has also authorized $500 million to repurchase shares in the open marketplace. And with that, I'll turn the call over to Lindsey.
spk02: Thank you, Scott. Revenues in corporate finance were $279 million for the quarter, down 7% when compared to the same quarter last year. We closed 144 transactions this quarter, compared to 151 in the same period last year, and our average transaction fee on closed deals stayed relatively flat. For fiscal year 2022, corporate finance revenues were up 98% when compared to fiscal year 2021, primarily due to a robust M&A market, the acquisition of GCA, and continued increases in both transaction count and average transaction fee. For fiscal year 2022, we saw significant growth in our capital markets business, our private funds placement business, and our non-US corporate finance business. all three strategic objectives of the firm. Financial restructuring revenues were $122 million for the quarter, a 15% decrease from the same period last year. We closed 25 transactions this quarter compared to 35 in the same quarter last year, while our average transaction fee on closed deals increased. This quarter ended up better than we expected as we had a few transactions that closed in Q4 fiscal year 2022 as opposed to their expected close date of Q1 fiscal year 2023. In financial and valuation advisory, revenues were $71 million for the quarter, a 23% increase from the same period last year. We had 999 fee events during the quarter compared to 765 in the same period last year. FBA continues to see growth across all major product lines and is experiencing good momentum as we head into fiscal year 2023. For fiscal year 2022, FBA had a record year with revenues of $284 million, 51% higher than last year. Growth of that amount in this product line is unprecedented and represents exceptional execution and purposeful diversification in a strong M&A market in fiscal year 2022. Turning to expenses, our adjusted compensation expenses were $290 million for the fourth fiscal quarter, versus $312 million for the same period last year. Our only adjustment was for deferred retention payments related to certain acquisitions. Beginning in Q1 fiscal year 2023, we expect this adjustment to increase materially as we will be including the $133 million four-year retention pool that was put in place for GCA in March. Our adjusted compensation expense ratio was 61.5% for both the quarter and for fiscal year 2022. Our adjusted non-compensation expenses were $59 million for the quarter versus $42 million for the same quarter last year, an increase of 40 percent. This increase was a result of including GCA's non-compensation expenses this quarter, which were not in last year's quarter, and we also saw increases in all categories of non-compensation as a result of increased investment and, in some cases, inflation. This resulted in an adjusted non-compensation expense ratio of 12.6 percent for the quarter versus 8.4% in the same quarter last year. We ended fiscal year 2022 with an adjusted non-compensation expense ratio of 8.5% versus 9.1% in fiscal 2021. We expect that our adjusted non-compensation expense ratio will begin to return to a more normalized level in fiscal year 2023 as we have largely returned to work and office. We are holding an increasing number of face-to-face marketing events We continue to invest in technology to give us a competitive advantage, and we are experiencing increases in our occupancy costs as we move or consolidate offices across the globe. For the quarter, we adjusted out of our non-compensation expenses $15.8 million in non-cash acquisition-related amortization, the vast majority of which was amortization related to the GCA transaction. We expect significantly elevated levels of amortization relating to this acquisition through fiscal year 2023. In addition, we adjusted out of our non-competition expenses 3.8 million in acquisition and integration costs related to the GCA acquisition. Our adjusted other income and expense increased for the quarter to an expense of approximately 0.3 million versus an expense of approximately 0.5 million in the same period last year. We adjusted out of our other income and expense 7.6 million of expense related to the earn out for one of our acquisitions. We treat all acquisition-related earnouts as purchase price and adjust out of our P&L any significant changes in the value of these earnouts. Our adjusted effective tax rate for the quarter was 27.9 percent compared to 29 percent during the same quarter last year. And for the fiscal year, our adjusted effective tax rate was 28.6 percent compared to 26.9 percent for the prior fiscal year. We maintain our long-term range for our effective tax rate of between 27 and 29 percent. Turning to the balance sheet and uses of cash, as you may have noticed, we did not include a balance sheet in our earnings release this quarter, as we require a bit more time to finalize the balance sheet, given the complexity of the GCA acquisition. A complete balance sheet for the quarter will be provided in our 10-K when filed. As of the quarter end, we had approximately $943 million of unrestricted cash and equivalents and investment securities, plus approximately $1 billion at the same time last year. In our fourth quarter, we paid cash bonuses to GCA employees who joined us in the merger, and we issued approximately 900,000 shares to them as part of their year-end compensation. We also issued 1.2 million shares to GCA employees as part of their retention pool previously discussed. A significant portion of our cash is earmarked to cover accrued but unpaid bonuses for fiscal year 2022 that will be paid this month and again in November, in addition to our cash bonuses We expect to issue in May approximately 2.3 million shares to employees as part of their compensation for fiscal year 2022. Similar to previous years, we intend to offset new shares associated with compensation with share repurchases throughout fiscal year 2023. And finally, in this past quarter, we repurchased approximately 1.2 million shares at an average price of $100.93 per share as part of our share repurchase program. With that, operator, we can open the line for questions.
