Q1 2025 Houlihan Lokey Inc Earnings Call

Speaker Change: 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, July 30, 2024. I will now turn the call over to the company.

Unknown Executive: Hansa session will follow the formal presentation. Please note that this conference call is being recorded today, July 30th, 2024.

Christopher Crain: I will now turn the call over to the company. Thank you, operator, and hello everyone. By now, everyone should have access to our first quarter fiscal year 2025 earnings release, which can be found on the Houlihan Lokey website at www.hl.com in the Investor Relations section.

Christopher M. Crain: Thank you, operator, and hello everyone. By now, everyone should have access to our first quarter fiscal year 2025 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 the use of words such as will, expect, anticipate, should, or other similar phrases, are not guarantees of future performance.

Speaker Change: Thank you, Operator, and hello, everyone.

Speaker Change: By now, everyone should have access to our first quarter fiscal year 2025 earnings release, which can be found on the Houlihan Lokey website at www.hl.com in the Investor Relations section.

Unknown Executive: 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 guaranteed. 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.

Christopher M. Crain: 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 conditions. We encourage investors to review our regulatory filings, including the Form 10-Q for the quarter ended June 30, 2024, when it is filed with the SEC.

Speaker Change: Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements.

Speaker Change: 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.

Speaker Change: 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.

Unknown Executive: 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 June 30th, 2024, when it is filed with the SEC.

Speaker Change: 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.

Speaker Change: We encourage investors to review our regulatory filings, including the Form 10-Q for the quarter ended June 30, 2024, when it is filed with the SEC.

Unknown Executive: 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 our financial condition. A reconciliation of these measures to the most directly comparable data measures is available in our earnings release and our investor presentation on the hl.com website.

Christopher M. Crain: During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. However, these measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

Speaker Change: During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance.

Speaker Change: These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

Speaker Change: 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.

Unknown Executive: Hosting the call today, we have Scott Adelson, who will hand Loki's Chief Executive Officer, and Lindsay Alley, Chief Financial Officer. They will provide some opening remarks, and then we will open the call to questions.

Christopher M. Crain: A reconciliation of these measures to the most directly comparable gap measures is available in our earnings release and our investor presentation on the HL.com website. Hosting the call today are 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 call to questions. With that, I'll turn the call over to Scott. Thank you, Christopher.

Speaker Change: 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 call to questions.

Scott Adelson: With that, I will turn the call over to Scott. Thank you, Christopher.

Scott Joseph Adelson: Welcome everyone to our first quarter fiscal 2025 earnings call. We ended the quarter with revenues of $514 million and adjusted earnings per share of $1.22. Revenues were up 24%, and adjusted earnings per share were up 37% compared to the same quarter last year. We began the new fiscal year with strength in all three of our businesses. And we concluded the first quarter with a solid increase in corporate finance, improving financial and valuation advisory services, and continuing elevated levels of financial restructuring revenue.

Speaker Change: With that, I'll turn the call over to Scott.

Scott Adelson: Welcome everyone to our first quarter fiscal 2025 earnings call. We ended the quarter with revenues of 514 million and adjusted earnings per share of $1.22. Revenues were up 24% and adjusted earnings per share were up 37% compared to the same quarter last year. We began the new fiscal year with strength at all three of our business lines, and we concluded the first quarter with a solid increase in corporate finance, improving financial evaluation advisory services, and continued elevated levels of financial restructuring revenues. Overall, we remain optimistic that the current market conditions will drive improved M&A activity throughout the year, even as macro elements of uncertainty, including the interest rate environment and US presidential elections, persist.

Scott Joseph Adelson: Thank you, Christopher. Welcome, everyone, to our first quarter Fiscal 2025 Earnings Call.

Lindsay Alley: We ended the quarter with revenues of $514 million and adjusted earnings per share of $1.22. Revenues were up 24% and adjusted earnings per share were up 37% compared to the same quarter last year.

Scott: We began the new fiscal year with strength in all three of our business lines.

Scott: And we concluded the first quarter with a solid increase in corporate finance, improving financial and valuation advisory services, and continue elevated levels of financial restructuring revenues.

Scott Joseph Adelson: Overall, we remain optimistic that current market conditions will drive improved M&A activity throughout the year, even as macro elements of uncertainty, including the interest rate environment and U.S. presidential elections, persist. Corporate finance produced 328 million in revenues for the quarter, a 45% increase over last year's first quarter and our highest first quarter corporate finance revenue ever. Key metrics for our corporate finance business continue to see steady improvement. Our transaction size and average fee per transaction are increasing, especially outside the U.S.

Scott: Overall, we remain optimistic that current market conditions will drive improved M&A activity throughout the year, even as macro elements of uncertainty, including the interest rate environment and U.S. presidential elections, persist.

Scott Adelson: Corporate Finance produced 328 million in revenues for the quarter, a 45% increase over last year's first quarter, and our highest first quarter corporate finance revenues ever. Key metrics for our corporate finance business continue to see steady improvement. Our transaction size and average fee per transaction is increasing, especially outside the US. The average close rate on transactions is increasing, and the time it takes to close a transaction is seeing slight improvement, though still lengthier than historical norms. As long as these trends remain, we should see improvement in our corporate finance business versus the same periods last year.

Scott: Corporate finance produced $328 million in revenues for the quarter, a 45% increase over last year's first quarter, and our highest first quarter corporate finance revenues ever.

Scott: Key metrics for our corporate finance business continue to see steady improvement.

Scott: Our transaction size and average fee per transaction is increasing.

Scott Joseph Adelson: The average close rate on transactions is increasing, and the time it takes to close a transaction is seeing slight improvement, though still lengthier than the historical norm. As long as these trends remain, we should see improvement in our corporate finance business compared to the same periods last year. Finally, capital providers in the middle market are aggressively seeking to deploy capital, benefiting middle market M&A and resulting in a strong start to the year for our capital markets business.

Scott: Especially outside the U.S., the average close rate on transactions is increasing and the time it takes to close a transaction is seeing slight improvement, though still lengthier than historical norms.

Scott: As long as these trends remain, we should see improvement in our corporate finance business versus the same periods last year.

Scott Adelson: Finally, capital providers in the middle market are aggressively seeking to deploy capital, benefiting middle market M&A and resulting in a strong start to the year for our capital markets business.

Scott: Finally, capital providers in the middle market are aggressively seeking to deploy capital, benefiting middle market M&A and resulting in a strong start to the year for our capital markets business.

Scott Adelson: Financial restructuring produced 117 million in revenues for the first quarter, the second highest first quarter revenue for this business. As we have mentioned in previous calls for fiscal 2025, we expect our financial restructuring business to perform similarly to the first three quarters of fiscal 2024. These elevated levels of financial restructuring activity are supported by persistently higher interest rates, political dislocation, especially in Europe, and accelerated refinancing due to corporate maturities occurring over the next couple of years. However, as general market conditions continue to improve, some of this restructuring activity could turn into healthy refinancing activity, and our capital markets business is well-positioned to take advantage of this opportunity.

Scott Joseph Adelson: Financial restructuring produced 117 million in revenues for the first quarter, the second highest first quarter revenue for this business. As we have mentioned in previous calls, for fiscal 2025, we expect our financial restructuring business to perform similarly to the first three quarters of fiscal 2025. These elevated levels of financial restructuring activity are supported by persistently higher interest rates, political dislocation, especially in Europe, and accelerated refinancings due to corporate maturities occurring over the next couple of years.

Scott: Financial restructuring produced $117 million in revenues for the first quarter, the second highest first quarter revenue for this business.

Scott: As we have mentioned in previous calls, for fiscal 2025, we expect our financial restructuring business to perform similarly to the first three quarters of fiscal 2024.

Scott: These elevated levels of financial restructuring activity are supported by persistently higher interest rates, political dislocation, especially in Europe , and accelerated refinancings due to corporate maturities occurring over the next couple of years.

Scott Joseph Adelson: However, as general market conditions continue to improve, some of this restructuring activity could turn into healthy refinancing activity, and our capital markets business is well positioned to take advantage of this opportunity. Financial and Valuation Advisory produced $68 million in revenues for the first quarter, a 4% increase versus the first quarter last year. Many of the same underlying trends that are affecting our corporate finance business are starting to positively impact our FBA business.

Scott: However, as general market conditions continue to improve, some of this restructuring activity could turn into healthy refinancing activity, and our capital markets business is well positioned to take advantage of this opportunity.

Scott Adelson: Financial evaluation advisory produced 68 million in revenues for the first quarter, a 4% increase versus the first quarter last year. Many of the same underlying trends that are affecting our corporate finance business are starting to positively impact our FBA business. Our less cyclical services, like portfolio valuation, have continued to perform well throughout this challenging economic backdrop, while our more pro-cyclical businesses have started to gain momentum.

Scott: Financial and Valuation Advisory produced $68 million in revenues for the first quarter, a 4% increase versus the first quarter last year.

Scott: Many of the same underlying trends that are affecting our corporate finance business are starting to positively impact our FBA business.

Scott Joseph Adelson: Our less cyclical services, like portfolio valuation, have continued to perform well throughout this challenging economic backdrop, while our more pro-cyclical businesses have started to gain momentum. In the quarter, we completed the acquisition of Triago, making a significant expansion of our private funds capabilities and adding seven managing directors to our business. The team has had positive early momentum and success in marketing our new fully integrated capabilities across primary, secondary, directs, and GP advisory marketing. More than 70 finance professionals now make up our private funds practice globally, positioning us to be a holistic advisor across products and geography.

Scott: Our less cyclical services, like portfolio valuation, have continued to perform well throughout this challenging economic backdrop, while our more pro-cyclical businesses have started to gain momentum.

