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Section 1: 8-K (8-K)

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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, 2019

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
¨
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, 2019, Houlihan Lokey, Inc. issued a press release announcing its financial results for the third fiscal quarter ended December 31, 2018. 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, 2019.






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:
January 29, 2019
Houlihan Lokey, Inc.
 
 
 
 
 
 
 
 
By:
/s/ J. Lindsey Alley
 
 
 
 
Name: J. Lindsey Alley
 
 
 
 
Position: Chief Financial Officer
 






EXHIBIT INDEX
Exhibit No.
 
Description
 
 
 
99.1
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
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Houlihan Lokey Reports Third Quarter Fiscal 2019 Financial Results

Third Quarter Fiscal 2019 Revenues of $298 million
Third Quarter Fiscal 2019 Diluted EPS of $0.67
Adjusted Third Quarter Fiscal 2019 Diluted EPS of $0.77
Announces Dividend of $0.27 per Share for Fourth Quarter Fiscal 2019


LOS ANGELES and NEW YORK - January 29, 2019 - Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its third fiscal quarter ended December 31, 2018. For the third quarter, revenues increased 15% to $298 million, compared with $259 million for the third quarter ended December 31, 2017.
Net income decreased 29% to $44 million, or $0.67 per diluted share, for the third quarter ended December 31, 2018, compared with $62 million, or $0.93 per diluted share, for the third quarter ended December 31, 2017. Adjusted net income for the third quarter ended December 31, 2018 grew 11% to $51 million, or $0.77 per diluted share, compared with $46 million, or $0.69 per diluted share, for the third quarter ended December 31, 2017.
"We had a strong third quarter, and we continue to see solid momentum across all three product lines as we enter a new calendar year. The firm received several important accolades this quarter, including being named as the #1 M&A advisor for all U.S. transactions under $1 billion in 2018 and the #1 global financial restructuring advisor in 2018, both in terms of number of transactions and value. We are also excited about reaching the $1 billion milestone based on our latest twelve months' revenues through the end of the third quarter. We achieved this milestone as a result of a strong commitment by all of us at Houlihan Lokey to drive shareholder value by investing in growth. I want to thank every employee at HLI for their contribution to helping us achieve this milestone." 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,
2018
 
2017
 
2018
 
2017
Revenues

$298,013

 

$258,937

 

$793,007

 

$718,611

Operating expenses:

 

 

 

Employee compensation and benefits
187,180

 
174,308

 
501,682

 
481,112

Non-compensation expenses
48,574

 
30,144

 
132,763

 
82,815

Operating income
62,259

 
54,485

 
158,562

 
154,684

Other (income) expense, net
(672
)
 
(632
)
 
(3,285
)
 
(2,338
)
Income before provision for income taxes
62,931

 
55,117

 
161,847

 
157,022

Provision for income taxes
18,974

 
(6,466
)
 
48,089

 
22,838

Net income attributable to Houlihan Lokey, Inc.

$43,957

 

$61,583

 

$113,758

 

$134,184

 
 
 
 
 
 
 
 
Diluted net income per share of common stock

$0.67

 

$0.93

 

$1.72

 

$2.02


1

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Revenues

For the third quarter ended December 31, 2018, revenues increased to $298 million, compared with $259 million for the third quarter ended December 31, 2017. For the quarter, Corporate Finance ("CF") revenues increased 43%, Financial Restructuring ("FR") revenues decreased 20%, and Financial Advisory Services ("FAS") revenues increased 9% when compared with the third quarter ended December 31, 2017. Revenues for the quarter ended December 31, 2018 included $8.9 million in expense reimbursements as a result of the adoption of ASC 606 effective April 1, 2018 that now clarifies that reimbursements of out-of-pocket expenses should be included in revenues, whereas prior to adoption we had been reporting non-compensation expenses net of such reimbursements.

Expenses

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

(Unaudited and in thousands)
 
Three Months Ended December 31,
 
U.S. GAAP
 
Adjusted (Non-GAAP)*
 
2018
 
2017
 
2018
 
2017
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits

$187,180

 

$174,308

 

$181,042

 

$164,423

% of Revenues
62.8
%
 
67.3
 %
 
60.7
%
 
63.5
%
Non-compensation expenses

$48,574

 

$30,144

 

$47,024

 

$28,869

% of Revenues
16.3
%
 
11.6
 %
 
15.8
%
 
11.1
%
Provision for Income Taxes

$18,974

 

($6,466
)
 

$19,819

 

$20,697

% of Pre-Tax Income
30.2
%
 
(11.7
)%
 
28.1
%
 
31.2
%

(Unaudited and in thousands)
 
Nine Months Ended December 31,
 
U.S. GAAP
 
Adjusted (Non-GAAP)*
 
2018
 
2017
 
2018
 
2017
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits

$501,682

 

$481,112

 

$483,266

 

$458,615

% of Revenues
63.3
%
 
67.0
%
 
60.9
%
 
63.8
%
Non-compensation expenses

$132,763

 

$82,815

 

$125,256

 

$81,540

% of Revenues
16.7
%
 
11.5
%
 
15.8
%
 
11.3
%
Provision for Income Taxes

$48,089

 

$22,838

 

$54,073

 

$63,605

% of Pre-Tax Income
29.7
%
 
14.5
%
 
28.9
%
 
35.5
%


*Note: The adjusted 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.

