10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2020

OR

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

For the transition period from __________ to ______________

Commission File Number: 001-37537

Houlihan Lokey, Inc.
(Exact name of registrant as specified in its charter)
Delaware	95-2770395
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

10250 Constellation Blvd.

5^th Floor

Los Angeles, California 90067

(Address of principal executive offices) (Zip Code)

(310) 788-5200

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001	HLI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    x  No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 30, 2020, the registrant had 50,733,275 shares of Class A common stock, $0.001 par value per share, and 18,745,482 shares of Class B common stock, $0.001 par value per share, outstanding.

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Changes in Stockholders' Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data and par value)	June 30, 2020			March 31, 2020
Assets
Cash and cash equivalents	$	422,164		$	380,373
Restricted cash	373			373
Investment securities	123,488			135,389
Accounts receivable, net of allowance for credit losses of $5,893 and $5,587, respectively	51,565			80,912
Unbilled work in process, net of allowance for credit losses of $1,566 and $1,302, respectively	36,378			39,821
Income taxes receivable	12,165			4,282
Deferred income taxes	5,017			6,507
Property and equipment, net	42,876			42,372
Operating lease right-of-use asset	152,428			135,240
Goodwill and other intangibles, net	812,355			812,844
Other assets	39,874			38,890
Total assets	$	1,698,683		$	1,677,003
Liabilities and Stockholders' Equity
Liabilities:
Accrued salaries and bonuses	$	222,393		$	420,376
Accounts payable and accrued expenses	37,233			53,883
Deferred income	28,570			26,780
Deferred income taxes	2,350			664
Loans payable to former shareholders	1,303			1,393
Loan payable to non-affiliate	3,362			3,283
Operating lease liabilities	172,871			154,218
Other liabilities	20,961			32,024
Total liabilities	489,043			692,621
Commitments and contingencies (Note 17)
Stockholders' equity:
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 50,713,967 and 46,178,633 shares, respectively	51			46
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 18,774,077 and 19,345,277 shares, respectively	19			19
Additional paid-in capital	848,756			649,954
Retained earnings	400,995			377,471
Accumulated other comprehensive (loss)	(40,181		)	(43,108		)
Total stockholders' equity	1,209,640			984,382
Total liabilities and stockholders' equity	$	1,698,683		$	1,677,003

See accompanying Notes to Consolidated Financial Statements

1

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended June 30,
(In thousands, except share and per share data)	2020			2019
Revenues	$	211,136		$	250,349
Operating expenses:
Employee compensation and benefits	137,121			163,311
Travel, meals, and entertainment	2,114			9,617
Rent	9,623			10,001
Depreciation and amortization	3,672			3,963
Information technology and communications	6,383			5,324
Professional fees	5,007			4,456
Other operating expenses	4,626			5,903
Total operating expenses	168,546			202,575
Operating income	42,590			47,774
Other (income)/expense, net	(1,161		)	(1,651		)
Income before provision for income taxes	43,751			49,425
Provision for income taxes	(2,349		)	6,649
Net income	$	46,100		$	42,776
Other comprehensive income, net of tax:
Foreign currency translation adjustments	2,927			(3,971		)
Comprehensive income	$	49,027		$	38,805
Attributable to Houlihan Lokey, Inc. common stockholders:
Weighted average shares of common stock outstanding:
Basic	63,684,431			61,670,617
Fully diluted	66,798,560			65,621,103
Earnings per share (Note 13)
Basic	$	0.72		$	0.69
Fully diluted	$	0.69		$	0.65

See accompanying Notes to Consolidated Financial Statements

2

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(In thousands, except share data)	Class A common stock			Class B common stock					Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total stockholders' equity
	Shares	$		Shares		$			$			$			$			$
Balances – April 1, 2020	46,178,633	$	46	19,345,277		$	19		$	649,954		$	377,471		$	(43,108	)	$	984,382
Cumulative effect of the change in accounting principle related to credit losses, net of tax	—	—		—		—			—			(682		)	—			(682		)
Shares issued	3,000,000	3		1,267,734		2			200,857			—			—			200,862
Stock compensation vesting (Note 14)	—	—		—		—			15,386			—			—			15,386
Dividends	—	—		—		—			—			(21,894		)	—			(21,894		)
Conversion of Class B to Class A shares	1,529,757	2		(1,529,757	)	(2		)	—			—			—			—
Shares issued to non-employee directors (Note 14)	5,577	—		—		—			333			—			—			333
Other shares repurchased/forfeited	—	—		(309,177	)	—			(17,774		)	—			—			(17,774		)
Net income	—	—		—		—			—			46,100			—			46,100
Change in unrealized translation	—	—		—		—			—			—			2,927			2,927
Total comprehensive income	—	—		—		—			—			46,100			2,927			49,027
Balances – June 30, 2020	50,713,967	$	51	18,774,077		$	19		$	848,756		$	400,995		$	(40,181	)	$	1,209,640

(In thousands, except share data)	Class A common stock			Class B common stock					Treasury Stock					Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total stockholders' equity
	Shares	$		Shares		$			Shares		$			$			$			$			$
Balances – April 1, 2019	38,200,802	$	38	27,197,734		$	27		—		$	—		$	645,090		$	276,468		$	(30,294	)	$	891,329
Shares issued	—	—		1,491,860		2			—		—			6,456			—			—			6,458
Stock compensation vesting (Note 14)	—	—		—		—			—		—			10,910			—			—			10,910
Class B shares sold	414,071	1		(414,071	)	(1		)	—		—			—			—			—			—
Dividends	—	—		—		—			—		—			—			(20,413		)	—			(20,413		)
Conversion of Class B to Class A shares	2,291,827	2		(2,291,827	)	(2		)	—		—			—			—			—			—
Shares issued to non-employee directors (Note 14)	7,027	—		—		—			—		—			—			—			—			—
Other shares repurchased/forfeited	—	—		(675,403	)	(1		)	(55,164	)	(2,502		)	(31,267		)	—			—			(33,770		)
Net income	—	—		—		—			—		—			—			42,776			—			42,776
Change in unrealized translation	—	—		—		—			—		—			—			—			(3,971		)	(3,971		)
Total comprehensive income	—	—		—		—			—		—			—			42,776			(3,971		)	38,805
Balances – June 30, 2019	40,913,727	$	41	25,308,293		$	25		(55,164	)	$	(2,502	)	$	631,189		$	298,831		$	(34,265	)	$	893,319

See accompanying Notes to Consolidated Financial Statements

3

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended June 30,
(In thousands)	2020			2019
Cash flows from operating activities:
Net income	$	46,100		$	42,776
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	3,606			2,527
Provision for bad debts, net of recoveries	1,943			(21		)
Unrealized gains on investment securities	(822		)	(164		)
Non-cash lease expense	5,574			6,106
Depreciation and amortization	3,672			3,963
Compensation expense – equity and liability classified share awards (Note 14)	17,196			12,762
Changes in operating assets and liabilities:
Accounts receivable	26,806			3,407
Unbilled work in process	3,211			247
Other assets	(1,077		)	(1,809		)
Accrued salaries and bonuses	(192,281		)	(171,003		)
Accounts payable and accrued expenses and other	(23,075		)	(4,915		)
Deferred income	1,790			1,381
Income taxes payable	(7,883		)	(4,466		)
Net cash (used in) operating activities	(115,240		)	(109,209		)
Cash flows from investing activities:
Purchases of investment securities	(99,277		)	(157,097		)
Sales or maturities of investment securities	112,000			249,479
Acquisition of business, net of cash acquired	—			8,710
Receivables from affiliates	—			(170		)
Purchase of property and equipment, net	(3,494		)	(7,441		)
Net cash provided by investing activities	9,229			93,481
Cash flows from financing activities:
Dividends paid	(26,247		)	(22,887		)
Other share repurchases	—			(2,502		)
Payments to settle employee tax obligations on share-based awards	(17,774		)	(31,267		)
Proceeds from issuance of Class A shares	189,060			—
Loans payable to former shareholders redeemed	(90		)	(90		)
Other financing activities	333			—
Net cash provided by/(used in) financing activities	145,282			(56,746		)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	2,520			(1,539		)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	41,791			(74,013		)
Cash, cash equivalents, and restricted cash – beginning of period	380,746			286,115
Cash, cash equivalents, and restricted cash – end of period	$	422,537		$	212,102
Supplemental disclosures of non-cash activities:
Shares issued via vesting of liability classified awards	$	7,511		$	6,457
Cash acquired through acquisitions	$	—		$	10,506
Cash paid during the period:
Interest	$	197		$	193
Taxes	3,656			12,560

See accompanying Notes to Consolidated Financial Statements

4

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 1 — Background

Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries:

• Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and a member of Financial Industry Regulatory Authority, Inc.

• Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly owned direct subsidiary of HL, Inc.

• HL Finance, LLC ("HL Finance"), a syndicated leveraged finance platform established to arrange senior secured leveraged loans for financial sponsor-backed, privately-held, and public corporate entities. HL Finance acts as an arranger on syndicated loan transactions and has entered into an agreement with an unaffiliated third party investor that may provide commitments with respect to certain syndicated loans arranged by HL Finance.

• Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K.").

On August 18, 2015, the Company successfully completed an initial public offering ("IPO") of its Class A common stock.

In June 2019, the Company exercised its option to acquire the remaining 51% of the shares of Lara (Italy Holdco) Limited ("Lara"). Lara's only operating subsidiary, Houlihan Lokey S.p.A., is an Italian-based company that provides corporate finance advisory services.

In November 2019, the Company completed the acquisition of Fidentiis Capital, an independent advisory business providing independent corporate finance advisory services relating to mergers and acquisitions, capital raising, and financing.

In December 2019, the Company completed the acquisition of Freeman & Co., an independent advisory business providing mergers and acquisitions advisory, capital raising, and other investment banking advisory services for the financial services sector.

The Company offers financial services and financial advice to a broad clientele located throughout the United States of America, Europe, the Middle East, and the Asia-Pacific region. The Company has U.S. offices in Los Angeles, San Francisco, Chicago, New York City, Minneapolis, McLean (Virginia), Dallas, Houston, Miami, and Atlanta as well as foreign offices in London, Paris, Frankfurt, Milan, Madrid, Amsterdam, Dubai, Sydney, Tokyo, Hong Kong, Beijing and Singapore. Together, the Company and its subsidiaries form an organization that provides financial services to meet a wide variety of client needs. The Company concentrates its efforts toward the earning of professional fees with focused services across the following three business segments:

• Corporate Finance ("CF") provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement ("Completion Fees"). A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the fees paid at the time an engagement letter is signed ("Retainer Fees") and in some cases fees paid during the course of the engagement ("Progress Fees") that may have been received.

5

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

• Financial Restructuring ("FR") provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

• Financial and Valuation Advisory ("FVA") primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the three months ended June 30, 2020 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2021. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (the "2020 Annual Report").

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income, shareholders' equity or cash flows as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

6

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contract. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling those contracts. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

7

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Operating Expenses

The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses.

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of June 30, 2020, we had one foreign currency forward contracts outstanding between the pound sterling and the euro with a notional value of €4.9 million. As of June 30, 2019, we entered into a foreign currency forward contract between the pound sterling and the U.S. dollar with an aggregate notional value of $20 million. The fair value of these contracts represented a net loss included in Other operating expenses of $(46) and $(41) during the three months ended June 30, 2020 and 2019, respectively.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with ASC Topic 820, Fair Value Measurement:

• Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

• Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available and may incorporate management's own assumptions or involve a significant degree of judgment.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

• Corporate debt securities: All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

• U.S. treasury securities: Fair values for U.S. treasury securities are based on quoted prices from recent trading activity of identical or similar securities. All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

Property and Equipment

Property and equipment are stated at cost. Repair and maintenance charges are expensed as incurred and costs of renewals or improvements are capitalized at cost. Depreciation on furniture and office equipment is recognized on a straight-line basis over the estimated useful lives of the respective assets. Leasehold improvements are recorded as prepaid assets and included within fixed lease payments. See Note 16 for additional information.

8

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of June 30, 2020 and March 31, 2020, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	422,537	$	380,746

(1) Restricted cash as of June 30, 2020 and March 31, 2020 consisted of a cash secured letter of credit issued for our Frankfurt office.

Investment Securities

Investment securities consist of corporate debt and U.S. Treasury securities with original maturities over 90 days. The Company classifies its investment securities as trading and measures them at fair value in the Consolidated Balance Sheets. Unrealized holding gains and losses for trading securities are included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income.     

Allowance for Credit Losses

The allowance for credit losses on accounts receivable and unbilled work in progress reflects management’s best estimate of expected losses using the Company's internal current expected credit losses model. This model analyzes expected losses based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that could potentially affect the collectibility of the reported amounts. This is recorded through provision for bad debts, which is included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income. Amounts deemed to be uncollectible are written off against the allowance for credit losses.

Income Taxes

The Company files a consolidated federal income tax return, as well as consolidated and separate returns in state and local jurisdictions, and the Company reports income tax expense on this basis.

We account for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The measurement of the deferred items is based on enacted tax laws and applicable tax rates. A valuation allowance related to a deferred tax asset is recorded if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company utilized a comprehensive model to recognize, measure, present, and disclose in its financial statements any uncertain tax positions that have been taken or are expected to be taken on a tax return. The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense and penalties related to income taxes are included in the provision for income taxes in the accompanying Consolidated Statements of Comprehensive Income.

The Global Intangible Low-Taxed Income tax (“GILTI inclusion”) can be recognized in the financial statements through an accounting policy election by either recording a period cost (permanent item) or providing deferred income taxes stemming from certain basis differences that are expected to result in GILTI inclusion. The Company has elected to account for the tax impacts of the GILTI inclusion as a period cost.

9

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

On March 27, 2020 the United States passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law.  The legislation is meant to address the economic uncertainty as a result of the coronavirus pandemic.  The Company has completed its evaluation of the provisions of the CARES Act which resulted in no material impacts on its income tax provision.

Leases

We assess whether an arrangement is or contains a lease at the inception of the agreement. Right-of-use ("ROU") assets represent our right to use underlying assets for the lease term and lease liabilities represent our obligation to make lease payments arising from leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease terms utilizing the discount rate implicit in the leases. If the discount rate implicit in the leases is not readily determinable, the present value of future lease payments is calculated utilizing the Company’s incremental borrowing rate, which approximates the interest that the Company would have to pay on a secured loan. The Company elected to utilize a portfolio approach and applies the rates to a portfolio of leases with similar terms and economic environments. The terms of our leases used to determine the ROU asset and lease liability account for options to extend when it is reasonably certain that we will exercise those options, if applicable. ROU assets and lease liabilities are subject to adjustment in the event of modification to lease terms, changes in probability that an option to extend or terminate a lease would be exercised and other factors. In addition, ROU assets are periodically reviewed for impairment.

Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.

The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

Goodwill and Intangible Assets

Goodwill represents an acquired company’s acquisition cost over the fair value of acquired net tangible and intangible assets. Goodwill is the net asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets identified and accounted for include tradenames and marks, backlog, developed technologies, and customer relationships. Those intangible assets with finite lives, including backlog and customer relationships, are amortized over their estimated useful lives.

Goodwill is reviewed annually for impairment and more frequently if potential impairment indicators exist. Goodwill is reviewed for impairment in accordance with Accounting Standards Update ("ASU") No. 2011-08, Testing Goodwill for Impairment, which permits management to make a qualitative assessment of whether it is more likely than not that one of its reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If management concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then management would not be required to perform the two-step impairment test for that reporting unit. If the assessment indicates that it is more likely than not that the reporting unit’s fair value is less than its carrying value, management must test further for impairment utilizing a two-step process. Step 1 compares the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying value of the reporting unit exceeds the estimated fair value, an impairment exists and is measured in Step 2 as the excess of the recorded amount of goodwill over the implied fair value of goodwill resulting from the valuation of the reporting unit. Impairment testing of goodwill requires a significant amount of judgment in assessing qualitative factors and estimating the fair value of the reporting unit, if necessary. The fair value is determined using an estimated market value approach, which considers estimates of future after tax cash flows, including a terminal value based on market earnings multiples, discounted at an appropriate market rate. As of June 30, 2020, management concluded that it was not more likely than not that the Company’s reporting units’ fair value was less than their carrying amount and no further impairment testing had been considered necessary.

Indefinite-lived intangible assets are reviewed annually for impairment in accordance with ASU 2012-02, Testing Indefinite-lived Intangible Assets for Impairment, which provides management the option to perform a qualitative assessment. If it is more likely than not that the asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment expense. As of June 30, 2020, management concluded that it was not more likely than not that the fair values were less than the carrying values.

10

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group (inclusive of other long-lived assets) be tested for possible impairment, management first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of June 30, 2020, no events or changes in circumstances were identified that indicated that the carrying amount of the finite-lived intangible assets were not recoverable.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (the “FASB”) issued the following authoritative guidance amending the FASB Accounting Standards Codification (“ASC”).

On April 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and all related amendments. See Note 16 for additional information.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. The amended guidance states an entity should account for the effects of a modification unless certain criteria are met, which include that the modified award has the same fair value, vesting conditions and classification as the original award. The Company adopted guidance effective April 1, 2019 and its application did not have a material impact on the consolidated financial statements and related disclosures.

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020. The impact of this pronouncement had an immaterial impact on our Net income for the three months ended June 30, 2020.

The following table provides a reconciliation of the cumulative transition adjustment pertaining to the adoption of the credit loss guidance reported within the Consolidated Balance Sheets.

	March 31, 2020		Transition Adjustment			April 1, 2020
Accounts receivable, net of allowance for credit losses	$	80,912	$	(599	)	$	80,313
Unbilled work in progress, net of allowance for credit losses	39,821		(232		)	39,589
Other assets	38,890		(93		)	38,797
Deferred income taxes, net	5,843		242			6,085
Retained earnings	$	377,471	$	(682	)	$	376,789

Note 3 — Revenue Recognition

Disaggregation of Revenues

The Company has disclosed disaggregated revenues based on its business segment and geographical area, which provides a reasonable representation of how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See Note 18 for additional information.