spk08: Thank you. Ladies and gentlemen, if you'd like to ask a question, you may do so by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Star 1 for questions. We'll pause a moment to assemble a queue. We'll take our first question from Brennan Hawken with UBS. Please go ahead.
spk07: Good afternoon. Thanks for taking my question. I want to unpack a little bit some of the comments Scott around the environment. You know, it seems as though the uncertainty is, you know, extending some timeframes as you flagged, but it'd be helpful to kind of understand maybe how the quarter progressed. It's my understanding that velocity of transactions and closing slowed as the quarter went on. And so number one, is that right? And then number two, Is the quarter to date here so far more similar to the end of last quarter, and therefore we should continue to expect that to sustain for at least for now, or have things changed since March?
spk05: Yeah, so I'd say the month and a half in the quarter we're in right now is experiencing similar fact patterns to maybe the final month and a half in the previous quarter. And by that, I mean a couple things. One, we're seeing things, once again, just take a little longer to close, but closings are still occurring. Just the time period are taking a little longer. We're seeing very few deals at this juncture being put on hold as we would describe them or just feel that they should be completely taken off the stack in terms of anything that we expect to close in the near term. And new business still continues to come in. So at this point, We would continue to point to delays from what we'd seen six months or a year ago, but new business is still relatively strong. And as we try to point out, whether this current market conditions we're in last another month or two, we probably end up with one conclusion on where we'll all be. And if it lasts for a couple more quarters or a year, we're going to see further drag on prospects for the time being.
spk07: Okay. Okay. Got it. Thank you. And restructuring, that picked up nicely quarter over quarter. And you guys finished at a higher range than that pre-pandemic range of the 300 to 350 that's been referred to previously. So is this year's results sort of the level that we should be thinking about for now? And we're hearing about leading indicators of restructuring picking up. inbounds to other restructuring firms. Are you all seeing similar developments, and how should we think about that playing through the restructuring line as we refine our models for the coming quarters and years?
spk05: So probably two key points. One, the current market conditions, and while we gave you some cautionary notes on kind of where M&A activity is, the reverse is happening in restructuring. There's There's more dialogue, more activity in getting hired, more companies running into some issues. The size of the indebtedness has definitely been growing for years. And interest rates are obviously creeping up. All of that sets out a net positive effect pattern for restructuring. The second point we would make is, remember, all restructurings do take some time. And much like we talked probably off of the March quarter in 2020, there's that handoff timing. So while we are starting to build, once again, new business coming in, some of it's just going to obviously take some time to close. And as we said, probably most of what we think we're bringing in now and might bring in the next couple quarters is going to have more of a financial impact on fiscal 24 than it will in fiscal 23.
spk07: Okay. But some of the, like, with restructuring, you know, sometimes there are some revenues that can come in not purely at the conclusion, right? So is it reasonable to at least think that we'll see some pickup in the restructuring versus where we had been running? Or was this quarter not really indicative of strength? It was more idiosyncratic.
spk05: So you are correct. In the restructuring business, you do get some decent amount of monthly or quarterly retainer fees. which have nothing to do with a closing date. On the other hand, I think we did try to point out that our fourth fiscal quarter happened to have a few probably beneficial projects that ended up closing in that fourth quarter that otherwise we probably would have thought would have closed in the first or second quarter. So we got some acceleration of closings, which maybe makes our fourth quarter restructuring a little stronger than otherwise we would have thought.
spk07: Got it. Okay.
spk05: Thanks for clarifying. All right. Thanks, Brennan.
spk08: We'll take our next question from Devin Ryan with JMP Securities. Please go ahead.