Scott Adelson: In the quarter, we completed the acquisition of Triago, making a significant expansion of our private funds capabilities and adding seven managing directors to our business. The team has had positive early momentum and success in marketing our new fully integrated capabilities across primary, secondary, directs, and GP advisory markets. More than 70 finance professionals now make up our private funds practice globally, positioning us to be a holistic advisor across products and geographies. In total, we added 27 new managing directors in the quarter, hiring six new managing directors in addition to the seven who joined us through the Triago Transact.

Scott: In the quarter, we completed the acquisition of Triago, making a significant expansion of our private funds capabilities and adding seven managing directors to our business.

Scott: The team has had positive early momentum and success in marketing our new fully integrated capabilities across primary, secondary, directs, and GP advisory markets.

Scott: More than 70 finance professionals now make up our private funds practice globally, positioning us to be a holistic advisor across products and geographies.

Scott Joseph Adelson: In total, we added 27 new managing directors in the quarter, hiring six new managing directors in addition to the seven who joined us through the Triago transaction. And we would like to congratulate the 14 managing directors who were promoted from director during the first fiscal quarter as part of our year-end process. Also, as part of the year-end process, we had 11 mostly planned managing directors departure. We continue to see a very strong hiring market for new senior talent and a steady flow of new candidates as we add to the most talented workforce in our firm system.

Scott: In total, we added 27 new Managing Directors in the quarter, hiring 6 new Managing Directors in addition to the 7 who joined us through the Triago transaction.

Scott Adelson: and we would like to congratulate the 14 Managing Directors who were promoted from Director during the first fiscal quarter as part of our UN process. Also, as part of the UN process, we had 11 mostly planned Managing Director departures. We continue to see a very strong hiring market for new senior talent and a steady flow of new candidates as we add to the most talented workforce in our firm history.

Scott: And we would like to congratulate the 14 Managing Directors who were promoted from Director during the first fiscal quarter as part of our year-end process.

Scott: Also, as part of the year-end process, we had 11 mostly planned Managing Director departures.

Scott: We continue to see a very strong hiring market for new senior talent and a steady flow of new candidates as we add to the most talented workforce in our firm's history.

Scott Adelson: We are optimistic about fiscal 2025 given the signs of improving M&A and capital markets activity. Given the investments we have made across our businesses over the last several years, we are especially well positioned to capitalize on this recovery as it unfolds.

Scott Joseph Adelson: We are optimistic about fiscal 2025 given the signs of improving M&A and capital markets activity. Given the investments we have made across our businesses over the last several years, we are especially well positioned to capitalize on this recovery as it unfolds. Lindsey, over to you.

Scott: We are optimistic about fiscal 2025 given the signs of improving M&A and capital markets activity. Given the investments we have made across our businesses over the last several years, we are especially well positioned to capitalize on this recovery as it unfolds.

Lindsay Alley: Lindsay, over to you. Thank you, Scott. Revenue is in corporate finance worth 328 million for the quarter. Up 45% when compared to the same quarter last year. It closed 116 transactions this quarter compared to 95 in the same period last year. And our average transaction fee was higher for the quarter versus the same quarter last year. Natural restructuring revenues were 117 million for the quarter. A 5% decrease versus the same period last year. We closed 33 transactions in the quarter compared to 30 in the same quarter last year, but our average transaction fee on closed deals decreased.

Lindsay Alley: Thank you, Scott. Revenues in corporate finance were $328 million for the quarter, up 45% when compared to the same quarter last year. It closed 116 transactions this quarter, compared to 95 in the same period last year, and our average transaction fee was higher for the quarter versus the same quarter last year. Net restructuring revenues were $117 million for the quarter, a 5% decrease versus the same period last year. We closed 33 transactions in the quarter compared to 30 in the same quarter last year, but our average transaction fee on closed deals decreased.

Lindsay Alley: Lindsay, over to you.

Lindsay Alley: Thank you, Scott.

Lindsay Alley: Revenues and corporate finance were $328 million for the quarter, up 45% when compared to the same quarter last year.

Lindsay Alley: It closed 116 transactions this quarter, compared to 95 in the same period last year. And our average transaction fee was higher for the quarter versus the same quarter last year.

Lindsay Alley: Natural Structuring revenues were $117 million for the quarter, a 5% decrease versus the same period last year. We closed 33 transactions in the quarter compared to 30 in the same quarter last year, but our average transaction fee on closed deals decreased.

Lindsay Alley: As we've mentioned in the past, given the nature of the business, revenues in our financial restructuring business can be lumpy quarter to quarter. For financial and valuation advisory revenues were 68 million for the quarter, a 4% increase from the same period last year. We had 847 fee events during the quarter compared to 786 in the same period last year.

Lindsay Alley: As we've mentioned in the past, given the nature of the business, revenues in our financial restructuring business can be lumpy quarter to quarter. For financial and valuation advisory, revenues were $68 million for the quarter, a 4% increase from the same period last year. We had 847 fee events during the quarter compared to 786 in the same period last year. Turning to expenses,

Lindsay Alley: As we've mentioned in the past, given the nature of the business, revenues in our financial restructuring business can be lumpy quarter to quarter.

Lindsay Alley: For financial and valuation advisory, revenues were $68 million for the quarter, a 4% increase from the same period last year. We had 847 fee events during the quarter, compared to 786 in the same period last year.

Lindsay Alley: Turning to expenses. Our adjusted compensation expenses were 316 million for the quarter versus 256 million for the same period last year. Our only adjustment was 14.2 million for deferred retention payments related to certain acquisitions. Our adjusted compensation expense ratio for the first quarter in both fiscal 2025 and 2024 was 61.5%.

Lindsay Alley: Our adjusted compensation expenses were $316 million for the quarter versus $256 million for the same period last year. Our only adjustment was $14.2 million for deferred retention payments related to certain acquisitions. Our adjusted compensation expense ratio for the first quarter of both fiscal 2025 and 2024 was 61.5%. We expect to maintain a long-term target of 61.5% for our adjusted compensation expense ratio.

Lindsay Alley: Turning to expenses. Our adjusted compensation expenses were $316 million for the quarter versus $256 million for the same period last year. Our only adjustment was $14.2 million for deferred retention payments.

Lindsay Alley: related to certain acquisitions.

Lindsay Alley: Our adjusted compensation expense ratio for the first quarter in both fiscal 2025 and 2024 was 61.5%. We expect to maintain our long-term target of 61.5% for our adjusted compensation expense ratio.

Lindsay Alley: We expect to maintain a long-term target of 61.5% for our adjusted compensation expense ratio. Our adjusted non-compensation expenses were 80 million for the quarter and increased of 6% over the same period last year. This resulted in an adjusted non-compensation expense ratio at the 10.6% of the quarter compared to 18.2% for the same period last year. On a per employee basis, our adjusted non-compensation expense was 31,000 this quarter versus 29,000 for the same quarter last year.

Lindsay Alley: Our adjusted non-compensation expenses were $80 million for the quarter, an increase of 6% over the same period last year. This resulted in an adjusted non-compensation expense ratio of 15.6% for the quarter compared to 18.2% for the same period last year. On a per employee basis, our adjusted non-competition expense was $31,000 this quarter versus $29,000 for the same quarter last year. For the quarter, we adjusted out of our non-compensation expenses $3.5 million in non-cash acquisition-related amortization and $3.6 million for acquisition-related costs, which were primarily related to the write-down of the assumed lease in New York as part of the Triago acquisition.

Lindsay Alley: Our adjusted non-compensation expenses were $80 million for the quarter, an increase of 6% over the same period last year.

Lindsay Alley: This resulted in an adjusted non-compensation expense ratio of 15.6% for the quarter compared to 18.2% for the same period last year. On a per-employee basis, our adjusted non-compensation expense was $31,000 this quarter versus $29,000 for the same quarter last year.

Lindsay Alley: For the quarter, we adjusted out of our non-compensation expenses 3.5 million in non-cash acquisition related amortization and 3.6 million for acquisition related costs, which was primarily related to the right down of the assumed lease in New York as part of the Triago acquisition. We also had an adjustment of 500,000 pertaining to professional fees associated with streamlining our global organizational structure, also referred to as Project Solo.

Lindsay Alley: For the quarter, we adjusted out of our non-compensation expenses $3.5 million in non-cash acquisition-related amortization and $3.6 million for acquisition-related costs, which was primarily related to the write-down of the assumed lease in New York as part of the Triago acquisition.

Lindsay Alley: We also had an adjustment of $500,000 pertaining to professional fees associated with streamlining our global organizational structure, also referred to as Project SOLAR. Our adjusted other income and expense produced income of approximately $5.1 million versus income of approximately $3 million in the same period last year. The improvement in this category was primarily due to a net increase in interest income. We adjusted out of other income and expense a loss of $828,000 related to the increase in value of an earn-out liability associated with one of our prior acquisitions.

Lindsay Alley: We also had an adjustment of $500,000 pertaining to professional fees associated with streamlining our global organizational structure, also referred to as Project SOLO.

Lindsay Alley: Our adjusted other income and expense produced income of approximately 5.1 million versus income of approximately 3 million in the same period last year. here. The improvement in this category was primarily due to a net increase in interest income. We adjusted out of other income and expense, a loss of 828,000 related to the increase in value of an earn-out liability associated with one of our prior acquisitions. We treat all acquisitions related earn outs as purchase price and the just out of our P&L any significant changes in the value of these earn outs. Our adjusted effective tax rate for the quarter was 31.2%, compared to 29.2% for the same quarter last year.

Lindsay Alley: Our adjusted other income and expense produced income of approximately $5.1 million versus income of approximately $3 million in the same period last year.

Lindsay Alley: The improvement in this category was primarily due to a net increase in interest income.

