Houlihan Lokey, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan-Loki Second Quarter Fiscal Year 2025 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 30, 2024. I will now turn the call over to the company. Thank you, Operator, and hello, everyone.

I now Everyone should have access to our second quarter fiscal year 2025 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. There are numerous risk certainties 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, 2024, 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 Adelson, Houlihan Loki's Chief Executive Officer, and Lindsay Alley, Chief Financial Officer. They will provide some opening remarks, and then we will open the call to questions. And with that, I'll turn the call over to Scott.

Thank you, Christopher, and welcome everyone to our second quarter fiscal 2025 earnings call. We ended the quarter with revenues of $575 million and adjusted earnings per share of $1.46. Revenues were up 23% and adjusted earnings per share were up 32% compared to the same period last year. We are pleased with our results for the quarter and we enter the second half of the year with momentum across all three of our business lines. Corporate finance continues to benefit from improvements in the M&A markets, and we expect the second half of the year to follow this trend. Financial restructuring had a strong second quarter as it continues to benefit from record leverage and still elevated interest rates. And our financial and valuation advisory group experienced growth in our market neutral services, as well as developing demand for those service lines affected by an improving M&A environment. While we are optimistic about the second half of our fiscal year, we recognize the challenges posed by the current macro environment. Interest rates, though lower than their recent peaks, remain high. and it may take time to feel the effects of lower interest rates on our clients' financial performance. Geopolitical volatility, particularly the potential for a wider conflict in the Middle East and Ukraine and the U.S. presidential elections, all add layers of complexity to our outlook. Despite these risks, we continue to experience a steady upward trajectory for markets and the business environment. Corporate finance produced $364 million in revenues for the quarter, representing a 29% increase over last year's second quarter. Key metrics for our corporate finance business continue to improve, and new business generation remains strong. Since Labor Day, we have seen an increasing number of companies choosing to go to market, a trend we expect to continue. While this trajectory of deals coming to market is positive, we continue to experience longer timelines to close these transactions. So, while transaction velocity is improving, it is doing so at a slower pace than in previous recoveries. Additionally, within corporate finance, our capital markets business performed very well in the quarter, bolstered by strength in private capital and the successful integration of our Triago acquisition. Financial restructuring produced $132 million in revenues for the second quarter, a 15% increase versus the second quarter last year, reinforcing our view that the restructuring markets remain elevated. New business activity was particularly strong, driven by a combination of large cap and middle market opportunities. This heightened activity is expected to benefit our restructuring business well into fiscal 2026. Additionally, as market conditions continue to improve, we are prepared for some restructuring activity to turn into healthy refinancing activity, which we are well positioned to execute on behalf of our clients. Financial and valuation advisory produced $79 million in revenue for the second quarter, a 12% increase versus the second quarter last year. Performance continues to be driven by our non-cyclical business quarterly portfolio valuation. We observed an uptick in new business generation in the first half of the year compared to the same period last year, and demand for our M&A-related services is starting to rebound. Regarding acquisitions, we recently announced the closing of our acquisition of Pretania Solutions. Pretania is a tech-enabled valuation platform based in the UK specializing in structured products. Pretania will be integrated into our financial and valuation advisory business and will complement our highly successful portfolio valuation group. We send a warm welcome to all our new colleagues joining as a result of this transaction. During the quarter, we announced the acquisition of Waller Helms, which will significantly expand the depth and breadth of our financial services industry group, especially in the insurance and wealth management sectors, areas that are highly active for private equity. This acquisition will create new synergies and strengthen our coverage of these sectors with 48 new financial professionals, including 13 managing directors. The acquisition is on track to close by the end of the calendar year. Separately, we hired three new managing directors this quarter as we continue to take advantage of an active hiring market, particularly in corporate finance. Our outlook for the second half of fiscal 2025 remains positive. We continue to reap the benefits of a balanced and highly diversified business model. The improving M&A sentiment, strong capital markets, and sustained strength in our restructuring business are all encouraging indicators. With the most talented workforce in our history, we are diligently working to capitalize on the market's recovery as it unfolds. With that, I'll turn the call over to you, Lindsay.