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred income (contract liability) until the performance obligations are satisfied.

11

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Costs incurred in fulfilling advisory contracts with point-in-time revenue recognition are recorded as a contract asset when the costs (i) relate directly to a contract, (ii) generate or enhance resources of the Company that will be used in satisfying performance obligations, and (iii) are expected to be recovered. The Company amortizes the contract asset costs related to fulfilling a contract based on recognition of fee revenues for the corresponding contract. As the Company changed the presentation of costs incurred in fulfilling advisory contracts from a net presentation within non-compensation expenses to a gross basis in revenues, the Company records a contract liability for the reimbursable costs incurred until the fee revenue is recognized.

Costs incurred in fulfilling an advisory contract with over-time revenue recognition are expensed as incurred.

The change in the Company’s contract assets and liabilities during the period primarily reflects the timing difference between the Company’s performance and the customer’s payment. The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2020		Increase/(Decrease)			June 30, 2020
Receivables (1)	$	73,720	$	(28,866	)	$	44,854
Unbilled work in process, net of allowance for credit losses	39,821		(3,443		)	36,378
Contract Assets (1)	7,192		(481		)	6,711
Contract Liabilities (2)	26,780		1,790			28,570

(1) Included within Accounts receivable, net of allowance for credit losses in the June 30, 2020 Consolidated Balance Sheet.

(2) Included within Deferred income in the June 30, 2020 Consolidated Balance Sheet.

During the three months ended June 30, 2020, $9.0 million of Revenues were recognized that were included in the Deferred income balance at the beginning of the period.

As a practical expedient, the Company does not disclose information about remaining performance obligations pertaining to (i) contracts that have an original expected duration of one year or less, and/or (ii) contracts where the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that is or forms part of a single performance obligation. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at June 30, 2020.

Note 4 — Related Party Transactions

The Company provides financial advisory services to its affiliates and certain other related parties, and received fees for these services totaling approximately $0 and $100 during the three months ended June 30, 2020 and 2019, respectively.

The Company provided certain management and administrative services for the Company's unconsolidated entities and received fees for these services. As a result, the Company received net fees of $0 and $126 during the three months ended June 30, 2020 and 2019, respectively.

In the accompanying Consolidated Balance Sheets, the Company carried accounts receivable and unbilled work in progress from related parties totaling approximately $2 and $0 as of June 30, 2020 and March 31, 2020, respectively.

Other assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $17,458 and $17,857 as of June 30, 2020, and March 31, 2020, respectively.

12

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 5 — Fair Value Measurements

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	99,485	$	—	$	99,485
U.S. treasury securities	—		24,003		—		24,003
Total asset measured at fair value	$	—	$	123,488	$	—	$	123,488

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	43,027	$	—	$	43,027
U.S. treasury securities	—		92,362		—		92,362
Total asset measured at fair value	$	—	$	135,389	$	—	$	135,389

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the instrument.

The Company had no transfers between fair value levels during the three months ended June 30, 2020.

The fair values of the financial instruments represent the amounts that would be received to sell assets or that would be paid to transfer liabilities in an orderly transaction between market participants as of a specified date. Fair value measurements maximize the use of observable inputs; however, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, as well as available observable and unobservable inputs.

The carrying value of Cash and cash equivalents, Restricted cash, Accounts receivable, Unbilled work in process, Receivables from affiliates, Accounts payable and accrued expenses, and Deferred income approximates fair value due to the short maturity of these instruments.

The carrying value of the loans to employees included in Other assets, Loans payable to former shareholders, and an unsecured loan which is included in Loan payable to non-affiliate approximates fair value due to the variable interest rate borne by those instruments.

13

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Note 6 — Investment Securities

The amortized cost, gross unrealized gains (losses), and fair value of investment securities were as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	98,654	$	845	$	(14	)	$	99,485
U.S. treasury securities	23,510		493		—			24,003
Total securities with unrealized gains	$	122,164	$	1,338	$	(14	)	$	123,488

	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	43,166	$	210	$	(349	)	$	43,027
U.S. treasury securities	91,722		691		(51		)	92,362
Total securities with unrealized gains	$	134,888	$	901	$	(400	)	$	135,389

Scheduled maturities of the debt securities held by the Company within the investment securities portfolio were as follows:

	June 30, 2020				March 31, 2020
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	94,074	$	94,168	$	105,349	$	105,302
Due within years two through five	28,090		29,320		29,539		30,087
Total debt within the investment securities portfolio	$	122,164	$	123,488	$	134,888	$	135,389

Note 7 — Allowance for Credit Losses

	June 30, 2020			March 31, 2020
Beginning balance	$	6,889		$	5,596
Transition adjustment as of April 1, 2020	831			—
Provision for bad debt	1,943			4,873
Recovery or write-off of uncollectible accounts	(2,204		)	(3,580		)
Ending balance	$	7,459		$	6,889

Note 8 — Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	June 30, 2020			March 31, 2020
Equipment	$	9,236		$	8,788
Furniture and fixtures	21,460			20,942
Leasehold improvements	43,646			41,643
Computers and software	18,555			17,941
Other	1,113			1,113
Total cost	94,010			90,427
Less: accumulated depreciation	(51,134		)	(48,055		)
Total net book value	$	42,876		$	42,372

14

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Additions to property and equipment during the three months ended June 30, 2020 were primarily related to leasehold improvement costs incurred and computer and software purchases.

Depreciation expense of approximately $2,675 and $2,409 was recognized during the three months ended June 30, 2020 and 2019, respectively.

Note 9 — Goodwill and Other Intangible Assets

The following table provides a reconciliation of Goodwill and other intangibles, net reported on our Consolidated Balance Sheets.

	Useful Lives	June 30, 2020			March 31, 2020
Goodwill	Indefinite	$	618,955		$	618,455
Tradename-Houlihan Lokey	Indefinite	192,210			192,210
Other intangible assets	Varies	6,154			10,732
Total cost		817,319			821,397
Less: accumulated amortization		(4,964		)	(8,553		)
Goodwill and other intangibles, net		$	812,355		$	812,844

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2020		Change (1)		June 30, 2020
Corporate Finance	$	363,925	$	500	$	364,425
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	618,455	$	500	$	618,955

(1) Changes pertain to foreign currency translation adjustments.

Amortization expense of approximately $997 and $1,554 was recognized for the three months ended June 30, 2020 and 2019, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five years are as follows:

	Year Ended March 31,
Remainder of 2021	$	613
2022	157
2023	7
2024	7
2025	7

Note 10 — Loans Payable

In August 2015, the Company entered into a revolving line of credit with Bank of America, N.A. (the "2015 Line of Credit"), which allowed for borrowings of up to $75.0 million and originally matured in August 2017. On July 28, 2017, the Company extended the maturity date of the 2015 Line of Credit to August 18, 2019, and, on August 15, 2019, the parties further extended the maturity date of the 2015 Line of Credit to September 18, 2019. On August 23, 2019, the Company refinanced the 2015 Line of Credit by entering into a new syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto (the "2019 Line of Credit"), which allows for borrowings of up to $100.0 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200.0 million) and matures on August 23, 2022 (or if such date is not a business day, the immediately preceding business day). The agreement governing the 2019 Line of Credit provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. As of June 30, 2020, no principal was outstanding under the 2019 Line of Credit.

15

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Prior to the IPO, Fram maintained certain loans payable to former shareholders consisting of unsecured notes payable which were transferred to the Company in conjunction with the IPO. The average interest rate on the individual notes was 2.15% and 3.75% as of June 30, 2020 and 2019, respectively, and the maturity dates range from 2020 to 2027. The Company incurred interest expense on these notes of $8 and $20 during the three months ended June 30, 2020 and 2019, respectively.

In November 2015, the Company acquired the investment banking operations of Leonardo & Co. NV ("Leonardo") in Germany, the Netherlands, and Spain, and made a 49% investment in Leonardo's operations in Italy. Total consideration included an unsecured loan of EUR 14 million payable on November 16, 2040, the remaining balance of which is included in Loan payable to non-affiliates on our Consolidated Balance Sheets. The loan bears interest at an annual rate of 1.50%. In each of January 2017, December 2017, December 2018, and December 2019, we paid a portion of this loan in the amount of EUR 2.9 million. The company incurred interest expense on this loan of $11 and $24 during the three months ended June 30, 2020 and 2019, respectively.

As described in Note 1, the Company acquired the remaining 51% of Lara, which is the holding company for Leonardo's operations in Italy, in June 2019. During the quarter ended September 30, 2019, the Company completed the redemption of the loans that were assumed upon the acquisition of the remaining 51% of Lara and that had been included in the Loan payable to non-affiliates on our Consolidated Balance Sheets.

An acquisition made in January 2017 included non-contingent consideration with a carrying value of $0 and $999 as of June 30, 2020 and March 31, 2020, respectively, which is included in Other liabilities in our Consolidated Balance Sheets.

In April 2018, the Company acquired Quayle Munro Limited. Total consideration included non-interest bearing unsecured convertible loans totaling GBP 10.5 million payable on May 31, 2022, which is included in Other liabilities in the accompanying Consolidated Balance Sheets. Under certain circumstances, the notes may be exchanged for Company Class B common stock over a three year period in equal annual installments starting on May 31, 2020. The Company incurred imputed interest expense on these notes of $84 and $36 for the three months ended June 30, 2020 and 2019, respectively.

In May 2018, the Company acquired BearTooth Advisors. Total consideration included an unsecured note of $2.8 million bearing interest at an annual rate of 2.88% and payable on May 21, 2048. This note was subsequently assigned by the seller to the former BearTooth principals (who became employees of the Company), and, under certain circumstances is convertible into Company Class B common stock after the fifth anniversary of the closing of the transaction. The Company incurred interest expense on this note of $26 for both the three months ended June 30, 2020 and 2019.

In December 2019, the Company acquired Freeman & Co. Total consideration included an unsecured note of $4.0 million bearing interest at an annual rate of 2.75% and payable on December 16, 2049. The note issued by the Company to the seller was distributed to the former principals of Freeman & Co. (who became employees of the Company). Under certain circumstances, the note may be exchanged by each principal for Company stock over a four-year period in equal annual installments starting in December 2020. The Company incurred interest expense on this notes of $27 for the three months ended June 30, 2020.

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheets on a fiscal year-end basis as of June 30, 2020 are as follows:

Remaining 2021	$	1,926
2022	11,172
2023	388
2024	31
2025	—
2026 and thereafter	12,110
Total	$	25,627

Note 11 — Accumulated Other Comprehensive (Loss)

Accumulated other comprehensive (loss) is comprised of Foreign currency translation adjustments of $2,927 and $(3,971) for the three months ended June 30, 2020 and 2019, respectively. We do not expect the change in foreign currency translation to have a material impact on our operating results and financial position.

16

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Accumulated other comprehensive (loss) as of June 30, 2020 was comprised of the following:

Balance, April 1, 2020	$	(43,108	)
Foreign currency translation adjustment	2,927
Balance, June 30, 2020	$	(40,181	)

Note 12 — Income Taxes

The Company’s provision for income taxes was $(2,349) and $6,649 for the three months ended June 30, 2020 and 2019, respectively. These represent effective tax rates of (5.4)% and 13.5% for the three months ended June 30, 2020 and 2019, respectively. The decrease in the Company’s tax rate during the quarter ended June 30, 2020 relative to the same period in 2019 was primarily a result of the vesting of stock that occurred in April and May 2020. The share vesting price in April and May 2020 was significantly higher as compared to the share vesting price over the same period in 2019.

Note 13 — Earnings Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended June 30,
	2020		2019
Numerator:
Net income attributable to holders of shares of common stock—basic	$	46,100	$	42,776
Net income attributable to holders of shares of common stock—diluted	$	46,100	$	42,776
Denominator:
Weighted average shares of common stock outstanding—basic	63,684,431		61,670,617
Weighted average number of incremental shares issuable from unvested restricted stock and restricted stock units, as calculated using the treasury stock method	3,114,129		3,950,486
Weighted average shares of common stock outstanding—diluted	66,798,560		65,621,103
Basic earnings per share	$	0.72	$	0.69
Diluted earnings per share	$	0.69	$	0.65

Note 14 — Employee Benefit Plans

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution savings plan for its domestic employees and defined contribution retirement plans for its international employees. The Company contributed approximately $924 and $779 to these plans during the three months ended June 30, 2020 and 2019, respectively.

Share-Based Incentive Plans

Following the IPO, additional awards of restricted shares have been and will be made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the "2016 Incentive Plan"), which became effective in August 2015 and was amended in October 2017. Under the 2016 Incentive Plan, it is anticipated that the Company will continue to grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent necessary to operate the Company's business. Equity-based incentive awards issued under the 2016 Incentive Plan generally vest over a four-year period. An aggregate of 37,847 restricted shares of Class A common stock were granted under the 2016 Incentive Plan to (i) two independent directors in August 2015 at $21 per share, (ii) two independent directors in the first quarter of fiscal 2017 at $25.21 per share, (iii) one independent director in the first quarter of fiscal 2017 at $23.93 per share, (iv) three independent directors in the first quarters of fiscal 2018 and 2019 at $33.54 and $44.50 per share, respectively, (v) one independent director in the third quarter of fiscal 2019 at $42.41 per share, (vi) four independent directors in the first quarter of fiscal 2020 at $47.22 per share, and (vii) one independent director in the third quarter of fiscal 2020 at $47.21 per share.

17

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

An excess tax benefit of $13,408 and $7,605 was recognized during the three months ended June 30, 2020 and 2019, respectively, as a component of the provision for income taxes and an operating activity on the Consolidated Statements of Cash Flows. The excess tax benefits recognized during the three months ended June 30, 2020 and 2019 were related to shares vested in April and May 2020 and 2019, respectively.

The share awards are classified as equity awards at the time of grant unless the number of shares granted is unknown. Awards that are settleable in shares based upon a future determinable stock price are classified as liabilities until the price is established and the resulting number of shares is known, at which time they are re-classified from liabilities to equity awards. Activity in equity classified share awards which relate to the Company's 2006 Incentive Award Plan (the "2006 Incentive Plan") and the 2016 Incentive Plan during the three months ended June 30, 2020 and 2019 is as follows:

Unvested Share Awards	Shares		Weighted Average Grant Date Fair Value
Balance, April 1, 2020	3,539		$	39.13
Granted	1,044		60.60
Vested	(1,769	)	32.38
Forfeited/Repurchased	28		47.08
Balance, June 30, 2020	2,842		$	51.38
Balance, April 1, 2019	3,764		$	32.29
Granted	1,359		47.22
Vested	(1,490	)	29.26
Forfeited/Repurchased	(24	)	36.22
Balance, June 30, 2019	3,609		$	39.12

Activity in liability classified share awards during the three months ended June 30, 2020 and 2019 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2020	$	20,989
Offer to grant	4,583
Share price determined-converted to cash payments	(249		)
Share price determined-transferred to equity grants	(7,262		)
Forfeited	(1,344		)
Balance, June 30, 2020	$	16,717
Balance, April 1, 2019	$	21,676
Offer to grant	3,155
Share price determined-converted to cash payments	(52		)
Share price determined-transferred to equity grants	(6,457		)
Forfeited	(50		)
Balance, June 30, 2019	$	18,272

Compensation expenses for the Company associated with both equity and liability classified awards totaled $17,196 and $12,762 for the three months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and 2019, there was $145,313 and $126,430, respectively, of total unrecognized compensation cost related to unvested share awards granted under both the 2006 Incentive Plan and 2016 Incentive Plan. These costs are recognized over a weighted average period of 1.9 years and 1.7 years, as of June 30, 2020 and 2019, respectively.

18

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

On October 19, 2017, our board of directors approved an amendment (the “Amendment”) to the 2016 Incentive Plan reducing the number of shares of common stock available for issuance under the 2016 Incentive Plan by approximately 12.2 million shares. Under the Amendment, the aggregate number of shares of common stock that are available for issuance under awards granted pursuant to the 2016 Incentive Plan is equal to the sum of (i) 8.0 million and (ii) any shares of our Class B common stock that are subject to awards under our 2006 Incentive Plan that terminate, expire or lapse for any reason after October 19, 2017.

The number of shares available for issuance will be increased annually beginning on April 1, 2018 and ending on April 1, 2025, by an amount equal to the lowest of:

• 6,540,659 shares of our Class A common stock and Class B common stock;

• Six percent of the shares of Class A common stock and Class B common stock outstanding on the final day of the immediately preceding fiscal year; and

• such smaller number of shares as determined by our board of directors.

Note 15 — Stockholders' Equity

There are two classes of authorized HL, Inc. common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions.

On May 30, 2019, pursuant to a registered underwritten public offering, ORIX USA sold 3,000,000 shares of our Class A common stock to the public at a price of $45.80.

On August 1, 2019, pursuant to a registered underwritten public offering, ORIX USA sold its remaining ownership of 3,377,935 shares of our Class A common stock to the public at a price of $45.62.

On May 20, 2020, the Company completed an underwritten public offering of 3,000,000 shares of its Class A common stock. The offering generated net proceeds for the Company of approximately $188.7 million after deducting the underwriting discount and estimated offering expenses payable by us.

Class A common stock

During the three months ended June 30, 2020, 5,577 shares were issued to non-employee directors, and 1,529,757 shares were converted from Class B to Class A. During the three months ended June 30, 2019, 7,027 shares were issued to non-employee directors, and 2,291,827 shares were converted from Class B to Class A. As of June 30, 2020, there were 50,668,425 Class A shares held by the public and 42,301 Class A shares held by non-employee directors. As of June 30, 2019, there were 37,418,661 Class A shares held by the public, 61,967 Class A shares held by non-employee directors, and 3,377,935 Class A shares held by ORIX USA.

Class B common stock

As of June 30, 2020 and 2019, there were 18,774,077 and 25,308,393, respectively, Class B shares held by the HL Voting Trust.

Dividends

Previously declared dividends related to unvested shares of $4,028 and $5,624 were unpaid as of June 30, 2020 and 2019, respectively.

