0001302215-18-000002.txt : 20180130 0001302215-18-000002.hdr.sgml : 20180130 20180129195808 ACCESSION NUMBER: 0001302215-18-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20180129 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180130 DATE AS OF CHANGE: 20180129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOULIHAN LOKEY, INC. CENTRAL INDEX KEY: 0001302215 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 952770395 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37537 FILM NUMBER: 18557260 BUSINESS ADDRESS: STREET 1: HOULIHAN LOKEY, INC. STREET 2: 10250 CONSTELLATION BLVD., 5TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 310.553.8871 MAIL ADDRESS: STREET 1: HOULIHAN LOKEY, INC. STREET 2: 10250 CONSTELLATION BLVD., 5TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: HOULIHAN LOKEY HOWARD & ZUKIN INC DATE OF NAME CHANGE: 20040902 8-K 1 hli-12312017x8k.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K


CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported):
January 29, 2018

Houlihan Lokey, Inc.

(Exact Name of Registrant as Specified in Charter)
Delaware
 
001-37537
 
95-2770395
(State or Other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
10250 Constellation Blvd., 5th Floor, Los Angeles, CA
 
 
 
90067
(Address of Principal Executive
Offices)
 
 
 
(Zip Code)

Registrant’s telephone number, including area code:
310-788-5200


(Former Name or Former Address, if Changed Since Last Report)
Not Applicable


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Item 2.02.    Results of Operations and Financial Condition.

On January 29, 2018, Houlihan Lokey, Inc. issued a press release announcing its financial results for the third fiscal quarter ended December 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information in Item 2.02 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 2.02, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d)  Exhibits

99.1    Press Release dated January 29, 2018.





SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
01/29/2018
Houlihan Lokey, Inc.
 
 
 
 
 
 
 
 
By:
/s/ J. Lindsey Alley
 
 
 
 
Name: J. Lindsey Alley
 
 
 
 
Position: Chief Financial Officer
 





EXHIBIT INDEX
Exhibit No.
 
Description
 
 
 
99.1
 



 EX-99.1 2 hli-12312017xex991.htm EXHIBIT 99.1 Exhibit
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Houlihan Lokey Reports Third Quarter Fiscal 2018 Financial Results

– Record Third Quarter Fiscal 2018 Revenue of $259 million, up 5% Year-Over-Year –
– Third Quarter Fiscal 2018 Diluted EPS of $0.93, up 82% Year-Over-Year –
– Adjusted Third Quarter Fiscal 2018 Diluted EPS of $0.69, up 21% Year-Over-Year –
– Announces Dividend of $0.20 per Share for Fourth Quarter Fiscal 2018 –

LOS ANGELES and NEW YORK - January 29, 2018 - Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey”, the “Company”), the global investment bank, today reported financial results for its third quarter ended December 31, 2017. For the third quarter, total revenue grew 5% to a record $259 million, compared with $248 million for the third quarter ended December 31, 2016.
Net income grew 81% to $62 million, or $0.93 per diluted share, for the third quarter ended December 31, 2017, compared with $34 million, or $0.51 per diluted share, for the third quarter ended December 31, 2016. Adjusted net income for the third quarter ended December 31, 2017 grew 20% to $46 million, or $0.69 per diluted share, compared with $38 million, or $0.57 per diluted share, for the third quarter ended December 31, 2016.
"We are pleased to report the highest quarterly revenues in our firm's history. This was achieved with all three of our business segments reporting an increase in quarterly revenues when compared to the same period last year. In calendar 2017, we were once again ranked as the #1 M&A advisor for all U.S. transactions under $1 billion and the #1 global financial restructuring advisor both in terms of number of transactions and value. We are optimistic about the current business climate and the opportunities that exist for the firm. We believe that tax reform will be net positive for our clients, our business and our shareholders,” stated Scott Beiser, Chief Executive Officer of Houlihan Lokey.

