Houlihan Lokey Q1 2026 Earnings Report

Houlihan Lokey EPS Results

• Actual EPS: $2.14
• Consensus EPS: $1.69
• Beat/Miss: Beat by +$0.45
• One Year Ago EPS: $1.22

Houlihan Lokey Revenue Results

• Actual Revenue: $605.35 million
• Expected Revenue: $573.07 million
• Beat/Miss: Beat by +$32.28 million
• YoY Revenue Growth: +17.80%

Houlihan Lokey Announcement Details

• Quarter: Q1 2026
• Date: 7/29/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 5:00PM ET

Houlihan Lokey (NYSE:HLI) is a global investment bank that provides financial advisory services to corporations, institutions, governments and other organizations. The firm focuses on complex strategic, financial and restructuring matters and is known for its independent advisory model.

Its principal businesses include corporate finance, financial restructuring, and financial and valuation advisory. Services include mergers and acquisitions advice, capital-raising and other strategic transactions, restructuring and liability management, fairness opinions, solvency analysis, financial reporting valuations, and transaction opinions.

Founded in 1972, Houlihan Lokey serves clients through offices across North America, Europe, the Asia-Pacific region and the Middle East. The company became publicly traded on the New York Stock Exchange in 2015 under the symbol HLI.

Houlihan Lokey Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q1 results: Revenues rose 18% year-over-year to $605 million and adjusted EPS jumped 75% to $2.14, highlighting robust start to fiscal 2026.
• Positive Sentiment: Corporate Finance revenues climbed 21% to $399 million, driven by higher transaction sizes and average fees despite muted sponsor activity.
• Neutral Sentiment: Financial Restructuring revenues increased 9% to $128 million on elevated in-court and out-of-court work, with management expecting sustained activity.
• Positive Sentiment: Financial & Valuation Advisory grew 16% to $79 million, led by noncyclical services and improving M&A conditions in the U.S.
• Neutral Sentiment: Management remains cautiously optimistic for fiscal 2026, citing a diversified global model and resilient markets amid macro volatility.

Presentation

[Operator]

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Houlihan Lokey Fiscal First Quarter 2026 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, 29th of July, 2025. I will now turn the call over to the company. Please go ahead.

[Christopher Crain, Head of Investor Relations at Houlihan Lokey]

Thank you, Operator, and hello everyone. By now everyone should have access to our First Quarter Fiscal Year 2026 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.

[Christopher Crain, Head of Investor Relations at Houlihan Lokey]

We encourage investors to review our regulatory filings, including the Form 10-Q for the quarter ended June 30th, 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 hl.com website. Hosting the call today, we have Scott Adelson, Houlihan Lokey's Chief Executive Officer, and Lindsey 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, CEO at Houlihan Lokey]

Thank you Christopher. Welcome everyone to our First Quarter Fiscal Year 2026 Earnings Call. We ended the quarter with revenues of $605 million 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 2026 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.

[Scott Adelson, CEO at Houlihan Lokey]

Turning to our results, Corporate Finance produced $399 million of revenue in the 1st quarter, a 21% increase over last year's 1st 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 2026 while we remain mindful of the potential headwinds including tariffs and inflation. Our Financial Restructuring business produced $128 million in revenues for the 1st quarter and a 9% increase over last year's 1st quarter. Financial Restructuring activity remains elevated, supported by persistently higher interest rates, macro uncertainty and overleveraged companies.

[Scott Adelson, CEO at Houlihan Lokey]

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 2026. Financial and Valuation Advisory produced $79 million in revenues for the 1st quarter, a 16% increase versus the 1st quarter last year. FVA had a very strong 1st quarter with continued growth in its non-cyclical service lines while its pro-cyclical businesses benefited from improving MA market conditions, particularly in the U.S. Our outlook for FVA 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 1st 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.

[Scott Adelson, CEO at Houlihan Lokey]

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 Dealmaking by Bloomberg, this major event showcased our one firm approach and global scope. With more than 4,000 people in 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.

[Scott Adelson, CEO at Houlihan Lokey]

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. Lindsey, over to you.