Stock subscriptions receivable

Employees of the Company periodically issued notes receivable to the Company documenting loans made by the Company to such employees for the purchase of restricted shares of the Company.

19

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Share repurchases

In July 2018, the board of directors authorized the repurchase of up to an additional $100 million of the Company's common stock.

During the three months ended June 30, 2020 and 2019, the Company repurchased 280,893 and 652,618 shares, respectively, of Class B common stock, to satisfy $17,092 and $31,267 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the three months ended June 30, 2020, the Company did not repurchase any additional shares of its outstanding common stock. During the three months ended June 30, 2019, the Company repurchased an additional 55,164 shares of its outstanding common stock at a weighted average price of and $47.81 per share, excluding commissions, for an aggregate purchase price of $2,502.

Note 16 — Leases

Lessee Arrangements

Operating Leases

We lease real estate and equipment used in operations from third parties. As of June 30, 2020, the remaining term of our operating leases ranged from 1 to 16 years with various automatic extensions.

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of June 30, 2020.

	Operating Leases
Remaining 2021	$	21,896
2022	27,416
2023	23,020
2024	17,791
2025	18,885
Thereafter	98,209
Total	207,217
Less: present value discount	(34,346		)
Operating lease liabilities	$	172,871

As of June 30, 2020, the Company entered into one additional office space operating lease that has not yet commenced, for approximately EUR 9.0 million. This operating lease will commence on January 2021 with a lease term of 15 years.

Lease costs

	Three Months Ended June 30,
	2020			2019
Operating lease expense	$	7,244		$	6,329
Variable lease expense (1)	2,327			3,650
Short-term lease expense	100			71
Less: Sublease income	(48		)	(49		)
Total lease costs	$	9,623		$	10,001

^{(1)  Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.}  

Weighted-average details

	June 30, 2020
Weighted-average remaining lease term (years)	10
Weighted-average discount rate	3.8	%

20

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

Supplemental cash flow information related to leases:

	Three Months Ended June 30,
	2020		2019
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	7,458	$	6,073
Right-of-use assets obtained in exchange for operating lease liabilities	22,652		—

Note 17 — Commitments and Contingencies

The Company has been named in various legal actions arising in the normal course of business. In the opinion of the Company, in consultation with legal counsel, the final resolutions of these matters are not expected to have a material adverse effect on the Company’s financial condition, operations and cash flows.

The Company also provides routine indemnifications relating to certain real estate (office) lease agreements under which it may be required to indemnify property owners for claims and other liabilities arising from the Company’s use of the applicable premises. In addition, the Company guarantees the performance of its subsidiaries under certain office lease agreements. The terms of these obligations vary, and because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the maximum amount that it could be obligated to pay under such contracts. Based on historical experience and evaluation of specific indemnities, management believes that judgments, if any, against the Company related to such matters are not likely to have a material effect on the consolidated financial statements. Accordingly, the Company has not recorded any liability for these obligations as of June 30, 2020 or March 31, 2020.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2020 Annual Report.

Note 18 — Segment and Geographical Information

The Company’s reportable segments are described in Note 1 and each are individually managed and provide separate services which require specialized expertise for the provision of those services. Revenues by segment represent fees earned on the various services offered within each segment. Segment profit consists of segment revenues, less (1) direct expenses including compensation, travel, meals and entertainment, professional fees, and bad debt and (2) expenses allocated by headcount such as communications, rent, depreciation and amortization, and office expense. The corporate expense category includes costs not allocated to individual segments, including charges related to incentive compensation and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and compliance and legal. The following tables present information about revenues, profit and assets by segment and geography.    

21

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

	Three Months Ended June 30,
	2020			2019
Revenues by segment
Corporate Finance	$	87,971		$	133,589
Financial Restructuring	88,620			79,354
Financial and Valuation Advisory	34,545			37,406
Revenues	$	211,136		$	250,349
Segment profit (1)
Corporate Finance	$	22,650		$	37,428
Financial Restructuring	36,169			23,977
Financial and Valuation Advisory	7,397			8,281
Total segment profit	66,216			69,686
Corporate expenses (2)	23,626			21,912
Other (income)/expense, net	(1,161		)	(1,651		)
Income before provision for income taxes	$	43,751		$	49,425

(1) We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2) Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	June 30, 2020		March 31, 2020
Assets by segment
Corporate Finance	$	404,082	$	403,147
Financial Restructuring	174,774		186,418
Financial and Valuation Advisory	125,212		127,440
Total segment assets	704,068		717,005
Corporate assets	994,615		959,998
Total assets	$	1,698,683	$	1,677,003

	Three Months Ended June 30,
	2020		2019
Income before provision for income taxes by geography
United States	$	34,968	$	38,231
International	8,783		11,194
Income before provision for income taxes	$	43,751	$	49,425

	Three Months Ended June 30,
	2020		2019
Revenues by geography
United States	$	176,945	$	208,151
International	34,191		42,198
Revenues	$	211,136	$	250,349

22

HOULIHAN LOKEY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In thousands, except share data or as otherwise stated)

	June 30, 2020		March 31, 2020
Assets by geography
United States	$	1,188,437	$	1,135,871
International	510,246		541,132
Total assets	$	1,698,683	$	1,677,003

Note 19 — Subsequent Events

On July 22, 2020, the Company's board of directors declared a quarterly cash dividend of $0.33 per share of Class A and Class B common stock, payable on September 15, 2020, to shareholders of record on September 2, 2020.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion should be read together with our consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. We make statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “intends,” “predicts,” “potential” or “continue,” the negative of these terms or other similar expressions. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to, the factors listed under the heading “Cautionary Note Regarding Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended March 31, 2020 (the "2020 Annual Report"). Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements speak only as of the date of this filing. You should not rely upon forward-looking statements as a prediction of future events. We are under no duty to and we do not undertake any obligation to update or review any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations whether as a result of new information, future developments or otherwise.

Key Financial Measures

Revenues

Revenues include fee revenues and reimbursements of expenses (see Note 2 and Note 3 to our unaudited consolidated financial statements in this Form 10-Q for additional information). Revenues reflect revenues from our Corporate Finance (“CF”), Financial Restructuring (“FR”), and Financial and Valuation Advisory (“FVA”) business segments that substantially consist of fees for advisory services.

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement. In general, advisory fees are paid at the time an engagement letter is signed (“Retainer Fees”), during the course of the engagement (“Progress Fees”), or upon the successful completion of a transaction or engagement (“Completion Fees”).

CF provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of Completion Fees. A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to Retainer Fees and in some cases Progress Fees that may have been received.

FR provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

FVA primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

24

Operating Expenses

Our operating expenses are classified as employee compensation and benefits expense and non-compensation expense; revenue and headcount are the primary drivers of our operating expenses. Reimbursements of certain out-of-pocket deal expenses are recorded on a gross basis and are therefore included in both Revenues and Operating expenses on the Consolidated Statements of Comprehensive Income.

Employee Compensation and Benefits Expense. Our employee compensation and benefits expense, which accounts for the majority of our operating expenses, is determined by management based on revenues earned, headcount, the competitiveness of the prevailing labor market, and anticipated compensation expectations of our employees. These factors may fluctuate, and as a result, our employee compensation and benefits expense may fluctuate materially in any particular period. Accordingly, the amount of employee compensation and benefits expense recognized in any particular period may not be consistent with prior periods or indicative of future periods.

Our employee compensation and benefits expense consists of base salary, payroll taxes, benefits, annual incentive compensation payable as cash bonus awards, deferred cash bonus awards, and the amortization of equity-based bonus awards. Base salary and benefits are paid ratably throughout the year. Our annual equity-based bonus awards include fixed share compensation awards and fixed dollar awards as a component of the annual bonus awards for certain employees. These equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each fiscal year; accordingly, expenses are amortized over the stated vesting period. In most circumstances, the unvested portion of these awards is subject to forfeiture should the employee depart from the Company. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performance and are generally paid in the first fiscal quarter of each year with respect to prior year performance. Generally, a portion of the cash bonus is deferred and paid in the third quarter of the fiscal year in which the bonus is awarded. The ratio of employee compensation and benefits to revenues is referred to as the "Compensation Ratio."

Non-Compensation Expense. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, and other operating expenses. We refer to all of these expenses as non-compensation expenses. A portion of our non-compensation expenses fluctuates in response to changes in headcount.

Other (Income)/Expense, net

Other (income)/expense, net includes (i) interest income earned on non-marketable and investment securities, Cash and cash equivalents, loans receivable from affiliates, employee loans, and commercial paper, (ii) interest expense and fees on our 2015 Line of Credit or 2019 Line of Credit (each defined herein), (iii) interest expense on the loan payable to affiliate, Loans payable to former shareholders, and the Loan payable to non-affiliates, (iv) equity income and/or gains or losses from funds and partnership interests where we have more than a minor ownership interest or more than minor influence over operations, but do not have a controlling interest and are not the primary beneficiary, and (v) gains and/or losses associated with the reduction/increase of earnout liabilities.

Results of Consolidated Operations

The following is a discussion of our results of operations for the three months ended June 30, 2020 and 2019. For a more detailed discussion of the factors that affected the revenues and the operating expenses of our CF, FR, and FVA business segments in these periods, see Part I, Item 2 of this Form 10-Q under the heading “Business Segments” below.

	Three Months Ended June 30,
($ in thousands)	2020			2019			Change
Revenues	$	211,136		$	250,349		(16	)%
Operating expenses:
Employee compensation and benefits	137,121			163,311			(16	)%
Non-compensation	31,425			39,264			(20	)%
Total operating expenses	168,546			202,575			(17	)%
Operating income	42,590			47,774			(11	)%
Other (income)/expense, net	(1,161		)	(1,651		)	(30	)%
Income before provision for income taxes	43,751			49,425			(11	)%
Provision for income taxes	(2,349		)	6,649			(135	)%
Net income attributable to Houlihan Lokey, Inc.	$	46,100		$	42,776		8	%

25

Three Months Ended June 30, 2020 versus June 30, 2019

Revenues were $211.1 million for the three months ended June 30, 2020, compared with $250.3 million for the three months ended June 30, 2019, representing a decrease of (16)%. For the quarter, CF revenues decreased (34)%, FR revenues increased 12%, and FVA revenues decreased (8)% when compared with the three months ended June 30, 2019.

Operating expenses were $168.5 million for the three months ended June 30, 2020, compared with $202.6 million for the three months ended June 30, 2019, representing a decrease of (17)%. Employee compensation and benefits expense, as a component of operating expenses, was $137.1 million for the three months ended June 30, 2020, compared with $163.3 million for the three months ended June 30, 2019, representing a decrease of (16)%. The decrease in employee compensation and benefits expense was primarily a result of a decrease in revenues for the quarter when compared to the same quarter last year. The Compensation Ratio was 64.9% for the three months ended June 30, 2020, compared with 65.2% for the three months ended June 30, 2019. Non-compensation expense, as a component of operating expenses, was $31.4 million for the three months ended June 30, 2020, compared with $39.3 million for the three months ended June 30, 2019, representing a decrease of (20)%. The decrease in non-compensation expense was primarily driven by a decrease in travel, meals, and entertainment expense and other operating expenses, partially offset by an increase in information technology expenses. The decrease in travel, meals, and entertainment expense was primarily driven by the firm’s current work-from-home policy implemented as a result of the COVID-19 pandemic.

Other (income)/expense, net decreased (30)% to $(1.2) million for the three months ended June 30, 2020, compared with $(1.7) million for the three months ended June 30, 2019, primarily due to lower interest (income) generated by our investment securities.

The provision for income taxes for the three months ended June 30, 2020 was $(2.3) million, which reflected an effective tax rate of (5.4)%. The provision for income taxes for the three months ended June 30, 2019 was $6.6 million which reflected an effective tax rate of 13.5%. The decrease in the Company's tax rate during the three-month period ended June 30, 2020 relative to the same period in 2019 was primarily a result of the vesting of stock that occurred in April and May 2020. The share vesting price in April and May 2020 was significantly higher as compared to the share vesting price over the same period in 2019.

26

Business Segments

The following table presents revenues, expenses and contributions from our continuing operations by business segment. The revenues by segment represent each segment’s revenues, and the profit by segment represents profit for each segment before corporate expenses, other (income)/expense, net, and income taxes.

	Three Months Ended June 30,
($ in thousands)	2020			2019			Change
Revenues by Segment
Corporate Finance	$	87,971		$	133,589		(34	)%
Financial Restructuring	88,620			79,354			12	%
Financial and Valuation Advisory	34,545			37,406			(8	)%
Revenues	$	211,136		$	250,349		(16	)%
Segment Profit (1)
Corporate Finance	$	22,650		$	37,428		(39	)%
Financial Restructuring	36,169			23,977			51	%
Financial and Valuation Advisory	7,397			8,281			(11	)%
Total Segment Profit	66,216			69,686			(5	)%
Corporate Expenses (2)	23,626			21,912			8	%
Other (income)/expense, net	(1,161		)	(1,651		)	(30	)%
Income Before Provision for Income Taxes	$	43,751		$	49,425		(11	)%
Segment Metrics
Number of Managing Directors
Corporate Finance	117			115			2	%
Financial Restructuring	48			45			7	%
Financial and Valuation Advisory	31			32			(3	)%
Number of Closed Transactions/Fee Events (3)
Corporate Finance	35			61			(43	)%
Financial Restructuring	29			25			16	%
Financial and Valuation Advisory	512			509			1	%

(1) We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment Profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2) Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

(3) Fee Events applicable to FVA only; a Fee Event includes any engagement that involves revenue activity during the measurement period with a revenue minimum of $1,000. References to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in Note 2 of our Consolidated Financial Statements.

Corporate Finance

Three Months Ended June 30, 2020 versus June 30, 2019

Revenues for CF were $88.0 million for the three months ended June 30, 2020, compared with $133.6 million for the three months ended June 30, 2019, representing a decrease of (34)%. Revenues decreased due to a significant decline in the number of closed transactions as a result of the COVID-19 pandemic, partially offset by an increase in the average transaction fee on closed transactions.

Segment profit for CF was $22.7 million for the three months ended June 30, 2020, compared with $37.4 million for the three months ended June 30, 2019. Profitability decreased primarily as a result of a decrease in revenues and an increase in compensation and non-compensation expenses as a percentage of revenues when compared to the same quarter last year.

27

Financial Restructuring

Three Months Ended June 30, 2020 versus June 30, 2019

Revenues for FR were $88.6 million for the three months ended June 30, 2020, compared with $79.4 million for the three months ended June 30, 2019, representing an increase of 12%. Revenues increased primarily due to an increase in the number of closed transactions and an increase in monthly retainer fees as a result of the increase in new engagements driven by the COVID-19 pandemic.

Segment profit for FR was $36.2 million for the three months ended June 30, 2020, compared with $24.0 million for the three months ended June 30, 2019, an increase of 51%. Profitability increased primarily as a result of increased revenues and lower compensation and non-compensation expenses as a percentage of revenues when compared to the same quarter last year.

Financial and Valuation Advisory

Three Months Ended June 30, 2020 versus June 30, 2019

Revenues for FVA were $34.5 million for the three months ended June 30, 2020, compared with $37.4 million for the three months ended June 30, 2019, representing a decrease of (8)%. Revenues decreased primarily as a result of a reduction in the average fee per fee event due to a shift in product mix driven by the COVID-19 pandemic, partially offset by a slight increase in the number of fee events.

Segment profit for FVA was $7.4 million for the three months ended June 30, 2020, compared with $8.3 million for the three months ended June 30, 2019, a decrease of (11)%. Profitability decreased primarily as a result of a decrease in revenues and an increase in compensation expenses as a percentage of revenues when compared to the same quarter last year.

Corporate Expenses

Three Months Ended June 30, 2020 versus June 30, 2019

Corporate expenses were $23.6 million for the three months ended June 30, 2020, compared with $21.9 million for the three months ended June 30, 2019. This 8% increase was primarily driven by an increase in other operating expenses.

Liquidity and Capital Resources

Our current assets comprise cash and cash equivalents, investment securities, receivables from affiliates, accounts receivable, and unbilled work in process related to fees earned from providing advisory services. Our current liabilities include deferred income, accounts payable and accrued expenses, accrued salaries and bonuses, income taxes payable, and current portion of loan obligations.

Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. As of June 30, 2020 and March 31, 2020, we had $153.1 million and $173.7 million of cash in foreign subsidiaries, respectively. Our excess cash may be invested from time to time in short term investments, including treasury securities, commercial paper, certificates of deposit, and investment grade corporate debt securities. Please refer to Note 6 for further detail.

As of June 30, 2020, the remaining principal balance of the Loan payable to non-affiliate was $3.4 million, which included foreign currency translation adjustments and interest expense. See Note 1 and Note 10 for additional information.

As of June 30, 2020 and March 31, 2020, our Restricted cash, Cash and cash equivalents, and Investment securities were as follows:

(In thousands)	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Investment securities	123,488		135,389
Total unrestricted cash and cash equivalents, including investment securities	545,652		515,762
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash, including investment securities	$	546,025	$	516,135

(1) Represents a deposit in support of a letter of credit issued for our Frankfurt office.

28

Our liquidity is highly dependent upon cash receipts from clients which in turn are generally dependent upon the successful completion of transactions as well as the timing of receivables collections, which typically occur within 60 days of billing. As of June 30, 2020, Accounts receivable, net of credit losses was $51.6 million. As of June 30, 2020, Unbilled work in process, net of credit losses was $36.4 million.

Our previously active revolving line of credit pursuant to the loan agreement, dated as of August 18, 2015, by and among Houlihan Lokey, certain domestic subsidiaries of Houlihan Lokey party thereto and Bank of America, N.A., amended July 28, 2017 and August 15, 2019 (the "2015 Line of Credit"), which provided a revolving line of credit of $75.0 million, was refinanced and replaced with the 2019 Line of Credit (as defined below).