Selected Financial Data
(Unaudited and in thousands, except per share data)
 
U.S. GAAP
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
2017
 
2016
 
2017
 
2016
Fee revenue

$258,937

 

$247,680

 

$718,611

 

$614,991

Operating expenses:

 

 

 

Employee compensation and benefits
174,308

 
164,971

 
481,112

 
411,677

Non-compensation expenses
30,144

 
25,886

 
82,815

 
78,653

Total operating expenses
204,452

 
190,857

 
563,927

 
490,330

Operating income
54,485

 
56,823

 
154,684

 
124,661

Other (income) expense, net
(632
)
 
1,084

 
(2,338
)
 
2,741

Income before provision for income taxes
55,117

 
55,739

 
157,022

 
121,920

Provision/(benefit) for income taxes
(6,466
)
 
21,759

 
22,838

 
47,653

Net income attributable to Houlihan Lokey, Inc.

$61,583

 

$33,980

 

$134,184

 

$74,267

 
 
 
 
 
 
 
 
Diluted net income per share of common stock

$0.93

 

$0.51

 

$2.02

 

$1.11


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Revenues

For the third quarter ended December 31, 2017, total fee revenue grew 5% to $259 million from $248 million for the third quarter ended December 31, 2016. For the quarter, Corporate Finance ("CF") revenues increased 5%, Financial Restructuring ("FR") revenues increased 4%, and Financial Advisory Services ("FAS") revenues increased 4% when compared with the third quarter ended December 31, 2016.

Expenses

The Company’s employee compensation and benefits and non-compensation expenses during the periods presented and described below are on a GAAP, an adjusted, and an adjusted awarded basis, as appropriate.

(Unaudited and in thousands)
 
Three Months Ended December 31,
 
U.S. GAAP
 
Adjusted (Non-GAAP)*
 
2017
 
2016
 
2017
 
2016
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits

$174,308

 

$164,971

 

$164,423

 

$158,516

% of Revenues
67.3
%
 
66.6
%
 
63.5
%
 
64.0
%
Non-compensation expenses

$30,144

 

$25,886

 

$28,869

 

$25,886

% of Revenues
11.6
%
 
10.5
%
 
11.1
%
 
10.5
%
Total operating expenses

$204,452

 

$190,857

 

$193,292

 

$184,402

% of Revenues
79.0
%
 
77.1
%
 
74.6
%
 
74.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted awarded employee compensation and benefits
 
 
 
 

$168,307

 

$162,233

% of Revenues
 
 
 
 
65.0
%
 
65.5
%

(Unaudited and in thousands)
 
Nine Months Ended
December 31,
 
U.S. GAAP
 
Adjusted (Non-GAAP)*
 
2017
 
2016
 
2017
 
2016
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits

$481,112

 

$411,677

 

$458,615

 

$392,216

% of Revenues
67.0
%
 
66.9
%
 
63.8
%
 
63.8
%
Non-compensation expenses

$82,815

 

$78,653

 

$81,540

 

$78,653

% of Revenues
11.5
%
 
12.8
%
 
11.3
%
 
12.8
%
Total operating expenses

$563,927

 

$490,330

 

$540,155

 

$470,869

% of Revenues
78.5
%
 
79.7
%
 
75.2
%
 
76.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted awarded employee compensation and benefits
 
 
 
 

$469,393

 

$401,900

% of Revenues
 
 
 
 
65.3
%
 
65.4
%


*Note: The adjusted and adjusted awarded figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.



2
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Total operating expenses were $204 million for the third quarter ended December 31, 2017, an increase of 7% when compared with $191 million in operating expenses for the third quarter ended December 31, 2016. Employee compensation and benefits expenses were $174 million for the third quarter ended December 31, 2017, compared with $165 million for the third quarter ended December 31, 2016. The increase in employee compensation and benefits expenses was primarily a result of the growth in revenues for the quarter.

Total adjusted operating expenses were $193 million for the third quarter ended December 31, 2017, an increase of 5% when compared with $184 million in adjusted operating expenses for the third quarter ended December 31, 2016. Adjusted employee compensation and benefits expenses were $164 million for the third quarter ended December 31, 2017, compared with $159 million for the third quarter ended December 31, 2016. The increase in adjusted employee compensation and benefits expenses were primarily a result of the growth in revenues for the quarter. This resulted in an adjusted compensation ratio of 63.5% for the third quarter ended December 31, 2017, compared with 64.0% for the third quarter ended December 31, 2016.

