Earnings call transcript: Houlihan Lokey Q1 2026 beats EPS forecast by 27%

Houlihan Lokey Inc. reported a robust performance in its first fiscal quarter of 2026, significantly surpassing earnings expectations. The company posted an adjusted earnings per share (EPS) of $2.14, beating the forecast of $1.68 by a noteworthy 27.38%. With a market capitalization of $13.56 billion and impressive revenue growth of 24.8% over the last twelve months, Houlihan Lokey continues to demonstrate strong momentum. Despite this strong financial showing, the stock experienced a slight decline of 0.59% during regular trading hours, closing at $192.85.

Key Takeaways

• Houlihan Lokey’s Q1 FY2026 EPS of $2.14 exceeded expectations by 27.38%.
• Revenue for the quarter reached $605 million, an 18% increase year-over-year.
• Despite strong earnings, the stock price declined slightly by 0.59%.
• The company remains cautiously optimistic about continued growth in FY2026.

Company Performance

Houlihan Lokey demonstrated strong performance in Q1 FY2026, with significant year-over-year growth across its business segments. The Corporate Finance segment led the way with a 21% increase in revenues, followed by Financial Restructuring and Financial and Valuation Advisory, which grew by 9% and 16%, respectively. This performance underscores the company’s resilience and adaptability in a volatile market environment.

Financial Highlights

• Revenue: $605 million, up 18% year-over-year.
• Earnings per share: $2.14, a 75% increase from the previous year.
• Adjusted compensation expense ratio: 61.5%.
• Unrestricted cash and investment securities: $867 million.

Earnings vs. Forecast

Houlihan Lokey’s EPS of $2.14 significantly outperformed the forecast of $1.68, resulting in a 27.38% earnings surprise. The company’s revenue also exceeded expectations, reaching $605 million compared to the forecasted $579.86 million, marking a 4.4% surprise.

Market Reaction

Despite the robust earnings beat, Houlihan Lokey’s stock closed with a slight decline of 0.59% at $192.85. Trading near its 52-week high of $198.78, InvestingPro analysis suggests the stock is currently overvalued. The stock did not show significant movement in the aftermarket session, indicating a cautious investor sentiment possibly influenced by broader market conditions and its relatively high P/E ratio of 31.44.

Outlook & Guidance

The company expressed cautious optimism for fiscal year 2026, anticipating continued growth across all business lines. With analyst targets ranging from $162 to $232 per share and projected EPS of $7.28 for FY2026, Houlihan Lokey expects increased sponsor activity following Labor Day and projects a full-year adjusted effective tax rate between 2-5%. Non-compensation expense growth is projected in the high single digits. For comprehensive analysis and detailed forecasts, investors can access the full Pro Research Report available on InvestingPro, which covers 1,400+ top US stocks with actionable intelligence for smarter investing decisions.

Executive Commentary

CEO Scott Adelson remarked, "We continue to see the benefits of our diversified business model," highlighting the company’s resilience amid market uncertainties. CFO Lindsay Alley noted, "Peak is the new trough," referring to the restructuring business’s strong performance.

Risks and Challenges

• Persistent high interest rates could impact restructuring activity.
• Market volatility may affect investor sentiment and stock performance.
• Global economic uncertainties could pose challenges to growth projections.
• Potential supply chain disruptions may affect operational efficiency.

Q&A

During the earnings call, analysts inquired about the company’s market momentum and deal pipeline, highlighting the resilience of the restructuring business. Executives also addressed strategies for managing director hiring and geographic market differences, emphasizing the company’s strong global platform and talent acquisition.

Full transcript - Houlihan Lokey Inc (HLI) Q1 2026:

Conference Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Houlihan Lokey Fiscal First Quarter twenty twenty six 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, 07/29/2025.

I will now turn the call over to the company. Please go ahead.

Christopher, Unspecified Corporate Representative, Houlihan Lokey: Thank you, operator, and hello, everyone. By now, everyone should have access to our first quarter fiscal year twenty twenty six earnings release, which can be found on the Houlihan Lokey 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 06/30/2025, 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 edshell.com website. Hosting the call today, we have Scott Adelson, Houlihan Lokey’s Chief Executive Officer and Lindsay Alley, Chief Financial Officer. They will provide some opening remarks, and then we will open the line to questions. With that, I’ll turn the call over to Scott.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thank you, Christopher. Welcome, everyone, to our first quarter fiscal year twenty twenty six earnings call. We ended the quarter with revenues of $6.00 $5,000,000 and adjusted earnings per share of $2.14 Revenues were up 18% and adjusted earnings per share were up 75% compared to the same quarter last year. We began fiscal twenty twenty six with momentum and concluded the quarter with solid performance by all three of our business lines. Our views of current market conditions and our business are broadly consistent with what we shared last quarter.