On August 23, 2019, the Company entered into a new syndicated revolving line of credit with the Bank of America, N.A. and certain other financial institutions party thereto, which allows for borrowings of up to $100 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200 million) and matures on August 23, 2022 (the "2019 Line of Credit"). As of June 30, 2020, no principal was outstanding under the 2019 Line of Credit. The agreement governing this facility provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. Borrowings under the 2019 Line of Credit require payments of interest at the annual rate of LIBOR plus 1.00%. The loan agreement requires compliance with certain loan covenants including but not limited to the maintenance of minimum consolidated earnings before interest, taxes, depreciation and amortization of no less than $150 million as of the end of any quarterly 12-month period and certain leverage ratios including a consolidated leverage ratio of less than 2.00 to 1.00. As of June 30, 2020, we were, and expect to continue to be, in compliance with such covenants.

Cash Flows

Our operating cash flows are primarily influenced by the amount and timing of receipt of advisory fees and the payment of operating expenses, including payments of incentive compensation to our employees. We pay a significant portion of our incentive compensation during the first and third quarters of each fiscal year. A summary of our operating, investing, and financing cash flows is as follows:

	Three Months Ended June 30,
(In thousands)	2020			2019			Change
Operating activities:
Net income	$	46,100		$	42,776		8	%
Non-cash charges	31,169			25,173			24	%
Other operating activities	(192,509		)	(177,158		)	9	%
Net cash (used in) operating activities	(115,240		)	(109,209		)	6	%
Net cash provided by investing activities	9,229			93,481			(90	)%
Net cash provided by/(used in) financing activities	145,282			(56,746		)	NM
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	2,520			(1,539		)	NM
Net increase/(decrease) in cash, cash equivalents, and restricted cash	41,791			(74,013		)	(156	)%
Cash, cash equivalents, and restricted cash—beginning of period	380,746			286,115			33	%
Cash, cash equivalents, and restricted cash—end of period	$	422,537		$	212,102		99	%

Three Months Ended June 30, 2020

Operating activities resulted in a net outflow of $(115.2) million primarily attributable to cash bonus payments paid in May 2020. Investing activities resulted in a net inflow of $9.2 million primarily attributable to sales or maturities of investment securities, partially offset by purchases of investment securities. Financing activities resulted in a net inflow of $145.3 million primarily attributable to proceeds from the Company's May 2020 offering. See Note 15 to our unaudited consolidated financial statements in this Form 10-Q for additional information.

Contractual Obligations

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2020 Annual Report.

29

Off‑Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our consolidated financial statements except for certain stand-by letters of credit and bank guarantees in support of various office leases totaling approximately $0.6 million.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period for which they are determined to be necessary.

There have been no material changes to the critical accounting policies disclosed in our 2020 Annual Report. For additional information on critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in the MD&A of the 2020 Annual Report.

Recent Accounting Developments

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(682), net of tax.

For additional discussion of recently issued accounting developments and their impact or potential impact on our consolidated financial statements, see Note 2 to our unaudited consolidated financial statements in this Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Market Risk and Credit Risk

Our business is not capital intensive and we generally do not issue debt or invest in derivative instruments. As a result, we are not subject to significant market risk (including interest rate risk) or credit risk (except in relation to receivables). We maintain our cash and cash equivalents with financial institutions with high credit ratings. Although these deposits are generally not insured, management believes we are not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Our cash and cash equivalents are denominated primarily in U.S. dollars, pound sterling and euros, and we face foreign currency risk in our cash balances and other assets and liabilities held in accounts outside the U.S. due to potential currency movements and the associated foreign currency translation accounting requirements.

We regularly review our accounts receivable and allowance for credit losses by considering factors such as historical experience, credit quality, age of the accounts receivable and recoverable expense balances, and the current economic conditions that may affect a customer’s ability to pay such amounts owed to us. We maintain an allowance for credit losses that, in our opinion, provides for an adequate reserve to cover losses that may be incurred.

Risks Related to Cash and Short Term Investments

Our cash is maintained in U.S. and non-U.S. bank accounts. We have exposure to foreign exchange risks through all of our international affiliates. However, we believe our cash is not subject to any material interest rate risk, equity price risk, credit risk or other market risk. Consistent with our past practice, we expect to maintain our cash in bank accounts or highly liquid securities.

Exchange Rate Risk

The exchange rate of the U.S. dollar relative to the currencies in the non-U.S. countries in which we operate may have an effect on the reported value of our non-U.S. dollar denominated or based assets and liabilities and, therefore, be reflected as a change in other comprehensive income. Our non-U.S. assets and liabilities that are sensitive to exchange rates consist primarily of trade payables and receivables, work in progress, and cash. The net impact of the fluctuation of foreign currencies in other comprehensive income within the Consolidated Statements of Comprehensive Income was $2,927 and $(3,971) during the three months ended June 30, 2020 and 2019, respectively.

30

In addition, the reported amounts of our revenues and expenses may be affected by movements in the rate of exchange between the currencies in the non-U.S. countries in which we operate and the U.S. dollar, affecting our operating results. We have analyzed our potential exposure to changes in the value of the U.S. dollar relative to the pound sterling and euro, the primary currencies of our European operations, by performing a sensitivity analysis on our net income, and determined that while our earnings are subject to fluctuations from changes in foreign currency rates, at this time we do not believe we face any material risk in this respect.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of June 30, 2020, we had one foreign currency forward contract outstanding between the pound sterling and the euro with a notional value of €4.9 million. As of June 30, 2019, we entered into a foreign currency forward contract between the pound sterling and the U.S. dollar with an aggregate notional value of $20 million. The fair value of these contracts represented a net loss included in Other operating expenses of $(46) and $(41) during the three months ended June 30, 2020 and 2019, respectively.

In summary, we have been impacted by changes in exchange rates and the potential impact of future currency fluctuation will increase as our international expansion continues. The magnitude of this impact will depend on the timing and volume of revenues and expenses of, and the amounts of assets and liabilities in, our foreign subsidiaries along with the timing of changes in the relative value of the U.S. dollar to the currencies of the non-U.S. countries in which we operate.

Item 4.        Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management, including the chief executive officer and chief financial officer, recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2020.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control over financial reporting performed during the fiscal quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

31

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. There has been no material change in the nature of our legal proceedings from the descriptions contained in our 2020 Annual Report.

Item 1A.    Risk Factors

There have been no material changes to the risk factors disclosed in our 2020 Annual Report.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

On June 10, 2020, the Company issued 102,165 shares of Class B common stock to certain former employees of a business acquired in 2018. The Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering and received no proceeds in connection with this issuance.

During the quarter ended June 30, 2020, the Company issued 4,819,536 shares of Class A common stock upon the conversion of a like number of shares of Class B common stock. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder. See Note 15 for additional information. The Company relied upon the exemption from registration provided by Section 3(a)(9) under the Securities Act of 1933, as amended.

Purchases of Equity Securities

The Company did not repurchase any Houlihan Lokey, Inc. equity securities during the quarter ended June 30, 2020. The following table summarizes all of the shares which were withheld from employees to satisfy tax withholding obligations resulting from the vesting of certain restricted stock awards during the quarter ended June 30, 2020:

Period	Total Number of Shares Purchased	Average Price Paid Per  Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2020 - April 30, 2020 (2)	239,865	$	59.38	—
May 1, 2020 - May 31, 2020 (2)	26,918	61.99		—
June 1, 2020 - June 30, 2020 (2)	14,110	60.26		—
Total	280,893	$	59.72	—	$	125,000,000

(1) The shares of Class A common stock repurchased through this program have been retired. In July 2020, the board of directors authorized a new program to replace the prior repurchase authority pursuant to which new program the Company would repurchase from time to time up to $125 million in aggregate purchase price of the Company’s Class A common stock or Class B common stock, in open market and negotiated purchases.

(2) Represents unvested shares of Class B common stock, which were withheld from employees to satisfy tax withholding obligations resulting from the vesting of certain restricted stock awards.

Item 3.    Defaults upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.

32

Item 6.    Exhibits

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed / Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of Houlihan Lokey, Inc., dated August 18, 2015.	8-K	333-205610	3.1	8/21/15
3.2	Amended and Restated Bylaws of the Company, dated August 18, 2015.	8-K	333-205610	3.2	8/21/15
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.					*
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.					*
32.1	Section 1350 Certification of Chief Executive Officer.					**
32.2	Section 1350 Certification of Chief Financial Officer.					**
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					*
104.1	Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.					*

*	Filed herewith.
**	Furnished herewith.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOULIHAN LOKEY, INC.
Date:	August 4, 2020	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)
Date:	August 4, 2020	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Scott L. Beiser, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ending June 30, 2020 of Houlihan Lokey, Inc. as filed with the Securities and Exchange Commission on the date hereof;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 4, 2020	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, J. Lindsey Alley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ending June 30, 2020 of Houlihan Lokey, Inc. as filed with the Securities and Exchange Commission on the date hereof;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 4, 2020	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott L. Beiser, Chief Executive Officer and Director of Houlihan Lokey, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 4, 2020	/s/ SCOTT L. BEISER
		Scott L. Beiser
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Lindsey Alley, Chief Financial Officer of Houlihan Lokey, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 4, 2020	/s/ J. LINDSEY ALLEY
		J. Lindsey Alley
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Cover Page - shares	3 Months Ended
	Jun. 30, 2020	Aug. 03, 2020
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-37537
Entity Registrant Name	Houlihan Lokey, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	95-2770395
Entity Address, Address Line One	10250 Constellation Blvd.
Entity Address, Address Line Two	5th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90067
City Area Code	(310)
Local Phone Number	788-5200
Title of 12(b) Security	Class A Common Stock, par value $0.001
Trading Symbol	HLI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Entity Central Index Key	0001302215
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Class A common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		50,733,275
Class B common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		18,745,482

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Assets
Cash and cash equivalents	$ 422,164	$ 380,373
Restricted cash	373	373
Investment securities	123,488	135,389
Accounts receivable, net of allowance for credit losses of $5,893 and $5,587, respectively	51,565	80,912
Unbilled work in process, net of allowance for credit losses of $1,566 and $1,302, respectively	36,378	39,821
Income taxes receivable	12,165	4,282
Deferred income taxes	5,017	6,507
Property and equipment, net	42,876	42,372
Operating lease right-of-use asset	152,428	135,240
Goodwill and other intangibles, net	812,355	812,844
Other assets	39,874	38,890
Total assets	1,698,683	1,677,003
Liabilities:
Accrued salaries and bonuses	222,393	420,376
Accounts payable and accrued expenses	37,233	53,883
Deferred income	28,570	26,780
Deferred income taxes	2,350	664
Loans payable to former shareholders	1,303	1,393
Loan payable to non-affiliate	3,362	3,283
Operating lease liabilities	172,871	154,218
Other liabilities	20,961	32,024
Total liabilities	489,043	692,621
Additional paid-in capital	848,756	649,954
Retained earnings	400,995	377,471
Accumulated other comprehensive (loss)	(40,181)	(43,108)
Total stockholders' equity	1,209,640	984,382
Total liabilities and stockholders' equity	1,698,683	1,677,003
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 50,713,967 and 46,178,633 shares, respectively
Common stock	51	46
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 18,774,077 and 19,345,277 shares, respectively
Common stock	$ 19	$ 19

XML

CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,893	$ 5,587
Allowance for doubtful accounts, unbilled work in process	$ 1,566	$ 1,302
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 50,713,967 and 46,178,633 shares, respectively
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	50,713,967	46,178,633
Common stock, shares outstanding (in shares)	50,713,967	46,178,633
Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 18,774,077 and 19,345,277 shares, respectively
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	18,774,077	19,345,277
Common stock, shares outstanding (in shares)	18,774,077	19,345,277

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenues	$ 211,136
Revenues	211,136	$ 250,349
Operating expenses:
Employee compensation and benefits	137,121	163,311
Travel, meals, and entertainment	2,114	9,617
Rent	9,623	10,001
Depreciation and amortization	3,672	3,963
Information technology and communications	6,383	5,324
Professional fees	5,007	4,456
Other operating expenses	4,626	5,903
Total operating expenses	168,546	202,575
Operating income	42,590	47,774
Other (income)/expense, net	(1,161)	(1,651)
Income before provision for income taxes	43,751	49,425
Provision for income taxes	(2,349)	6,649
Net income	46,100	42,776
Other comprehensive income, net of tax:
Foreign currency translation adjustments	2,927	(3,971)
Comprehensive income	$ 49,027	$ 38,805
Weighted average shares of common stock outstanding:
Basic (in shares)	63,684,431	61,670,617
Fully Diluted (in shares)	66,798,560	65,621,103
Net income per share of common stock
Basic (in dollars per share)	$ 0.72	$ 0.69
Fully Diluted (in dollars per share)	$ 0.69	$ 0.65

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Class A common stock	Class B common stock	Total stockholders' equity	Common stock Class A common stock	Common stock Class B common stock	Treasury Stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss
Beginning balance (in shares) at Mar. 31, 2019					38,200,802	27,197,734	0
Beginning balance at Mar. 31, 2019				$ 891,329	$ 38	$ 27	$ 0	$ 645,090	$ 276,468	$ (30,294)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)						1,491,860
Shares issued				6,458		$ 2		6,456
Stock compensation vesting				10,910				10,910
Class B shares sold (in shares)					414,071	(414,071)
Class B shares sold				0	$ 1	$ (1)
Dividends				(20,413)					(20,413)
Conversion of Class B to Class A shares (in shares)					2,291,827	(2,291,827)
Conversion of Class B to Class A shares				0	$ 2	$ (2)
Shares issued to non-employee directors (in shares)					7,027
Shares issued to non-employee directors				0
Other shares repurchased/retired/forfeited (in shares)						(675,403)	(55,164,000)
Other shares repurchased/forfeited				(33,770)		$ (1)	$ (2,502)	(31,267)
Net income	$ 42,776			42,776					42,776
Change in unrealized translation	(3,971)			(3,971)						(3,971)
Total comprehensive income				38,805					42,776	(3,971)
Ending balance (in shares) at Jun. 30, 2019					40,913,727	25,308,293	(55,164,000)
Ending balance at Jun. 30, 2019				893,319	$ 41	$ 25	$ (2,502)	631,189	298,831	(34,265)
Increase (Decrease) in Stockholders' Equity
Cumulative effect of the change in accounting principle related to credit losses, net of tax				(682)					(682)
Beginning balance (in shares) at Mar. 31, 2020		46,178,633	19,345,277		46,178,633	19,345,277
Beginning balance at Mar. 31, 2020	984,382			984,382	$ 46	$ 19		649,954	377,471	(43,108)
Increase (Decrease) in Stockholders' Equity
Shares issued (in shares)					3,000,000	1,267,734
Shares issued				200,862	$ 3	$ 2		200,857
Stock compensation vesting				15,386				15,386
Dividends				(21,894)					(21,894)
Conversion of Class B to Class A shares (in shares)					1,529,757	(1,529,757)
Conversion of Class B to Class A shares				0	$ 2	$ (2)
Shares issued to non-employee directors (in shares)					5,577
Shares issued to non-employee directors				333				333
Other shares repurchased/retired/forfeited (in shares)						(309,177)
Other shares repurchased/forfeited				(17,774)				(17,774)
Net income	46,100			46,100					46,100
Change in unrealized translation	2,927			2,927						2,927
Total comprehensive income				49,027					46,100	2,927
Ending balance (in shares) at Jun. 30, 2020		50,713,967	18,774,077		50,713,967	18,774,077
Ending balance at Jun. 30, 2020	$ 1,209,640			$ 1,209,640	$ 51	$ 19		$ 848,756	$ 400,995	$ (40,181)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net income	$ 46,100	$ 42,776
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	3,606	2,527
Provision for bad debts, net of recoveries	1,943	(21)
Unrealized gains on investment securities	(822)	(164)
Non-cash lease expense	5,574	6,106
Depreciation and amortization	3,672	3,963
Compensation expense – equity and liability classified share awards (Note 14)	17,196	12,762
Changes in operating assets and liabilities:
Accounts receivable	26,806	3,407
Unbilled work in process	3,211	247
Other assets	(1,077)	(1,809)
Accrued salaries and bonuses	(192,281)	(171,003)
Accounts payable and accrued expenses and other	(23,075)	(4,915)
Deferred income	1,790	1,381
Income taxes payable	(7,883)	(4,466)
Net cash (used in) operating activities	(115,240)	(109,209)
Cash flows from investing activities:
Purchases of investment securities	(99,277)	(157,097)
Sales or maturities of investment securities	112,000	249,479
Acquisition of business, net of cash acquired	0	8,710
Receivables from affiliates	0	(170)
Purchase of property and equipment, net	(3,494)	(7,441)
Net cash provided by investing activities	9,229	93,481
Cash flows from financing activities:
Dividends paid	(26,247)	(22,887)
Other share repurchases	0	(2,502)
Payments to settle employee tax obligations on share-based awards	(17,774)	(31,267)
Proceeds from issuance of Class A shares	189,060	0
Loans payable to former shareholders redeemed	(90)	(90)
Other financing activities	333	0
Net cash provided by/(used in) financing activities	145,282	(56,746)
Effects of exchange rate changes on cash, cash equivalents, and restricted cash	2,520	(1,539)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	41,791	(74,013)
Cash, cash equivalents, and restricted cash – beginning of period	380,746	286,115
Cash, cash equivalents, and restricted cash – end of period	422,537	212,102
Supplemental disclosures of non-cash activities:
Shares issued via vesting of liability classified awards	7,511	6,457
Cash acquired through acquisitions	0	10,506
Cash paid during the period:
Interest	197	193
Taxes	$ 3,656	$ 12,560

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BACKGROUND

3 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND

Background

Houlihan Lokey, Inc. ("Houlihan Lokey" or "HL, Inc.," also referred to as the "Company," "we," "our," or "us") is a Delaware corporation that controls the following primary subsidiaries:

• Houlihan Lokey Capital, Inc., a California corporation ("HL Capital, Inc."), is a wholly owned direct subsidiary of HL, Inc. HL Capital, Inc. is registered as a broker-dealer under Section 15(b) of the Securities Exchange Act of 1934 and a member of Financial Industry Regulatory Authority, Inc.