[Lindsey Alley, CFO at Houlihan Lokey]

Thank you, Scott. Revenues in Corporate Finance were $399 million 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, and our average transaction fee was higher for the quarter versus the same quarter last year. Revenues and activity levels in the U.S. continue to outpace those in EMEA and we expect this regional dynamic to persist through the summer. Financial Restructuring revenues were $128 million 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 million for the quarter, a 16% increase from the same period last year.

[Lindsey Alley, CFO at Houlihan Lokey]

We had 957 fee events during the quarter compared to 847 in the same period last year, a 13% increase. Turning to expenses, our adjusted compensation expenses were $372 million for the quarter versus $316 million for the same period last year. Our only adjustment was $21 million for deferred retention payments related to certain acquisitions. Our adjusted compensation expense ratio for the 1st quarter in both fiscal 2026 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 million for the quarter compared to $80 million for the same period last year. Our adjusted non-compensation expense ratio for the 1st quarter in both fiscal 2026 and 2025 was 15.6%.

[Lindsey Alley, CFO at Houlihan Lokey]

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 $9.5 million 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 million 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&L.

[Lindsey Alley, CFO at Houlihan Lokey]

Historically, the effects of the revaluation of acquisition contingent consideration occurred in other income and expense. Starting in fiscal 2026, we are including the effects of the revaluation of acquisition contingent consideration in 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 million versus income of approximately $5 million 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 -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.

[Lindsey Alley, CFO at Houlihan Lokey]

This year and for the last several years, stock vesting has had a positive impact on our GAAP effective tax rate.

[Lindsey Alley, CFO at Houlihan Lokey]

Versus for both the quarter and the.

[Lindsey Alley, CFO at Houlihan Lokey]

Year and we have adjusted out that benefit. Without the adjustment in Q1 of fiscal 2025, our adjusted effective tax rate would have been 9.3% for the 1st quarter. Given the significant impact from stock vesting, we expect to see our fiscal 2026 full year adjusted effective tax rate between 25-26%. Without the adjustment for stock vesting in fiscal year 2025, our adjusted effective tax rate for last year would have been 26%. For the 1st quarter fiscal 2026, we adjusted out of our effective tax rate the effects of acquisition related non deductible expenses. Turning to the balance sheet, we ended the quarter with approximately $867 million of unrestricted cash and investment securities. Our cash position declined this quarter as we paid a significant portion of our fiscal 2025 bonuses to employees in May.

[Lindsey Alley, CFO at Houlihan Lokey]

Also in our first quarter, we issued approximately 1.1 million shares to employees as part of our fiscal 2025 year end compensation and we repurchased through withhold to cover approximately 800,000 shares during the month of May. With that operator, we can open the line for questions.

[Operator]

Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two and if you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Devin Ryan from Citizens. Please go ahead.

[Devin Ryan, Managing Director at Citizens]

Great.

[Devin Ryan, Managing Director at Citizens]

Hi, Scott.

[Devin Ryan, Managing Director at Citizens]

Hi, Lindsey.

[Devin Ryan, Managing Director at Citizens]

How are you?

[Scott Adelson, CEO at Houlihan Lokey]

Hey, Devin.

[Devin Ryan, Managing Director at Citizens]

I heard the comment in prepared remarks that your views of the business are broadly consistent with last quarter. I am just curious, as it relates to Corporate Finance, I would assume that there has been some market improvement, just with sentiment improving and more optimism in the market more broadly. I am just curious if you are seeing that.

[Devin Ryan, Managing Director at Citizens]

With clients from where you were three.

[Devin Ryan, Managing Director at Citizens]

Months ago, maybe three months ago, you're already starting to see that reacceleration in momentum, but just love to dig.

[Devin Ryan, Managing Director at Citizens]

In there a bit more, and then.

[Devin Ryan, Managing Director at Citizens]

Just if you can just hit on.

[Devin Ryan, Managing Director at Citizens]

Kind of how backlogs have trended, kind.

[Devin Ryan, Managing Director at Citizens]

Of.

[Devin Ryan, Managing Director at Citizens]

Move forward on auctions and transactions, and then from a spectrum perspective as.

