Houlihan Lokey, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan-Loki's first quarter fiscal year 2024 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, July 27, 2023. 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 2024 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, 2023, 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 Visor, Houlihan Loki's Chief Executive Officer, and Lindsey 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 2024 earnings call. We ended the quarter with revenues of $416 million and adjusted earnings per share of $0.89. For the quarter, revenues were down 1%, and adjusted earnings per share were down 19% from a year earlier. We entered our first quarter hopeful to see some growth after a challenging fiscal 2023, but the M&A markets remained sluggish and deal closings in both M&A and financial valuation advisory were soft. However, throughout the quarter, we saw improvements in client confidence as a result of improving equity and debt capital markets, which has positively affected the appetite for M&A. Although still too early to call it a trend, we are seeing an improvement in deal momentum in M&A and a renewed interest from our clients in testing today's market conditions after sitting on the sidelines for over a year. As we look forward, we don't see any material macroeconomic overhangs that might slow this momentum down, and economic statistics support a soft landing and likely increased M&A activity. Our corporate finance business produced 227 million in revenues for the quarter. This was a decline from both the prior year period and last quarter. Lower results in corporate finance were driven by our typical first quarter seasonality, but also a sluggish first quarter market for M&A closings. From a geographic standpoint, our US corporate finance business, in fact, grew quarter over quarter, while Europe lagged due to ongoing economic headwinds. As we have mentioned in previous quarters, the number and quality of new business opportunities continues to remain strong, and for the first time in a long time, we are seeing discrete improvements in the M&A environment for deal closings. Also encouraging, albeit episodic, is that several mandates, which have been on hold for months, recently became active. While interest rates remain much higher than in recent years, the market consensus is that we are at or near the peak of this interest rate cycle and inflation is improving. With this stability, the debt capital markets environment, especially for middle market firms, is more active than it has been in several quarters. Our financial restructuring business had another strong quarter, producing revenues of $123 million. Both the number of quarterly closed transactions and the number of new mandates have increased steadily over the last several quarters when compared to the same periods in the previous year. The restructuring business continues to benefit from higher interest rates and a fast approaching debt maturity wall. Since this restructuring cycle is not the result of a one-off crisis, we continue to expect financial restructuring to achieve elevated revenues over the next couple of years. Financial and valuation advisory produced 65 million in quarterly revenues. Overall, our more stable FAA business grew slightly last year, but has stalled in this market environment. Our market neutral service lines are performing well, but the service lines that are tied to the M&A markets continue to be soft in our first fiscal quarter. If the green shoots we are seeing in corporate finance and the overall M&A markets do in fact produce an increase and M&A activity, we would expect FVA to see revenue momentum in the back half of our fiscal year. During the quarter, we announced the signing of our acquisition of Seven Mile Advisors, an IT services investment banking firm headquartered in Charlotte, North Carolina. We expect this deal will close in our second fiscal quarter. Also during the quarter, we hired six new managing directors as well as added 18 managing directors from internal promotions as previously reported. Whenever we enter a challenging M&A environment like the one we have experienced over the last 18 months or so, we recognize that our most important asset is our people, and we work very hard to keep that workforce motivated and in place through the cycle. In fact, we believe that supplementing that workforce with strong acquisitions and senior hires is crucial, as many of our smaller competitors don't have the benefits of our more diversified business platform. I am pleased to report that whenever a more robust M&A market returns, we are extremely well positioned to capitalize on it as we have done an excellent job at retaining and recruiting our most important asset through this cycle. And with that, I'll turn the call over to Lindsey.