spk01: Hi, Scott. Hi, Lindsay. How are you?
spk05: Hey, Devin.
spk01: Maybe to come back to Brennan's first question just on kind of the environment, particularly on the M&A side. So I appreciate that, you know, when market conditions change, you know, there's often – new conversations that come together as a result of that. I'm curious, if you could just give us a little more detail around what's driving some of the newer conversations, because it sounds like you're still quite active. And despite this volatility, new people are at least engaging and interested in doing things from a transactional perspective. And then I'm also curious if The deals that are maybe being discussed today, the newer ones, there's a probability higher that those types of deals will move forward and get to completion versus obviously something that maybe started before market conditions or the world changed. I would suspect that's a harder deal to push forward now that everything has changed. I'm just curious for a little more background on all that. Thank you.
spk05: Sure. On one hand, I think what we're seeing in terms of the business environment today, just compared it to call it spring of 2020. In spring of 2020, when the pandemic was really starting, I think there was much greater concern on where all this was going to go. And probably people thought it was going to be a much deeper negative impact to the economy, deal business, et cetera. Today, clearly, there's a lot of negative headwinds out there. Uh, but I don't think people are nearly as concerned, nervous about, uh, transactions, transaction closings, et cetera, than they probably were two years ago. That's at least what we would say today. Um, I think a couple of things are still driving new business, um, in no particular order, but some people are motivated to want to try to get something done sooner because they just think interest rates are going to continue to rise. And if you want to do a deal, you might as well do it. Uh, we tend to, as you know, do more work probably with private companies than public companies. And I think price volatility is usually greater in the public marketplace than the private marketplace. And then if you further dissect different components of the industry, I think some of the higher-perspective growth, more questionable business plan companies, which rose quite a bit in the stock market or the VC market, those are the ones who have come down the most. And while we do work in that area, that isn't necessarily the biggest component of what we do. So I think there's certain insulated areas that we're seeing that's still driving the business. And you still have the private equity community sitting on lots and lots of money and still in the business of needing to do deals. So I think that's what we're seeing and why deals are still occurring. Deals flow is still coming in. Just buyers, sellers, lenders, borrowers are taking a little longer to ultimately close.
spk01: Yeah. Okay, great. And then just to follow up here, I want to dig in a little bit more on what you're seeing in the capital markets business and the outlook that's obviously been a really nice story for a little hand and a good growth story and conditions over the last new year have also been pretty favorable. But I'm curious, like the opportunities over the intermediate term there, because on one hand, you have kind of a, more difficult market backdrop. But on the other hand, companies still need capital for different reasons, even beyond just M&A. And in a choppy market, it would seem that there could be a lot of value in being an intermediary in introducing kind of companies to capital providers or vice versa. So I'm just curious if that's an area that could still be quite resilient in this type of backdrop.
spk05: So the quick answer is yes. And I think what you find is probably the total amount of deployed capital to finance different kinds of businesses for different reasons is probably less today than it was a quarter or so ago. But on the other hand, what we've always said in the agenting of financing, which we do, our biggest competition is really the CFO or the private equity shop themselves saying, we don't need to hire an advisor. We can do it ourselves. So when things get a little more difficult, a little more turbulent, a little more volatility that we've seen out there, the number of situations where people are choosing to hire an advisor versus do it themselves has been growing. So as we've always said, depending upon the magnitude of the negativity out in the marketplace, actually some turbulence is net good for our capital markets business. And so far, like I said, maybe total amount of deal activity might be shrinking there, but the percentage of situations that people are hiring firms like ourselves or our competitors is actually growing.
spk01: Yeah. Okay. Great to hear. I'll leave it there. Thanks, Scott. Thanks, Devin.
spk08: We'll take our next question from Mannion Gasalia with Morgan Stanley. Please go ahead.
spk06: Hi. Good afternoon. You know, the FAA business held up nicely in a tough environment. And, you know, I think you said that there's good momentum going into the next fiscal year. Can you talk about how we should think about these revenues in the current environment? You know, I know part of these revenues are cyclical, part of them are not. And, you know, you've clearly gained share in that business and you've grown your relationships as well. So, you know, how should we think of this business if the market environment stays the way it is?