[Devin Ryan, Managing Director at Citizens]

If you can touch on that.

[Devin Ryan, Managing Director at Citizens]

Thanks.

[Scott Adelson, CEO at Houlihan Lokey]

Really bad connection. I will try and do my best with that. 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. Even within this quarter, you saw the momentum shift, if you will, a bit back and forth. That is 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. 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, Managing Director at Citizens]

Okay, thanks.

[Scott Adelson, CEO at Houlihan Lokey]

Apologies for the second part of your question. Quite honestly, it 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, Managing Director at Citizens]

Yeah, if I'm not through, I'll hop.

[Devin Ryan, Managing Director at Citizens]

Back in the queue. Essentially I just wanted to give a little bit of sense of how the backlog is refilling and then if.

[Devin Ryan, Managing Director at Citizens]

are sectors that are snapping back faster and then if there are any areas that.

[Devin Ryan, Managing Director at Citizens]

Aren't because we're still impacted by tariffs or otherwise.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, I'd say, Devin, on the backlog side, we don't. We try to stay away from backlog commentary. You know, having said that, you know, 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. In terms of backlog, look, you know, 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, Managing Director at Citizens]

Got it.

[Devin Ryan, Managing Director at Citizens]

Okay, I'll leave it there.

[Devin Ryan, Managing Director at Citizens]

Thank you guys.

[Operator]

Thank you. Your next question comes from Brendan O'Brien from Wolfe Research. Please go ahead.

[Brendan O'Brien, Analyst at Wolfe Research]

Good afternoon and thanks for taking my questions.

[Brendan O'Brien, Analyst at Wolfe Research]

You know, to start, I just want.

[Brendan O'Brien, Analyst at Wolfe Research]

To touch or follow up on Devin's question, you know, within Corporate Finance, the top line trends continue to look very strong. The year-on-year growth in 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, CEO at Houlihan Lokey]

Yeah, I mean again, same commentary about getting better kind of quarter by quarter, right? It is, it's back to what we've talked about before. What's the slope of that improvement? We clearly are in a good environment at this point. Again, at kind of the bottom end of it is what I would say 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.

[Lindsey Alley, CFO at Houlihan Lokey]

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. I mean 21% growth is decelerating versus the same time last year, but still pretty strong.

[Lindsey Alley, CFO at Houlihan Lokey]

It's over a much larger base.

[Lindsey Alley, CFO at Houlihan Lokey]

I mean we don't, you know, 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 at Wolfe Research]

I totally appreciate that. I guess for my follow up, I just wanted to clarify some of your comments around the non comp side. You know, specifically, I know you guided to the high single digit non comp growth rate last quarter. Is that still your expectation for the full year this year or, you know, has something changed, whether it is travel or inflation or anything like that?

[Lindsey Alley, CFO at Houlihan Lokey]

No, we're still at that high single digits, unfortunately. We just had our entire non-comp expense in our 1st quarter. I'm joking about that. But we did, you know, we had a higher 1st quarter. I think there was a specific reason why. We do expect to see kind of that still that high single digits for the balance of the year. Part of that is driven by headcount growth, as you know. The faster our headcount grows this year, the higher our non-comp expense. Some of it is beyond our control and some of it is a good problem to have. 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 at Wolfe Research]

Great.

[Brendan O'Brien, Analyst at Wolfe Research]

Thank you for taking my questions.

[Lindsey Alley, CFO at Houlihan Lokey]

Pleasure.

[Operator]

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

[James Yarrow, Analyst at Goldman Sachs]

Good afternoon and thanks for taking the question. Scott. Hey guys. Restructuring remained elevated this quarter. I 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.

[James Yarrow, Analyst at Goldman Sachs]

For each of those.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, I mean I think it's consistent. Again we kind of think about it as in court and out of court, if you will. It continues to be active on both sides with obviously some of the not as large transactions leaning more towards the out of court. There does seem to be a good pipeline kind of across the board and we're seeing it just continue to be a strong restructuring environment or certainly elevated.