Employee compensation and benefits expenses were $187 million for the third quarter ended December 31, 2018, compared with $174 million for the third quarter ended December 31, 2017. The increase in employee compensation and benefits expenses was primarily a result of higher fee revenues when compared with the same quarter last year.

2

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Adjusted employee compensation and benefits expenses were $181 million for the third quarter ended December 31, 2018, compared with $164 million for the third quarter ended December 31, 2017. The increase in adjusted employee compensation and benefits expenses was primarily a result of an increase in fee revenues for the quarter when compared with the same quarter last year. This resulted in an adjusted compensation ratio of 60.7% for the third quarter ended December 31, 2018, versus 63.5% for the third quarter ended December 31, 2017.

Non-compensation expenses were $49 million for the third quarter ended December 31, 2018 and $30 million for the third quarter ended December 31, 2017. The increase in non-compensation expenses was primarily driven by (i) the recognition of reimbursements of out-of-pocket expenses as revenues rather than reporting non-compensation expense net of such amounts as was the case in the prior year period, (ii) higher rent expense, (iii) higher professional fees, and (iv) general increases in travel, meals, and entertainment and other operating expenses.

Adjusted non-compensation expenses were $47 million for the third quarter ended December 31, 2018 and $29 million for the third quarter ended December 31, 2017. The increase in adjusted non-compensation expenses was primarily driven by (i) the recognition of reimbursements of out-of-pocket expenses as revenues rather than reporting non-compensation expense net of such amounts as was the case in the prior year period, (ii) higher rent expense, (iii) higher professional fees, and (iv) general increases in travel, meals, and entertainment and other operating expenses.

The provision for income taxes was $19 million, representing an effective tax rate of 30.2% for the third quarter ended December 31, 2018, compared with ($6) million, representing an effective tax rate of (11.7)% for the third quarter ended December 31, 2017. The increase in the Company's tax rate was primarily a result of the Tax Cuts and Jobs Act (the "Tax Act") that was enacted into law in December 2017, as well as the adoption of ASU 2016-09, Compensation - Stock Compensation, which resulted in a decrease to the provision for income taxes for the quarter ended December 31, 2017 due to the vesting of share awards that were accelerated during the quarter.

The adjusted provision for income taxes was $20 million, representing an adjusted effective tax rate of 28.1% for the third quarter ended December 31, 2018, compared with $21 million, representing an adjusted effective tax rate of 31.2% for the third quarter ended December 31, 2017. 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

Corporate Finance revenues increased 43% to $184 million for the third quarter ended December 31, 2018, compared with $129 million in the quarter ended December 31, 2017. Revenues increased primarily as a result of a significant increase in the number of transactions that closed during the quarter compared to the same period last year, coupled with the recognition of reimbursements of out-of-pocket expenses as revenues. CF closed 89 transactions in the third quarter ended December 31, 2018, versus 54 transactions in the third quarter ended December 31, 2017. CF's average transaction fee for the quarter was slightly lower when compared with the same period last year.


3

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(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Corporate Finance
 
 
 
 
 
 
 
Revenues

$183,965

 

$129,003

 

$462,893

 

$398,822

# of MDs
108

 
95

 
108

 
95

# of Closed Transactions
89

 
54

 
220

 
170

For the third quarter ended December 31, 2018, Financial Restructuring revenues decreased 20% to $75 million, compared with $94 million in the third quarter ended December 31, 2017. FR closed 21 transactions in the third quarter ended December 31, 2018, versus 19 transactions in the third quarter ended December 31, 2017, but FR's average transaction fee for the quarter was lower when compared with the same period last year.

(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Financial Restructuring
 
 
 
 
 
 
 
Revenues

$75,013

 

$94,160

 

$218,173

 

$216,470

# of MDs
44

 
42

 
44

 
42

# of Closed Transactions
21

 
19

 
54

 
51

For the third quarter ended December 31, 2018, Financial Advisory Services revenues increased 9% to $39 million, compared with $36 million in the third quarter ended December 31, 2017. The growth in revenues was primarily a result of the recognition of reimbursements of out-of-pocket expenses as revenues.

