HLI 10-K & 10-Q changes, risk factors and insider trading

As a financial services firm, we are materially affected by conditions in the global financial markets and economic conditions throughout the world. Financial markets and economic conditions can be negatively impacted by many factors beyond our control, such as the inability to access credit markets, rising interest rates or inflation, terrorism, political uncertainty, supply chain disruptions, uncertainty in the U.S. federal fiscal, monetary, or trade policies and the fiscal, monetary and trade policy of foreign governments, an evolving regulatory environment (and the timing and nature of regulatory reform), climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, disruptive technologies, cyberattacks or campaigns, military conflicts around the world, such as ongoing conflicts in Eastern Europe and the Middle East, or other geopolitical events. The current U.S. administration has implemented, and continues to implement, significant and rapid changes in federal government operations and policies, including international trade policies, which may impact economic stability, the financial markets and the financial services industry broadly. Unfavorable market or economic conditions, including reduced expectations for, or further declines in, the U.S. and global economic outlook, may adversely affect our businesses; in particular, where revenue generated is directly related to the volume and size of the transactions in which we are involved. For example, weak market or economic conditions may adversely affect our CF and FVA groups because, in an economic downturn, the volume and size of transactions may decrease, thereby reducing the demand for our M&A, capital raising and opinion advisory services and increasing price competition among financial services companies seeking such engagements. Moreover, in the period following an economic downturn, the volume and size of transactions typically takes time to recover and lags a recovery in market and economic conditions. In particular, our clients and their counterparties engaging in M&A transactions often rely on access to the credit and/or capital markets to finance their transactions. The uncertainty of available credit and interest rates and the volatility of the capital markets and the fact that we do not provide financing or otherwise commit capital to clients can adversely affect the size, volume, timing and ability of such clients to successfully complete M&A transactions and thus can adversely affect our CF and FVA groups. In addition, our profitability would be adversely affected due to our fixed costs and the possibility that we would be unable to reduce our variable costs without reducing revenue or within a timeframe sufficient to offset any decreases in revenue relating to changes in market and economic conditions. On the other hand, strong market or economic conditions may adversely affect our FR group. In a strong environment, the volume and size of recapitalization and restructuring transactions may decrease, thereby reducing the demand for the services provided by our FR business segment and increasing price competition among financial services companies seeking such engagements. Changes in market and economic conditions are expected to impact our businesses in different ways, and we may not be able to benefit from such changes. Further, our business, financial condition and results of operations could be adversely affected by changing market or economic conditions. Our profitability may also be adversely affected by changes in market and economic conditions because we may not be able to reduce certain fixed costs within a time frame sufficient to match any decreases in revenue. Conditions such as an economic recession, stagflation, rising unemployment, the effects of tariffs, trade wars, elevated interest rates, inflationary prices, terrorism or political uncertainty and other factors beyond our control may adversely affect demand for our services and the ability to manage costs associated with employees and vendors. The future market and economic climate may deteriorate because of many factors beyond our control, including tariffs, elevated interest rates or inflation, terrorism or political uncertainty. In addition, the U.S. Federal Reserve changes the federal funds interest rate from time to time, and market interest rates have risen in recent periods. WhileThe thetiming, timingpace and impact of risingany future changes in interest rates are unknown,uncertain, aand continuedthe increaseability inof marketthe U.S. Federal Reserve to adjust interest rates or market confidence in the independence of the U.S. Federal Reserve could have an adverse effect on our transaction volumes, results of operations and financial condition. In addition,Further, in recent years, concerns arose with respect to the financial condition of a number of banking organizations in the United States, in particular those with exposure to certain types of depositors and large portfolios of investment securities. We maintain our cash at financial institutions, often with balances that exceed the current FDIC insurance limits. If any such financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition. In addition, the operating environment and public trading prices of financial services sector securities can be highly correlated, in particular in times of stress, which may adversely affect the trading price of our Class A common stock and potentially our results of operations.

