Houlihan Lokey, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Houlihan-Loki's first quarter fiscal year 2023 earnings conference call. At this time, all participants are in the listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, July 28, 2022. I will now turn the call over to Christopher Crane, Houlihan-Loki's general counsel.

Thank you, operator, and hello, everyone. By now, everyone should have access to our first quarter fiscal year 2023 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 condition. We encourage investors to review our regulatory filings, including the Form 10-Q for the quarter ended June 30, 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 Moki's chief executive officer, and Lindsay Alley, chief financial officer of the company. They will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Scott.

Thank you, Christopher. Welcome everyone to our first quarter fiscal year 2023 earnings call. We ended the quarter with record first quarter revenues of $419 million in earnings per share of $1.10. We are pleased with these results, particularly in light of some of the ongoing challenges in the macro environment. However, to give a more complete picture, while our revenues are higher than last year's reported results, if we include GCA's revenues as if we had acquired them on April 1, 2021, our comparable revenues would have declined approximately 14%. Throughout our fiscal first quarter and continuing into our second quarter, we are experiencing market headwinds that are impacting our corporate finance business, modestly impacting our financial and valuation advisory business, and improving our financial restructuring opportunities. Our corporate finance business continues to exhibit trends which cut in both directions. Current market conditions are elongating the time to close transactions in selected sectors and geographies, lowering transaction valuations and fees. At the same time, corporate clients are performing well, the volume of new business activity remains quite healthy, and market sentiment seems to suggest that these headwinds are temporary. It is difficult to predict where the economy takes us over the next couple of quarters. We may slide into a recession that could have a significant effect on the M&A market, or we may continue along like this for a couple of quarters before seeing improving results. Nonetheless, we are comforted by the fact that we are seeing strong activity levels in our corporate finance business, with the quality of clients at a level we have never seen before. Regardless of the timing of closing of transactions, we continue to build high quality potential deferred revenues in our backlog, suggesting that our reputation and market share continue to grow. Financial and valuation advisory continues to experience solid growth and recorded a 19% increase in revenues year over year for the fiscal first quarter. That being said, current market conditions are also having a modest impact on FEA's growth prospects. For the first quarter, our current mix of service lines Quality of the team and meaningful increase in headcount enable us to record solid revenue growth despite these market headwinds. FBA remains our least volatile business, and given its diverse service offering, has historically performed better than our corporate finance business in weaker M&A markets. Financial restructuring remains an important component of the firm's overall diversification strategy. Based on activity levels and financial restructuring, we believe we are in the initial stages of a stronger business environment for restructuring. The typical restructuring cycle starts with an increase in conversation, which progresses to verbal engagements, to contractual engagements, to execution work, and finally, to closed transactions. Today, our number of verbal engagements is the highest in nearly 18 months. While these new opportunities will have limited financial impact on our fiscal 2023 results, if these verbal engagements translate to closed transactions, we anticipate improving results in fiscal 2024. Today's opportunities and restrictions have been broad-based across industries and up until this point greater in Europe and Asia versus the U.S. Given the size and importance of the U.S. market, We are closely monitoring opportunities and we believe we are well positioned if or when this market catches up with Europe and Asia. Turning to growth, in the quarter ended June 30th, we internally promoted 29 employees to managing director. We also externally hired six managing directors. On the acquisition front, we remain selective and are pursuing opportunities we believe are a strategic fit to our business model and are accretive to shareholders. We are pleased with our current pipeline of acquisition opportunities and believe this pipeline will only increase if financial market conditions worsen. In closing, we are thrilled to be celebrating our 50th anniversary this year. Investment banking is quite competitive, and I'm so proud of how well our employees and this firm have done over five decades. I want to thank all of our employees, our clients, and our shareholders for their part in making Houlihan Loki the successful firm it has become. Collectively, we look forward to what we can build in the next half century. And with that, I'll turn the call over to Lindsey.