spk05: So I think on one hand, the market environment is probably net neutral to negative to FVA compared to where it was six months or a year ago. But on the other hand, it's clearly net positive in terms of what we and who we've hired, what we have built, some of the new service lines we're into. I think our capabilities, our bench strength, our opportunity set is just much greater because of the internal impact I'll call it tactical and strategical decisions we've made. And that's what's really driving the business. And we've always said we cannot and do not control the external marketplace. Let us focus on as much as what we can do on the internal side. And right now, I think the internal moves we've made are offsetting any weakness that's out in the marketplace. And that's what's continued to drive really quarter over quarter growth in this business.
spk02: Yeah. Another way to think about it is, you know, there are a couple product lines in that business. that are enormous and we are a fraction of the market share. And so there is just, this is a market share gain story in FBA and it will be for the foreseeable future. So even if you've got a flat to weaker market, like where we are now, you're just likely going to see continued momentum as we pick up market share in the handful of product lines where we've made investments.
spk06: Great. Then just separately, I wanted to get your thoughts on how you're thinking about your excess cash and capital. I mean, I saw the increase in the buyback authorization, but I think one of the things you've done consistently or at least consistently look to do when markets have turned is acquire and integrate smaller boutique firms. So is the increased buyback authorization just something you have in your back pocket if those opportunities don't come through or is you know, are you maybe saying that you have your hands full right now with the GCA acquisition and, you know, buybacks are a way of signaling that you're unlikely to do anything in the near term?
spk02: No, I think the increase in buybacks is really just consistent with the increase in the size of the firm, the increased amount of stock that we're issuing to employees. So I think that's probably what's driving the continued increase. I mean, I think if you go back the last five or six years, you will have seen a a continued increase of this, just like you've seen a continued increase of the dividend since we've grown. So I wouldn't read into it any more than just the size of the firm and the number of shares we issue as part of compensation. But yes, I think to address the acquisition comment, we have found in weaker markets, and I don't think we're prepared to say this is a weak M&A market right now. It's not what we're seeing. But in weaker M&A markets, if we ever get there, We have seen opportunities to make acquisitions that are much more attractive than they are in super strong M&A markets. And so that strategy for us hasn't changed based on the GCA transaction.
spk06: Great. Thanks so much.
spk08: We'll take our next question from Steven Chuback with Wolf Research. Please go ahead.
spk03: Brendan O' Good evening, guys. This is Brendan O'Brien filling in for Stephen Chuback. So for my first question, 10 years of consecutive revenue growth is quite impressive. However, as you noted in your prepared remarks, there are significant headwinds to M&A activity that weren't present at this time last year. And any pickup in restructuring will not meaningfully hit the bottom line until 2020 for fiscal year 24. I understand that the outlook is very uncertain at the moment. There's a lot of moving pieces. But as things stand today, how confident are you in your ability to deliver that revenue growth this coming year in light of these headwinds?
spk02: So let me take you back to March of 2020 when we said at the beginning of our conversations entering that year that we were very concerned about the market conditions given what was happening with COVID. And I would have bet anything that our revenues would have been materially affected by what was happening with COVID. And that lasted about six months or even less and then turned itself around. So I think you're flipping a coin in terms of what the macroeconomic conditions are going to do and how they're going to affect either us or any of our peers in this space. But I will tell you that the activity levels are strong and the macroeconomic factors are present. And what happens over the next three to six months is anyone's guess.
spk03: I appreciate it. It's definitely a very uncertain time. So for my follow-up on sponsor activity, while there's a lot of optimism entering the year on the outlook for sponsor M&A, activity has been relatively more subdued when compared to last year's elevated level. with many of your peers citing the challenging price discovery and backdrop as a key driver of the slowdown. However, as you mentioned, sponsors are in the business of deploying capital, and we saw during COVID that sponsors returned to the market fairly quickly and aggressively. So I just wanted to get your thoughts on how long you believe sponsors can really stay on the sidelines here before they need to start deploying capital more aggressively.
spk05: You know, historically, and we've seen, you know, a handful of downturns really over the decades. And, you know, you've got to go back even beyond the COVID one. And usually it's a relatively short period of time would be point one. The second point is I think the more midsize or smaller PE shops need to deploy capital probably more with some sense of necessity because they're just not big enough. to survive off of just management fees that some of the large behemoths might be able to. And so we've tended to see that also increases the velocity of deal transactions even during market downturns.
spk03: That's great, Collier. Thanks for taking my questions. Thank you. Thank you, Brian.