Revenue and profits derived from our CF and FR business segments can be highly volatile. We derive a substantial portion of our revenue from advisory fees, which are mainly generated at key milestones, such as the closing of a transaction, the timing of which is outside of our control. In many cases, for advisory engagements that do not result in the successful consummation of a transaction, we are not paid a fee other than the reimbursement of certain out-of-pocket expenses and, in some cases, a modest retainer, despite having devoted considerable resources to these transactions. The achievement of these contractually-defined goalsmilestones is often impacted by factors outside of our control, such as market conditions and the decisions and actions of our clients and interested third parties. For example, a client could delay or terminate an acquisition transaction because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or shareholder approvals, failure to secure necessary financing, adverse market conditions or because the target's business is experiencing unexpected financial problems. Anticipated bidders for client assets during a restructuring transaction may not materialize or our client may not be able to restructure its operations or indebtedness due to a failure to reach agreement with its principal creditors. Because fees in such engagements are typically contingent, revenue on such engagements, which is recognized when all revenue recognition criteria are met, is not certain and the timing of receipt is difficult to predict and may not occur evenly throughout the year.

We expect that we will continue to rely on advisory fees, including fees based upon goals,milestones, such as the completion of a transaction, for a substantial portion of our revenue for the foreseeable future. Accordingly, a decline in our advisory engagements or the market for advisory services would adversely affect our business. In addition, our financial results will likely fluctuate from quarter to quarter based on when fees are earned, and high levels of revenue in one quarter will not necessarily be predictive of continued high levels of revenue in future periods. Should these contingent fee arrangements represent a greater percentage of our business in the future, we may experience increased volatility in our working capital requirements and greater variations in our quarter-to-quarter results, which could affect the price of our Class A common stock. Because advisory revenue can be volatile and represents a significant portion of our total revenue, we may experience greater variations in our revenue and profits than other larger, more diversified competitors in the financial services industry. Fluctuations in our quarterly financial results could, in turn, lead to large adverse movements in the price of our Class A common stock or increased volatility in our stock price generally.

We regularly evaluate opportunities to acquire other businesses whose key strategic benefit is the addition of financial professionals.professionals in sectors and/or geographies that we believe provide a compelling opportunity. Unless and until acquisitions of other businesses generate meaningful revenues, the purchase prices we pay to acquire such businesses could have a material adverse effect on our business, financial condition and results of operations. If we acquire a business, we may be unable to manage it profitably or successfully integrate its operations with our own. Moreover, we may be unable to realize the financial, operational, and other benefits we anticipate from acquisitions. Competition for future acquisition opportunities in our markets could increase the price we pay for businesses we acquire and could reduce the number of potential acquisition targets. Further, acquisitions may involve a number of special financial and business risks, including expenses related to any potential acquisition from which we may withdraw, diversion of our management's time, attention, and resources, decreased utilization during the integration process, loss of key acquired personnel, difficulties in integrating diverse corporate cultures, increased costs to improve or integrate personnel and financial, accounting, technology and other systems, including compliance with the Sarbanes-Oxley Act, dilutive issuances of equity securities, including convertible debt securities, incurrence of debt, the assumption of legal liabilities, amortization of acquired intangible assets, potential write-offs related to the impairment of goodwill, and additional conflicts of interest. If we are unable to successfully manage these risks, we will not be able to implement our growth strategy, which ultimately could materially adversely affect our business, financial condition and results of operations.

•terrorism, political hostilities, war and other civil disturbances or other catastrophic events, such as the conflicts in UkraineUkraine, Israel, and Israel,Iran, that reduce business activity; and

Although the current U.S. Presidential administrationPresident has signed an executive order to pause, subject to certain exceptions, the initiation of new investigations and enforcement actions under the FCPA, the United States Department of Justice and the SEC have historically devoted significant resources to enforcement of the FCPA. In addition, the United Kingdom has significantly expanded the reach of its anti-bribery laws. While we have developed and implemented policies and procedures designed to ensure strict compliance by us and our personnel with the FCPA and other anti-corruption laws, such policies and procedures may not be effective in all instances to prevent violations. Any determination that we have violated the FCPA (notwithstanding the current pause on FCPA investigations and enforcement action) or other applicable anti-corruption laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects, financial condition, results of operations or the market value of our Class A common stock.