Lindsay Alley: We adjust it out of other income and expense, a loss of $828,000, related to the increase in value of an earn-out liability associated with one of our prior acquisitions. We treat all acquisition-related earn-outs as purchase price and adjust out of our P&L any significant changes in the value of these earn-outs.

Lindsay Alley: We treat all acquisition-related earnouts as purchase price and adjust out of our P&L any significant changes in the value. Our adjusted effective tax rate for the quarter was 31.2% compared to 29.2% for the same quarter last year. The increase in our adjusted tax rate was driven primarily by increased non-deductible expenses for the quarter. We adjusted out of our gap effective tax rate, a significant benefit that we received as a result of our stock vesting in the first quarter.

Lindsay Alley: Our adjusted effective tax rate for the quarter was 31.2%, compared to 29.2% for the same quarter last year.

Lindsay Alley: The increase in our adjusted tax rate was driven primarily by increased non-deductible expenses for the quarter.

Lindsay Alley: The increase in our adjusted tax rate was driven primarily by increased non-deductible expenses for the quarter.

Lindsay Alley: We adjusted out of our gap effective tax rate, a significant benefit that we received as a result of our stock investing in the first quarter. We also adjusted out a one-time reversal of a deferred tax asset. A long-term target for our adjusted effective tax rate is between 28 and 30%, and we expect the school 2025 to end up at the high end of that range.

Lindsay Alley: We adjusted out of our GAAP effective tax rate a significant benefit that we received as a result of our stock vesting in the first quarter. We also adjusted out a one-time reversal of a deferred tax asset.

Lindsay Alley: We also adjusted out a one-time reversal of a deferred tax asset. Our long-term target for our adjusted effective tax rate is between 28 and 30 percent, and we expect fiscal 2025 to end up at the high end of that range.

Lindsay Alley: A long-term target for our adjusted effective tax rate is between 28 and 30 percent, and we expect fiscal 2025 to end up at the high end of that range.

Lindsay Alley: Turning to the balance sheet, as of quarter end, we had approximately 485 million of unrestricted cash in equivalents and investment securities.

Lindsay Alley: Turning to the balance sheet, as of quarter end, we had approximately $485 million of unrestricted cash and equivalents and investment security. Our cash position declined this quarter as we paid a significant portion of our fiscal 2024 bonuses to employees in May. Also, in our first quarter, we issued approximately 1 million new shares to employees as part of our fiscal 2024 year-end compensation, and we repurchased through withholding to cover approximately 800,000 shares during the month of May. And with that, Operator, we can open the line for questions.

Lindsay Alley: Turning to the balance sheet, as of quarter end we had approximately 485 million of unrestricted cash and equivalents and investment securities. Our cash position declined this quarter as we paid a significant portion of our fiscal 2024 bonuses to employees in May.

Lindsay Alley: Our cash position to climb this quarter is we pay a significant portion of our fiscal 2024 bonuses to employees in May. Also, in our first quarter, we issued approximately 1 million new shares to employees as part of our fiscal 2024 year-end compensation, and we repurchased through withhold to cover approximately 800,000 shares during the month of May.

Lindsay Alley: Also, in our first quarter, we issued approximately 1 million new shares to employees as part of our fiscal 2024 year-end compensation, and we repurchased through Withhold to Cover approximately 800,000 shares during the month of May. And with that, Operator, we can open the line for questions.

Unknown Executive: And with that, operator, we can open the line for questions.

Unknown Executive: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speak of equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please; I'll be pulled for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question key. You may press star 2 if you would like to remove a question from the... For participants using speaker equipment, it may be necessary to pick up a handset before pressing the start button. One moment, please, while we poll for questions. The first question comes from the line of Brennan Hawken with UBS. Please go ahead.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Brennan Hawken: The first question comes from the line of Brennan Hawking with UBS; please call it. Good afternoon, Scott. Now let's see. Thanks for taking my questions. We would like to start on corporate. Hey guys, how are you? We would like to start on corporate finance. Good to see breaking out of the prior range, and it certainly sounds like from your prepared remarks, the outlook for that business continues to improve.

Lindsay Alley: One moment please while we poll for questions.

Speaker Change: The first question comes from the line of Brennan Hawken with UBS. Please go ahead.

Brennan Hawken: Good afternoon, Scott and Lindsey. Thanks for taking my questions.

Brennan Hawken: Good afternoon, Scott and Lindsay. Thanks for taking my questions.

Brennan Hawken: We'd like to start on... Hey guys, how are you? Uh, we'd like to start on corporate finance, good to see it breaking out of the prior range. And it certainly sounds like from your prepared remarks that the outlook for that business continues to improve. So, you know, is there any historical context that you could give or, you know, is there a way in which we should be thinking about, you know, potential growth and what indicators we should be watching as we continue to monitor the situation?

Brennan Hawken: Hey guys, how are you? We'd like to start on...

Speaker Change: Corporate finance

Brennan Hawken: Good to see breaking out of the prior range, and it certainly sounds like from your prepared remarks, the outlook for that business continues to improve. So, you know, is there a historical context that you could give or, you know, is there a way in which we should

Scott Adelson: Is there a historical context you could give, or is there a way in which we should be thinking about the potential growth and what indicators we should be watching as we continue to monitor the situation? I think it's really consistent with what we've been saying for a number of quarters now that we continue to see things improving, and they are continuing to improve. We have benefited, as we've said, particularly in Europe, from a very different reputation than we had prior to our transaction a couple of years ago. As the market increases, we are seeing improvement in average deal size, in our close rates, in our fees, and so forth, and all of that, just an ear into our benefits.

Speaker Change: be thinking about the potential growth and what indicators we should be watching as we continue to monitor the situation.

Scott Joseph Adelson: I think it's really consistent with what we've been saying for a number of quarters now that we continue to see things improving, and they're continuing to improve. And we have benefited, as we've said, particularly in Europe, from a very different reputation than we had prior to our transaction a couple years ago. And as the market increases, we are seeing improvements in average deal size, in our close rates, in our fees, and so forth, and all of that is just inherent to our benefits.

Speaker Change: I think it's really consistent with what we've been saying for a number of quarters now that we continue to see things improving and they are continuing to improve and we have

Speaker Change: benefited, as we've said, particularly in Europe from a very different reputation than we had prior to our transaction of a couple of years ago. As the market increases, we are seeing improvement in average deal size and

Speaker Change: And our close rates and our fees and so forth and all that just inherent to our benefit.

Scott Joseph Adelson: And the only thing I'd add, Brennan, is that we do have a seasonal business, as I think most of you know, and so we do think about it in terms of how the next quarter will perform versus the same quarter last year, and that moves into the third quarter for us in Q4. That's primarily in our corporate finance and our FBA business. As you know, our restructuring business tends to be a bit lumpier, maybe a little less seasonal, but certainly for corporate finance and FBA, we are comparing versus the same quarter last year. And I think our comments were generally around, look, if conditions continue to behave the way they are, or improve the way they are, we should expect to see good growth quarter over quarter.

Scott Adelson: The only thing I've had, Brennan, is we do have a few little businesses. I think most of you know, and so we do think about it in terms of how the next quarter will perform versus the same quarter last year, and that moves into the third quarter for us in Q4, and that's primarily in our corporate finance and our FDA business. As you know, our restructuring business tends to be a bit lumpier, maybe a little less seasonal, but certainly for corporate finance and FDA, we are comparing versus the same quarter last year, and I think our comments were generally around, look at condition, continue to hate the way they are, improve the way they are.

Speaker Change: And the only thing I'd add, Brennan, is, you know, we do have a seasonal business, as I think most of you know.

Speaker Change: And so we do think about it in terms of how the next quarter will perform versus the same quarter last year.

Brennan Hawken: Got it. That's clear. Thanks very much.

Speaker Change: and that moves into the third quarter for us in Q4. And that's primarily in our corporate finance and our FBA business.

Speaker Change: As you know, our restructuring business tends to be a bit lumpier, maybe a little less seasonal, but certainly for corporate finance and FDA, we are comparing versus the same quarter last year. And I think our comments were generally around, look, if conditions continue to behave the way they are, improve the way they are, we should expect to see, you know, growth, good growth quarter over quarter.

Brennan Hawken: We should expect to see, you know, good growth quarter over quarter. Got it. That's clear.

Brennan Hawken: On restructuring, you know, we've recently seen what I believe is the first full-blown restructuring from the creditor of Direct Lending Group. I'm curious to hear your views on this. Maybe this is more of a one-off, or do you think this might be a sign of building stress behind all of the liability management mandates that we've seen in recent years? And if that's the case, you know, could that provide some upside given that full-blown restructurings do tend to be more profitable than liability management?

Brennan Hawken: Thanks very much.

Brennan Hawken: On restructuring, we've recently seen what I believe is the first full-blown restructuring from the creditor of Direct Lending Group. Curious to hear your views on this; maybe is this more of a one-off, or do you think this might be a sign of building stress behind all of the liability management mandates that we've seen in recent years? And if that's the case, could that provide some upside given that full-blown restructuring do tend to be more profitable than liability management? I'll take a stab at that. Brennan, I'm not familiar with the restructuring that you've mentioned. We still think that the credit markets remain quite healthy and continue to be in the middle market or primary source of capital.

Speaker Change: Got it. That's clear. Thanks very much. On restructuring, we've recently seen what I believe is the first full-blown restructuring from a

Speaker Change: The creditor of Direct Lending Group.

Speaker Change: Curious to hear your views on this. Maybe is this more of a one-off or do you think this might be a sign of?