Non-compensation expenses were $30 million for the third quarter ended December 31, 2017, compared with $26 million for the third quarter ended December 31, 2016, an increase of 16%. Non-compensation expenses increased primarily as a result of higher general operating expenses during the third quarter ended December 31, 2017. Adjusted non-compensation expenses were $29 million for the third quarter ended December 31, 2017, compared with $26 million for the third quarter ended December 31, 2016, an increase of 12%. Adjusted non-compensation expenses increased primarily as a result of higher general operating expenses during the third quarter ended December 31, 2017.

The provision/(benefit) for income taxes was $(6) million, representing an effective tax rate of (12)% for the third quarter ended December 31, 2017, compared with $22 million, representing an effective tax rate of 39% for the third quarter ended December 31, 2016. The significant decrease in the effective tax rate was a result of (i) the Tax Cuts and Jobs Acts (the "Tax Act") that was enacted into law in December 2017 that resulted in a lower effective federal tax rate; the re-measurement of deferred tax assets and liabilities based on the new tax rate; and a one-time deemed repatriation tax on foreign earnings, and (ii) the positive difference between the price of the stock at the time of vesting in October 2017 (accelerated from April/May 2018) and our stock price at the time of grant for the shares that vested. The adjusted provision for income taxes was $21 million, representing an adjusted effective tax rate of 31% for the third quarter ended December 31, 2017, compared with $24 million, representing an adjusted effective tax rate of 39% for the third quarter ended December 31, 2016. The decrease in the adjusted effective tax rate was a result of a lower statutory federal tax rate per the Tax Act.

Segment Reporting for the Third Quarter

For the third quarter ended December 31, 2017, Corporate Finance revenue grew 5% to $129 million, compared with $123 million during the third quarter ended December 31, 2016. The growth in revenues was driven by an increase in the number of closed transactions. CF closed 54 transactions in the third quarter ended December 31, 2017, versus 50 transactions in the third quarter ended December 31, 2016. Segment profit equaled $34 million for the third quarter ended December 31, 2017, compared with $40 million for the third quarter ended December 31, 2016. Segment profitability decreased primarily as a result of higher employee compensation and benefits as a percentage of revenues when compared to the same quarter of the prior year.

3
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(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Corporate Finance
 
 
 
 
 
 
 
Revenues

$129,002

 

$123,240

 

$398,822

 

$319,483

Segment Profit¹
33,903

 
40,423

 
129,689

 
91,517

# of MDs
95

 
90

 
95

 
90

# of Closed Transactions
54

 
50

 
170

 
154

For the third quarter ended December 31, 2017, Financial Restructuring revenue grew 4% to $94 million, compared with $90 million during the third quarter ended December 31, 2016. The growth in revenues was driven primarily by a significant increase in the average transaction fee per closed transaction. FR closed 19 transactions in the third quarter ended December 31, 2017, versus 23 transactions in the third quarter ended December 31, 2016. Segment profit was $33 million for the third quarter ended December 31, 2017, compared with $25 million for the third quarter ended December 31, 2016, an increase of 33%. The increase in profitability was primarily a result of lower employee compensation and benefits expenses as a percentage of revenues when compared to the same quarter last year.

(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Financial Restructuring
 
 
 
 
 
 
 
Revenues

$94,160

 

$90,180

 

$216,470

 

$203,372

Segment Profit¹
32,777

 
24,664

 
51,352

 
55,542

# of MDs
42

 
42

 
42

 
42

# of Closed Transactions
19

 
23

 
51

 
45

For the third quarter ended December 31, 2017, Financial Advisory Services revenue grew 4% to $36 million, compared with $34 million in the third quarter ended December 31, 2016. Revenues for FAS increased primarily as a result of strong performance by our transaction advisory and portfolio valuation businesses, and our intellectual property business continues to grow. Segment profit was $6 million for the third quarter ended December 31, 2017, compared with $9 million for the third quarter ended December 31, 2016. Segment profitability decreased primarily as a result of higher employee compensation and benefits and increased non-compensation expenses when compared to the same quarter last year.