Because our financial statements are denominated in United States Dollars and we receive a portion of our net revenue in other currencies, we are exposed to fluctuations in foreign currencies. In addition, we pay certain of our expenses in such currencies. Fluctuations in foreign currency exchange rates led to a net gain in cash of $4.9 million for fiscal 2026, compared to a net loss in cash of $(0.8) million for fiscal 2025, compared to a net loss in cash of $(0.4) million for fiscal 2024.2025. In particular, we are exposed to the Euro, the Yen, and the Pound Sterling, and fluctuations in these and other currencies relative to the United States Dollar have had, and may continue to have, an adverse effect on our revenue. From time to time, we have entered into transactions to hedge our exposure to certain foreign currency fluctuations through the use of derivative instruments or other methods. Notwithstanding our entry into such hedge transactions, a depreciation of any of the currencies to which we are exposed relative to the United States Dollar could result in an adverse impact to our business, financial condition, results of operations and/or cash flows.

In addition, we face the possibility of an actual, potential or perceived conflict of interest where we represent a client on a transaction in which an existing client is a party. We may be asked by two potential clients to act on their behalf on the same transaction, including by two clients as potential buyers in the same acquisition transaction. In each of these situations, we face the risk that our current policies, controls and procedures may not timely identify or appropriately manage suchactual or potential conflicts of interest. Conflicts may also arise from investments or activities of employees outside their business activities on behalf of the Company. It is possible that actual, potential or perceived conflicts could give rise to client dissatisfaction, litigation or regulatory enforcement actions. Appropriately identifying and managing actual or perceived conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation which could materially adversely affect our business in a number of ways, including a reluctance of some potential clients and counterparties to do business with us.

Further, because we provide our services primarily in connection with significant or complex transactions, disputes or other matters that usually involve confidential and sensitive information or are adversarial, and because our work is the product of myriad judgments of our financial professionals and other staff operating under significant time and other pressures, we may not always perform to the standards expected by our clients. In addition, we may face reputational damage from, among other things, litigation against us, or our failure to protect confidential information. There is also a risk that our employees could engage in misconduct that could adversely affect our business. If our employees were to improperly use or disclose confidential information provided by our clients, we could be subject to regulatory sanctions and legal liability and suffer serious harm to our reputation, financial position, current client relationships and ability to attract future clients. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in all cases. In addition, our financial professionals and other employees are responsible for the security of the information in our systems or under our control and for ensuring that non-public information is kept confidential. Should any employee not follow appropriate security measures, the improper release or use of confidential information could result. If our employees engage in misconduct or fail to follow appropriate security measures, we could be subject to legal liability and reputational harm, which could impair our ability to attract and retain clients and in turn materially adversely affect our business.

We operate a business that is highly dependent on information systems and technology to securely process, transmit and store such information and to communicate among our locations around the world and with our employees, clients and vendors. For example, our clients typically provide us with sensitive and confidential information. Any failure to keep secure and accurate books and records can render us liable to disciplinary action by governmental and self-regulatory authorities, as well as to claims by our clients. We rely on third-party service providers for certainimportant aspects of our business. Any serious interruption or deterioration in the performance of these third parties or failures of their information systems and technology could impair our operations, affect our reputation and adversely affect our business.