Speaker Change: Building stress behind all of the liability management mandates that we've seen in recent years and and if that's the case You know could that provide some upside given that full-blown restructurings do tend to be more profitable than liability management

Scott Joseph Adelson: I mean, I'll take a stab at that. Brennan, I'm not familiar with the restructuring that you mentioned. We still think that the credit markets remain quite healthy and continue to be in the middle market, our primary source of capital. And so, you know, there is quite a bit of leverage out there. There will be some players that perform well and others that do not, but we're not looking at this restructuring that you mentioned as a sign of things to come.

Brennan Hawken: I'll take a stab at that. Brennan, I'm not familiar with the restructuring that you mentioned. We still think that the credit markets remain quite healthy.

Speaker Change: and continue to be in the middle market, our primary source of capital. And so, you know, there is quite a bit of leverage out there. There will be some players that perform well and others that do not.

Scott Adelson: And so, you know, there is quite a bit of leverage out there. There will be some players that perform well, and others that do not. But we don't, we're not looking at this restructuring that you mentioned as a sign of things to come. Okay. Thanks for taking my questions.

Speaker Change: We're not looking at this restructuring that you mentioned as a sign of things to come.

Brennan Hawken: Okay, thanks for taking my questions.

Speaker Change: Okay, thanks for taking my questions.

Unknown Executive: Thank you.

James Edwin Yaro: Thank you. The next question comes from the line of James Yaro with Coleman Sachs. Please go ahead.

James Yaro: Next question comes from the line of James Yaro with Goldman Sachs. Please go ahead. Good afternoon, Scott and Lindsay. And thanks for taking my questions.

Speaker Change: Thank you. Next question comes from the line of James Yaro with Coleman Sachs. Please go ahead.

James Edwin Yaro: Good afternoon, Scott and Lindsay, and thanks for taking my questions. Maybe just starting with corporate finance and specifically on the sponsor side of the business, maybe if you could just provide your thoughts on how much they have improved over the last few months. And then over what time period would you expect sponsor M&A to fully normalize, and would we need to see rates come down for that to occur?

Scott Adelson: Maybe just starting with corporate finance and specifically on the sponsor side of the business, maybe you could just provide your thoughts on how much those improved over the last few months and then over what time period would you expect sponsor M&A to fully normalize and would we need to see rates come down for that to occur? Thanks. Good. Good set of questions. I think when you take a look, it has been that continued improvement in the sponsor world as well. You do see people gaining confidence in moving deals forward. We've been saying that again for quarters, and this is just a continuation of it.

James Edwin Yaro: Good afternoon, Scott and Lindsay, and thanks for taking my questions.

James Edwin Yaro: Maybe just starting with corporate finance and specifically on the sponsor side of the business, maybe if you could just provide your thoughts on how much those have improved over the last few months.

Speaker Change: And then over what time period would you expect sponsor M&A to fully normalize and would we need to see rates come down for that to occur?

Scott Joseph Adelson: improvement in the sponsor world as well. You do see people gaining confidence and moving deals forward. We've been saying that, again, for quarters, and this is just a continuation of it. I can't sit here and tell you when that will exactly peak, or that crystal ball is not available to me. Having said that, everything is continuing in the right direction.

Speaker Change: Thanks. Good set of questions. I mean, I think when you take a look, it has been that continued improvement in the sponsor world as well. You do see people gaining confidence and moving deals forward. We've been saying that, again, for quarters, and this is just a continuation of it. I can't sit here and tell you when that will exactly peak or that crystal ball is not available to me. Having said that, everything is continuing in the direction that we have expected it to, and everything that we are seeing right now says it will continue.

Scott Adelson: I can't sit here and tell you when that will exactly peak or that that crystal ball is not available to me. Having said that, everything is continuing in the direction that we have expected it to, and we just can. Everything that we are seeing right now says it will continue.

James Yaro: Okay, that's very helpful.

Scott Joseph Adelson: Okay, that's very helpful. Maybe just on the private funds, businesses, you know, you talked about the size of the business; those numbers are very helpful. But maybe just your, if you take a step back, your views on the durability of the industry growth that we're seeing in that business and which pockets within the business you see the best opportunities to grow and take market share.

Scott Adelson: Maybe just on the private funds businesses, you know, you talked about the size of the business; those numbers are very helpful. But maybe just your, if you take a step back, your views on the durability of the industry growth that we're seeing in that business and which pockets within the business you see the best opportunities to grow and take market share. I think when you're talking about the private funds, really, is in our view, a rapidly evolving part of the market. Let's go on the primary side more on the secondaries and directs and stakes, that we are still in very early days of that as the entire alternative asset class really matures as an industry, along thinking about things like this. And we think that there is a lot of growth, and that's why we've made the investments that we've made in it, and we are very pleased with our early indications of how things are going.

Speaker Change: Okay, that's very helpful. Maybe just on the private funds businesses, you know, you talked about the size of the business, those numbers are very helpful, but maybe just your, if you take a step back, your views on the durability of the industry growth that we're seeing in that business and which pockets within the business you see the best opportunities to grow and take market share.

Scott Joseph Adelson: I think when you're talking about the private funds group, it really is, in our view, a rapidly evolving part of the market, less so on the primary side, more on the secondaries, directs, and stakes, that we are still in the very early days of that, as the entire alternative asset class really matures as an industry along things like this. And we think that there is a lot of growth potential, and that's why we've made the investments that we have made in it. And we are very pleased with our early indications of how things are going.

Speaker Change: I think when you're talking about the private funds group, it really is, in our view, a rapidly evolving part of the market. Less so on the primary side, more on the secondaries and directs and stakes.

Speaker Change: We are still in very early days of that as the entire alternative asset class really matures as an industry along things like this and we think that

Speaker Change: There is a lot of growth and that's why we've made the investments that we've made in it and we are very pleased with our early indications of how things are going.

James Yaro: Thank you so much. Appreciate it. Thank you.

James Edwin Yaro: Very helpful. Thank you so much.

Speaker Change: Very helpful. Thank you so much.

Ryan Michael Kenny: Thank you. The next question comes from the line of Devin Ryan with JMP Securities. Please go ahead.

Devin Ryan: Next question comes from the line of Devin Ryan, with JMP Security's Peace Corps head.

Speaker Change: Appreciate it.

Speaker Change: Thank you. Next question comes from the line of Devin Ryan with JMP Securities. Please go ahead.

Scott Adelson: Hi Scott, I want to see how are you. Devin, I want to pick up on the comment on the average fee size outside the US, and you sound like GCA has been a nice catalyst for the European business. And now that it's been integrated, just curious kind of the network effects that you might be seeing on productivity for either the legacy European bankers within Houlihan or even connectivity into their US counterparts. And I'm going to try to think about what this all implies potentially for upside to average banker productivity over time. You're given that there were so many bankers out of a GCA, and it sounds like it's going pretty well.

Ryan Michael Kenny: Hi Scott. Hi Lindsey. How are you? Hey Devin.

Ryan Michael Kenny: Hi, Scott. Hi, Lindsey. How are you?

Scott Joseph Adelson: I want to pick up on the comment on the average fee size outside the U.S. And, you know, it sounds like GCA has been a nice catalyst for the European business. And now that it's been integrated, I'm just curious about the network effects that you might be seeing on productivity for either the legacy European bankers within Houlihan or even connectivity to their U.S. counterparts. And I'm just trying to think about what this all implies potentially for upside to average banker productivity over time, just given that there were so many bankers out of the GCA and it sounds like it's going pretty well. Thanks.

Speaker Change: Thank you. Bye.

Speaker Change: I want to pick up on the comment on the average fee size outside the US and you know it sounds like GCA has been a nice catalyst for the European business and

Speaker Change: Now that it's been integrated, I'm just curious about the network effects that you might be seeing on productivity for either the legacy European bankers within Houlihan or even connectivity into their U.S. counterparts. And I'm just trying to think about...

Speaker Change: What this all implies potentially for upside to average banker productivity over time. Given that there were so many bankers added with GCA and it sounds like it's going pretty well. Thanks.

Scott Adelson: Thanks. Yeah, I mean, I think that there is a, we're a very different firm. Each individual firm of you was very different than before the transaction that we are on a combined basis afterwards. And our importance to the marketplace and the ability for us to truly deliver an international footprint with our capital markets capabilities, with our sponsor capabilities, has certainly driven a different type of business that I would say either of individuals was seeing before. And as markets return, we expect to continue to see that momentum.

Scott Joseph Adelson: Yeah, I mean, I think that there is a we're a very different firm. Each individual firm, if you will, is very different from before the transaction than we are on a combined basis afterwards in our importance to the marketplace and the ability for us to truly deliver an international footprint with our capital markets capabilities.

Speaker Change: Yeah, I mean, I think that there is a, we're a very different firm, each individual firm, if you will, is very different than before the transaction than we are on a combined basis afterwards and our importance to the marketplace and the ability for us to truly deliver

Speaker Change: International Footprint with our Capital Markets capabilities with our sponsor capabilities has certainly driven a Different type of business that I would say either group of individuals

Speaker Change: was seen before, and as markets return, we expect to continue to see that momentum.

Scott Adelson: All right, thanks. And just to follow up on just the capital market outlook, and maybe the interplay as well, it's just the restructuring business. And I'm curious, you know, obviously the M&A business has been relatively depressed, and it started to pick up. Restructuring has been healthy and may take down, but more traditional kind of capital markets activity may open up as a result. So I'm just going to curious how one that business has been trending in the two, the interplay with that business, if restructuring slows down, but the M&A businesses is taking up.

Scott Joseph Adelson: All right, thanks. And just to follow up on that,

Speaker Change: All right, thanks. And just to follow up on CapitalMarket.org and maybe the interplay as well with the restructuring business.