• Houlihan Lokey Financial Advisors, Inc., a California corporation ("HL FA, Inc."), is a wholly owned direct subsidiary of HL, Inc.

• HL Finance, LLC ("HL Finance"), a syndicated leveraged finance platform established to arrange senior secured leveraged loans for financial sponsor-backed, privately-held, and public corporate entities. HL Finance acts as an arranger on syndicated loan transactions and has entered into an agreement with an unaffiliated third party investor that may provide commitments with respect to certain syndicated loans arranged by HL Finance.

• Houlihan Lokey EMEA, LLP, a limited liability partnership registered in England ("HL EMEA, LLP"), is an indirect subsidiary of HL, Inc. HL EMEA, LLP is regulated by the Financial Conduct Authority in the United Kingdom ("U.K.").

On August 18, 2015, the Company successfully completed an initial public offering ("IPO") of its Class A common stock.

In June 2019, the Company exercised its option to acquire the remaining 51% of the shares of Lara (Italy Holdco) Limited ("Lara"). Lara's only operating subsidiary, Houlihan Lokey S.p.A., is an Italian-based company that provides corporate finance advisory services.

In November 2019, the Company completed the acquisition of Fidentiis Capital, an independent advisory business providing independent corporate finance advisory services relating to mergers and acquisitions, capital raising, and financing.

In December 2019, the Company completed the acquisition of Freeman & Co., an independent advisory business providing mergers and acquisitions advisory, capital raising, and other investment banking advisory services for the financial services sector.

The Company offers financial services and financial advice to a broad clientele located throughout the United States of America, Europe, the Middle East, and the Asia-Pacific region. The Company has U.S. offices in Los Angeles, San Francisco, Chicago, New York City, Minneapolis, McLean (Virginia), Dallas, Houston, Miami, and Atlanta as well as foreign offices in London, Paris, Frankfurt, Milan, Madrid, Amsterdam, Dubai, Sydney, Tokyo, Hong Kong, Beijing and Singapore. Together, the Company and its subsidiaries form an organization that provides financial services to meet a wide variety of client needs. The Company concentrates its efforts toward the earning of professional fees with focused services across the following three business segments:

• Corporate Finance ("CF") provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of fees paid upon the successful completion of the transaction or engagement ("Completion Fees"). A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the fees paid at the time an engagement letter is signed ("Retainer Fees") and in some cases fees paid during the course of the engagement ("Progress Fees") that may have been received.

• Financial Restructuring ("FR") provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees.

•

Financial and Valuation Advisory ("FVA") primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the three months ended June 30, 2020 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2021. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (the "2020 Annual Report").

Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income, shareholders' equity or cash flows as previously reported.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contract. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling those contracts. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

Operating Expenses

The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses.

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

From time to time, we enter into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. As of June 30, 2020, we had one foreign currency forward contracts outstanding between the pound sterling and the euro with a notional value of €4.9 million. As of June 30, 2019, we entered into a foreign currency forward contract between the pound sterling and the U.S. dollar with an aggregate notional value of $20 million. The fair value of these contracts represented a net loss included in Other operating expenses of $(46) and $(41) during the three months ended June 30, 2020 and 2019, respectively.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with ASC Topic 820, Fair Value Measurement:

• Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

• Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

For Level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based upon the best information available and may incorporate management's own assumptions or involve a significant degree of judgment.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

• Corporate debt securities: All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

• U.S. treasury securities: Fair values for U.S. treasury securities are based on quoted prices from recent trading activity of identical or similar securities. All fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

Property and Equipment

Property and equipment are stated at cost. Repair and maintenance charges are expensed as incurred and costs of renewals or improvements are capitalized at cost. Depreciation on furniture and office equipment is recognized on a straight-line basis over the estimated useful lives of the respective assets. Leasehold improvements are recorded as prepaid assets and included within fixed lease payments. See Note 16 for additional information.

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of June 30, 2020 and March 31, 2020, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	422,537	$	380,746

(1) Restricted cash as of June 30, 2020 and March 31, 2020 consisted of a cash secured letter of credit issued for our Frankfurt office.

Investment Securities

Investment securities consist of corporate debt and U.S. Treasury securities with original maturities over 90 days. The Company classifies its investment securities as trading and measures them at fair value in the Consolidated Balance Sheets. Unrealized holding gains and losses for trading securities are included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income.     

Allowance for Credit Losses

The allowance for credit losses on accounts receivable and unbilled work in progress reflects management’s best estimate of expected losses using the Company's internal current expected credit losses model. This model analyzes expected losses based on relevant information about historical experience, current conditions, and reasonable and supportable forecasts that could potentially affect the collectibility of the reported amounts. This is recorded through provision for bad debts, which is included in Other operating expenses in the accompanying Consolidated Statements of Comprehensive Income. Amounts deemed to be uncollectible are written off against the allowance for credit losses.

Income Taxes

The Company files a consolidated federal income tax return, as well as consolidated and separate returns in state and local jurisdictions, and the Company reports income tax expense on this basis.

We account for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax basis of our assets and liabilities. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The measurement of the deferred items is based on enacted tax laws and applicable tax rates. A valuation allowance related to a deferred tax asset is recorded if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company utilized a comprehensive model to recognize, measure, present, and disclose in its financial statements any uncertain tax positions that have been taken or are expected to be taken on a tax return. The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense and penalties related to income taxes are included in the provision for income taxes in the accompanying Consolidated Statements of Comprehensive Income.

The Global Intangible Low-Taxed Income tax (“GILTI inclusion”) can be recognized in the financial statements through an accounting policy election by either recording a period cost (permanent item) or providing deferred income taxes stemming from certain basis differences that are expected to result in GILTI inclusion. The Company has elected to account for the tax impacts of the GILTI inclusion as a period cost.

On March 27, 2020 the United States passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law.  The legislation is meant to address the economic uncertainty as a result of the coronavirus pandemic.  The Company has completed its evaluation of the provisions of the CARES Act which resulted in no material impacts on its income tax provision.

Leases

We assess whether an arrangement is or contains a lease at the inception of the agreement. Right-of-use ("ROU") assets represent our right to use underlying assets for the lease term and lease liabilities represent our obligation to make lease payments arising from leases. ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease terms utilizing the discount rate implicit in the leases. If the discount rate implicit in the leases is not readily determinable, the present value of future lease payments is calculated utilizing the Company’s incremental borrowing rate, which approximates the interest that the Company would have to pay on a secured loan. The Company elected to utilize a portfolio approach and applies the rates to a portfolio of leases with similar terms and economic environments. The terms of our leases used to determine the ROU asset and lease liability account for options to extend when it is reasonably certain that we will exercise those options, if applicable. ROU assets and lease liabilities are subject to adjustment in the event of modification to lease terms, changes in probability that an option to extend or terminate a lease would be exercised and other factors. In addition, ROU assets are periodically reviewed for impairment.

Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.

The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

Goodwill and Intangible Assets

Goodwill represents an acquired company’s acquisition cost over the fair value of acquired net tangible and intangible assets. Goodwill is the net asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Intangible assets identified and accounted for include tradenames and marks, backlog, developed technologies, and customer relationships. Those intangible assets with finite lives, including backlog and customer relationships, are amortized over their estimated useful lives.

Goodwill is reviewed annually for impairment and more frequently if potential impairment indicators exist. Goodwill is reviewed for impairment in accordance with Accounting Standards Update ("ASU") No. 2011-08, Testing Goodwill for Impairment, which permits management to make a qualitative assessment of whether it is more likely than not that one of its reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If management concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then management would not be required to perform the two-step impairment test for that reporting unit. If the assessment indicates that it is more likely than not that the reporting unit’s fair value is less than its carrying value, management must test further for impairment utilizing a two-step process. Step 1 compares the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying value of the reporting unit exceeds the estimated fair value, an impairment exists and is measured in Step 2 as the excess of the recorded amount of goodwill over the implied fair value of goodwill resulting from the valuation of the reporting unit. Impairment testing of goodwill requires a significant amount of judgment in assessing qualitative factors and estimating the fair value of the reporting unit, if necessary. The fair value is determined using an estimated market value approach, which considers estimates of future after tax cash flows, including a terminal value based on market earnings multiples, discounted at an appropriate market rate. As of June 30, 2020, management concluded that it was not more likely than not that the Company’s reporting units’ fair value was less than their carrying amount and no further impairment testing had been considered necessary.

Indefinite-lived intangible assets are reviewed annually for impairment in accordance with ASU 2012-02, Testing Indefinite-lived Intangible Assets for Impairment, which provides management the option to perform a qualitative assessment. If it is more likely than not that the asset is impaired, the amount that the carrying value exceeds the fair value is recorded as an impairment expense. As of June 30, 2020, management concluded that it was not more likely than not that the fair values were less than the carrying values.

Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group (inclusive of other long-lived assets) be tested for possible impairment, management first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of June 30, 2020, no events or changes in circumstances were identified that indicated that the carrying amount of the finite-lived intangible assets were not recoverable.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (the “FASB”) issued the following authoritative guidance amending the FASB Accounting Standards Codification (“ASC”).

On April 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and all related amendments. See Note 16 for additional information.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. The amended guidance states an entity should account for the effects of a modification unless certain criteria are met, which include that the modified award has the same fair value, vesting conditions and classification as the original award. The Company adopted guidance effective April 1, 2019 and its application did not have a material impact on the consolidated financial statements and related disclosures.

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020. The impact of this pronouncement had an immaterial impact on our Net income for the three months ended June 30, 2020.

The following table provides a reconciliation of the cumulative transition adjustment pertaining to the adoption of the credit loss guidance reported within the Consolidated Balance Sheets.

	March 31, 2020		Transition Adjustment			April 1, 2020
Accounts receivable, net of allowance for credit losses	$	80,912	$	(599	)	$	80,313
Unbilled work in progress, net of allowance for credit losses	39,821		(232		)	39,589
Other assets	38,890		(93		)	38,797
Deferred income taxes, net	5,843		242			6,085
Retained earnings	$	377,471	$	(682	)	$	376,789

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REVENUE RECOGNITION

3 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Revenue Recognition

Disaggregation of Revenues

The Company has disclosed disaggregated revenues based on its business segment and geographical area, which provides a reasonable representation of how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See Note 18 for additional information.

Contract Balances

The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred income (contract liability) until the performance obligations are satisfied.

Costs incurred in fulfilling advisory contracts with point-in-time revenue recognition are recorded as a contract asset when the costs (i) relate directly to a contract, (ii) generate or enhance resources of the Company that will be used in satisfying performance obligations, and (iii) are expected to be recovered. The Company amortizes the contract asset costs related to fulfilling a contract based on recognition of fee revenues for the corresponding contract. As the Company changed the presentation of costs incurred in fulfilling advisory contracts from a net presentation within non-compensation expenses to a gross basis in revenues, the Company records a contract liability for the reimbursable costs incurred until the fee revenue is recognized.

Costs incurred in fulfilling an advisory contract with over-time revenue recognition are expensed as incurred.

The change in the Company’s contract assets and liabilities during the period primarily reflects the timing difference between the Company’s performance and the customer’s payment. The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2020		Increase/(Decrease)			June 30, 2020
Receivables (1)	$	73,720	$	(28,866	)	$	44,854
Unbilled work in process, net of allowance for credit losses	39,821		(3,443		)	36,378
Contract Assets (1)	7,192		(481		)	6,711
Contract Liabilities (2)	26,780		1,790			28,570

(1) Included within Accounts receivable, net of allowance for credit losses in the June 30, 2020 Consolidated Balance Sheet.

(2) Included within Deferred income in the June 30, 2020 Consolidated Balance Sheet.

During the three months ended June 30, 2020, $9.0 million of Revenues were recognized that were included in the Deferred income balance at the beginning of the period.

As a practical expedient, the Company does not disclose information about remaining performance obligations pertaining to (i) contracts that have an original expected duration of one year or less, and/or (ii) contracts where the variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that is or forms part of a single performance obligation. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at June 30, 2020.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Related Party Transactions

The Company provides financial advisory services to its affiliates and certain other related parties, and received fees for these services totaling approximately $0 and $100 during the three months ended June 30, 2020 and 2019, respectively.

The Company provided certain management and administrative services for the Company's unconsolidated entities and received fees for these services. As a result, the Company received net fees of $0 and $126 during the three months ended June 30, 2020 and 2019, respectively.

In the accompanying Consolidated Balance Sheets, the Company carried accounts receivable and unbilled work in progress from related parties totaling approximately $2 and $0 as of June 30, 2020 and March 31, 2020, respectively.

Other assets in the accompanying Consolidated Balance Sheets includes loans receivable from certain employees of $17,458 and $17,857 as of June 30, 2020, and March 31, 2020, respectively.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

Fair Value Measurements

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	99,485	$	—	$	99,485
U.S. treasury securities	—		24,003		—		24,003
Total asset measured at fair value	$	—	$	123,488	$	—	$	123,488

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	43,027	$	—	$	43,027
U.S. treasury securities	—		92,362		—		92,362
Total asset measured at fair value	$	—	$	135,389	$	—	$	135,389

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the instrument.

The Company had no transfers between fair value levels during the three months ended June 30, 2020.

The fair values of the financial instruments represent the amounts that would be received to sell assets or that would be paid to transfer liabilities in an orderly transaction between market participants as of a specified date. Fair value measurements maximize the use of observable inputs; however, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, as well as available observable and unobservable inputs.

The carrying value of Cash and cash equivalents, Restricted cash, Accounts receivable, Unbilled work in process, Receivables from affiliates, Accounts payable and accrued expenses, and Deferred income approximates fair value due to the short maturity of these instruments.

The carrying value of the loans to employees included in Other assets, Loans payable to former shareholders, and an unsecured loan which is included in Loan payable to non-affiliate approximates fair value due to the variable interest rate borne by those instruments.

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INVESTMENT SECURITIES

3 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

Investment Securities

The amortized cost, gross unrealized gains (losses), and fair value of investment securities were as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	98,654	$	845	$	(14	)	$	99,485
U.S. treasury securities	23,510		493		—			24,003
Total securities with unrealized gains	$	122,164	$	1,338	$	(14	)	$	123,488

	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	43,166	$	210	$	(349	)	$	43,027
U.S. treasury securities	91,722		691		(51		)	92,362
Total securities with unrealized gains	$	134,888	$	901	$	(400	)	$	135,389

Scheduled maturities of the debt securities held by the Company within the investment securities portfolio were as follows:

	June 30, 2020				March 31, 2020
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	94,074	$	94,168	$	105,349	$	105,302
Due within years two through five	28,090		29,320		29,539		30,087
Total debt within the investment securities portfolio	$	122,164	$	123,488	$	134,888	$	135,389

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ALLOWANCE FOR DOUBTFUL ACCOUNTS

3 Months Ended

Jun. 30, 2020

Receivables [Abstract]

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance for Credit Losses

	June 30, 2020			March 31, 2020
Beginning balance	$	6,889		$	5,596
Transition adjustment as of April 1, 2020	831			—
Provision for bad debt	1,943			4,873
Recovery or write-off of uncollectible accounts	(2,204		)	(3,580		)
Ending balance	$	7,459		$	6,889

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PROPERTY AND EQUIPMENT

3 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	June 30, 2020			March 31, 2020
Equipment	$	9,236		$	8,788
Furniture and fixtures	21,460			20,942
Leasehold improvements	43,646			41,643
Computers and software	18,555			17,941
Other	1,113			1,113
Total cost	94,010			90,427
Less: accumulated depreciation	(51,134		)	(48,055		)
Total net book value	$	42,876		$	42,372

Additions to property and equipment during the three months ended June 30, 2020 were primarily related to leasehold improvement costs incurred and computer and software purchases.

Depreciation expense of approximately $2,675 and $2,409 was recognized during the three months ended June 30, 2020 and 2019, respectively.

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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Other Intangible Assets

The following table provides a reconciliation of Goodwill and other intangibles, net reported on our Consolidated Balance Sheets.

	Useful Lives	June 30, 2020			March 31, 2020
Goodwill	Indefinite	$	618,955		$	618,455
Tradename-Houlihan Lokey	Indefinite	192,210			192,210
Other intangible assets	Varies	6,154			10,732
Total cost		817,319			821,397
Less: accumulated amortization		(4,964		)	(8,553		)
Goodwill and other intangibles, net		$	812,355		$	812,844

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2020		Change (1)		June 30, 2020
Corporate Finance	$	363,925	$	500	$	364,425
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	618,455	$	500	$	618,955

(1) Changes pertain to foreign currency translation adjustments.

Amortization expense of approximately $997 and $1,554 was recognized for the three months ended June 30, 2020 and 2019, respectively.

The estimated future amortization for finite-lived intangible assets for each of the next five years are as follows:

	Year Ended March 31,
Remainder of 2021	$	613
2022	157
2023	7
2024	7
2025	7

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LOANS PAYABLE

3 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

LOANS PAYABLE

Loans Payable

In August 2015, the Company entered into a revolving line of credit with Bank of America, N.A. (the "2015 Line of Credit"), which allowed for borrowings of up to $75.0 million and originally matured in August 2017. On July 28, 2017, the Company extended the maturity date of the 2015 Line of Credit to August 18, 2019, and, on August 15, 2019, the parties further extended the maturity date of the 2015 Line of Credit to September 18, 2019. On August 23, 2019, the Company refinanced the 2015 Line of Credit by entering into a new syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto (the "2019 Line of Credit"), which allows for borrowings of up to $100.0 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of $200.0 million) and matures on August 23, 2022 (or if such date is not a business day, the immediately preceding business day). The agreement governing the 2019 Line of Credit provides that borrowings bear interest at an annual rate of LIBOR plus 1.00%, commitment fees apply to unused amounts, and contains debt covenants which require that the Company maintain certain financial ratios. As of June 30, 2020, no principal was outstanding under the 2019 Line of Credit.

Prior to the IPO, Fram maintained certain loans payable to former shareholders consisting of unsecured notes payable which were transferred to the Company in conjunction with the IPO. The average interest rate on the individual notes was 2.15% and 3.75% as of June 30, 2020 and 2019, respectively, and the maturity dates range from 2020 to 2027. The Company incurred interest expense on these notes of $8 and $20 during the three months ended June 30, 2020 and 2019, respectively.

