Houlihan Lokey, Inc. — FY2024 Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2024. This is an annual filing, not a standalone calendar fourth-quarter report; the filing does not provide a clear standalone Q4 results summary. Houlihan Lokey is a global independent advisory firm operating through Corporate Finance (CF), Financial Restructuring (FR), and Financial and Valuation Advisory (FVA).
Financial performance
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $1,914.4 million | $1,809.4 million |
| Operating income | $362.9 million | $341.7 million |
| Net income attributable to Houlihan Lokey | $280.3 million | $254.2 million |
| Diluted earnings per share | $4.11 | $3.76 |
| Operating cash flow | $328.5 million | $136.3 million |
| Cash, cash equivalents and investment securities, unrestricted | $759.2 million | $751.7 million |
- Revenue increased 6%; operating income rose 6% and net income rose 10%. Operating margin was approximately 19.0%, versus 18.9%; net margin was approximately 14.6%, versus 14.0%.
- Employee compensation and benefits were $1,213.6 million, with a 63% compensation ratio in both years. Non-compensation expenses increased 6% to $338.0 million.
- Other income, net, was $27.7 million in FY2024, compared with other expense of $17.7 million in FY2023. The year-over-year change included a gain from reduced acquisition earnout liabilities, higher interest income, and the prior-year $15 million SEC civil penalty accrual.
- Income tax expense was $110.2 million; the effective tax rate increased to 28.2% from 21.5%, primarily due to lower stock-compensation deductions, foreign taxes, and the prior-year release of an uncertain-tax-position provision.
- Operating cash flow improved to $328.5 million, while investing and financing activities used $70.4 million and $250.6 million, respectively. Cash and restricted cash increased $7.0 million during the year. Operating cash flow benefited from earnings and non-cash items, partly offset by working-capital movements.
- At March 31, 2024, cash and cash equivalents were $721.2 million; investment securities were $38.0 million. Accounts receivable were $199.6 million and unbilled work in progress was $192.0 million, both higher than a year earlier.
- No principal was outstanding on the $100 million revolving credit facility; it matures August 23, 2025. The company reported compliance with its covenants. Operating lease liabilities were $415.4 million. The filing does not characterize all $37.8 million of other liabilities as debt.
Segment trends and changes versus prior year
- CF: Revenue decreased 2% to $1,106.8 million and segment profit decreased 15% to $302.5 million. Closed transactions fell 11%, reflecting softer M&A markets; higher average fees on completed transactions partly offset lower volume.
- FR: Revenue rose 32% to $522.0 million and segment profit rose 60% to $194.1 million. Closed transactions increased 19%, supported by favorable restructuring conditions and lower compensation expense as a share of revenue.
- FVA: Revenue was nearly flat at $285.6 million, while segment profit fell 9% to $74.4 million, mainly due to higher non-compensation expenses.
- International revenue increased to $570.1 million from $520.1 million and represented approximately 30% of FY2024 revenue.
Outlook, risks and notable items
- Management described the environment as relatively stable for M&A and capital markets, but noted client caution and uncertainty from inflation, higher interest rates, international conflict, and economic disruption. Management was optimistic about the short- to medium-term restructuring outlook, citing leverage, inflation, supply-chain issues, geopolitical events, and tighter monetary policy.
- The filing provides no specific revenue, earnings, or margin guidance. Management expects results to remain volatile because significant CF and FR fees depend on transaction milestones and successful closings.
- Key risks include market-driven transaction volumes and fee timing, competition and pricing pressure, retaining senior professionals, client collections, international and foreign-exchange exposure, regulation, litigation, cybersecurity, and acquisition integration. Goodwill and other intangible assets totaled $1.325 billion; management reported no impairment indication from its FY2024 review.
- The company settled an SEC records-preservation investigation for a $15 million civil penalty, accrued in FY2023 and paid in FY2024. The company reported no material pending legal proceedings expected to materially affect it, while noting that some matters cannot be reliably estimated.
- After year-end, the board declared a $0.57-per-share quarterly dividend, and the company closed its acquisition of Triago Management Development in April 2024.
- KPMG issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls and internal controls were effective.
Important facts for investors to verify
- Whether FR’s strong FY2024 performance continues, and whether CF transaction volume recovers from the reported softness.
- Collection and conversion of the increased receivables and unbilled work in progress into cash, including exposure to client insolvencies or disputed fees.
- The sustainability of earnings excluding the benefit of earnout revaluation and higher interest income, and the drivers of the higher effective tax rate.
- Acquisition integration, contingent consideration, and the scale of goodwill and intangible assets relative to the business.
- The $0.57 dividend’s sustainability alongside compensation, lease commitments, acquisitions, and the absence of outstanding revolver borrowings; also note that the board may change the dividend.
- Governance implications of the dual-class structure: the HL Voting Trust controlled approximately 77.1% of voting power at March 31, 2024.