(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Financial Advisory Services
 
 
 
 
 
 
 
Revenues

$35,774

 

$34,260

 

$103,319

 

$92,136

Segment Profit¹
5,585

 
8,506

 
20,777

 
21,776

# of MDs
37

 
34

 
37

 
34

# of Fee Events2
537

 
517

 
1,071

 
950

1.
We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. We account for the compensation expense in the business segment where the employee resides.
2.
A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of $1,000 (one thousand dollars).

4
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Balance Sheet and Capital Allocation

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.20 per share of Class A and Class B common stock. The dividend will be payable on March 15, 2018 to stockholders of record as of the close of business on March 2, 2018.

During the third quarter ended December 31, 2017, the Company accelerated the vesting of 1.7 million shares of common stock, and as a result of tax withholding associated with this acceleration, the Company retired 806,248 shares of common stock at an average price of $41.28 per share for a total cost of $33.3 million.

As of December 31, 2017, the Company had $330 million of cash and cash equivalents and investment securities, and loans payable aggregating $12 million.
 
Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Daylight Time on Monday, January 29, 2018, to discuss its third quarter fiscal year 2018 results. The number to call is 1-800-239-9838 (domestic) or 1-323-794-2551 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available on January 29, 2018 through February 5, 2018, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 7775356#. A replay of the webcast will be archived and available on the Company’s website.
 
Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Adjusted net income, total and on a per share basis, and adjusted operating expenses are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results. Adjusted net income and adjusted operating expenses remove the significant accounting impact of one-time charges associated with the Company’s IPO and other matters, as set forth in the tables at the end of this release.

Adjusted net income and adjusted operating expenses as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, adjusted net income is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company’s financial information determined under GAAP. For a description of the Company’s use of adjusted net income and a reconciliation with net income, as well as a reconciliation of the specific line items in adjusted operating expenses, see the section of this press release titled “Reconciliation of GAAP to Adjusted Financial Information.” Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.


5
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About Houlihan Lokey

Houlihan Lokey (NYSE: HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, valuation, and strategic consulting. The firm serves corporations, institutions, and governments worldwide with offices in the United States, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm's commitment to client success across its advisory services. Houlihan Lokey is ranked as the No. 1 M&A advisor for all U.S. transactions, the No. 1 global restructuring advisor, and the No. 1 global M&A fairness opinion advisor over the past 20 years, according to Thomson Reuters. For more information, please visit www.HL.com.

Contact Information

Investor Relations
212.331.8225
IR@HL.com
OR
Public Relations
212.331.8223
PR@HL.com


6
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Appendix

Consolidated Balance Sheet (Unaudited)
Consolidated Statement of Income (Unaudited)
Reconciliation of GAAP to Adjusted Financial Information (Unaudited)


7
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Houlihan Lokey, Inc.
Consolidated Balance Sheet
(In thousands, except share data and par value)
 
December 31,
2017
 
March 31,
2017
 
(unaudited)
 
(audited)
Assets:
 
 
 
Cash and cash equivalents

$197,178

 

$300,314

Restricted cash
—

 
192,372

Investment securities
132,835

 
—

Accounts receivable, net of allowance for doubtful accounts
33,543

 
60,718

Unbilled work in process
41,528

 
57,682

Income taxes receivable
12,492

 
—

Receivable from affiliates
7,108

 
10,913

Property and equipment, net of accumulated depreciation
32,171

 
30,416

Goodwill and other intangibles
721,689

 
715,343

Other assets
19,074

 
17,949

Total assets

$1,197,618

 

$1,385,707

Liabilities and Stockholders' Equity
 
 
 
Liabilities:
 
 
 