In November 2015, the Company acquired the investment banking operations of Leonardo & Co. NV ("Leonardo") in Germany, the Netherlands, and Spain, and made a 49% investment in Leonardo's operations in Italy. Total consideration included an unsecured loan of EUR 14 million payable on November 16, 2040, the remaining balance of which is included in Loan payable to non-affiliates on our Consolidated Balance Sheets. The loan bears interest at an annual rate of 1.50%. In each of January 2017, December 2017, December 2018, and December 2019, we paid a portion of this loan in the amount of EUR 2.9 million. The company incurred interest expense on this loan of $11 and $24 during the three months ended June 30, 2020 and 2019, respectively.

As described in Note 1, the Company acquired the remaining 51% of Lara, which is the holding company for Leonardo's operations in Italy, in June 2019. During the quarter ended September 30, 2019, the Company completed the redemption of the loans that were assumed upon the acquisition of the remaining 51% of Lara and that had been included in the Loan payable to non-affiliates on our Consolidated Balance Sheets.

An acquisition made in January 2017 included non-contingent consideration with a carrying value of $0 and $999 as of June 30, 2020 and March 31, 2020, respectively, which is included in Other liabilities in our Consolidated Balance Sheets.

In April 2018, the Company acquired Quayle Munro Limited. Total consideration included non-interest bearing unsecured convertible loans totaling GBP 10.5 million payable on May 31, 2022, which is included in Other liabilities in the accompanying Consolidated Balance Sheets. Under certain circumstances, the notes may be exchanged for Company Class B common stock over a three year period in equal annual installments starting on May 31, 2020. The Company incurred imputed interest expense on these notes of $84 and $36 for the three months ended June 30, 2020 and 2019, respectively.

In May 2018, the Company acquired BearTooth Advisors. Total consideration included an unsecured note of $2.8 million bearing interest at an annual rate of 2.88% and payable on May 21, 2048. This note was subsequently assigned by the seller to the former BearTooth principals (who became employees of the Company), and, under certain circumstances is convertible into Company Class B common stock after the fifth anniversary of the closing of the transaction. The Company incurred interest expense on this note of $26 for both the three months ended June 30, 2020 and 2019.

In December 2019, the Company acquired Freeman & Co. Total consideration included an unsecured note of $4.0 million bearing interest at an annual rate of 2.75% and payable on December 16, 2049. The note issued by the Company to the seller was distributed to the former principals of Freeman & Co. (who became employees of the Company). Under certain circumstances, the note may be exchanged by each principal for Company stock over a four-year period in equal annual installments starting in December 2020. The Company incurred interest expense on this notes of $27 for the three months ended June 30, 2020.

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheets on a fiscal year-end basis as of June 30, 2020 are as follows:

Remaining 2021	$	1,926
2022	11,172
2023	388
2024	31
2025	—
2026 and thereafter	12,110
Total	$	25,627

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ACCUMULATED OTHER COMPREHENSIVE (LOSS)

3 Months Ended

Jun. 30, 2020

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE (LOSS)

Accumulated Other Comprehensive (Loss)

Accumulated other comprehensive (loss) is comprised of Foreign currency translation adjustments of $2,927 and $(3,971) for the three months ended June 30, 2020 and 2019, respectively. We do not expect the change in foreign currency translation to have a material impact on our operating results and financial position.

Accumulated other comprehensive (loss) as of June 30, 2020 was comprised of the following:

Balance, April 1, 2020	$	(43,108	)
Foreign currency translation adjustment	2,927
Balance, June 30, 2020	$	(40,181	)

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INCOME TAXES

3 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

Income Taxes

The Company’s provision for income taxes was $(2,349) and $6,649 for the three months ended June 30, 2020 and 2019, respectively. These represent effective tax rates of (5.4)% and 13.5% for the three months ended June 30, 2020 and 2019, respectively. The decrease in the Company’s tax rate during the quarter ended June 30, 2020 relative to the same period in 2019 was primarily a result of the vesting of stock that occurred in April and May 2020. The share vesting price in April and May 2020 was significantly higher as compared to the share vesting price over the same period in 2019.

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EARNINGS PER SHARE

3 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Earnings Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended June 30,
	2020		2019
Numerator:
Net income attributable to holders of shares of common stock—basic	$	46,100	$	42,776
Net income attributable to holders of shares of common stock—diluted	$	46,100	$	42,776
Denominator:
Weighted average shares of common stock outstanding—basic	63,684,431		61,670,617
Weighted average number of incremental shares issuable from unvested restricted stock and restricted stock units, as calculated using the treasury stock method	3,114,129		3,950,486
Weighted average shares of common stock outstanding—diluted	66,798,560		65,621,103
Basic earnings per share	$	0.72	$	0.69
Diluted earnings per share	$	0.69	$	0.65

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EMPLOYEE BENEFIT PLANS

3 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

EMPLOYEE BENEFIT PLANS

Employee Benefit Plans

Defined Contribution Plans

The Company sponsors a 401(k) defined contribution savings plan for its domestic employees and defined contribution retirement plans for its international employees. The Company contributed approximately $924 and $779 to these plans during the three months ended June 30, 2020 and 2019, respectively.

Share-Based Incentive Plans

Following the IPO, additional awards of restricted shares have been and will be made under the Amended and Restated Houlihan Lokey, Inc. 2016 Incentive Award Plan (the "2016 Incentive Plan"), which became effective in August 2015 and was amended in October 2017. Under the 2016 Incentive Plan, it is anticipated that the Company will continue to grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent necessary to operate the Company's business. Equity-based incentive awards issued under the 2016 Incentive Plan generally vest over a four-year period. An aggregate of 37,847 restricted shares of Class A common stock were granted under the 2016 Incentive Plan to (i) two independent directors in August 2015 at $21 per share, (ii) two independent directors in the first quarter of fiscal 2017 at $25.21 per share, (iii) one independent director in the first quarter of fiscal 2017 at $23.93 per share, (iv) three independent directors in the first quarters of fiscal 2018 and 2019 at $33.54 and $44.50 per share, respectively, (v) one independent director in the third quarter of fiscal 2019 at $42.41 per share, (vi) four independent directors in the first quarter of fiscal 2020 at $47.22 per share, and (vii) one independent director in the third quarter of fiscal 2020 at $47.21 per share.

An excess tax benefit of $13,408 and $7,605 was recognized during the three months ended June 30, 2020 and 2019, respectively, as a component of the provision for income taxes and an operating activity on the Consolidated Statements of Cash Flows. The excess tax benefits recognized during the three months ended June 30, 2020 and 2019 were related to shares vested in April and May 2020 and 2019, respectively.

The share awards are classified as equity awards at the time of grant unless the number of shares granted is unknown. Awards that are settleable in shares based upon a future determinable stock price are classified as liabilities until the price is established and the resulting number of shares is known, at which time they are re-classified from liabilities to equity awards. Activity in equity classified share awards which relate to the Company's 2006 Incentive Award Plan (the "2006 Incentive Plan") and the 2016 Incentive Plan during the three months ended June 30, 2020 and 2019 is as follows:

Unvested Share Awards	Shares		Weighted Average Grant Date Fair Value
Balance, April 1, 2020	3,539		$	39.13
Granted	1,044		60.60
Vested	(1,769	)	32.38
Forfeited/Repurchased	28		47.08
Balance, June 30, 2020	2,842		$	51.38
Balance, April 1, 2019	3,764		$	32.29
Granted	1,359		47.22
Vested	(1,490	)	29.26
Forfeited/Repurchased	(24	)	36.22
Balance, June 30, 2019	3,609		$	39.12

Activity in liability classified share awards during the three months ended June 30, 2020 and 2019 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2020	$	20,989
Offer to grant	4,583
Share price determined-converted to cash payments	(249		)
Share price determined-transferred to equity grants	(7,262		)
Forfeited	(1,344		)
Balance, June 30, 2020	$	16,717
Balance, April 1, 2019	$	21,676
Offer to grant	3,155
Share price determined-converted to cash payments	(52		)
Share price determined-transferred to equity grants	(6,457		)
Forfeited	(50		)
Balance, June 30, 2019	$	18,272

Compensation expenses for the Company associated with both equity and liability classified awards totaled $17,196 and $12,762 for the three months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and 2019, there was $145,313 and $126,430, respectively, of total unrecognized compensation cost related to unvested share awards granted under both the 2006 Incentive Plan and 2016 Incentive Plan. These costs are recognized over a weighted average period of 1.9 years and 1.7 years, as of June 30, 2020 and 2019, respectively.

On October 19, 2017, our board of directors approved an amendment (the “Amendment”) to the 2016 Incentive Plan reducing the number of shares of common stock available for issuance under the 2016 Incentive Plan by approximately 12.2 million shares. Under the Amendment, the aggregate number of shares of common stock that are available for issuance under awards granted pursuant to the 2016 Incentive Plan is equal to the sum of (i) 8.0 million and (ii) any shares of our Class B common stock that are subject to awards under our 2006 Incentive Plan that terminate, expire or lapse for any reason after October 19, 2017.

The number of shares available for issuance will be increased annually beginning on April 1, 2018 and ending on April 1, 2025, by an amount equal to the lowest of:

• 6,540,659 shares of our Class A common stock and Class B common stock;

• Six percent of the shares of Class A common stock and Class B common stock outstanding on the final day of the immediately preceding fiscal year; and

•

such smaller number of shares as determined by our board of directors.

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STOCKHOLDERS' EQUITY

3 Months Ended

Jun. 30, 2020

Equity [Abstract]

STOCKHOLDERS' EQUITY

Stockholders' Equity

There are two classes of authorized HL, Inc. common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share, and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions.

On May 30, 2019, pursuant to a registered underwritten public offering, ORIX USA sold 3,000,000 shares of our Class A common stock to the public at a price of $45.80.

On August 1, 2019, pursuant to a registered underwritten public offering, ORIX USA sold its remaining ownership of 3,377,935 shares of our Class A common stock to the public at a price of $45.62.

On May 20, 2020, the Company completed an underwritten public offering of 3,000,000 shares of its Class A common stock. The offering generated net proceeds for the Company of approximately $188.7 million after deducting the underwriting discount and estimated offering expenses payable by us.

Class A common stock

During the three months ended June 30, 2020, 5,577 shares were issued to non-employee directors, and 1,529,757 shares were converted from Class B to Class A. During the three months ended June 30, 2019, 7,027 shares were issued to non-employee directors, and 2,291,827 shares were converted from Class B to Class A. As of June 30, 2020, there were 50,668,425 Class A shares held by the public and 42,301 Class A shares held by non-employee directors. As of June 30, 2019, there were 37,418,661 Class A shares held by the public, 61,967 Class A shares held by non-employee directors, and 3,377,935 Class A shares held by ORIX USA.

Class B common stock

As of June 30, 2020 and 2019, there were 18,774,077 and 25,308,393, respectively, Class B shares held by the HL Voting Trust.

Dividends

Previously declared dividends related to unvested shares of $4,028 and $5,624 were unpaid as of June 30, 2020 and 2019, respectively.

Stock subscriptions receivable

Employees of the Company periodically issued notes receivable to the Company documenting loans made by the Company to such employees for the purchase of restricted shares of the Company.

Share repurchases

In July 2018, the board of directors authorized the repurchase of up to an additional $100 million of the Company's common stock.

During the three months ended June 30, 2020 and 2019, the Company repurchased 280,893 and 652,618 shares, respectively, of Class B common stock, to satisfy $17,092 and $31,267 of required withholding taxes in connection with the vesting of restricted awards, respectively. During the three months ended June 30, 2020, the Company did not repurchase any additional shares of its outstanding common stock. During the three months ended June 30, 2019, the Company repurchased an additional 55,164 shares of its outstanding common stock at a weighted average price of and $47.81 per share, excluding commissions, for an aggregate purchase price of $2,502.

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LEASES

3 Months Ended

Jun. 30, 2020

Leases [Abstract]

LEASES

Leases

Lessee Arrangements

Operating Leases

We lease real estate and equipment used in operations from third parties. As of June 30, 2020, the remaining term of our operating leases ranged from 1 to 16 years with various automatic extensions.

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of June 30, 2020.

	Operating Leases
Remaining 2021	$	21,896
2022	27,416
2023	23,020
2024	17,791
2025	18,885
Thereafter	98,209
Total	207,217
Less: present value discount	(34,346		)
Operating lease liabilities	$	172,871

As of June 30, 2020, the Company entered into one additional office space operating lease that has not yet commenced, for approximately EUR 9.0 million. This operating lease will commence on January 2021 with a lease term of 15 years.

Lease costs

	Three Months Ended June 30,
	2020			2019
Operating lease expense	$	7,244		$	6,329
Variable lease expense (1)	2,327			3,650
Short-term lease expense	100			71
Less: Sublease income	(48		)	(49		)
Total lease costs	$	9,623		$	10,001

^{(1)  Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.}  

Weighted-average details

	June 30, 2020
Weighted-average remaining lease term (years)	10
Weighted-average discount rate	3.8	%

Supplemental cash flow information related to leases:

	Three Months Ended June 30,
	2020		2019
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	7,458	$	6,073
Right-of-use assets obtained in exchange for operating lease liabilities	22,652		—

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Commitments and Contingencies

The Company has been named in various legal actions arising in the normal course of business. In the opinion of the Company, in consultation with legal counsel, the final resolutions of these matters are not expected to have a material adverse effect on the Company’s financial condition, operations and cash flows.

The Company also provides routine indemnifications relating to certain real estate (office) lease agreements under which it may be required to indemnify property owners for claims and other liabilities arising from the Company’s use of the applicable premises. In addition, the Company guarantees the performance of its subsidiaries under certain office lease agreements. The terms of these obligations vary, and because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the maximum amount that it could be obligated to pay under such contracts. Based on historical experience and evaluation of specific indemnities, management believes that judgments, if any, against the Company related to such matters are not likely to have a material effect on the consolidated financial statements. Accordingly, the Company has not recorded any liability for these obligations as of June 30, 2020 or March 31, 2020.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2020 Annual Report.

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SEGMENT AND GEOGRAPHICAL INFORMATION

3 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHICAL INFORMATION

Segment and Geographical Information

The Company’s reportable segments are described in Note 1 and each are individually managed and provide separate services which require specialized expertise for the provision of those services. Revenues by segment represent fees earned on the various services offered within each segment. Segment profit consists of segment revenues, less (1) direct expenses including compensation, travel, meals and entertainment, professional fees, and bad debt and (2) expenses allocated by headcount such as communications, rent, depreciation and amortization, and office expense. The corporate expense category includes costs not allocated to individual segments, including charges related to incentive compensation and share-based payments to corporate employees, as well as expenses of senior management and corporate departmental functions managed on a worldwide basis, including office of the executives, accounting, human capital, marketing, information technology, and compliance and legal. The following tables present information about revenues, profit and assets by segment and geography.    

	Three Months Ended June 30,
	2020			2019
Revenues by segment
Corporate Finance	$	87,971		$	133,589
Financial Restructuring	88,620			79,354
Financial and Valuation Advisory	34,545			37,406
Revenues	$	211,136		$	250,349
Segment profit (1)
Corporate Finance	$	22,650		$	37,428
Financial Restructuring	36,169			23,977
Financial and Valuation Advisory	7,397			8,281
Total segment profit	66,216			69,686
Corporate expenses (2)	23,626			21,912
Other (income)/expense, net	(1,161		)	(1,651		)
Income before provision for income taxes	$	43,751		$	49,425

(1) We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2) Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	June 30, 2020		March 31, 2020
Assets by segment
Corporate Finance	$	404,082	$	403,147
Financial Restructuring	174,774		186,418
Financial and Valuation Advisory	125,212		127,440
Total segment assets	704,068		717,005
Corporate assets	994,615		959,998
Total assets	$	1,698,683	$	1,677,003

	Three Months Ended June 30,
	2020		2019
Income before provision for income taxes by geography
United States	$	34,968	$	38,231
International	8,783		11,194
Income before provision for income taxes	$	43,751	$	49,425

	Three Months Ended June 30,
	2020		2019
Revenues by geography
United States	$	176,945	$	208,151
International	34,191		42,198
Revenues	$	211,136	$	250,349

	June 30, 2020		March 31, 2020
Assets by geography
United States	$	1,188,437	$	1,135,871
International	510,246		541,132
Total assets	$	1,698,683	$	1,677,003

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SUBSEQUENT EVENTS

3 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Subsequent Events

On July 22, 2020, the Company's board of directors declared a quarterly cash dividend of $0.33 per share of Class A and Class B common stock, payable on September 15, 2020, to shareholders of record on September 2, 2020.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and include all information and footnotes required for consolidated financial statement presentation. The results of operations for the three months ended June 30, 2020 are not necessarily indicative of the results of operations to be expected for the fiscal year ending March 31, 2021. The unaudited interim consolidated financial statements and notes to consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (the "2020 Annual Report").

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation.

The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other (income)/expense, net in the Consolidated Statements of Comprehensive Income.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.

Revenue, Operating Expenses

Revenues

Revenues consist of fee revenues from advisory services and reimbursed costs incurred in fulfilling the contract. Revenues reflect fees generated from our CF, FR, and FVA business segments.

The Company generates revenues from contractual advisory services and reimbursed costs incurred in fulfilling those contracts. Revenues for all three business segments (CF, FR, and FVA) are recognized upon satisfaction of the performance obligation, which may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. The substantial majority of the Company’s advisory fees (i.e., the success related Completion Fees) are considered variable and constrained as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement.

Revenues from CF engagements primarily consist of fees generated in connection with advisory services related to corporate finance, mergers and acquisitions, and capital markets offerings. Completion Fees from these engagements are recognized at a point in time when the related transaction has been effectively closed. At that time, the Company has transferred control of the promised service and the customer obtains control. CF contracts generally contain a variety of promised services that may be capable of being distinct, but they are not distinct within the context of the contract as the various services are inputs to the combined output of successfully brokering a specific transaction.