While market forecasts remain difficult given a dynamic and volatile macro environment, we continue to see the benefits of our diversified business model, particularly across industry and geography. The markets in which we operate are showing resilience, adapting to the complexities and uncertainties of the current environment. Turning to our results. Corporate Finance produced $399,000,000 of revenue in the first quarter, a 21% increase over last year’s first quarter. Key metrics for our Corporate Finance business, including transaction size and average fee per transaction, continued to see steady improvement.

This was achieved despite muted activity from the financial sponsor community, underscoring the strength of our business, which we believe should pick up as sponsor activity eventually returns to more historic levels. We are cautiously optimistic that this momentum will continue through fiscal twenty twenty six, while we remain mindful of the potential headwinds, including tariffs and inflation. Our Financial Restructuring business produced $128,000,000 of revenues for the first quarter, a 9% increase over last year’s first quarter. Financial restructuring activity remains elevated, supported by persistently higher interest rates, macro uncertainty and overleveraged companies. Revenues in Financial Restructuring are diversified across industry and geography, and we are experiencing a balanced mix of debtor and creditor work.

We expect to continue to see elevated restructuring revenues throughout fiscal twenty twenty six. Financial and Valuation Advisory produced $79,000,000 in revenues for the first quarter, a 16% increase versus the first quarter last year. FBA had a very strong first quarter with continued growth in its noncyclical service lines, while its procyclical businesses benefited from improving M and A market conditions, particularly in The U. S. Our outlook for FEA is similar to our outlook for CF as we expect to see continued year over year growth throughout the remainder of the fiscal year.

In the first quarter, we hired three new managing directors, and we continue to see a strong hiring market for senior talent, drawn to our global platform and track record of growth. Our pipeline of acquisition opportunities remains robust, and we are confident that the combination of our organic hires and strategic acquisitions will continue to help us expand our workforce across industry, service line, and geography. On the marketing front, I’m very proud to announce that we hosted the inaugural Houlihan Lokey ONE conference in New York, dubbed the Woodstock of Deal Making by Bloomberg. This major event showcased our one firm approach and global scope with more than 4,000 people in the attendance and approximately 400 companies participating. We are thrilled with the feedback we received from clients who attended, and we’re proud of the experience that we are curating for our clients and prospects around the world.

We remain confident in our outlook for our fiscal year 2026. Despite volatility in global markets, companies appear to be adapting to the realities of decision making in this environment. With our global reach, sector depth and balanced business model, we continue to be well positioned to help our clients navigate the environment and capitalize on new opportunities. Lindsay, over to you.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Thank you, Scott. Revenues in Corporate Finance were $399,000,000 for the quarter, up 21% compared to the same quarter last year. We closed 125 transactions this quarter, up from 116 in the same period last year. Their average transaction fee was higher for the quarter versus the same quarter last year. Revenues and activity levels in The U.

S. Continued to outpace those in EMEA, and we expect this regional dynamic to persist through the summer. Financial Restructuring revenues were $128,000,000 for the quarter, a 9% increase versus the same period last year. We closed 35 transactions this quarter compared to 33 in the same quarter last year, and our average transaction fee on closed deals increased. For Financial and Valuation Advisory, revenues were $79,000,000 for the quarter, a 16% increase from the same period last year.

We had nine fifty seven fee events during the quarter compared to eight forty seven in the same period last year, a 13% increase. Turning to expenses. Our adjusted compensation expenses were $372,000,000 for the quarter versus $316,000,000 for the same period last year. Our only adjustment was $21,000,000 for deferred retention payments related to certain acquisitions. Our adjusted compensation expense ratio for the first quarter in both fiscal twenty twenty six and 2025 was 61.5%.