Accrued salaries and bonuses
281,080

 
336,465

Accounts payable and accrued liabilities
36,717

 
41,655

Deferred income
3,790

 
3,717

Income taxes payable
—

 
4,937

Deferred income taxes
25,918

 
31,196

Forward repurchase liability
—

 
192,372

Loan payable to affiliate
—

 
15,000

Loans payable to former shareholders
3,422

 
5,482

Loan payable to non-affiliate
8,787

 
12,080

Other liabilities
9,293

 
12,348

Total liabilities
369,007

 
655,252

Redeemable Non-Controlling Interest
4,714

 
3,838

 
 
 
 
Shareholders' Equity:
 
 
 
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 26,599,555 and 22,026,811 shares as of December 31, 2017 and March 31, 2017, respectively
27

 
22

Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 39,291,756 and 50,883,299 shares as of December 31, 2017 and March 31, 2017, respectively
39

 
51

Treasury stock, at cost; 0 and 6,900,000 shares as of December 31, 2017 and March 31, 2017, respectively
—

 
(193,572
)
Additional paid-in capital
655,108

 
854,750

Retained earnings
181,999

 
87,407

Accumulated other comprehensive loss
(13,276
)
 
(21,917
)
Stock subscription receivable
—

 
(124
)
Total shareholders' equity
823,897

 
726,617

Total liabilities and shareholders' equity

$1,197,618

 

$1,385,707


8
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Houlihan Lokey, Inc.
Consolidated Statement of Income
(Unaudited and in thousands, except share and per share data)
 
Three Months Ended December 31,
 
Nine Months Ended
December 31,
 
2017

2016
 
2017
 
2016
Fee revenue

$258,937



$247,680

 

$718,611



$614,991

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Employee compensation and benefits
174,308


164,971

 
481,112


411,677

Travel, meals, and entertainment
8,034

 
4,782

 
19,941

 
15,927

Rent
7,159

 
7,012

 
21,308

 
20,748

Depreciation and amortization
1,971

 
2,277

 
6,120

 
6,898

Information technology and communications
4,424

 
4,631

 
13,666

 
13,482

Professional fees
4,484

 
2,783

 
10,242

 
8,214

Other operating expenses
3,538

 
3,401

 
10,025

 
10,940

Provision for bad debt
534

 
1,000

 
1,513

 
2,444

Total operating expenses
204,452


190,857

 
563,927


490,330

 
 
 
 
 
 
 
 
Operating income
54,485


56,823

 
154,684


124,661

 
 
 
 
 
 
 
 
Other (income) expense, net
(632
)

1,084

 
(2,338
)

2,741

Income before provision for income taxes
55,117


55,739

 
157,022


121,920

 
 
 
 
 
 
 
 
Provision/(benefit) for income taxes
(6,466
)

21,759

 
22,838


47,653

Net income attributable to Houlihan Lokey, Inc.

$61,583



$33,980

 

$134,184



$74,267

 
 
 
 
 
 
 
 
  Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
    Basic
62,552,777

 
61,104,822

 
62,338,102

 
60,941,996

    Fully Diluted
66,122,939

 
66,692,326

 
66,467,378

 
66,619,214

  Net income per share of common stock:
 
 
 
 
 
 
 
    Basic

$0.98

 

$0.56

 

$2.15

 

$1.22

    Fully Diluted

$0.93

 

$0.51

 

$2.02

 

$1.11




9
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Houlihan Lokey, Inc.
Reconciliation of GAAP to Adjusted Financial Information
(Unaudited and in thousands, except per share data)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2017
 
2016
 
2017
 
2016
Fee revenue

$258,937

 

$247,680

 

$718,611

 

$614,991

 
 
 
 
 
 
 
 
Employee Compensation and Benefits
 
 
 
 
 
 
 
Employee Compensation and Benefits (GAAP)

$174,308

 

$164,971

 

$481,112

 

$411,677

Less/Plus: Adjustments1
(9,885
)
 
(6,455
)
 
(22,497
)
 
(19,461
)
Employee Compensation and Benefits (Adjusted)
164,423

 
158,516

 
458,615

 
392,216

Less/Plus: Adjustments2
3,884

 
3,717

 
10,778

 
9,684

Employee Compensation and Benefits (Adjusted Awarded)
168,307

 
162,233

 
469,393

 
401,900

 


 


 
 