OurWe clientsface typicallynumerous, provideevolving uscybersecurity withthreats sensitiveto our IT systems and confidential information. We have beenexperienced subjectincidents and regularly face cyber-attacks, which will continue in varying degrees for all companies globally. While to attempteddate securityno breachesincidents andhave cyber-attacksmaterially and,impacted aour successfulbusiness, there is no guarantee that material incidents will not occur in the future. A significant breach could lead to shutdowns or disruptions of our systems or third-party systems on which we rely and potentialmaterially unauthorized disclosure of sensitive or confidential information. Breaches of our security systems or third-party network security systems on which we rely could involve attacks that are intended to obtain unauthorized access tocompromise our proprietary information, client and third party information, destroy data or disable, degrade or sabotage our systems, oftenincluding through the introduction of computer viruses,viruses or malware (e.g., ransomware), cyber-attacks and other means and could originate from a wide variety of sources, includingsuch as unknown third partiesparties, outsidenation-state theactors Company.or even insiders. As cyber-attack techniques evolve in response to enhanced detection and protection measures, cyber-attacks/threats/incidents could persist for an extended period of time before detection or escalation. There can be no assurance that the cybersecurity protections and controls utilized by us, or by our third parties on whom we rely, will be effective within this cyber threat landscape.landscape, particularly as actors are increasingly using tools such as artificial intelligence to enhance their techniques. For example, phishing and email spoofing attacks often seek to obtain information to impersonate employees or clients in order to,that, among other things, seek to direct fraudulent bank transfers or obtain valuable information via social engineering.engineering are increasingly sophisticated. The proliferation of deepfake technology adds to these risks. Fraudulent transfers resulting from phishing attacks or email spoofing of our employees could result in a material loss of assets, reputational harm or legal liability and in turn materially adversely affect our business. In addition, our employees are responsible for following proper measures to maintain the confidentiality of information we hold. If our systems or third-party systems on which we rely are compromised or perceived to be compromised, do not operate properly or are disabled, or if an employee fails to follow proper measures resulting in the release of confidential information, we could suffer a disruption of our business, financial losses, liability to clients, regulatory sanctions and damage to our reputation.

We and our third-party service providers and their subprocessors, are exploringlikely theto integrationdevelop ofor incorporate artificial intelligence technologies (“AI”) intotechnology ourin operations.certain business operations, processes or services. The full extent of current or future risks related to the development of AI technology is not possible to predict. We cannot anticipate, prevent or mitigate all of the potential risks, challenges or impacts of such changes. The deployment of AI, which relies on substantial data volumes, introduces risks such as potential leakage of confidential or proprietary information, unauthorized access, misuse, or theft of sensitive data, and the possibility of competitors adopting AI more effectively, which could materially impact our business, financial condition, results of operations, or market share. Additionally,The third-partyworldwide servicelegal providersand mayregulatory independentlyenvironment implementrelating to AI solutions,is uncertain and rapidly evolving, which could furtherrequire complicatechanges in our potential use and implementation of AI technology, limit our ability to integrate AI and increase our compliance costs and the risk landscape.of non-compliance.

Our role as advisor to our clients involves complex analysis and the exercise of professional judgment, includingincluding, in particular, in rendering fairness opinions in connection with mergers and other transactions. Our activities, and particularly those of our FVA group, may subject us to the risk of significant legal liabilities to our clients and affected third parties, including shareholders of our clients who could bring securitieslegal class actionsclaims against us. In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial services companies continues to be high. Litigation alleging that we performed below our agreed standard of care or breached any other obligations to a client or other parties could expose us to significant legal liabilities, particularly with respect to our FVA group, and, regardless of outcome, is often very costly, could distract our management and managing directors and could damage our reputation. These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time. Our engagements typically include broad indemnities from our clients and provisions to limit our exposure to legal claims relating to our services, but these provisions may not protect us in all cases, including when we perform below our agreed standard of care or a client does not have the financial capacity to pay under the indemnity. As a result, we may incur significant legal expenses in defending against or settling litigation. In addition, we may have to spend a significant amount to adequately insure against these potential claims, or insurance coverage may not be available on commercial terms or at all. Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which could seriously harm our business prospects, financial condition and results of operations.

Extensive and evolving regulation of our business and the businesses of our clients exposes us to the potential for significant penalties and fines due to compliance failures, increases our costscosts, and may result in limitations on the manner in which our business is conducted.