We expect to maintain our long term target of 61.5% for our adjusted compensation expense ratio for the balance of the year. Our adjusted non compensation expenses increased to $94,000,000 for the quarter compared to $80,000,000 for the same period last year. Our adjusted non compensation expense ratio for the first quarter in both fiscal twenty twenty six and 2025 was 15.6%. On a per employee basis, our adjusted non compensation expense for the quarter increased to $35,000 versus $31,000 for the same quarter last year. The increase was primarily driven by our Houlihan Lokey One Conference, which combined six legacy conferences spread throughout the year in The U.

S. Into a single flagship conference. Excluding the cost of this event, non compensation expense growth would generally have been in line with historical trends. For the quarter, we adjusted out of our non compensation expenses $9,500,000 in non cash acquisition related amortization, approximately $900,000 pertaining to professional fees associated with streamlining our global organizational structure, referred to as Project Solo, and approximately $18,000,000 related to the increase in value of acquisition contingent consideration. We have always treated all acquisition contingent consideration as purchase price and adjust any significant changes to the value of such contingent consideration out of our P and L.

Historically, the effects of the revaluation of acquisition contingent consideration occurred in other income and expense. Starting in fiscal twenty twenty six, we are including the effects of the revaluation of acquisition contingent consideration and non compensation expense as a separate line item. As a result, any adjustments to this line item will occur in non compensation expense going forward. Our other income and expense produced income of approximately $8,000,000 versus income of approximately $5,000,000 in the same period last year. The improvement was primarily due to an increase in interest and other income generated by our investment securities.

Our adjusted effective tax rate for the quarter was negative 0.8% compared to 31.2% for the same quarter last year. The decrease is due to a policy change, which we discussed in last quarter’s remarks. We are no longer including the impact of stock based compensation vesting on our adjusted effective tax rate. This year and for the last several years, stock vesting has had a positive impact on our GAAP effective tax rate for both the quarter and the year, and we have adjusted out that benefit. Without the adjustment in 2025, our adjusted effective tax rate would have been 9.3% for the first quarter.

Given the significant impact from stock vesting, we expect to see our fiscal twenty twenty six full year adjusted effective tax rate between 256%. Without the adjustment for stock vesting in fiscal year twenty twenty five, our adjusted effective tax rate for last year would have been 26%. For the first quarter fiscal twenty twenty six, we adjusted out of our effective tax rate the effects of acquisition related nondeductible expenses. Turning to the balance sheet. We ended the quarter with approximately $867,000,000 of unrestricted cash and investment securities.

Our cash position declined this quarter as we paid a significant portion of our fiscal twenty twenty five bonuses to employees in May. Also in our first quarter, we issued approximately 1,100,000.0 shares to employees as part of our fiscal twenty twenty five year end compensation, and we repurchased through withhold cover approximately 800,000 shares during the month of May. With that, operator, we can open the line for questions.

Conference Operator: Thank you. Your first question comes from Devin Ryan from Citizens. Please go ahead.

Devin Ryan, Analyst, Citizens: Great. Hi, Scott. Hi, Lindsay. How are you?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Hey, Devin.

Devin Ryan, Analyst, Citizens: I heard the comment in prepared remarks that your views to the business are broadly consistent with last quarter. And so I’m just curious as it relates to Corporate Finance. Would assume that there have been some market improvement just with sentiment improving and more optimism in the market more broadly. So just curious if you’re seeing that with clients from where you were three months ago. And maybe three months ago, you already started to see that reacceleration in momentum.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: But just want

Devin Ryan, Analyst, Citizens: to dig in there a bit more. And then just if you can just hit on kind of how backlogs have trended kind of, if stocks are going to move forward on auctions and transactions, and then from a sector perspective as well, if you could touch on that. Thanks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Really bad connection, so I will try and do my best with that. But I think that what we’ve been saying for a long time is that it keeps getting better quarter by quarter, but not necessarily month by month. So even within this quarter, you saw the momentum shift, if you will, a bit back and forth, and that’s some of the uncertainty we see in the marketplace. Having said that, as I said in my remarks, I mean, the resiliency of our clients to really adjust to the market we are in continues to get better and better. And I think that is what we’re feeling.

It is getting better and better quarter by quarter, but not necessarily month by month.

Devin Ryan, Analyst, Citizens: Okay. Thanks. Apologies for

Scott Adelson, Chief Executive Officer, Houlihan Lokey: the The second part of question, quite honestly, was backlog, I think, but you were breaking up so bad I wasn’t really sure. If you want to try and repeat it, I’ll give it a shot.