Revenues from FR engagements primarily consist of fees generated in connection with advisory services to debtors, creditors and other parties-in-interest involving recapitalization or deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. Retainer Fees and Progress Fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. Completion Fees from these engagements are considered variable and constrained until the related transaction has been effectively closed as they are contingent upon a future event which includes factors outside of our control (e.g., completion of a transaction or third party emergence from bankruptcy or approval by the court).

Revenues from FVA engagements primarily consist of fees generated in connection with valuation and diligence services and rendering fairness, solvency and other financial opinions. Revenues are recognized at a point in time as these engagements include a singular objective that does not transfer any notable value to the Company’s clients until the opinions have been rendered and delivered to the client. However, certain engagements consist of advisory services where fees are usually based on the hourly rates of our financial professionals. Such revenues are recognized over time as the benefits of these advisory services are transferred to the Company’s clients throughout the course of the engagement, and, as a practical expedient, the Company has elected to use the ‘as-invoiced’ approach to recognize revenue.

Taxes, including value added taxes, collected from customers and remitted to governmental authorities are accounted for on a net basis, and therefore, are excluded from revenue in the consolidated statements of comprehensive income.

Operating Expenses

The majority of the Company’s operating expenses are related to compensation for employees, which includes the amortization of the relevant portion of the Company’s share-based incentive plans (Note 14). Other types of operating expenses include: Travel, meals, and entertainment; Rent; Depreciation and amortization; Information technology and communications; Professional fees; and Other operating expenses

Translation of Foreign Currency Transactions

Translation of Foreign Currency Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are included in the consolidation by translating the assets and liabilities at the reporting period-end exchange rates; however, revenues and expenses are translated using the applicable exchange rates determined on a monthly basis throughout the fiscal year. Resulting translation adjustments are reported as a separate component of Accumulated other comprehensive loss, net of applicable taxes.

Cash and Cash Equivalents, and Restricted Cash

Cash and Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash held at banks and highly liquid investments with original maturities of three months or less. As of June 30, 2020 and March 31, 2020, the Company had cash balances with banks in excess of insured limits. The Company believes it is not exposed to any significant credit risk with respect to Cash and cash equivalents.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	422,537	$	380,746

(1)

Restricted cash as of June 30, 2020 and March 31, 2020 consisted of a cash secured letter of credit issued for our Frankfurt office.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Financial Accounting Standards Board (the “FASB”) issued the following authoritative guidance amending the FASB Accounting Standards Codification (“ASC”).

On April 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and all related amendments. See Note 16 for additional information.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. The amended guidance states an entity should account for the effects of a modification unless certain criteria are met, which include that the modified award has the same fair value, vesting conditions and classification as the original award. The Company adopted guidance effective April 1, 2019 and its application did not have a material impact on the consolidated financial statements and related disclosures.

On April 1, 2020, we adopted ASU 2016-13 Financial Instruments—Credit Losses — Measurement of Credit Losses on Financial Instruments, and all related amendments, under a modified retrospective approach. Upon adoption, a cumulative transition adjustment was recorded, which reduced retained earnings by $(924). The tax impact of this adjustment increased retained earnings by $242, resulting in a net decrease to retained earnings of $(682) as of April 1, 2020. The impact of this pronouncement had an immaterial impact on our Net income for the three months ended June 30, 2020.

The following table provides a reconciliation of the cumulative transition adjustment pertaining to the adoption of the credit loss guidance reported within the Consolidated Balance Sheets.

	March 31, 2020		Transition Adjustment			April 1, 2020
Accounts receivable, net of allowance for credit losses	$	80,912	$	(599	)	$	80,313
Unbilled work in progress, net of allowance for credit losses	39,821		(232		)	39,589
Other assets	38,890		(93		)	38,797
Deferred income taxes, net	5,843		242			6,085
Retained earnings	$	377,471	$	(682	)	$	376,789

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	422,537	$	380,746

(1)

Restricted cash as of June 30, 2020 and March 31, 2020 consisted of a cash secured letter of credit issued for our Frankfurt office.

Schedule of Restricted Cash

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.     

	June 30, 2020		March 31, 2020
Cash and cash equivalents	$	422,164	$	380,373
Restricted cash (1)	373		373
Total cash, cash equivalents, and restricted cash	$	422,537	$	380,746

(1)

Restricted cash as of June 30, 2020 and March 31, 2020 consisted of a cash secured letter of credit issued for our Frankfurt office.

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The following table provides a reconciliation of the cumulative transition adjustment pertaining to the adoption of the credit loss guidance reported within the Consolidated Balance Sheets.

	March 31, 2020		Transition Adjustment			April 1, 2020
Accounts receivable, net of allowance for credit losses	$	80,912	$	(599	)	$	80,313
Unbilled work in progress, net of allowance for credit losses	39,821		(232		)	39,589
Other assets	38,890		(93		)	38,797
Deferred income taxes, net	5,843		242			6,085
Retained earnings	$	377,471	$	(682	)	$	376,789

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REVENUE RECOGNITION (Tables)

3 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Contract with Customer, Asset and Liability

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

	April 1, 2020		Increase/(Decrease)			June 30, 2020
Receivables (1)	$	73,720	$	(28,866	)	$	44,854
Unbilled work in process, net of allowance for credit losses	39,821		(3,443		)	36,378
Contract Assets (1)	7,192		(481		)	6,711
Contract Liabilities (2)	26,780		1,790			28,570

(1) Included within Accounts receivable, net of allowance for credit losses in the June 30, 2020 Consolidated Balance Sheet.

(2)

Included within Deferred income in the June 30, 2020 Consolidated Balance Sheet.

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Information About Other Financial Assets

The following table presents information about the Company's financial assets, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values:

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	99,485	$	—	$	99,485
U.S. treasury securities	—		24,003		—		24,003
Total asset measured at fair value	$	—	$	123,488	$	—	$	123,488

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Corporate debt securities	$	—	$	43,027	$	—	$	43,027
U.S. treasury securities	—		92,362		—		92,362
Total asset measured at fair value	$	—	$	135,389	$	—	$	135,389

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INVESTMENT SECURITIES (Tables)

3 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities

The amortized cost, gross unrealized gains (losses), and fair value of investment securities were as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	98,654	$	845	$	(14	)	$	99,485
U.S. treasury securities	23,510		493		—			24,003
Total securities with unrealized gains	$	122,164	$	1,338	$	(14	)	$	123,488

	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Corporate debt securities	$	43,166	$	210	$	(349	)	$	43,027
U.S. treasury securities	91,722		691		(51		)	92,362
Total securities with unrealized gains	$	134,888	$	901	$	(400	)	$	135,389

Schedule of Maturities of Debt Securities

Scheduled maturities of the debt securities held by the Company within the investment securities portfolio were as follows:

	June 30, 2020				March 31, 2020
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	94,074	$	94,168	$	105,349	$	105,302
Due within years two through five	28,090		29,320		29,539		30,087
Total debt within the investment securities portfolio	$	122,164	$	123,488	$	134,888	$	135,389

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ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables)

3 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Allowance for Uncollectible Accounts Receivable

	June 30, 2020			March 31, 2020
Beginning balance	$	6,889		$	5,596
Transition adjustment as of April 1, 2020	831			—
Provision for bad debt	1,943			4,873
Recovery or write-off of uncollectible accounts	(2,204		)	(3,580		)
Ending balance	$	7,459		$	6,889

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net of accumulated depreciation consists of the following:

	June 30, 2020			March 31, 2020
Equipment	$	9,236		$	8,788
Furniture and fixtures	21,460			20,942
Leasehold improvements	43,646			41,643
Computers and software	18,555			17,941
Other	1,113			1,113
Total cost	94,010			90,427
Less: accumulated depreciation	(51,134		)	(48,055		)
Total net book value	$	42,876		$	42,372

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Other Intangibles

The following table provides a reconciliation of Goodwill and other intangibles, net reported on our Consolidated Balance Sheets.

	Useful Lives	June 30, 2020			March 31, 2020
Goodwill	Indefinite	$	618,955		$	618,455
Tradename-Houlihan Lokey	Indefinite	192,210			192,210
Other intangible assets	Varies	6,154			10,732
Total cost		817,319			821,397
Less: accumulated amortization		(4,964		)	(8,553		)
Goodwill and other intangibles, net		$	812,355		$	812,844

Schedule of Goodwill

Goodwill attributable to the Company’s business segments is as follows:

	April 1, 2020		Change (1)		June 30, 2020
Corporate Finance	$	363,925	$	500	$	364,425
Financial Restructuring	162,815		—		162,815
Financial and Valuation Advisory	91,715		—		91,715
Goodwill	$	618,455	$	500	$	618,955

(1)

Changes pertain to foreign currency translation adjustments.

Estimated Future Amortization for Amortizable Intangible Assets

The estimated future amortization for finite-lived intangible assets for each of the next five years are as follows:

	Year Ended March 31,
Remainder of 2021	$	613
2022	157
2023	7
2024	7
2025	7

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LOANS PAYABLE LOANS PAYABLE (Tables)

3 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Scheduled Aggregate Repayments of Loan Payable to Affiliate

The scheduled aggregate repayments of our Loans payable to former shareholders, Other liabilities, and the Loan payable to non-affiliates in the accompanying Consolidated Balance Sheets on a fiscal year-end basis as of June 30, 2020 are as follows:

Remaining 2021	$	1,926
2022	11,172
2023	388
2024	31
2025	—
2026 and thereafter	12,110
Total	$	25,627

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) (Tables)

3 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive (loss) as of June 30, 2020 was comprised of the following:

Balance, April 1, 2020	$	(43,108	)
Foreign currency translation adjustment	2,927
Balance, June 30, 2020	$	(40,181	)

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EARNINGS PER SHARE (Tables)

3 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Income Per Share

The calculations of basic and diluted earnings per share attributable to holders of shares of common stock are presented below.

	Three Months Ended June 30,
	2020		2019
Numerator:
Net income attributable to holders of shares of common stock—basic	$	46,100	$	42,776
Net income attributable to holders of shares of common stock—diluted	$	46,100	$	42,776
Denominator:
Weighted average shares of common stock outstanding—basic	63,684,431		61,670,617
Weighted average number of incremental shares issuable from unvested restricted stock and restricted stock units, as calculated using the treasury stock method	3,114,129		3,950,486
Weighted average shares of common stock outstanding—diluted	66,798,560		65,621,103
Basic earnings per share	$	0.72	$	0.69
Diluted earnings per share	$	0.69	$	0.65

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EMPLOYEE BENEFIT PLANS (Tables)

3 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Activity in Equity Classified Share Awards

Activity in equity classified share awards which relate to the Company's 2006 Incentive Award Plan (the "2006 Incentive Plan") and the 2016 Incentive Plan during the three months ended June 30, 2020 and 2019 is as follows:

Unvested Share Awards	Shares		Weighted Average Grant Date Fair Value
Balance, April 1, 2020	3,539		$	39.13
Granted	1,044		60.60
Vested	(1,769	)	32.38
Forfeited/Repurchased	28		47.08
Balance, June 30, 2020	2,842		$	51.38
Balance, April 1, 2019	3,764		$	32.29
Granted	1,359		47.22
Vested	(1,490	)	29.26
Forfeited/Repurchased	(24	)	36.22
Balance, June 30, 2019	3,609		$	39.12

Activity in Liability Classified Share Awards

Activity in liability classified share awards during the three months ended June 30, 2020 and 2019 is as follows:

Awards Settleable in Shares	Fair Value
Balance, April 1, 2020	$	20,989
Offer to grant	4,583
Share price determined-converted to cash payments	(249		)
Share price determined-transferred to equity grants	(7,262		)
Forfeited	(1,344		)
Balance, June 30, 2020	$	16,717
Balance, April 1, 2019	$	21,676
Offer to grant	3,155
Share price determined-converted to cash payments	(52		)
Share price determined-transferred to equity grants	(6,457		)
Forfeited	(50		)
Balance, June 30, 2019	$	18,272

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LEASES (Tables)

3 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lessee, Operating Lease, Liability, Maturity

The following table outlines the maturity of our existing operating lease liabilities on a fiscal year-end basis as of June 30, 2020.

	Operating Leases
Remaining 2021	$	21,896
2022	27,416
2023	23,020
2024	17,791
2025	18,885
Thereafter	98,209
Total	207,217
Less: present value discount	(34,346		)
Operating lease liabilities	$	172,871

Lease, Cost

Lease costs

	Three Months Ended June 30,
	2020			2019
Operating lease expense	$	7,244		$	6,329
Variable lease expense (1)	2,327			3,650
Short-term lease expense	100			71
Less: Sublease income	(48		)	(49		)
Total lease costs	$	9,623		$	10,001

^{(1)  Primarily consists of payments for property taxes, common area maintenance and usage based operating costs.}  

Weighted-average details

	June 30, 2020
Weighted-average remaining lease term (years)	10
Weighted-average discount rate	3.8	%

Supplemental cash flow information related to leases:

	Three Months Ended June 30,
	2020		2019
Operating cash flows:
Cash paid for amounts included in the measurement of Operating lease liabilities	$	7,458	$	6,073
Right-of-use assets obtained in exchange for operating lease liabilities	22,652		—

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SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)

3 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Schedule of Revenue, Profit and Assets by Segment

The following tables present information about revenues, profit and assets by segment and geography.    

	Three Months Ended June 30,
	2020			2019
Revenues by segment
Corporate Finance	$	87,971		$	133,589
Financial Restructuring	88,620			79,354
Financial and Valuation Advisory	34,545			37,406
Revenues	$	211,136		$	250,349
Segment profit (1)
Corporate Finance	$	22,650		$	37,428
Financial Restructuring	36,169			23,977
Financial and Valuation Advisory	7,397			8,281
Total segment profit	66,216			69,686
Corporate expenses (2)	23,626			21,912
Other (income)/expense, net	(1,161		)	(1,651		)
Income before provision for income taxes	$	43,751		$	49,425

(1) We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment profit may vary significantly between periods depending on the levels of collaboration among the different segments.

(2) Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital.

	June 30, 2020		March 31, 2020
Assets by segment
Corporate Finance	$	404,082	$	403,147
Financial Restructuring	174,774		186,418
Financial and Valuation Advisory	125,212		127,440
Total segment assets	704,068		717,005
Corporate assets	994,615		959,998
Total assets	$	1,698,683	$	1,677,003

Revenue by Geographic Areas

	Three Months Ended June 30,
	2020		2019
Income before provision for income taxes by geography
United States	$	34,968	$	38,231
International	8,783		11,194
Income before provision for income taxes	$	43,751	$	49,425

	Three Months Ended June 30,
	2020		2019
Revenues by geography
United States	$	176,945	$	208,151
International	34,191		42,198
Revenues	$	211,136	$	250,349

Assets by Geographical Areas

	June 30, 2020		March 31, 2020
Assets by geography
United States	$	1,188,437	$	1,135,871
International	510,246		541,132
Total assets	$	1,698,683	$	1,677,003

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BACKGROUND (Details) - segment	3 Months Ended
	Jun. 30, 2020	Sep. 30, 2019	Nov. 30, 2015
Class of Stock [Line Items]
Number of business segments	3
Italy | Leonardo & CO. NV
Class of Stock [Line Items]
Investment interest in Italy (as a percent)	51.00%	51.00%	49.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) € in Millions	3 Months Ended
	Jun. 30, 2020 USD ($) segment	Jun. 30, 2019 USD ($)	Jun. 30, 2020 EUR (€)
Related Party Transaction [Line Items]
Number of business segments | segment	3
Foreign Currency Forward Contract
Related Party Transaction [Line Items]
Aggregate notional value of foreign currency forward contract		$ 20,000,000	€ 4.9
Other operating expenses | Foreign Currency Forward Contract
Related Party Transaction [Line Items]
Fair value gains (losses) included in other operating expenses | $	$ (46,000)	$ (41,000)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Accounting Policies [Abstract]
Cash and cash equivalents	$ 422,164	$ 380,373
Restricted cash	373	373
Total cash, cash equivalents, and restricted cash	$ 422,537	$ 380,746	$ 212,102	$ 286,115

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($)	Jun. 30, 2020	Apr. 01, 2020	Mar. 31, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reduction to retained earnings	$ 1,209,640,000		$ 984,382,000
Accounts receivable, net of allowance for credit losses	51,565,000	$ 80,313,000	80,912,000
Unbilled work in progress, net of allowance for credit losses	36,378,000	39,589,000	39,821,000
Other assets	39,874,000	38,797,000	38,890,000
Deferred income taxes, net	5,017,000	6,085,000	6,507,000
Retained earnings	$ 400,995,000	376,789,000	$ 377,471,000
Cumulative Effect, Period Of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reduction to retained earnings		(924)
Accounts receivable, net of allowance for credit losses		(599,000)
Unbilled work in progress, net of allowance for credit losses		(232,000)
Other assets		(93,000)
Deferred income taxes, net		242,000
Retained earnings		$ (682,000)

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REVENUE RECOGNITION - Summary of Receivables, Contract Assets, and Contract Liabilities (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2020 USD ($)
Receivables
Beginning balance	$ 73,720
Increase/(Decrease)	(28,866)
Ending balance	44,854
Unbilled work in process, net of allowance for doubtful accounts
Beginning balance	39,821
Increase/(Decrease)	(3,443)
Ending balance	36,378
Contract Assets
Beginning balance	7,192
Increase/(Decrease)	(481)
Ending balance	6,711
Contract Liabilities
Beginning balance	26,780
Increase/(Decrease)	1,790
Ending balance	$ 28,570

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REVENUE RECOGNITION - Narrative (Details) $ in Millions	3 Months Ended
	Jun. 30, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue recognized that was previously included in deferred income	$ 9.0