Speaker Change: I'm curious, you know, obviously the M&A business has been relatively depressed and it's starting to pick up, restructuring has been healthy and may take down, but more traditional kind of capital markets activity may open up as a result, so I'm just kind of curious how, one, that business has been trending, and then two, the interplay with that business, if restructuring

Scott Adelson: Thanks. Yeah, I mean, the capital markets business has continued to grow, I think, for a number of reasons, saying as we continue to see growth in the private capital markets, obviously being one of them as that market heats up. Obviously, there are certain restructurings that, in a less robust financing environment, may have become restructurings; may wind up being capital markets opportunities. We think we're well positioned in either direction that those had, but the capital markets businesses continuing to grow for multiple reasons, not just that.

Speaker Change: Slow down, but yeah, the M&A business is picking up. Thanks

Scott Joseph Adelson: Yeah, I mean, the capital markets business has continued to grow, I think, for a number of reasons, and as we continue to see growth in the private capital markets, obviously, being one of them as that market heats up. Obviously, there are certain restructurings that in a less robust financing environment may have become restructurings may wind up being capital markets opportunities; we think we're well positioned for in either direction that those head. But the capital markets businesses are continuing to grow for multiple reasons, not just that.

Speaker Change: Yeah, I mean in the capital markets business has continued to grow I think for a number of reasons and as we continue to see growth in the private capital markets obviously being one of them as that market heats up obviously there are certain restructurings that in a less robust financing environment may have become Restructurings may wind up being capital markets opportunities. We think we're well positioned

Speaker Change: with in either direction that those head but the capital markets business is continuing to grow for multiple reasons not just that.

Scott Adelson: Okay, great.

Ryan Michael Kenny: Okay, great. Thank you very much.

Unknown Executive: Thank you very much.

Unknown Executive: Thank you.

Speaker Change: Okay, great. Thank you very much.

Kenneth Brooks Worthington: Thank you. The next question comes from the line of Ken Worthington with J.P. Morgan. Please go ahead. Hi.

Ken: Next question comes on the line of Ken with JP Morgan. Please go ahead. Hi, good afternoon. On F&A, revenue is up quarter over quarter, but as we look sort of year over year, growth at sort of 4% in what seems like an easier comp comparison. We've seen deceleration in growth from what we've seen in recent quarters.

Speaker Change: Thank you.

Speaker Change: Thank you. Next question comes from the line of Ken Worthington with J.P. Morgan. Please go ahead.

Kenneth Brooks Worthington: Hi, good afternoon. On FEA, revenue is up quarter over quarter, but as we look sort of year over year, growth is at sort of 4% in what seems like an easier comp comparison. We've seen a deceleration in growth from what we've seen in recent quarters. So you can give us a little more detail on the variance in revenue generation from this quarter last year and maybe why we're not seeing better growth more recently in that area given how strong the markets are and sort of the rebound we're starting to see in M&A and the impact that we would expect that to have there versus what we saw this time last year

Kenneth Brooks Worthington: Hi, good afternoon. On FDA, you know, revenue is up quarter over quarter, but as we look sort of year over year, growth at sort of 4% in what seems like an easier comp comparison.

Speaker Change: We've seen deceleration in growth from what we've seen in recent quarters. So you can give us a little more detail on the variance in revenue generation from, you know, this quarter last year and maybe why we're not seeing...

Scott Adelson: So you can give us a little more detail on the variance in revenue generation from this quarter last year, and maybe why we're not seeing better growth more recently in that area, given how strong markets are and sort of the rebound we're starting to see in M&A and the impact that we would expect would have there versus what we saw this time last. last year. What are the puts in? Yeah, I mean, I think, yeah, for FDA, as a reminder, you know, the last couple of years, when I'd say the M&A markets were down pretty significantly, not only for our peers, but for us, FDA was flat.

Speaker Change: better growth more recently in that area, given how strong markets are and sort of the rebound we're starting to see in M&A and the impact that we would expect would have there versus what we saw this time last year.

Scott Joseph Adelson: What are the puts and takes? Yeah, I mean, for FDA, as a reminder, you know, the last couple of years when I'd say the M&A markets were down pretty significantly, not only for our peers but for us, the FDA was flat. And so they had a pretty good couple of years where most, certainly M&A-focused firms were down. And so, you know, for us.

Speaker Change: What are the puts and takes? Yeah, I mean, I think, yeah, for FBA, as a reminder, you know, the last couple of years when I'd say the M&A markets were down pretty significantly, not only for our peers, but for us.

Scott Adelson: And so they had a pretty good couple of years, where most certainly M&A focus firms were down. And so, you know, for us, we are actually quite happy with the growth in M&A this quarter, or sorry, with FDA this quarter. There are several business lines with an FDA, some of which are traditionally kind of M&A market driven, others of which have nothing to do with the current state of the market. So, I think, you know, coming off a couple of good years in FDA on a relative basis, I think quarter-on-quarter growth here is something we're pretty happy about.

Speaker Change: FDA was flat, and so they had a pretty good couple of years where most certainly M&A focused firms were down. And so, you know, for us...

Scott Joseph Adelson: We're actually quite happy with the growth in M&A this quarter, sorry, with FBA this quarter. There are several business lines within FBA, some of which are traditionally kind of M&A market-driven, others of which have nothing to do with the current state of the markets. And so, you know, coming off a couple of good years in FBA on a relative basis, I think quarter-over-quarter growth here is something we're pretty happy about.

Speaker Change: We're actually quite happy with the growth in M&A this quarter, I'm sorry, with FDA this quarter.

Speaker Change: There are several business lines within SBA, some of which are traditionally kind of M&A market driven, others of which have nothing to do with the current state of the markets.

Speaker Change: you know, coming off a couple of good years in FCA on a relative basis, I think quarter over quarter growth here is

Scott Joseph Adelson: And I'd say the mix of the service lines is probably going to result in FBA growing slower than corporate finance as these markets come back. And that's the nature of the business. In good, strong M&A markets, it tends to grow a little bit slower than a pure M&A business because of the non-cyclical businesses that it's in, or I'd say that the non-cyclical businesses it's in. And then, in tougher markets, it tends to perform better. And so I think that's probably what you're talking about.

Scott Adelson: And I'd say the mix of the service lines is probably going to result in FDA growing slower than Quarter Finance as these markets come back. And that's the nature of the business. In good, strong M&A markets, attempts to grow a little bit slower than a pure M&A business because of the non-cyclical businesses that it's in, or I'd say that non-cyclical businesses it's in, and then in tougher markets, it tends to perform better. And so I think that's probably what you're seeing.

Speaker Change: I'm something where we're pretty happy about and I'd say the mix of the service lines.

Speaker Change: is probably going to result in FBA growing slower than corporate finance as these markets come back.

Speaker Change: And that's the nature of the business. In good, strong M&A markets, it tends to grow a little bit slower than a pure M&A business because of the non-cyclical businesses that it's in, and then in tougher markets, it tends to perform better. And so I think that's probably what you're seeing.

Scott Adelson: Okay. Can you give us actually give us a little more color on, you know, those, you know, non-market-tentative businesses and how they're doing. And even on the rebound that you're seeing in the more market-tentative businesses, again, can you just take us one level deeper and give us a little more color? Yeah, we don't get in this specific line out of performance in FDA. I will say it is the non-sensitive, non-market-tentative businesses did absolutely better than the businesses that were M&A focused in FDA, but we don't get into the detailed can on which businesses are performing in terms of the specifics, in terms of how the businesses are performing within FDA.

Kenneth Brooks Worthington: Can you actually give us a little more color on those non-market sensitive businesses and how they're doing, and even on the rebound that you're seeing in the more market sensitive businesses? Again, can you just take us one level deeper and give us a little more color?

Speaker Change: Okay, can you give us, actually give us a little more color on...

Speaker Change: non-market sensitive businesses and how they're doing, and even on the rebound that you're seeing in the more market sensitive businesses. Again, can you just take us one level deeper and give us a little more color?

Scott Joseph Adelson: Yeah, we don't get into specific line item performance in FBA. I will say the non-market sensitive businesses did certainly better than the businesses that were M&A focused in FBA. But we don't get into the details, Ken, on which businesses are performing in terms of the specifics on terms of how the businesses are performing.

Speaker Change: Yeah, we don't get into specific line item performance at FEA. I will say it is the non-sensitive, non-market sensitive businesses.

Speaker Change: did certainly better than the businesses that were M&A focused in FBA, but we don't get into the details, Ken, on which businesses are performing in terms of the specifics in terms of how the businesses are performing within FBA.

Kenneth Brooks Worthington: Then a super simple one on tax. You mentioned tax for the rest of the year kind of should come at the high end of the historic range. What's driving the tax to be at the high end versus the low end? Again, it's a mix of business, but what's happening in the mix? Yeah, there are a few things. I think it is, you know, as you know, we have pretty big businesses in some of the higher jurisdictions in Europe, so the higher tax jurisdictions in Europe, so the UK, Germany.

Lindsay Alley: Then a super simple one on tax. You mentioned tax for the rest of the year. Kind of should come at the high end of the historic range. What's driving the tax to be at the high end versus the low end? I guess it's mixed with business. I think it's what's happening in the media. Yeah, it's a few things. I think it is, you know, we have pretty big businesses and some of the higher jurisdictions in Europe. So the higher tax or restrictions in Europe. So UK, Germany, we have a big business in Japan, all of which are performing pretty well.

Speaker Change: I

Speaker Change: Then a super simple one on tax. You mentioned tax for the rest of the year should come at the high end of the historic range. What's driving the tax to be at the high end versus the low end?

Kenneth Brooks Worthington: I get it's a mix of business.

Speaker Change: what's happening in the mix.

Speaker Change: It's a few things. I think it is, you know, as you know, we have pretty big businesses and some of the higher jurisdictions in Europe , so the higher tax jurisdictions in Europe , so UK, Germany.