Devin Ryan, Analyst, Citizens: Yes. If I’m not going through, I’ll hop back in the queue. But essentially, I just wanted to get a little bit of sense of how the backlog is refilling. And then if there’s sectors that are snapping back faster and then if there’s any areas that aren’t because they’re still impacted by tariffs or otherwise?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yes. I’d say, Devin, on the backlog side, we don’t we try to stay away from backlog commentary. Having said that, we continue to see good solid performance across all the sectors. I made a comment regarding geography. We do think Europe, EMEA has been a bit slower than The U.

S. Over the last three to six months, and we don’t expect that to change this summer. But in terms of backlog, look, some of our peers have made commentary around backlog. It’s quite strong. We want to get away from comparing backlog this quarter versus last quarter versus the same time last year in terms of backlog.

Devin Ryan, Analyst, Citizens: Got it. Okay. I’ll leave it there. But thank you guys.

Conference Operator: Thank you. Your next question comes from Brendan O’Brien from Wolfe Research. Please go ahead.

Brendan O’Brien, Analyst, Wolfe Research: Good afternoon and thanks for taking my questions. Sorry, I just wanted to touch or follow-up on Devin’s question a bit. Within Corporate Finance, the top line trends continue to look very strong. But the year on year growth and the number of deals completed has seemed to decelerate a bit. Just want to get a sense as to the breadth of activity that you’re seeing in the market today and specifically around the quality of assets that you’re seeing move and when we can start to see that aperture widen?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yes. I mean, again, same commentary about getting better kind of quarter by quarter, right? It’s back to what we’ve talked about before, what’s the slope of that improvement. But we clearly are in a good environment at this point, but, again, at kind of the bottom end of it is what I would say. The in in terms of volume of deals, I do think after Labor Day, after Labor Day, we’re going to see that even pick up more.

That certainly is the indication from everything we’re seeing.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: And look, I’d say from a deceleration standpoint, we had an extraordinary quarter one last year. I think our Corporate Finance revenues grew 44% or so. Mean 21% growth is decelerating versus the same time last year, but it’s still pretty strong and it’s over a much larger base. And so I mean, we don’t see a decelerating trend at all. We’re just operating off of a higher base this year versus the same time last year.

Brendan O’Brien, Analyst, Wolfe Research: Totally appreciate that. And I guess for my follow-up, I just wanted to clarify some of your comments around the non comp side. Specifically, I know you guided to the high single digit comp growth rate last quarter. Is that still your expectation for the full year this year? Or has something changed, whether it’s travel or inflation or anything like that?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: No, we’re still at that high single digits. Unfortunately, we just had our entire non comp expense in our first quarter. I’m joking about that, but we did we had a higher first quarter. I think there was a specific reason why, but we do expect to see kind of that still that high single digits for the balance of the year.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Now

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: part of that is driven by headcount growth, as you know. So the faster our headcount grows this year, the higher our non comp expense. And so some of it is beyond our control and some of it is a good problem to have. But as we sit here today, no change from last quarter in terms of what the end of the year looks like.

Brendan O’Brien, Analyst, Wolfe Research: Thank you for taking my questions.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Pleasure.

Conference Operator: Thank you. Your next question comes from James Yarrow from Goldman Sachs. Please go ahead.

James Yarrow, Analyst, Goldman Sachs: Good afternoon and thanks for taking the question. Scott

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Hey, James. Hey,

James Yarrow, Analyst, Goldman Sachs: guys. Restructuring remained elevated this quarter. Know you gave the outlook for the business as being elevated, but maybe you could just dig down a little bit into anything that you are seeing around liability management versus Chapter 11 traditional restructuring and then expectations for the forward for each of those?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah. I mean, think it’s consistent. Again, we kind of think about it as in court and out of court, if you will. But the it continues to be active on both sides with obviously some of the not as large transactions leaning more towards the out of court. And but there does seem to be a good pipeline kind of across the board, and we’re seeing it just continue to be a a strong restructuring environment are certainly elevated.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: And James, our commentary for restructuring hasn’t really changed much. I mean, we don’t we consider liability management for this more restructuring. So we don’t really differentiate it. And look, the market has been and think we will continue to be reasonably strong for liability management transactions, given that we’ve just had a really long runway. And we don’t see that changing through certainly through fiscal twenty twenty six, which is why we you see you hear a little bit of confidence in terms of elevated restructuring for

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: the balance of the year.