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	May 20, 2020	Aug. 01, 2019	May 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Related Party Transaction [Line Items]
Weighted average price per share (in dollars per share)					$ 47.81
Management Accounting Legal Regulatory And Other Administrative Services [Member] | ORIX USA Corporation
Related Party Transaction [Line Items]
Related party revenue and income				$ 0	$ 100
Management And Other Administrative Services | Majority-Owned Subsidiary, Unconsolidated [Member]
Related Party Transaction [Line Items]
Related party revenue and income				0	$ 126
Accounts Receivable and Unbilled Work in Progress
Related Party Transaction [Line Items]
Due from related parties				$ 2		$ 0
Class B common stock
Related Party Transaction [Line Items]
Outstanding common stock repurchased and retired (in shares)				280,893,000	652,618,000
Class A common stock
Related Party Transaction [Line Items]
Shares issued during period (in shares)	3,000,000
Outstanding common stock repurchased and retired (in shares)				0	55,164,000
Proceeds from sale of stock	$ 188,700
Class A common stock | ORIX USA Corporation
Related Party Transaction [Line Items]
Shares issued during period (in shares)		3,377,935,000	3,000,000
Price to the public (in dollars per share)		$ 45.62	$ 45.80
Other Assets | Loans Receivable | Certain employees
Related Party Transaction [Line Items]
Due from related parties				$ 17,458		$ 17,857

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	$ 123,488	$ 135,389
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	123,488	135,389
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	99,485	43,027
Corporate debt securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
Corporate debt securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	99,485	43,027
Corporate debt securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
U.S. treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	24,003	92,362
U.S. treasury securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	0	0
U.S. treasury securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	24,003	92,362
U.S. treasury securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total asset measured at fair value	$ 0	$ 0

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INVESTMENT SECURITIES - Schedule of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Securities Held to Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 122,164
Gross Unrealized Gains	1,338
Gross Unrealized (Losses)	(14)
Fair Value	123,488
Amortized Cost		$ 134,888
Gross Unrealized Gains		901
Gross Unrealized (Losses)		(400)
Fair Value		135,389
Corporate debt securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	98,654
Gross Unrealized Gains	845
Gross Unrealized (Losses)	(14)
Fair Value	99,485
Amortized Cost		43,166
Gross Unrealized Gains		210
Gross Unrealized (Losses)		(349)
Fair Value		43,027
U.S. treasury securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	23,510
Gross Unrealized Gains	493
Gross Unrealized (Losses)	0
Fair Value	$ 24,003
Amortized Cost		91,722
Gross Unrealized Gains		691
Gross Unrealized (Losses)		(51)
Fair Value		$ 92,362

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INVESTMENT SECURITIES - Schedule of Maturities of Debt Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Debt Securities, Held-to-maturity, Maturity [Abstract]
Amortized Cost , due within one year	$ 94,074	$ 105,349
Estimated Fair Value, due within one year	94,168	105,302
Amortized Cost, Due within one year through five years	28,090	29,539
Estimated Fair Value, Due within one year through five years	29,320	30,087
Amortized Cost	122,164	134,888
Estimated Fair Value	$ 123,488	$ 135,389

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ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Allowance for Uncollectible Accounts Receivable
Beginning balance	$ 6,889	$ 5,596	$ 5,596
Transition adjustment as of April 1, 2020	6,889	5,596	6,889
Provision for bad debt	1,943	$ (21)	4,873
Recovery or write-off of uncollectible accounts	(2,204)		(3,580)
Ending balance	7,459		6,889
Cumulative Effect, Period Of Adoption, Adjustment
Allowance for Uncollectible Accounts Receivable
Beginning balance	831
Transition adjustment as of April 1, 2020	$ 831		831
Ending balance			$ 831

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Property, Plant and Equipment [Line Items]
Total cost	$ 94,010		$ 90,427
Less: accumulated depreciation	(51,134)		(48,055)
Total net book value	42,876		42,372
Depreciation expense	2,675	$ 2,409
Equipment
Property, Plant and Equipment [Line Items]
Total cost	9,236		8,788
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total cost	21,460		20,942
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total cost	43,646		41,643
Computers and software
Property, Plant and Equipment [Line Items]
Total cost	18,555		17,941
Other
Property, Plant and Equipment [Line Items]
Total cost	$ 1,113		$ 1,113

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 618,955	$ 618,455
Tradename-Houlihan Lokey	192,210	192,210
Other intangible assets	6,154	10,732
Total cost	817,319	821,397
Less: accumulated amortization	(4,964)	(8,553)
Goodwill and other intangibles, net	$ 812,355	$ 812,844

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GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill by Business Segments (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill
April 1, 2020	$ 618,455
Changes	500
June 30, 2020	618,955
Corporate Finance
Goodwill
April 1, 2020	363,925
Changes	500
June 30, 2020	364,425
Financial Restructuring
Goodwill
April 1, 2020	162,815
Changes	0
June 30, 2020	162,815
Financial Advisory Services
Goodwill
April 1, 2020	91,715
Changes	0
June 30, 2020	$ 91,715

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GOODWILL AND OTHER INTANGIBLE ASSETS - Finite-Lived Intangible Assets, Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 997	$ 1,554

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GOODWILL AND OTHER INTANGIBLE ASSETS - Finite-Lived Intangible Assets, Amortization Expense, Fiscal Year Maturity (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Year Ended March 31,
Remainder of 2021	$ 613
2022	157
2023	7
2024	7
2025	$ 7

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LOANS PAYABLE - Narrative (Details) € in Millions	1 Months Ended					3 Months Ended
	Dec. 31, 2019 EUR (€)	Dec. 31, 2018 EUR (€)	Dec. 31, 2017 EUR (€)	Jan. 31, 2017 EUR (€)	Aug. 31, 2015 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019	Aug. 23, 2019 USD ($)	May 31, 2018 USD ($)	Apr. 30, 2018 GBP (£)	Nov. 30, 2015 EUR (€)
Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity					$ 75,000,000.0						$ 100,000,000.0
Outstanding line of credit						$ 0
LIBOR | Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)					1.00%
2019 Line of Credit, Expansion Option | Bank of America | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity											$ 200,000,000.0
Loans Payable | 1.50% Loans Payable
Debt Instrument [Line Items]
Interest on debt						11,000	$ 24,000
Stated interest rate (as a percent)														1.50%
Portion of loan paid | €	€ 2.9	€ 2.9	€ 2.9	€ 2.9
Loans Payable | Non Interest Bearing Unsecured Convertible Loan
Debt Instrument [Line Items]
Interest on debt						84,000	36,000
Loans payable, face amount | £													£ 10,500,000
Loans Payable | 2.88% Loans Payable
Debt Instrument [Line Items]
Interest on debt						26,000	26,000
Stated interest rate (as a percent)												2.88%
Loans payable, face amount												$ 2,800,000
Loans Payable | 2.75% Loans Payable
Debt Instrument [Line Items]
Interest on debt						27,000
Stated interest rate (as a percent)									2.75%
Loans payable, face amount									$ 4,000,000.0
Loans Payable | Former Shareholders
Debt Instrument [Line Items]
Interest on debt						$ 8,000	$ 20,000
Stated interest rate (as a percent)						2.15%	3750.00%
Italy | Leonardo & CO. NV
Debt Instrument [Line Items]
Investment interest in Italy (as a percent)						51.00%				51.00%				49.00%
Loans payable, face amount | €														€ 14.0
Other Liabilities | January 2017 Acquisition
Debt Instrument [Line Items]
Non-contingent consideration						$ 0		$ 999,000

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LOANS PAYABLE - Schedule of Loan Repayments (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Debt Disclosure [Abstract]
Remaining 2021	$ 1,926
2022	11,172
2023	388
2024	31
2025	0
2026 and thereafter	12,110
Total	$ 25,627

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Accumulated Other Comprehensive Loss
Balance, April 1, 2020	$ (43,108)
Foreign currency translation adjustment	2,927	$ (3,971)
Balance, June 30, 2020	(40,181)
Accumulated Foreign Currency Adjustment Attributable to Parent
Accumulated Other Comprehensive Loss
Foreign currency translation adjustment	$ 2,927

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Provision for income taxes	$ (2,349)	$ 6,649
Effective tax rate	(5.40%)	13.50%

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Numerator:
Net income attributable to holders of shares of common stock—basic	$ 46,100	$ 42,776
Net income attributable to holders of shares of common stock—diluted	$ 46,100	$ 42,776
Denominator:
Weighted average shares of common stock outstanding—basic (in shares)	63,684,431	61,670,617
Weighted average number of incremental shares issuable from unvested restricted stock and restricted stock units, as calculated using the treasury stock method (in shares)	3,114,129	3,950,486
Weighted average shares of common stock outstanding—diluted (in shares)	66,798,560	65,621,103
Net income per share attributable to holders of shares of common stock
Basic (in dollars per share)	$ 0.72	$ 0.69
Diluted (in dollars per share)	$ 0.69	$ 0.65

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EMPLOYEE BENEFIT PLANS - Defined Contribution Plans (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Share-based Payment Arrangement [Abstract]
Defined contribution plan, amount of contributions	$ 924	$ 779

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EMPLOYEE BENEFIT PLANS - Share-Based Incentive Plans (Narrative) (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended
	Oct. 19, 2017 shares	Aug. 31, 2015 director $ / shares shares	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 director $ / shares	Jun. 30, 2019 USD ($) director $ / shares shares	Dec. 31, 2018 director $ / shares	Jun. 30, 2018 director $ / shares	Jun. 30, 2017 director $ / shares	Jun. 30, 2016 director $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax benefits recorded | $			$ 13,408		$ 7,605
Payments to settle employee tax obligations on share-based awards | $			17,774		31,267
Compensation expenses | $			17,196		12,762
Unrecognized compensation cost | $			$ 145,313		$ 126,430
Unrecognized compensation cost, period for recognition			1 year 10 months 24 days		1 year 8 months 12 days
2006 Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			1,044,000		1,359,000
Aggregate shares granted, price per share (in dollars per share) | $ / shares			$ 60.60		$ 47.22
2016 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			4 years
2016 Incentive Plan | Director | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		37,847
Aggregate shares granted, number of recipients | director		2		1	4	1	3	3
Aggregate shares granted, price per share (in dollars per share) | $ / shares		$ 21		$ 47.21	$ 47.22	$ 42.41	$ 44.50	$ 33.54
2016 Incentive Plan | Director | Restricted Stock | Exercise Price 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares granted, number of recipients | director									2
Aggregate shares granted, price per share (in dollars per share) | $ / shares									$ 25.21
2016 Incentive Plan | Director | Restricted Stock | Exercise Price 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares granted, number of recipients | director									1
Aggregate shares granted, price per share (in dollars per share) | $ / shares									$ 23.93
Amended And Restated 2016 Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase (reduction) to common stock available for issuance (in shares)	(12,200,000)
Common stock available for issuance (in shares)	8,000,000.0
Class A common stock | April 1, 2018 | Amended And Restated 2016 Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase (reduction) to common stock available for issuance (in shares)	6,540,659
Annual increase to number of shares available for issuance (as a percent)	6.00%

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EMPLOYEE BENEFIT PLANS - Activity in Equity Classified Share Awards (Details) - 2006 Incentive Plan - Restricted Stock - $ / shares	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Shares
Beginning balance (in shares)	3,539,000	3,764,000
Granted (in shares)	1,044,000	1,359,000
Vested (in shares)	(1,769,000)	(1,490,000)
Forfeited/Repurchased (in shares)		(24,000)
Ending balance (in shares)	2,842,000	3,609,000
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)	$ 39.13	$ 32.29
Granted (in dollars per share)	60.60	47.22
Vested (in dollars per share)	$ 32.38	29.26
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Repurchased in Period	(28,000)
Forfeited/Repurchased (in dollars per share)	$ 47.08	36.22
Ending balance (in dollars per share)	$ 51.38	$ 39.12

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EMPLOYEE BENEFIT PLANS - Activity in Liability Classified Shares (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Awards Settleable in Shares
Beginning balance	$ 20,989	$ 21,676
Offer to grant	4,583	3,155
Share price determined-converted to cash payments	(249)	(52)
Share price determined-transferred to equity grants	(7,262)	6,457
Forfeited	(1,344)	(50)
Ending balance	$ 16,717	$ 18,272

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STOCKHOLDERS' EQUITY (Details)					3 Months Ended
	May 20, 2020 USD ($) shares	Aug. 01, 2019 $ / shares shares	May 30, 2019 $ / shares shares	Aug. 19, 2015 class_of_stock	Jun. 30, 2020 USD ($) shares	Jun. 30, 2019 USD ($) $ / shares shares	Mar. 31, 2020 shares	Mar. 31, 2019 shares	Dec. 31, 2018 USD ($)	Jul. 31, 2018 USD ($)	Aug. 18, 2015 vote
Class of Stock [Line Items]
Number of classes of common stock | class_of_stock				2
Conversion ratio of common stock											1
Dividends outstanding | $					$ 4,028,000				$ 5,624,000
Authorized amount to be repurchased | $										$ 100,000,000
Weighted average price per share (in dollars per share) | $ / shares						$ 47.81
Class A common stock
Class of Stock [Line Items]
Common stock voting rights, number of votes per share | vote											1
Shares issued to non-employee directors (in shares)	3,000,000
Proceeds from sale of stock | $	$ 188,700,000
Conversion of Class B to Class A shares (in shares)						2,291,827
Shares issued of common stock (in shares)					50,713,967		46,178,633
Number of common shares outstanding (in shares)					50,713,967		46,178,633
Outstanding common stock repurchased and retired (in shares)					0	55,164,000
Shares repurchased and retired, value | $						$ 2,502,000
Class A common stock | Common stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)					5,577	7,027
Conversion of Class B to Class A shares (in shares)					1,529,757
Number of common shares outstanding (in shares)					50,713,967	40,913,727	46,178,633	38,200,802
Class B common stock
Class of Stock [Line Items]
Common stock voting rights, number of votes per share | vote											10
Shares issued of common stock (in shares)					18,774,077		19,345,277
Number of common shares outstanding (in shares)					18,774,077		19,345,277
Outstanding common stock repurchased and retired (in shares)					280,893,000	652,618,000
Shares repurchased and retired, value | $					$ 17,092,000	$ 31,267,000
Class B common stock | Common stock
Class of Stock [Line Items]
Number of common shares outstanding (in shares)					18,774,077	25,308,293	19,345,277	27,197,734
ORIX USA Corporation
Class of Stock [Line Items]
Shares issued of common stock (in shares)						3,377,935
ORIX USA Corporation | Class A common stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)		3,377,935,000	3,000,000
Price to the public (in dollars per share) | $ / shares		$ 45.62	$ 45.80
Investor | Class A common stock
Class of Stock [Line Items]
Shares issued of common stock (in shares)					50,668,425	37,418,661
Director | Class A common stock
Class of Stock [Line Items]
Shares issued to non-employee directors (in shares)					5,577	7,027
HL Holders | Class B common stock
Class of Stock [Line Items]
Number of common shares outstanding (in shares)					18,774,077	25,308,393
Director | Class A common stock
Class of Stock [Line Items]
Shares issued of common stock (in shares)					42,301	61,967
Restricted Stock | 2006 Incentive Plan
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Repurchased in Period					(28,000)

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LEASES - Narrative (Details) € in Millions	3 Months Ended
	Jun. 30, 2020 EUR (€) lease
Lessee, Lease, Description [Line Items]
Number of operating leases | lease	1
Lease not yet commenced, amount | €	€ 9.0
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	16 years
Operating lease, lease not yet commenced, term of contract	15 years

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LEASES - Maturity of Existing Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020
Leases [Abstract]
Remaining 2021	$ 21,896
2022	27,416
2023	23,020
2024	17,791
2025	18,885
Thereafter	98,209
Total	207,217
Less: present value discount	(34,346)
Operating lease liabilities	$ 172,871	$ 154,218

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Operating lease expense	$ 7,244	$ 6,329
Variable lease expense	2,327	3,650
Short-term lease expense	100	71
Less: Sublease income	(48)	(49)
Total lease costs	$ 9,623	$ 10,001

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LEASES - Weighted Average Details (Details)	Jun. 30, 2020
Leases [Abstract]
Weighted-average remaining lease term (years)	10 years
Weighted-average discount rate	3.80%

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LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Cash paid for amounts included in the measurement of Operating lease liabilities	$ 7,458	$ 6,073
Right-of-use assets obtained in exchange for operating lease liabilities	$ 22,652	$ 0

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SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue and Assets by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Segment Reporting Information [Line Items]
Revenues	$ 211,136	$ 250,349	$ 250,349
Segment profit	66,216		69,686
Corporate expenses	168,546	202,575
Other (income)/expense, net	(1,161)	(1,651)
Income before provision for income taxes	43,751	$ 49,425	49,425
Total assets	1,698,683		1,677,003
Operating Segments
Segment Reporting Information [Line Items]
Total assets	704,068		717,005
Operating Segments | Corporate Finance
Segment Reporting Information [Line Items]
Revenues	87,971		133,589
Segment profit	22,650		37,428
Total assets	404,082		403,147
Operating Segments | Financial Restructuring
Segment Reporting Information [Line Items]
Revenues	88,620		79,354
Segment profit	36,169		23,977
Total assets	174,774		186,418
Operating Segments | Financial Advisory Services
Segment Reporting Information [Line Items]
Revenues	34,545		37,406
Segment profit	7,397		8,281
Total assets	125,212		127,440
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Corporate expenses	23,626		21,912
Total assets	994,615		959,998
Segment Reconciling Items
Segment Reporting Information [Line Items]
Other (income)/expense, net	$ (1,161)		$ (1,651)

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SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue and Assets by Geographical Areas (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	$ 43,751	$ 49,425	$ 49,425
Revenues	211,136	250,349	250,349
Total assets	1,698,683		1,677,003
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	34,968	38,231
Revenues	176,945	208,151
Total assets	1,188,437		1,135,871
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before provision for income taxes	8,783	11,194
Revenues	34,191	$ 42,198
Total assets	$ 510,246		$ 541,132

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SUBSEQUENT EVENTS (Details)	Jul. 22, 2020 $ / shares
Subsequent Event
Subsequent Event [Line Items]
Quarterly cash dividend declared (in dollars per share)	$ 0.33