[Lindsey Alley, CFO at Houlihan Lokey]

James, our commentary for restructuring hasn't really changed much. I mean we consider liability management traditional restructuring so we don't really differentiate it. Look, the market has been and I think 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 certainly through fiscal 2026, which is why you hear a little bit of confidence in terms of elevated restructuring for the balance of the year.

[James Yarrow, Analyst at Goldman Sachs]

That's great. Scott or Lindsey, 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 or how much growth that business could have over time?

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, 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. 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, LP stakes, that whole piece and directs is something that we're really seeing the benefit of coming onto 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 mean, feeling really good about it.

[James Yarrow, Analyst at Goldman Sachs]

Great.

[Scott Adelson, CEO at Houlihan Lokey]

A lot more to come.

[James Yarrow, Analyst at Goldman Sachs]

Perfect. And then one quick ticky, tanky one for you, Lindsey. 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.

[James Yarrow, Analyst at Goldman Sachs]

The high single digits range year on year.

[James Yarrow, Analyst at Goldman Sachs]

Is that correct?

[Lindsey Alley, CFO at Houlihan Lokey]

Yes, that's correct.

[James Yarrow, Analyst at Goldman Sachs]

Thank you so much.

[Lindsey Alley, CFO at Houlihan Lokey]

Of course.

[Operator]

Thank you. Your next question comes from Alex Bond from KBW. Please go ahead.

[Alex Bond, Analyst at KBW]

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

[Alex Bond, Analyst at KBW]

Know, would you, would you expect to?

[Alex Bond, Analyst at KBW]

See, you know, 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.

[Alex Bond, Analyst at KBW]

Thanks.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, I think that it's consistent. The sponsor activity has been muted, no doubt about that. I think that's one of the reasons we're pretty happy with where things are given the muted level of activity sponsors at the moment. We certainly have seen it continue to pick up again. It is continuing to pick up.

[Scott Adelson, CEO at Houlihan Lokey]

We do expect it to pick up.

[Scott Adelson, CEO at Houlihan Lokey]

Even more based upon dialogues that we're having right now.

[Lindsey Alley, CFO at Houlihan Lokey]

Labor Day for sponsors happens to be a nice inflection point to go to market. Yes, different than strategics, they tend to operate a bit more with the seasons just given summer and vacation.

[Alex Bond, Analyst at KBW]

Got it. Okay, that's helpful. Maybe just as a quick follow up, I know you mentioned that you continue to expect the U.S. market to kind of outpace the EMEA region just from an M&A perspective, but curious if you could maybe just drill down a little bit more there and maybe any trends that you're seeing that are differing there or is there or are you expecting to see a broader recovery in volumes in Europe as well, but maybe just stronger in the U.S. Just any color there would be great as well.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, I think that our history is that they do not tend to move in exact unison. 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 U.S. I think that this is just a cycle time. It is just coming out slightly slower. It is not, it is not dramatic differences.

[Alex Bond, Analyst at KBW]

Got it. Understood. That's helpful. Thank you, guys.

[Lindsey Alley, CFO at Houlihan Lokey]

Thank you.

[Operator]

Thank you. The next question comes from Ryan Kenny from Morgan Stanley. Please go ahead.

[Ryan Kenny, Executive Director at Morgan Stanley]

Hi.

[Ryan Kenny, Executive Director at Morgan Stanley]

Thanks for taking my question. You mentioned that you are cautiously optimistic on the environment. My question is with markets at all-time highs and deal announcements picking up and tariff headlines coming through, why not just optimistic? 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, CEO at Houlihan Lokey]

Yeah, I think just by our nature, we're measured, number one. Number two is really that we are living in an environment that has demonstrated a degree of uncertainty and volatility. 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.

[Ryan Kenny, Executive Director at Morgan Stanley]

Thank you.

[Scott Adelson, CEO at Houlihan Lokey]

Pleasure.

[Operator]

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

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Hey, good afternoon.

[Scott Adelson, CEO at Houlihan Lokey]

Hey, Jim.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Scott, you talked about the acquisition environment still being robust and the pipeline being good. As the environment picks up, does.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

It get a little tougher to close the deals?

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Do you still think regardless of the environment, there's still a lot of opportunity to consolidate?