Our ability to conduct business and our operating results, including compliance costs, may be adversely affected as a result of any new requirements imposed by the SEC, FINRA or other United States or foreign governmental regulatory authorities or self-regulatory organizations that regulate financial services firms or supervise financial markets. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. In addition, some of our clients or prospective clients may adopt policies that exceed regulatory requirements and impose additional restrictions affecting their dealings with us. Accordingly, we may incur significant costs to comply with United States and international regulations. Our expenses incurred in complying with these regulatory requirements, including legal fees and fines or penalties paid to the SEC, FINRA and United States or foreign governmental regulatory authorities or self-regulatory organizations, have increased in recent years. For example, on August 8, 2023, we reached an agreement on an Offer of Settlement with the SEC to resolve an administrative and cease-and-desist proceeding concerning the Company's compliance with records preservation requirements related to business communications sent over off-channel electronic messaging platforms. As part of the agreement, the Company paid a $15 million civil penalty. We maintain an internal team that works full-time to develop and implement regulatory compliance policies and procedures, monitor business activities to ensure compliance with such policies and proceduresprocedures, and reportsreport to senior management. This team also uses various softwaretechnological tracking and reporting systems and confers regularly with internal and outside legal counsel in the performance of its responsibilities. In addition, new laws or regulations or changes in enforcement of existing laws or regulations applicable to our clients may adversely affect our business. For example, changes in antitrust enforcement could affect the level of M&A activity and changes in applicable regulations could restrict the activities of our clients and their need for the types of advisory services that we provide to them.

Our failure to comply with applicable laws or regulations could result in adverse publicity and reputational harm as well as fines, suspensions of personnel or other sanctions, including revocation of any required registration of us or any of our subsidiaries and/or financial professionals and could impair retention or recruitment of executives and/or senior financial professionals. In addition, any changes in the regulatory framework under which we operate could impose additional expenses or capital requirements on us, result in limitations on the manner in which our business is conducted, have an adverse impact upon our business, financial condition and results of operations and require substantial attention by senior management. In addition, our business is subject to periodic examination by various regulatory authorities, and we cannot predict the outcome of any such examinations.

The dual class structure of our common stock and the ownership of our Class B common stock by the HL Holders through the HL Voting Trust have the effect of concentrating voting control with the HL Voting Trust for the foreseeable future,Trust, which limits the ability of our Class A common stockholders to influence corporate matters. We are controlled by the HL Voting Trust, whose interests may differ from those of our Class A common stockholders.

Each share of our Class B common stock is entitled to ten votes per share, and each share of our Class A common stock is entitled to one vote per share. As of March 31, 2025,2026, the HL Holders through the HL Voting Trust beneficially owned 16,698,11915,266,333 shares of common stock representing approximately 23.7%22% of the economic interest, and controlled 74.9%approximately 74% of the voting power of our outstanding capital stock. The HL Voting Trust will, for the foreseeable future, havehas significant influence over our corporate management and affairs,affairs and will beis able to control virtually all matters requiring stockholder approval. The HL Voting Trust is able to elect a majority of the members of our board of directors and control actions to be taken by us and our board of directors, including amendments to our amended and restated certificate of incorporation and bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets. The directors so elected will have the authority, subject to the terms of our indebtedness and applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions. This concentrated control will limit the ability of holders of our Class A common stock to influence corporate matters for the foreseeable future and may materially adversely affect the market price of our Class A common stock. It is possible that the interests of the HL Voting Trust may in some circumstances conflict with our interests and the interests of our other stockholders. For example, the HL Voting Trust may have different tax positions or other differing incentives from other stockholders that could influence their decisions regarding whether and when to cause us to dispose of assets, incur new or refinance existing indebtedness or take other actions. Additionally, the holders of our Class B common stock may cause us to make strategic decisions or pursue acquisitions that could involve risks to holders of our Class A common stock or may not be in the best interests of holders of our Class A common stock.

The holders of our Class B common stock will also be entitled to a separate vote in the event we seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our common stock or in a manner that alters or changes the powers, preferencespreferences, or special rights of the Class B common stock in a manner that affects its holders adversely. Future transfers by holders of Class B common stock will generally result in those shares converting on a one-for-one basis to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares inover the long-term.