(Unaudited and $ in thousands)
 
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Financial Advisory Services
 
 
 
 
 
 
 
Revenues

$39,035

 

$35,774

 

$111,941

 

$103,319

# of MDs
35

 
37

 
35

 
37

# of Fee Events1
502

 
537

 
1,046

 
1,071

1.
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).

Balance Sheet and Capital Allocation

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.27 per share of Class A and Class B common stock. The dividend will be payable on March 15, 2019 to stockholders of record as of the close of business on March 4, 2019.

For the third quarter ended December 31, 2018, the Company repurchased 370,728 shares of its common stock in open market purchases at an average price of $40.33 per share, for a total cost of $15 million.

As of December 31, 2018, the Company had $297 million of unrestricted cash and cash equivalents and investment securities, and loans payable and other liabilities aggregating $32 million.

4

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Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Tuesday, January 29, 2019, to discuss its third quarter fiscal 2019 results. The number to call is 1-800-289-0438 (domestic) or 1-323-994-2082 (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 from January 29, 2019 through February 5, 2019, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 7993332#. 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, adjusted operating expenses and adjusted provision for income taxes 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, adjusted operating expenses and adjusted provision for income taxes remove the significant accounting impact of one-time or non-recurring charges associated with the Company’s one-time/non-recurring matters, as set forth in the tables at the end of this release.

Adjusted net income as calculated by the Company is 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 net income, 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.

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 in number of transactions, the No. 1 global restructuring advisor in both number of transactions and value, and the No. 1 global M&A fairness opinion advisor in number of transactions over the past 20 years, according to Thomson Reuters. For more information, please visit www.HL.com.


5

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Contact Information

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

Appendix

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


6

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Houlihan Lokey, Inc.
Consolidated Balance Sheet
(In thousands, except share data and par value)
 
December 31,
2018
 
March 31,
2018
 
(unaudited)
 
(audited)
Assets:
 
 
 
Cash and cash equivalents

$256,401

 

$206,723

Restricted cash
368

 
93,500

Investment securities
40,960

 
209,319

Accounts receivable, net of allowance for doubtful accounts
65,365

 
77,259

Unbilled work in process
30,660

 
45,862

Receivable from affiliates
7,027

 
8,732

Property and equipment, net of accumulated depreciation
30,865

 
32,146

Goodwill and other intangibles, net of accumulated amortization
795,251

 
723,310

Other assets
33,273

 
21,990

Total assets
1,260,170

 
1,418,841

Liabilities and Stockholders' Equity
 
 
 
Liabilities:
 
 
 
Accrued salaries and bonuses
291,073

 
377,901

Accounts payable and accrued expenses
45,159

 
40,772

Deferred income
28,522

 
3,620

Income taxes payable
3,457

 
9,967

Deferred income taxes
9,343

 
22,180

Forward purchase liability

 
93,500

Loans payable to former shareholders
2,342

 
3,036

Loan payable to non-affiliate
6,712

 
8,825

Other liabilities
22,895

 
6,227

Total liabilities
409,503

 
566,028

 
 
 
 
Stockholders' equity:
 
 
 
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 34,510,793 and 30,604,405 shares as of December 31, and March 31, 2018, respectively
35

 
31

Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 30,911,808 and 37,187,932 shares as of December 31, and March 31, 2018, respectively
31

 
37

Treasury stock, at cost; 0 and 2,000,000 shares as of December 31, and March 31, 2018, respectively

 
(93,500
)
Additional paid-in capital
635,005

 
753,077

Retained earnings
248,590

 
207,124

Accumulated other comprehensive loss
(32,994
)
 
(13,956
)
Total stockholders' equity
850,667

 
852,813

Total liabilities and stockholders' equity
1,260,170

 
1,418,841


7

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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,
 
2018

2017
 
2018
 
2017
Revenues

$298,013



$258,937

 

$793,007

 

$718,611

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Employee compensation and benefits
187,180


174,308

 
501,682

 
481,112

Travel, meals, and entertainment
12,991

 
8,034

 
32,689

 
19,941

Rent
9,987

 
7,159

 
28,612

 
21,308

Depreciation and amortization
3,635

 
1,971

 
10,809

 
6,120

Information technology and communications
5,775

 
4,424

 
16,073

 
13,666

Professional fees
6,087

 
4,484

 
18,148

 
10,242

Other operating expenses, net
10,099

 
4,072

 
26,432

 
11,538

Total operating expenses
235,754


204,452

 
634,445

 
563,927

 
 
 
 
 
 
 
 
Operating income
62,259


54,485

 
158,562

 
154,684

 
 
 
 
 
 
 
 
Other (income) expense, net
(672
)

(632
)
 
(3,285
)
 
(2,338
)
Income before provision for income taxes
62,931


55,117

 
161,847

 
157,022

 
 
 
 
 
 
 
 
Provision for income taxes
18,974


(6,466
)
 
48,089

 
22,838

Net income attributable to Houlihan Lokey, Inc.