James Yarrow, Analyst, Goldman Sachs: That’s great. Scott or Lindsay, maybe just any thoughts around or any color around the growth of your secondaries business since you did the deal? And then I guess any thoughts around the cyclical versus structural drivers and perhaps your expectations for how much growth that business can have over time?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yes. I think that we’re very happy with that. That is now all involved within our Capital Solutions group, which, as you know, is part of Corporate Finance. And that integrated approach seems to be serving us very well, and we’re extremely happy with many parts of that. Even on the primary side, we see that picking up.

But certainly on the secondary side, the GP stakes, healthy stakes. That whole piece in directs is something that we’re really seeing the benefit of them coming on to our platform. And not just in terms of results, but also in terms of thinking about the business differently and how it can even scale much larger than I think maybe people thought it could have. I’ve been feeling really good about it.

James Yarrow, Analyst, Goldman Sachs: Great.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: A lot more to come.

James Yarrow, Analyst, Goldman Sachs: Perfect. And then one quick ticky tacky one for you, Luci. I just want to clarify a previous point. So your commentary is that the growth of non comp dollars for the fiscal year is still expected to be in the high single digits range year on year. Is that correct?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yes, that’s correct.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Thank you so much.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Of course. Thank

Conference Operator: you. Your next question comes from Alex Bond from KBW. Please go ahead.

Alex Bond, Analyst, KBW: Hey, good afternoon, everyone. Just wanted to maybe drill down on the sponsor side of the market currently. And I know referenced earlier that the post Labor Day market is shaping up, expecting to see an increase there, but kind of across the market more broadly. But I’m wondering if that is consistent with what you’re seeing in terms of in the sponsor market as well. And then especially just given some of the recent market tailwinds that we’ve had.

So yes, I guess just summarizing, would you expect to see an increase in, sponsor activity kind of after that Labor Day period? Or could a more broader, resumption in sponsor activity maybe take a little bit longer than that? Any color there would be great. Thanks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yes. I think that it’s consistent. The sponsor activity has been muted, no doubt about that. And I think that’s one of the reasons we’re pretty happy with where things are given the muted level of active sponsors at the moment. But we certainly have seen it continue to pick up.

Again, it is continuing to pick up and we do expect it to pick up even more based upon dialogues that we’re having right now.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: And Labor Day for sponsors happens to be a nice inflection point to go to market. And so yes, different than strategic state, they tend to operate a bit more with the seasons, just given summer and vacation.

Alex Bond, Analyst, KBW: Got it. Okay. That’s helpful. And then maybe just as quick follow-up, I know you mentioned that you continue to expect The U. S.

Markets kind of outpace the EMEA region just from an M and A perspective. But curious if you can maybe just drill down a little bit more there and maybe any trends that you’re seeing that are differing there? Or are you expecting to see a broader recovery in volumes in Europe as well, but maybe just stronger in The US? Just any color there would be great as well.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah. I think that our history is that they don’t move tend to move in exact unison. And I can tell you that when things started to turn down a number of quarters ago, the, EMEA was slower to turn down than The US. And I think that this is just a cycle time. It’s just coming out slightly slower.

It’s not dramatic differences.

Alex Bond, Analyst, KBW: Got it. Understood. That’s helpful. Thank you, guys.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Thank you.

Conference Operator: Thank you. Your next question comes from Ryan Kenny from Morgan Stanley. Please go ahead.

Ryan Kenny, Analyst, Morgan Stanley: Hi, thanks for taking my question. Hi, So you mentioned that you’re cautiously optimistic on the environment. And my question is, with markets at all time highs and deal announcements picking up and tariff headlines coming through, why not just optimistic? And what are you hearing from clients that maybe would make them slow down a bit in getting more deals, moving through the pipeline?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Yeah. I think just by our nature, we’re we’re measured, number one. Number number two is really that we are living in an in an environment that has demonstrated a degree of uncertainty and and volatility, and so that causes us to be measured in those statements. Having said that, if things continue on the way they are at the moment, feel very good about it. But it’s just a recognition that we are living in more volatile times at the moment.

Thank you. Pleasure.