The HL Voting Trust controls a majority of the voting power of our outstanding common stock. As a result, we qualify as a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange.NYSE. Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of the board of directors consist of independent directors, the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors, and the requirement that we have a compensation committee that is composed entirely of independent directors.

We intend to continue to rely on some or all of these exemptions. While at the present time, a majority of our board of directors consists of independent directors and our compensation and nominating and corporate governance committees consist entirely of independent directors, that may not continue to be the case. Accordingly, our stockholders do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.NYSE.

• changes in the evaluations of our Class A common stock by research analysts;

Established in 1972, Houlihan LokeyLokey, Inc. is a leading global independent investment bank with expertise in mergers and acquisitions,acquisitions (“M&A”), capital markets, financial restructurings andrestructurings, liability management, and financial and valuation advisory.advisory Withservices. officesWe in the Americas, Europe, the Middle East, and the Asia-Pacific region, the Company servesserve a diverse set of clients worldwide, including corporations, institutions,financial sponsors and governmentsgovernment worldwide.agencies. HoulihanWe Lokey’sprovide our financial professionals with an integrated platform that enables them to deliver meaningful and differentiated advice to our clients. We advise our clients on strategycritical strategic and financial decisionsdecisions, employing a rigorous analytical approach coupled with deep product and industry expertise. We market our services through our product areas, our industry groups and our Financial Sponsors group, serving our clients in three business segments: Corporate Finance (“CF”), encompassing M&A and capital solutions; Financial Restructuring (“FR”), including restructurings both out-of-court and in formal bankruptcy or insolvency proceedings; and Financial and Valuation Advisory (“FVA”), including financial opinions and a variety of valuation and financial consulting services.

As of March 31, 2025,2026, we servedemployed ourmore clientsthan globally with 1,8931,900 financial professionals, including 339354 Managing Directors. We plan to continue to grow our firm across industry sectors, geographies and products to deliver quality advice and innovative solutions to our clients, both organically and through acquisitions.

We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters that set forth our fees. A significant portion of our engagements include Progress Fees (as defined herein) consistingand/or ofCompletion bothFees periodic(as anddefined milestone-related payments.herein). The occurrence and timing of milestone-related payments, such as upon the closing of a transaction, are generally not within our control. Accordingly, revenue and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter.

Corporate expenses represent expenses that are not allocated to individual business segments such as those relating to our executive management, accounting, information technology, legal and compliance, marketing, and human capital,capital groups, including related compensation expense for corporate employees.

Based on historical experience, we believe current economic conditions provide a relatively stable environment for M&A and capital markets activities, but the continued threat from sustained elevated interest rates or inflation, international conflict, and international trade policies provide some level of uncertainty in the coming quarters.year. In the United States, ourOur dialogue with clients who are evaluating strategic alternatives remains measuredpositive as wethey continueconsider totheir seeoptions concernsfor aroundliquidity even in the macro-economicface of the uncertainty caused by the factors mentioned above.

Our Financial Restructuring activity hasalso improvedremains stable as a result of the factors mentioned above (elevated interest rates, global trade policy and conflict). We continue to remainsee optimisticsustained aboutlevels the currentof restructuring and liability management outlookactivity over the short to medium term due to elevated interest rates, record levels of company leverage, disruption in the software space, recent geopolitical events,events and global trade policy disruption, and contracting monetary policy.disruption.

Revenues include fee revenues and reimbursements of expenses (see Note 2 and Note 3 included in Part II, Item 8 of this Form 10-K). Revenues reflectare revenuesgenerated from our CF, FR, and FVA business segments thatand substantiallyprimarily consist of fees for advisory services.

FVA primarily provides financial advisory and valuation services with respect to companies, debt and equity interests (including complex illiquid investments), and other types of assets and liabilities; fairness opinions in connection with mergers and acquisitions and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions; as well as diligence, tax, transaction accounting, and other financial advisory services to companies, boards of directors, special committees, retained counsel, financial and strategic investors, trustees, and other parties. Also, our FVA business segment provides dispute resolution services to clientsclients, wherefor which fees are usually based on the hourly rates of our financial professionals. UnlikeThe ourmajority CF or FR segments, the fees generated inof our FVA segmentrevenues are generally not contingent on the successful completionconsists of aRetainer transaction.Fees, Progress Fees and/or Completion Fees.