 
 
Non-Compensation Expenses
 
 
 
 
 
 
 
Non-Compensation Expenses (GAAP)

$30,144

 

$25,886

 

$82,815

 

$78,653

Less/Plus: Adjustments3
(1,275
)
 
—

 
(1,275
)
 
—

Non-Compensation Expenses (Adjusted)
28,869

 
25,886

 
81,540

 
78,653

 
 
 
 
 
 
 
 
Operating Income
 
 
 
 
 
 
 
Operating Income (GAAP)

$54,485

 

$56,823

 

$154,684

 

$124,661

Less/Plus: Adjustments4
11,160

 
6,455

 
23,772

 
19,461

Operating Income (Adjusted)
65,645

 
63,278

 
178,456

 
144,122

 
 
 
 
 
 
 
 
Other (Income) Expenses, net
 
 
 
 
 
 
 
Other (Income) Expenses, net (GAAP)

($632
)
 

$1,084

 

($2,338
)
 

$2,741

Less/Plus: Adjustments5
—

 
—

 
1,552

 
—

Other (Income) Expenses, net (Adjusted)
(632
)
 
1,084

 
(786
)
 
2,741

 
 
 
 
 
 
 
 
Provision/(benefit) for Income Taxes
 
 
 
 
 
 
 
Provision/(benefit) for Income Taxes (GAAP)

($6,466
)
 

$21,759

 

$22,838

 

$47,653

Less/Plus: Adjustments6
27,163

 
2,520

 
40,767

 
7,631

Provision for Income Taxes (Adjusted)
20,697

 
24,279

 
63,605

 
55,284

 
 
 
 
 
 
 
 
Net Income
 
 
 
 
 
 
 
Net Income (GAAP)

$61,583

 

$33,980

 

$134,184

 

$74,267

Less/Plus: Adjustments7
(16,003
)
 
3,935

 
(18,547
)
 
11,830

Net Income (Adjusted)
45,580

 
37,915

 
115,637

 
86,097

 
 
 
 
 
 
 
 
Diluted adjusted net income per share of common stock

$0.69

 

$0.57

 

$1.74

 

$1.29

____________________________
Note: Figures may not sum due to rounding.
1.
Consists of pre-IPO grant vesting, including grants re-awarded following forfeiture, if any (($9,885) in Q3 FY18; ($6,455) in Q3 FY17; ($22,497) in YTD FY18; ($19,461) in YTD FY17).
2.
Reflects (i) the expected vesting of grants that were made in prior year periods that were expensed during the period plus any unvested grants that were forfeited during the period (($14,557) in Q3 FY18; ($6,091) in Q3 FY17; ($30,503) in YTD FY18; ($18,585) in YTD FY17), and (ii) estimated normal year-end grants of deferred stock during the period ($18,441 in Q3 FY18; $9,808 in Q3 FY17; $41,281 in YTD FY18; $28,269 in YTD FY17).
3.
Includes costs associated with Houlihan Lokey's secondary offering of stock (($1,275) in Q3 FY18).
4.
Includes pre-IPO grant vesting, including grants re-awarded following forfeiture, if any, plus costs associated with Houlihan Lokey's secondary offering of stock.
5.
Includes (i) the net gain from the acquisition of the remaining outstanding equity stake of the Australia joint venture ($166 in YTD FY18), and (ii) the reduction of an earnout liability ($1,386 in YTD FY18).
6.
Includes adjustments relating to the following: (i) the tax impact of the Tax Act ($14,230 in Q3 FY18 and YTD FY18); (ii) the tax impact as a result of the adoption of ASU No. 2016-09, Compensation - Stock Compensation due to the acceleration of vesting of share awards in February and October 2017 ($9,448 Q3 FY18 and $18,853 in YTD FY18), and (iii) the tax impact, using the adjusted effective tax rate, of the adjustments described in footnotes 1 and 3 ($3,485 for Q3 FY18 and $2,520 in Q3 FY17; $7,684 in YTD FY18 and $7,631 in YTD FY17).
7.
Consists of the adjustments described above net of the tax impact of described adjustments.

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