Kenneth Brooks Worthington: We have big businesses in Japan, all of which are performing pretty well, so that's going to drive our tax rate a little bit higher. And that's probably the primary thing driving it. And so I think as long as we're optimistic about some of the larger markets with higher taxes that we're in, you're going to see us towards the higher end of that range. Thank you very much.

Speaker Change: We have a big business in Japan, all of which are performing pretty well, so that's going to drive our tax rate a little bit higher.

Lindsay Alley: So that's going to drive our tax rate a little bit higher, and that's probably the primary thing driving it. And so I think as long as we're optimistic about some of the larger markets with higher taxes that we're in, you're going to see us towards the higher end of that range.

Speaker Change: And that's probably the primary thing driving it. And so I think as long as we're optimistic about some of the larger markets with higher taxes that we're in, you're going to see us towards the higher end of that range.

Lindsay Alley: Okay, high quality problem. Thank you very much. Yeah, it's a high-quality problem. Thank you.

Kenneth Brooks Worthington: Yeah, it's a high quality problem. Thank you.

Speaker Change: Okay, high quality problem. Thank you very much. Yeah, it's a high quality problem. Thank you.

Brendan O'brien: Thank you. The next question comes from the line of Brendan O'Brien with Wolf Research. Please go ahead.

Brendan O'brien: Next question comes from the line of Brendan O'Brien with Wolf Research. Please go ahead. Hey, good afternoon. Thanks for taking my questions. I guess the start I just wanted to follow up on the European business. So I just wanted to give a sense as to how I...

Speaker Change: Thank you. Next question comes from the line of Brendan O'Brien with Wolf Research. Please go ahead.

Scott Joseph Adelson: Hey, good afternoon. Thanks for taking my questions. I guess to start, I just wanted to follow up on the European business. I just wanted to get a sense as to how Transcripts by Transcription Outsourcing, LLC.

Brendan O'brien: Hey, good afternoon. Thanks for taking my questions. I guess to start, I just wanted to follow up on the European business. I just wanted to get a sense as to how activity

Scott Adelson: Activity is trending in Europe relative to US, specifically whether the recent rate cuts by the UCB have had any material impact on activity levels in the region. I mean, really from our perspective, we continue to see it picking up like it has in the US. If anything, I would say it is lagged in a little bit in that pickup, but the directionally everything is heading in the same. Direction, it is just more about pace.

Speaker Change: is trending in Europe relative to the U.S., specifically whether the recent rate cuts by the UCB have had any material impact on activity levels in the region.

Brendan O'brien: I mean, really, from our perspective, we continue to see it picking up, like it has in the US. If anything, I would say it has lagged a little bit in that pickup. But the directionally, everything is heading in the same direction; it is just more about pace. Gotcha. And I guess, you know, pivoting to restructuring and their comments indicating that we could see a tail off in activity if M&A activity were to pick up more meaningfully, which makes sense given the historical relationships between the two businesses.

Speaker Change: I mean really from from our perspective we continue to see it picking up

Speaker Change: like it has in the U.S. If anything, I would say it has lagged it a little bit in that pickup, but the directionally, everything is heading in the same.

Speaker Change: Direction, it is just more about pace.

Scott Adelson: And yes, you know, pivoting to restructuring and their comments indicating that we could see a tail off in activity, if I'm an activity where to pick up more more meaningfully, which makes sense given the historical relationships between the two businesses. I know in the past, you know, you guys have spoken to the business, kind of seeing higher floors and higher ceilings as you continue to grow. So just want to get a sense as to how we should be thinking about the trajectory of restructuring over the next couple of years and maybe where that number could settle out.

Speaker Change: Gotcha. And I guess, you know, pivoting to restructuring.

Speaker Change: And their comments indicating that we could see a tail-off in activity if M&A activity were to pick up more meaningfully, which makes sense given the historical relationships between the two businesses.

Brendan O'brien: I know in the past, you guys have spoken about the business of seeing higher floors and higher ceilings as you continue to grow. So I just want to get a sense as to how we should be thinking about the trajectory of restructuring over the next couple of years and maybe where that number could settle out.

Speaker Change: I know in the past, you know, you guys have spoken to the business kind of seeing higher floors and higher ceilings as you continue to grow. So I just want to get a sense as to how we should be thinking about the trajectory of restructuring over the next couple of years and maybe where that number could settle out.

Scott Adelson: Yeah, I mean, I think that just to be clear is the MNA, but even more so capital markets, the availability of capital picks up is more so than MNA is really what can can drive some solutions to more distressed situations that when you, when we're looking at our distressed business, we have seen it over time. Reaching new levels, they're all as people continue to utilize that and multiple branches of that increasingly around the world. That market is just growing. There will always be a percentage that wind up a default for one reason or another. And even without that, we still have elevated interest rates and likely will for a period of time, and right now we still have a call never having been in this cycle extraordinary default rates.

Scott Joseph Adelson: Yeah, I mean, just to be clear, as M&A, but even more so capital markets, the availability of capital picks up more so than M&A is really what can drive some solutions to more distressed situations. That when we're looking at our distressed business, we have seen it over time reach new levels, there are as people continue to utilize that, and multiple tranches of debt, increasingly around the world, that market is just growing, there will always be a percentage that wind up in default for one reason or another.

Speaker Change: Yeah, I mean, I think that, just to be clear, M&A, but even more so capital markets, the availability of capital picks up is more so than M&A is really what can drive some solutions.

Speaker Change: to more distressed situations. When we're looking at our distressed business, we have seen it over time reach new levels. As people continue to utilize that

Speaker Change: and multiple tranches of debt increasingly around the world. That market is just growing. There will always be a percentage that wind up in default for one reason or another.

Scott Joseph Adelson: And even without that, we still have elevated interest rates and likely will for a period of time. And right now, we still have, I'll call it, never haven't been in this cycle, extraordinary default rates; it's just been normal default rates. But we've gotten so used to really almost non-existent default rates prior to that. This, this is, in our minds, very much the norm. How long that exists for, you know, time will tell, but we expect the elevated levels to persist for a while. Chris, thank you for taking my question.

Speaker Change: And even without, we still have elevated interest rates and likely will for a period of time. And right now we still have, I'll call it, we never, haven't been in this cycle at extraordinary default rates. It's just been normal default rates, but we've gotten so used to really almost non-existent default rates prior to that.

Scott Adelson: It's just been normal to fall rates, but we've gotten so used to really almost nonexistent to fall rates prior to that. This is in our minds very much to be normal. How long that exists for time will tell, but we expect the elevated levels to persist for a while. Great, thank you for taking my question. Thank you.

Speaker Change: This is, in our minds, very much the new normal. How long that exists for, you know, time will tell, but we expect the elevated levels to persist for a while.

Speaker Change: Chris, thank you for taking my questions.

Brendan O'brien: Thank you. The next question comes from the line of Ryan Kenny with Morgan Stanley.

Ryan Kenny: Next question comes from the line of Ryan Kenny with Morgan Stanley. Please go ahead. Good afternoon. Thanks for taking my question. Can you impact the comment and the prepared remarks around time to close corporate finance transactions, seeing some improvement that feels like, you know, a much better environment and discussion than we were in last year. We're talking about lags on all learning calls. So what's really driving that change? I mean, look, this segment and everything that we're discussing and all of our peers have been discussing, as well as the pickup in the M&A market. And some of that is, as we've discussed, there are reasons why bird deals had been dragging on; just one more piece of information that we want, one more schedule.

Speaker Change: Thank you. Next question comes from the line of Ryan Kenny with Morgan Stanley . Please go ahead.

Ryan Michael Kenny: Hi, good afternoon. Thanks for taking my question. Can you impact a comment in the prepared remarks around time to close corporate finance transactions, seeing some improvement that feels like, you know, a much better environment and discussion than we were in last year when we were talking about lags on all the earnings calls. So what's really driving that change?

Ryan Michael Kenny: Hi, good afternoon. Thanks for taking my question. Can you impact the comment and the prepared remarks around time to close?

Speaker Change: Corporate Finance Transactions seeing some improvement that feels like a much better environment and discussion than we were in last year when we were talking about lags on all the earnings calls. So what's really driving that change?

Scott Joseph Adelson: I mean, look, the sentiment and everything that we're discussing and all of our peers have been discussing as well as the pickup in the M&A market. And some of that is, as we've discussed, there are reasons why deals have been dragging on. Just one more piece of information that we want one more schedule. Some of that is starting to subside. I would not say that we are back in any way, but I'd call it an optimistic or even probably normal time frame, but it is improving. And that is good to see.

Speaker Change: I mean look the sentiment that everything that we're discussing and all of our peers have been discussing as well as the pickup in the M&A market and some of that is as we've discussed

Speaker Change: There are reasons why Verdeals had been dragging on just one more piece of information that we want, one more schedule. Some of that is starting to subside. I would not say that we are back in any way to, I'd call it optimistic or even probably normal time frame, but it is improving.

Scott Adelson: Some of that is starting to subside.

Scott Adelson: I would not say that we are back in any way to, I call it optimistic or even probably normal time print, but it is improving, and that that is good to see.

Scott Adelson: And on sponsors, I heard the comments earlier around sponsor activity improving. Here's what through how the recent rotation to mid cap stocks and value stocks is impacting conversations with sponsors. Is that a meaningful catalyst to get movement on their portfolio companies? That really isn't something that I would say people are massively fixated on; certainly, something that we have seen. And it is a bit of a different attitude when you're buying a stock for years versus effectively renting it. It's just a different mentality between public and private markets.

Ryan Michael Kenny: And on sponsors, I heard the comments earlier around sponsor activity improving. Just walk through how the recent rotation to mid-cap stocks and value stocks is impacting conversations with sponsors. Is that a meaningful catalyst to get movement on their portfolio companies, that really is.