[Scott Adelson, CEO at Houlihan Lokey]

That? At least based on our history, that has not been a particularly strong indicator. Actually, if anything, it tends to work the other way. When things get really tough, people do not want to do deals. It does not change my view at all.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Okay.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Just to follow up on restructuring, I hear you. Right now, the environment's still pretty good. I guess based on your history and cyclic, do you see if the Fed's cutting rates, we get through these tariffs, the environment, the economic environment does.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Better, does that business slow or is.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

it just different because of the liability management environment? You know, there's still plenty of room to kind of grow that piece of the puzzle.

[Scott Adelson, CEO at Houlihan Lokey]

I think three years ago we would have told you, yes, we would expect to see restructuring, you know, decline as M&A started to pick up. That had happened many times in the past for us. You know, look, in this environment, restructuring has shown real resilience. I think there are a whole bunch of factors for that result that lead to that resilience.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, I don't want to sound too optimistic, but look, this may be the new trough for restructuring, you know, 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, shoot, we may still see restructuring revenues kind of where they are today and waiting for the next cycle. We've stopped kind of guessing what the trough might look like for restructuring based on just how well it's performed over the last couple of years.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Right.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Peak is the new trough.

[Scott Adelson, CEO at Houlihan Lokey]

Yeah, peak is exactly.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Okay.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

If the interest rates go back to zero, that's,

[Scott Adelson, CEO at Houlihan Lokey]

yeah.

[Lindsey Alley, CFO at Houlihan Lokey]

Right.

[Scott Adelson, CEO at Houlihan Lokey]

I mean, normal cuts.

[Scott Adelson, CEO at Houlihan Lokey]

Yep.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

That makes sense.

[Jim Mitchell, Senior Equity Analyst at Seaport Global Securities]

Thank you.

[Lindsey Alley, CFO at Houlihan Lokey]

Sure.

[Operator]

Thank you. Once again, if you do wish to ask a question, please press Star one. Your next question comes from Ken Worthington from J.P. Morgan. Please go ahead.

[Operator]

Good afternoon, this is Madeline. Delighted on for Ken, thanks for taking our question. You mentioned a strong MD hiring environment in your prepared remarks, and I think you've mentioned it in previous quarters as well. We've been noticing your MD headcount growth has been significantly outpacing overall headcount growth for about the last 12 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? Is this more so just reflecting the opportunistic hiring that you're pursuing?

[Scott Adelson, CEO at Houlihan Lokey]

I think that we are always looking for talent. That is part of our business model. We are very fortunate that, given the success and our growth and the resilience of our business model, we've been able to continue to attract really fantastic talent. That is really all over the world and across our product lines. We are going to stay committed to that.

[Lindsey Alley, CFO at Houlihan Lokey]

I don't think that 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 the numbers aren't suggesting that right now.

[Lindsey Alley, CFO at Houlihan Lokey]

Okay, great. Thank you. Are there any particular businesses or sectors you're focusing on for future hiring?

[Scott Adelson, CEO at Houlihan Lokey]

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

[Scott Adelson, CEO at Houlihan Lokey]

Thank you so much.

[Lindsey Alley, CFO at Houlihan Lokey]

Thanks Madeline.

[Scott Adelson, CEO at Houlihan Lokey]

Pleasure.

[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.

[Lindsey Alley, CFO at Houlihan Lokey]

I want to thank you all for.

[Lindsey Alley, CFO at Houlihan Lokey]

Participating in our First Quarter Fiscal Year 2026 Earnings Call. We look forward to updating everyone on our progress when we discuss our 2nd quarter results for fiscal year 2026 this fall.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Participants

Executives

• Scott Adelson, CEO
• Lindsey Alley, CFO

Analysts

• Analyst at J.P. Morgan
• Brendan O'Brien, Analyst at Wolfe Research
• Christopher Crain, Head of Investor Relations at Houlihan Lokey
• Alex Bond, Analyst at KBW
• Ryan Kenny, Executive Director at Morgan Stanley
• James Yarrow, Analyst at Goldman Sachs
• Devin Ryan, Managing Director at Citizens
• Jim Mitchell, Senior Equity Analyst at Seaport Global Securities