Our operating expenses are classified as employee compensation and benefits expenseexpenses and non-compensation expenseexpenses; 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 onin the Consolidated Statements of Comprehensive Income.

Employee Compensation and Benefits Expense.Expenses. Our compensation expenses are comprised of employee compensation and benefits expense,and whichacquisition accountsrelated compensation and benefits expenses. Compensation expenses account for the majority of our operating expenses, isand are 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 expenseexpenses may fluctuate materially in any particular period. Accordingly, the amount of employee compensation and benefits expenseexpenses recognized in any particular period may not be consistent with prior periods or indicative of future periods. In connection with certain acquisitions, certain employees may be entitled to deferred consideration, primarily in the form of retention payments, should certain service and/or performance conditions be met in the future. As a result of these conditions, such deferred consideration would be expensed as compensation in current and future periods and has been accrued as liabilities on the Consolidated Balance Sheets as of March 31, 2026 and 2025.

Our employeeEmployee compensation and benefits expense consistsconsist 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. Annual equity-based bonus awards granted prior to December 31, 2024 include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. These equityEquity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which typically 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, and in certain cases if certain financial metrics are not met. Certain annual equity-based bonus awards granted prior to December 31, 2024 include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performanceperformance, and are generally paid in the first quarter of each fiscal 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. We refer to the ratio of our employee compensation and benefits expenses to our revenues as our “Compensation Ratio.”

Non-Compensation Expense.Expenses. 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.expenses, and gains and/or losses associated with changes in the fair value of earnout liabilities. 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,(Income) Expense, Net

Revenues were $2.62 billion for the year ended March 31, 2026, compared with $2.39 billion for the year ended March 31, 2025, compared with $1.91 billion for the year ended March 31, 2024, representing an increase of 25%.10%. The increase in revenues was primarily the result of an increase in CF revenues for the year ended March 31, 2025, compared with the year ended March 31, 2024,revenues, as described in further detail below. For the year ended March 31, 2025, CF revenues increased 38%, FR revenues increased 4%, and FVA revenues increased 11% when compared with the year ended March 31, 2024.

Operating expenses were $2.09 billion for the year ended March 31, 2026, compared with $1.89 billion for the year ended March 31, 2025, comparedan withincrease $1.55of 11%. Compensation expenses, as a component of operating expenses, was $1.68 billion for the year ended March 31, 2024,2026, ancompared increase of 22%. Employee compensation and benefits expense, as a component of operating expenses, waswith $1.52 billion for the year ended March 31, 2025, compared with $1.21 billion for the year ended March 31, 2024, an increase of 26%.10%. The increase in employee compensation and benefits expense was primarily due to the increase in revenues for the fiscal year. The Compensation Ratio was 64% andfor 63% forboth the years ended March 31, 20252026 and 2024,2025, respectively. Non-compensation expenses, as a component of operating expenses, were $363.6$407.1 million for the year ended March 31, 2026, compared with $362.6 million for the year ended March 31, 2025, compared with $338.0 million for the year ended March 31, 2024, an increase of 8%.12%. The increase in non-compensation expenses was primarily a result of an increaseincreases in depreciationrevaluation of acquisition contingent consideration, travel, meals and amortization, other operating expenses,entertainment, and information technology and communications expenses, partially offset by a decrease in professional fees.expenses.

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

(34)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 one thousand dollars.$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.

Revenues for CF were $1.74 billion for the year ended March 31, 2026, compared with $1.53 billion for the year ended March 31, 2025, compared with $1.11 billion for the year ended March 31, 2024, representing an increase of 38%.14%. The increase in revenues was primarily due to a 25%an increase in the number of closed transactions forduring the year ended March 31, 2025, compared with the year ended March 31, 2024,period, which was driven by favorable market conditions.