Speaker Change: And that is good to see.

Speaker Change: And on sponsors, I heard the comments earlier around sponsor activity improving. Can you just walk through how the recent rotation to mid-cap stocks and value stocks is impacting conversations with sponsors? Is that a meaningful catalyst to get...

Scott Joseph Adelson: That really isn't something that I would say people are massively fixated on, certainly something that we have seen. And it is a bit of a different attitude. When you're buying a stock for years versus effectively renting it, it's just a different mentality between the public and private markets.

Speaker Change: Movement on their portfolio companies

Speaker Change: That really isn't something that I would say people are massively fixated on. It's certainly something that we have seen and it is a bit of a different attitude when you're buying a stock for years versus effectively renting it. It's just a different mentality between public and private markets.

Unknown Executive: Thank you.

Ryan Michael Kenny: Thank you. The next question comes from the line of Jim Mitchell with Seaport Global. Please go ahead.

Jim Mitchell: Next question comes from the line of Jim Mitchell with People at Global, please go ahead. Hey, good afternoon. Maybe just following up on that last question.

Speaker Change: Thank you. Next question comes from the line of Jim Mitchell with Seaport Global. Please go ahead.

James Francis Mitchell: Hey, good afternoon. Maybe I can follow up on that last question. Hey, how are you? On that last question in terms of maybe just smaller deals, generally, I think in the past you've talked about smaller deals and financial sponsors typically rebounding more quickly than larger deals. Are you seeing that? Is that part of the positive outlook? How are you? How is it playing out in terms of smaller deals coming to market relative to the overall market?

Jim Mitchell: Hey, how are you? On that last question, in terms of maybe just smaller deals generally, I think in the past, you've talked about smaller deals and financial sponsors typically rebounding more quickly than larger deals. Are you seeing that? Is that part of the positive outlook? How was it playing out in terms of the smaller deals coming to market relative to the overall market? I mean, I would say we are just seeing a normal mix within our portfolio of things. I can't point to that. They are smaller or larger. Really, it is a fairly normal mix at this point.

James Francis Mitchell: Hey, good afternoon. Maybe just following up on that last question. Hey, how are you on that last question in terms of maybe just smaller deals generally, I think in the past you've talked about

Speaker Change: Smaller deals and financial sponsors typically rebounding more quickly than larger deals. Are you seeing that? Is that part of the positive outlook? How are you, how is it playing out in terms of the smaller deals come to market relative to the overall market?

Scott Joseph Adelson: I mean, I would say we are just seeing a normal mix within our portfolio of things. Jose, I can't point to that they are smaller or larger. Really, it is a fairly normal mix at this point. There's no trend there.

Speaker Change: I mean I would say we are just seeing a normal mix within our portfolio of things. I can't point to that they are smaller or larger. Really it is a fairly normal mix at this point. There's no trend there.

Scott Adelson: There's no trend there.

James Francis Mitchell: Okay, and then just maybe on MD headcount. I appreciate that it's lumpy in terms of leavings and hirings and things like that, but if you look at the last four quarters, year-over-year growth has been around, you know, 1 to 2%. Was that sort of a deliberate slowing in the environment, and should we expect that pace to pick up? Or how should we think about MD headcount from here?

Scott Adelson: Okay, and then just maybe on MD head count. I appreciate that it's lumpy in terms of leavings and hirings and things like that. But if you look at the last four quarters, year-over-year growth has been around, you know, one to two percent. Was that sort of a kind of deliberate slowing in the environment, and we should expect that pace to pick up? Or how should we think about MD head count from here? You know, I think we are constantly looking for talent. And, unfortunately, as I always joke, you can't go to the investment banker store and pick up a few.

Speaker Change: Okay, and then just maybe on MD headcount, I appreciate that it's lumpy in terms of leavings and hirings and things like that, but if you look at the last four quarters...

Speaker Change: Year-over-year growth has been around, you know, one to two percent Was that sort of a kind of deliberate slowing in the environment? And we should expect that pace to pick up or how should we think about MD headcount from here?

Scott Joseph Adelson: You know, I think we are constantly looking for talent. And unfortunately, as I always joke, you can't go to the investment banker store and pick up a few.

Speaker Change: You know, I think we are constantly looking for talent, and unfortunately, as I always joke, you can't go to the investment banker store and pick up a few. I mean, it is a process for us, and we are constantly looking, and when we see talent that we think we mutually agree is a good fit,

Scott Adelson: I mean, it is a process for us, and we are constantly looking, and when we see talent that we think we usually agree is a good bit. We do our best to attract that talent. And so that is we don't think about it so much as, hey, we're going to go hire 10 MDs as quarter or something like that. That's not the way we think about it. But should we expect at least sort of more historical growth going forward? I mean, on from a net head count perspective, you've been, you know, mid-high single digits. Is that a fair way to think about the next couple of years?

Speaker Change: We do our best to attract that talent. And so that is, we don't think about it so much as, hey, we're going to go hire 10 MDs this quarter or something like that. That's just not the way we think about it.

Scott Joseph Adelson: I mean, it is a process for us. And when we see talent that we think will be a good fit, we mutually agree is a good fit, we do our best to attract that talent. And so that is, we don't think about it so much as, hey, we're going to go hire 10 MDs this quarter or something like that. That's not the way we think about it.

James Francis Mitchell: But should we expect at least sort of more historical growth going forward? I mean, from a net headcount perspective, you've been, you know, mid-high single digits. Is that a fair way to think about the next couple of years?

Speaker Change: But should we expect at least sort of more historical growth going forward? I mean, from a net headcount perspective, you've been, you know, mid-high single digits. Is that a fair way to think about the next couple years?

Scott Joseph Adelson: Yeah, I think that's, I think that's fair. Look, I think the last couple years we have had a slowdown in the M&A markets. And I think we, along with every other firm, kind of took a step back and said, you know, do we want to make some changes within the organization to, you know, right-size the workforce around the last couple of years? And we probably did that along with everybody else.

Scott Adelson: Yeah, I think that's I think that's fair.

Scott Adelson: Look, look, I think the last couple of years, we had a slow down in the name markets. And I think we, along with every other firm, kind of took a step back and said, you know, do we want to, you know, make some changes within the organization to. To kind of right size or workforce around the last couple of years, and we probably did that along with everybody else. And so you're probably seeing some puts and takes in terms of new hires versus departures over the last couple of years.

Speaker Change: Yeah, I think that's I think that's fair. Look, I think the last couple years, we had a slowdown in the M&A markets. And I think we along with every other firm

Speaker Change: kind of took a step back and said, you know, do we want to, you know, make some changes within the organization?

Speaker Change: to kind of right size a workforce around the last couple of years. And we probably did that along with everybody else. And so you're probably seeing some puts and takes in terms of new hires versus departures over the last couple of years.

James Francis Mitchell: And so you're probably seeing some puts and takes in terms of new hires versus departures over the last couple of years that wouldn't exist in a high-capacity environment. And so, yes, you know, probably what our growth looked like for the five years prior to two years ago. And then that's a decent proxy, maybe take GCA out. That's a decent proxy for what our growth and headcounts would look like. All right, great. Thanks.

Scott Adelson: That that the won't exist in a high capacity environment. And so yes, you know, probably our growth look like for the five years prior to two years ago. And then that's a decent proxy.

Speaker Change: that won't exist in a high-capacity environment.

Speaker Change: our group look like for the five years prior to two years ago and then that's a decent proxy maybe take TCA out that's a deep right proxy for what our growth and headcounts to look like

Scott Adelson: Maybe take GCA out. That's a decent proxy for what our growth and that counts to look like.

Unknown Executive: Thank you. Right. Great.

James Francis Mitchell: All right. Great. Thanks.

Unknown Executive: Thanks. Thank you.

James Edwin Yaro: Thank you. The next question comes from the line of James Yaro with Goldman Sachs.

James Yaro: Next question comes on the line of James Yaro with Gordon Sex. Please go ahead. Thanks for taking my follow-up. I just wanted to touch on the non-Copic status. He did fall for the second consecutive quarter. Again, and despite the much stronger revenue, maybe you could just talk to the updated trajectory for non-comp that we should be thinking about. And then maybe any thoughts on maybe your best guess for what a normalized non-comp ratio looks like. I know that's changed a lot over the past few years with COVID, and obviously with travel increasing, but just any thoughts there.

James Edwin Yaro: Thank you. The next question comes from the line of James Yaro with Goldman Sachs. Please go ahead.

James Edwin Yaro: Thanks for taking my follow-up. I just wanted to touch on the non-copy expenses. We did fall for the second consecutive quarter again, and despite the much stronger revenue, maybe you could just talk about the updated trajectory for non-comp that we should be thinking about. And then maybe any thoughts on maybe your best guess for what a normalized non-comp ratio looks like. I know that's changed a lot over the past few years with COVID and then, obviously, with travel increasing, but just any thoughts there.

James Edwin Yaro: Thanks for taking my follow-up. I just wanted to touch on the non-copy expenses.

Speaker Change: He did fall for the second consecutive quarter.

James Edwin Yaro: Unknown Speaker Again, and despite the much stronger revenue, maybe you could just talk to the updated trajectory for non-comp that we should be thinking about. And then maybe, you know, any thoughts on maybe your best guess for what a normalized non-comp ratio looks like. I know that's changed a lot over the past few years.

Speaker Change: with COVID and then obviously with travel increasing, but just any thoughts there.

Lindsay Alley: Yeah, I think with respect to non-comp, the comments I've made before, I think, are probably similar, James. We expect non-comp this year, the last couple of years, non-comp's been at that 15, 16 percent growth. We don't expect it to be like that this year. We expect it to kind of normalize, and whether it normalizes kind of mid to high single digits, not sure.

