Houlihan Lokey, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Houlihan Loki's second 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, October 26, 2023. I will now turn the call over to Chuck Yamaron, Houlihan Loki's Chief Compliance Officer. Please go ahead.

Thank you, Operator, and hello, everyone. By now, you should all have access to our second 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 the 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 September 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 relief 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 will open the call to questions. With that, I'll turn the call over to Scott.

Thank you, Chuck. Welcome, everyone, to our second quarter fiscal 2024 earnings call. We ended the quarter with revenues of $467 million and adjusted earnings per share of $1.11. Revenues were down 5% and adjusted earnings per share were down 7% from the quarter a year earlier. However, in comparison to the June quarter, revenues were up 12% and adjusted earnings per share were up 25%. Over the last seven quarters and during a challenging time in the world's financial markets, our diversified business model has enabled us to produce steady results with quarterly revenues consistently in a range of $416 million to $490 million. Our business activity and financial results have shown consistent improvement since April, and we enter our third fiscal quarter with measured optimism. The market environment for our corporate finance and financial and valuation advisory business is improving, but at a pace that is likely to result in a slow exit from this market environment. Consistent with their commentary in the previous quarter, we continue to experience improvement in client confidence as a result of improving capital markets. We see some improvement in deal momentum in M&A, and a renewed interest from our clients in testing current market conditions after sitting on the sidelines for more than 18 months. However, recent events, including rising interest rates, a stalled stock market, and the war in Israel, have slowed some of the momentum we experienced in late spring and early summer. Looking forward, we remain optimistic that market conditions will continue to improve, but we are realistic about the macro pressures that exist today. Our corporate finance business produced $282 million in revenues for the quarter. This was a decline from the prior year period, but an increase from last quarter. For several months, we have continued to experience a solid level of new business opportunities. Financial sponsors are showing increased interest in taking their portfolio companies to market. This is a result of an improving availability of debt capital, a resilient stock market, pressure from limited partners seeking liquidity, and the desire by PE managers to get back into the deal business versus maintenance business. Strategic buyers and sellers are also slowly coming back buoyed by an improving equity markets and continued stable financial performance. This increased interest to transact is still tempered by a fickle M&A market resulting in a longer time to close transactions and deeper due diligence. With respect to our capital markets business, our revenues are up year over year, driven by improvements in availability of credit, particularly in the mid-cap space. Also, capital is harder to access than it was in calendar 2021, which has increased our value proposition for this service line. Historically, in a business rebound, we see capital markets improving first, then M&A activity follows. We expect this rebound to follow a similar path. Our financial restructuring business had another strong quarter, producing revenues of $115 million. While the restructuring business continues to benefit from higher interest rates and a fast-approaching debt maturity wall, the growth in new business slowed during the quarter, likely a result of improving capital markets. While the U.S. restructuring market has leveled off a bit, causing a slowdown in new business activity, we have seen continued strength in our restructuring business in Europe, Asia, and South America, where we believe our brand and market presence is second to none. As we have said on previous calls, since this restructuring cycle is not the result of a one-off crisis, we expect to experience elevated revenues over the next couple of years versus a significant revenue spike and subsequent drop as we experienced in previous cycles. Financial and valuation advisory produced $71 million in quarterly revenues, down from the same quarter last year, but higher than anything we have reported for FEA in the last three quarters. Our market neutral service lines continue to perform well in this environment, while our service lines that are tied to the M&A markets are lagging previous year results. If the slow but general improvements we are seeing in corporate finance and the overall M&A markets produce an increase in M&A closings, we would expect FEA to see positive revenue momentum and calendar 2024. Although we resumed share repurchases this quarter, we continue to take a conservative approach to excess cash in order to give us plenty of balance sheet flexibility to take advantage of acquisitions that may arise. Also during the quarter, we had two new managing directors start and believe that the market for hiring senior bankers remains attractive. Over the last seven quarters, our senior hires, acquisitions, and geographic expansions have resulted in significant value being added to our investment banking platform. We believe we are well positioned for growth as market conditions continue to improve, and we are well prepared to maximize that opportunity for the benefit of our employees and shareholders. And with that, I'll turn the call over to Lindsey.