spk08: We'll take our next question from Michael Brown with KBW. Please go ahead.
spk10: Okay, great. Good afternoon, guys. Michael. So on restructuring, clearly a strong result this quarter. If I heard you correctly, it sounds like that was due to a resolution of a COVID-era transaction. Just wanted to check in. Is there anything really left in that pipeline? Or would you say that that's mostly been kind of burned through at this point as you look forward?
spk02: Mike, I think the reference, and maybe this was just miscommunicated, was that quarter over quarter, even though we had a strong quarter, we were down because last year's same quarter had COVID-related restructurings in them. And on a comparable basis, we just couldn't compare to that. So I don't think that there may be a little bit of COVID-related restructurings left, but it's insignificant. What drove the you know, the quarter was there were a handful of transactions that ended up closing in this quarter that we had expected to close in the first half of this year, and it kind of drove revenues higher than expectations for the quarter, and it turned out to be a very strong quarter. They're not necessarily COVID-related transactions.
spk10: Okay, thanks for the clarification. Yeah, clearly strong productivity this quarter. And just as a follow-up on the restructuring business, at Q2 earnings, you guys spent some time talking about the global strength and reputation of the business, and you highlighted the Evergrande mandate. To the extent you can, and any update on the status of the restructuring activity related to the Chinese real estate market, and then just any comments on where else in the world you're seeing some pockets of activity or where else things could Certainly, we're asking things to flare up outside of the U.S. and Europe.
spk05: We won't comment specifically on any unique transaction, but we are clearly seeing probably more opportunities and more growth in various areas of the world, not called the United States. We're doing a lot of work right now in the Asia-Pacific area. Europe is actually probably heating up. more rapidly than the U.S. in terms of restructuring, and there's pockets of opportunity in the Middle East and Latin America. So I wouldn't point to a particular place other than I'd say at this juncture, probably the U.S. in terms of new opportunities or the growth in new opportunities is lagging a bit behind other parts of the world. Part of that's a dollar exchange rate. Part of it is what happens when interest rates go up. It tends to impact emerging markets quicker than domestic markets. So it's really kind of worldwide. We're starting to see things pick up and maybe even pick up a little faster outside of the United States at this juncture.
spk10: Just a quick one. How many of the MDs in restructuring are based outside of the U.S.?
spk05: Don't really know offhand, but we're going to probably say probably about a third.
spk10: Great. Thanks, Scott. Thanks, Mike.
spk08: We'll take our next question from Ken Worthington with JP Morgan. Please go ahead.
spk09: Hi. Good afternoon. You mentioned in the prepared remarks that GCA did not experience the same slowdown as Houlihan. So how should we think about the impact of the macro environment on GCA over the next few quarters? Is it something that, you know, GCA just happened to be working through a previously built pipeline this quarter and thus maybe activity will slow in coming quarters as they kind of make their way through the pipeline? Or maybe there's something just different about the GCA business, which leaves them less susceptible to the macro factor. So help us think about GCA. Okay.
spk02: So I think, and again, maybe this was just miscommunicated, we didn't make comment regarding GCA's performance versus HL's performance in the quarter. I think we believe that both firms, from an M&A standpoint, were affected by the same macroeconomic factors that occurred during the quarter and no differentiation between the two.
spk05: And the other thing is just, you know, over... The future quarters, there isn't really a distinction between GCA and Houlihan Loki anymore. We've consolidated offices, consolidated personnel. We've put people in different industry groups, capital markets, et cetera. And the only reason we're really ever trying to mention anything about GCA is just until we get a full year's run rate, you do have some issues. I think mostly what we talked about is the reason our non-comp expenses went up is because we now had for six months, GCA results, and we haven't had it for a full year. But at this point, like I said, going forward, while they've added a lot of headcount and revenues and helped in our diversification, it really is just one firm operating collectively in what we do. Okay, great. Thank you. Thanks, Kurt.
spk08: And ladies and gentlemen, this will conclude today's question and answer session. At this time, I'd like to turn the conference back to your presenters for any additional or closing remarks.
spk05: Well, I want to thank you all for participating in our fourth quarter and fiscal year 2020 earnings call, and we look forward to updating everyone on our progress when we discuss our first quarter results for fiscal 2023 this coming summer.
spk08: Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.
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