Lindsay Alley: I think, with respect to non-comp, the comments I've made before, I think, are probably similar, James. We expect non-comp this year. The last couple of years non-comp spin that 15, 16% growth. We don't expect it to be like that this year. We expect it to normalize. And whether normalize is kind of mid to high single digits, not sure of. I think it depends on a whole number of factors, including revenue, because there are reimbursable expenses in there. But I don't think that's a bad way to think about non-comp. And I think this quarter was roughly 6%.

Speaker Change: Yeah, I think with respect to non-com, the...

Speaker Change: The comments I've made before I think are probably similar, James. We expect non-comp this year, the last couple of years non-comp's been at that 15-16% growth. We don't expect it to be like that this year. We expect it to kind of normalize. And whether it normalizes kind of mid to high single digits.

James Edwin Yaro: I think it depends on a whole number of factors, including revenue, because there are reimbursable expenses in there. But I don't think that's a bad way to think about non-comp. And I think this quarter was roughly 6 percent versus last year's same quarter. And, you know, it was a good quarter with respect to managing non-comp. We still expect pressure on our investments in information technology. We still expect pressure on PM&E, just given some of the inflation concerns.

Speaker Change: I'm not sure of. I think it depends on a whole number of factors, including revenue, because there's reimbursable expenses in there.

Speaker Change: But I don't think that's a bad way to think about non-cop and I think this quarter was roughly 6%.

Lindsay Alley: And versus last year, same quarter. And it was a good quarter with respect to managing non-comp. We still expect pressure on our investments in information technology. We still expect pressure on PME, just given some of the inflation concerns. And then, in terms of what a normal non-comp looks like from a ratio standpoint, it's hard to tell. It's hard to tell how quickly revenues are going to return. And so I'm a little hesitant to mention that, just because we've been in sort of, like I said, kind of an imminent recession here for the last couple of years.

Speaker Change: and versus last year, same quarter.

Speaker Change: And, you know, it was a good quarter with respect to managing non-com. We still expect pressure on our investments in information technology. We still expect pressure on QME, just given some of the inflation concerns.

James Edwin Yaro: And then, in terms of what a normal non-comp looks like from a ratio standpoint, it's hard to tell. Similarly, it's hard to tell how quickly revenues are going to return. And so I'm a little hesitant to mention that, just because, like I said, we've been in sort of, like I said, a kind of M&A recession here for the last couple of years, and it is 100 percent driven by revenues. And so in terms of how to answer your question, we feel like we have a much better prediction of what non-comp's going to look like for the next three quarters than we do of But I think we remain optimistic on both. It's hard for me to answer your ratio question until I have a better sense of how quick revenues will return. Very fair.

Speaker Change: And then in terms of what a normal non-conf looks like.

Speaker Change: From a ratio standpoint, it's hard to tell. It's hard to tell how quickly revenues are going to return. And so I'm a little hesitant to mention that.

Speaker Change: Unknown Speaker Just because, you know, we've been in sort of a, like I said, a kind of an M&A recession here for the last couple of years, and it is 100% driven by revenues. And so in terms of how to answer your question, we feel like that we have a much better prediction of what non comps can look like for the next three quarters, and we do what revenue is going to look like.

James Yaro: And it is 100% driven by revenues. And in terms of how to answer your question, we feel like that we have a much better prediction of what non-comp spin look like for the next week, quarters, and we do what revenue is going to look like. But I think we remain optimistic on both. It's hard for me to answer your ratio question until I have a better sense of how quick revenues are going to return. Very fair. Thanks for taking my follow-up.

Speaker Change: But I think we remain optimistic on both. It's hard for me to answer your ratio question until I have a better sense of how quick revenues will return.

James Edwin Yaro: Very fair. Thanks for taking my follow-up.

Speaker Change: Very fair, thanks for taking my follow-up.

Unknown Executive: Thank you.

Aidan Hall: Thank you. The next question comes from the line of Aidan Hall with KBW. Please go ahead.

Aidan Hall: Next question comes from the line of Aidan Hall with KBW. Please go ahead. Great. Good afternoon, everyone. Thanks for taking my question. Maybe just one on the inorganic side. Inorganic growth has been a large part of the story at the firm. Just wondering if you could just give us any color around or characterize kind of the pipeline or conversations that you're having, just giving the building activity seen across the industry. And there are any areas of, you know, that are particularly attractive to you from an inorganic perspective that you would flag.

Speaker Change: Thank you. Next question comes from the line of Aidan Hall with KBW. Please go ahead.

Aidan Hall: Great. Good afternoon, everyone.

Aidan Hall: Thanks for taking my question. Unknown Speaker Maybe just one on the inorganic side. Inorganic growth has been a large part of the story at the firm. Just wondering if you could give us any color around or characterize the pipeline or conversations that you're having, just giving the building activity seen across the industry, and there's any areas of, you know, that are particularly attractive to you from an inorganic perspective that you would flag.

Aidan Hall: Great. Good afternoon, everyone. Thanks for taking my question.

Speaker Change: Maybe just one on the inorganic side. Inorganic growth has been a large part of the story at the firm.

Aidan Hall: Just wondering if you'd just give us any color around or characterize kind of the pipeline or conversations that you're having, just giving the building activity seen across the industry. And there's any areas of, you know, that are particularly attractive to you from an inorganic perspective that you would flag?

Scott Adelson: Yeah, great, great question. And I think that we've obviously stated that is a part of our business model and part of our growth. And we continue to be committed towards it. And we are in constant dialogue with a number of parties. And at the end of the day, the thing that is driving it most is finding who we really think are a super strong cultural fit to our organization. And again, a little bit like the bankers don't know exactly when they're going to fall in. But you could best show that we are constantly in dialogue with people and things are moving along as they have been in the past.

Scott Joseph Adelson: Yeah, great, great question. And I think that we've obviously stated that it is a part of our business model and part of our growth. And we continue to be committed to it, and we are in constant dialogue with a number of parties. And at the end of the day, the thing that is driving it most is finding groups that we really think are a super strong cultural fit for our organization. And, again, a little bit like bankers don't know exactly when they're going to fall in love with. But you can rest assured that we are constantly in dialogue with people, and things are moving along as they have been in the past.

Speaker Change: Yeah, great, great question. And I think that we've obviously stated that is a part of our business model and part of our growth and we continue to be committed.

Speaker Change: Unknown Speaker We are in constant dialogue with a number of parties, and at the end of the day, the thing that is driving it most is finding groups that we really think are a good fit.

Speaker Change: super strong cultural fit to our organization. And again, a little bit like bankers don't know exactly when they're going to fall in. But it's you can rest assured that we are constantly in dialogue with people and things are moving along as they have been in the past.

Scott Adelson: and just to follow up on the specifics. I think, look, but think about it this way. We have three, four hundred subsectors in industry, some of which we are strong in and some of which we are underweighted. The ones that were underweighted is kind of game on for acquisitions or organicires. And it really just got's point. It is. We want to fill every single one of them out in the US. That's all. Some of the objectives. And if we find the right person through organic hire to help us become strong in that subsector, we will.

Scott Joseph Adelson: And just to follow up on the specifics, I think look, think about it this way: we have 3-400 subsectors in the industry, some of which we are strong in, and some of which we are underweighted. The ones that are underweighted are kind of game on for acquisitions or organic hires. And really, to Scott's point, we want to fill every single one of them out in the U.S. That's our ultimate objective. And if we find the right person through organic hire to help us become strong in that subsector, we will. And if an acquisition makes the most sense, we'll pull that lever. And so really, the whole strategy is filling out those underweighted sectors in industry. And we believe there are hundreds of them.

Speaker Change: And just to follow up on the specifics, I think, look, think about it this way, we have

Speaker Change: Three, four hundred subsectors in industry, some of which we are strong in and some of which we are underweighted.

Speaker Change: The ones that were underweighted is kind of game on for acquisitions or organic hires and it really, to Scott's point, it is, we want to fill every single one of them out in the U.S. That's our ultimate objective.

Speaker Change: And if we find the right person through organic hire to help us become strong in that sub-sector, we will. And if an acquisition makes the most sense.

Unknown Executive: And if an acquisition makes the most sense, we'll pull that lever. And so really the whole strategy is filling up those underweighted sectors in industry. And we believe there are hundreds of them. Got it. Appreciate the color. Thanks for taking my question.

Speaker Change: will pull that lever. And so really, the whole strategy is filling up those underweighted sectors in industry, and we believe there are hundreds of them.

Aidan Hall: Got it. I appreciate the color. Thanks for taking my question.

Speaker Change: Got it. Appreciate the caller.

Unknown Executive: Thank you.

Scott Joseph Adelson: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Scott Adelson for closing comments.

Unknown Executive: Ladies and gentlemen, we have reached the end of the question and answer session.

Speaker Change: Good thing.

Speaker Change: Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Scott Adelson for closing comments.

Scott Adelson: I would now like to turn the floor over to Scott Edelsen for closing comments. I want to thank you all for participating in our first quarter fiscal 2025 earnings call. We look forward to updating everyone on our progress when we discuss our second quarter results for fiscal 2025 this coming fall. Thank you.

Scott Joseph Adelson: I want to thank you all for participating in our first quarter fiscal 2025 earnings call. We look forward to updating everyone on our progress when we discuss our second quarter results for Fiscal 2025 this coming fall. Thank you.

Scott Joseph Adelson: I want to thank you all for participating in our first quarter fiscal 2025 earnings call. We look forward to updating everyone on our progress when we discuss our second quarter results for fiscal 2025 this coming fall. Thank you.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Unknown Executive: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you.

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Speaker Change: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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