$43,957



$61,583

 

$113,758

 

$134,184

 
 
 
 
 
 
 
 
  Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
    Basic
61,972,027

 
62,552,777

 
62,399,221

 
62,338,102

    Fully Diluted
65,758,679

 
66,122,939

 
65,985,660

 
66,467,378

  Net income per share of common stock:
 
 
 
 
 
 
 
    Basic

$0.71

 

$0.98

 

$1.82

 

$2.15

    Fully Diluted

$0.67

 

$0.93

 

$1.72

 

$2.02



8

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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,
 
2018
 
2017
 
2018
 
2017
Revenues

$298,013

 

$258,937

 

$793,007

 

$718,611

 
 
 
 
 
 
 
 
Employee Compensation and Benefits
 
 
 
 
 
 
 
Employee Compensation and Benefits (GAAP)

$187,180

 

$174,308

 

$501,682

 

$481,112

Less/Plus: Adjustments1
(6,138
)
 
(9,885
)
 
(18,417
)
 
(22,497
)
Employee Compensation and Benefits (Adjusted)
181,042

 
164,423

 
483,266

 
458,615

 


 


 
 
 
 
Non-Compensation Expenses
 
 
 
 
 
 
 
Non-Compensation Expenses (GAAP)

$48,574

 

$30,144

 

$132,763

 

$82,815

Less/Plus: Adjustments2
(1,550
)
 
(1,275
)
 
(7,507
)
 
(1,275
)
Non-Compensation Expenses (Adjusted)
47,024

 
28,869

 
125,256

 
81,540

 
 
 
 
 
 
 
 
Operating Income
 
 
 
 
 
 
 
Operating Income (GAAP)

$62,259

 

$54,485

 

$158,562

 

$154,684

Less/Plus: Adjustments3
7,688

 
11,160

 
25,923

 
23,772

Operating Income (Adjusted)
69,947

 
65,645

 
184,485

 
178,456

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

($672
)
 

($632
)
 

($3,285
)
 

($2,338
)
Less/Plus: Adjustments4

 

 
719

 
1,552

Other (Income) Expenses, net (Adjusted)
(672
)
 
(632
)
 
(2,566
)
 
(786
)
 
 
 
 
 
 
 
 
Provision for Income Taxes
 
 
 
 
 
 
 
Provision for Income Taxes (GAAP)

$18,974

 

($6,466
)
 

$48,089

 

$22,838

Less/Plus: Adjustments5
845

 
27,163

 
5,984

 
40,767

Provision for Income Taxes (Adjusted)
19,819

 
20,697

 
54,073

 
63,605

 
 
 
 
 
 
 
 
Net Income
 
 
 
 
 
 
 
Net Income (GAAP)

$43,957

 

$61,583

 

$113,758

 

$134,184

Less/Plus: Adjustments6
6,842

 
(16,003
)
 
19,221

 
(18,547
)
Net Income (Adjusted)
50,799

 
45,580

 
132,979

 
115,637

 
 
 
 
 
 
 
 
Diluted adjusted net income per share of common stock

$0.77

 

$0.69

 

$2.02

 

$1.74

____________________________
Note: Figures may not sum due to rounding.
1.
Consists of pre-IPO grant vesting, including grants re-awarded following forfeiture, if any.
2.
Includes costs associated with Houlihan Lokey's secondary offering of stock ($0 in Q3 FY19; ($498) in YTD FY19; ($1,275) in Q3 FY18 and YTD FY18), completed acquisitions ($0 in Q3 FY19; ($1,929) in YTD FY19), acquisition-related amortization (($1,550) in Q3 FY19; ($4,460) in YTD FY19), and HL Finance setup costs ($0 in Q3 FY19 and ($619) in YTD FY19).
3.
Includes adjustments from (1) and (2) above.
4.
Includes Australia related transaction expenses ($166 in YTD FY18) and the reduction of an earnout liability ($719 in YTD FY19; $1,386 in YTD FY18).
5.
Includes adjustments relating to the following: (i) the tax impact of the Tax Act and other discrete items (($1,313) in Q3 FY19 and YTD FY19; $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 ($9,448 in 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, 2, and 4 ($2,158 in Q3 FY19; $3,485 in Q3 FY18; $7,297 in YTD FY19; $7,684 in YTD FY18).
6.
Consists of the adjustments described above net of the tax impact of described adjustments.

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