Conference Operator: Thank you. Your next question comes from Jim Mitchell from Seaport Global Securities. Please go ahead.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Hey, good afternoon.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Hey, Jim.

Christopher, Unspecified Corporate Representative, Houlihan Lokey0: Scott, you talked about the acquisition environment still being robust and the pipeline being good. But as the environment picks up, does it get a little tougher to close the deals? Or do you still think, regardless of the environment, there’s still a lot of opportunity to consolidate?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: That, at least based upon our history, that has not been a particularly strong indicator. And actually, if anything, it tends to work the other way. When things get really tough, people don’t wanna do deals. And so it I it doesn’t change my view at all.

Christopher, Unspecified Corporate Representative, Houlihan Lokey0: Okay. And then just a follow-up on restructuring. I hear you right now, the environment is still pretty good. But I guess based on your history and cyclicality, do you see if the Fed’s cutting rates, we get through these tariffs, the environment, the economic environment does better? Does that business slow or is it just different because of the liability management environment and there’s still plenty of room to kind of grow that piece of the puzzle?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: I think three years ago, we would have told you, yes, we would expect to see restructuring decline as M and A started to pick up, that had happened many times in the past for us. You know, look, in in this environment, restructuring has shown real resilience, and I think there are a

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: whole bunch of factors,

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: for that result that lead to that resilience. And so, yeah, I don’t want to sound too optimistic, but look, this may be the new trough for restructuring. And when we see interest rates come down a little bit, which I think most people expect over time, if we see an improving economy with less volatility in the macro environment, I mean, we may see restructuring revenues kind of where they are today waiting for the next cycle. So we’ve stopped kind of guessing what the trough might look like

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: just how well it’s performed over the last couple of years.

Christopher, Unspecified Corporate Representative, Houlihan Lokey0: Right. So so peak is the new trough?

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yeah. Peak is the exactly.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Okay. If if the interest rates go back to zero, that’s

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: what Yeah. Yeah. Yeah. Yeah. Right.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I mean, it’s normal cuts.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: Yes, that makes sense. Thank you.

Christopher, Unspecified Corporate Representative, Houlihan Lokey0: Sure.

Conference Operator: Thank you. Your next question comes from Ken Worthington from JPMorgan. Please go ahead.

Christopher, Unspecified Corporate Representative, Houlihan Lokey1: Good afternoon. This is Madeline Delighted on for Ken. Thanks for taking our question. Mentioned a strong MD hiring environment in your prepared remarks. And I think you’ve mentioned it in previous quarters as well.

But we’ve been noticing your MD headcount growth has been significantly outpacing overall headcount growth for about the last twelve months. Is this a cognizant choice on your end to concentrate talent at more senior levels or maybe even consolidating junior talent or administrative roles? Or is this more so just reflecting the opportunistic hiring that you’re pursuing?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I think that we are always looking for talent. That is part of our business model. And we are very fortunate that given the success in our growth and the resilience of our business model, we’ve been to continue to attract really fantastic talent. And so and that’s really all over the world and across our product lines, and we’re we’re gonna stay committed to that.

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: But I don’t think there’s no structural design that says we’re growing senior talent and slowing down junior talent growth. It just probably happenstance in the numbers. My guess is we will revert back to kind of the structure that we’ve historically had. It just may be that

Lindsay Alley, Chief Financial Officer, Houlihan Lokey: the numbers aren’t suggesting that right now.

Christopher, Unspecified Corporate Representative, Houlihan Lokey1: Okay, great. Thank you. And are there any particular businesses or sectors you’re focusing on for future hiring?

Scott Adelson, Chief Executive Officer, Houlihan Lokey: No. I I I mean, we really feel that in every one of our sectors and and our products, there is opportunity for growth, and we are always looking for great people that we think are a strong cultural fit.

Christopher, Unspecified Corporate Representative, Houlihan Lokey1: Thank you so much.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: Thanks, Benoit. Pleasure.

Conference Operator: Thank you. There are no further questions at this time. I’ll now hand the call back over to the company for closing remarks.

Scott Adelson, Chief Executive Officer, Houlihan Lokey: I want to thank you all for participating in our first quarter fiscal year twenty twenty six earnings call. We look forward to updating everyone on our progress when we discuss our second quarter results for fiscal year twenty twenty six this fall.

Conference Operator: And that does conclude our conference for today. Thank you for participating. You may now disconnect.

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