Segment profit for CF was $581 million for the year ended March 31, 2026, compared with $474 million for the year ended March 31, 2025, compared with $303 million for the year ended March 31, 2024, representing an increase of 57%.23%. The increase in segment profit was primarily a result of higher revenues forwhen compared to the yearsame endedperiod Marchlast 31, 2025, compared with the year ended March 31, 2024.year.

Revenues for FR were $529 million for the year ended March 31, 2026, compared with $544 million for the year ended March 31, 2025, compared with $522 million for the year ended March 31, 2024, representing ana increasedecrease of 4%.(3)%. The increasedecrease in revenues was primarily due to a 15% increasedecrease in the number of closed transactions for the year ended March 31, 2025, compared with the year ended March 31, 2024,transactions, which was driven by less favorable market conditions.conditions for restructuring.

Segment profit for FR was $179 million for the year ended March 31, 2026, compared with $209 million for the year ended March 31, 2025, compareda with $194 million for the year ended March 31, 2024, an increasedecrease of 8%.(14)%. The increasedecrease in segment profit was primarily a result of higherlower revenues forand higher compensation expenses as a percentage of revenue when compared to the yearsame endedperiod Marchlast 31, 2025, compared with the year ended March 31, 2024.year.

Revenues for FVA were $344 million for the year ended March 31, 2026, compared with $318 million for the year ended March 31, 2025, compared with $286 million for the year ended March 31, 2024, an increase of 11%.8%. The increase in revenues was primarily due to an increase in the numberaverage offee per Fee Events for the year ended March 31, 2025, compared with the year ended March 31, 2024,Event, driven by improvements in the M&A markets, which affected one or more of the service lines within our FVA business.markets.

Segment profit for FVA was $94 million for the year ended March 31, 2026, compared with $89 million for the year ended March 31, 2025, compared with $74 million for the year ended March 31, 2024, representing an increase of 19%.6%. The increase in segment profit was primarily a result of higher revenues and lower non-compensation expenses for the year ended March 31, 2025, compared with the year ended March 31, 2024.revenues.

Corporate expenses were $271$327 million for the year ended March 31, 2026, compared with $270 million for the year ended March 31, 2025, compared with $208 million for the year ended March 31, 2024, representing an increase of 30%.21%. The increase in corporate expenses was driven primarily aby resultincreased compensation expense and increased revaluation of higheracquisition compensationcontingent expensesconsideration forwhen compared to the yearsame endedperiod Marchlast 31, 2025, compared with the year ended March 31, 2024.year.

Our current assets compriseare primarily comprised of cash and cash equivalents, investment securities, accounts receivable, and unbilled work in progress related to fees earned from providing advisory services. Our current liabilities includeare deferredprimarily income,comprised of accrued salaries and bonuses and accounts payable and accrued expenses, accrued salaries and bonuses, income taxes payable, and current portion of other liabilities.expenses.

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-dealers.broker-dealer. As of March 31, 20252026 and 2024,2025, we had $686$860 million and $545$686 million of cash and cash equivalents in foreign subsidiaries, respectively. Our excess cash may be invested 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 March 31, 20252026 and 2024,2025, our cash and cash equivalents,equivalents and investment securities, and restricted cashsecurities were as follows:

As of each fiscal year end, a material portion of our cash and cash equivalents is reserved to cover accrued,accrued but unpaid bonuses,bonuses that are paid the following May and November.

Our liquidity is highly dependent upon cash receipts from clients that 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 March 31, 20252026, and 2024, we had $257 million and $200 million of Accountsaccounts receivable, net of allowance for credit losses,losses respectively.was $228 million. As of March 31, 2025 and 2024, we had $158 million and $192 million of2026, Unbilled work in progress, net of allowance for credit losses,losses respectively.was $271 million.

On August 23, 2019, the Company entered into a syndicated revolving line of credit with the Bank of America, N.A. and certain other financial institutions party thereto, which was amended by athe First Amendment to Credit Agreement dated as of August 2, 20222022, and further amended by the Second Amendment to Credit Agreement on August 19, 2025 (as amended, the “"HLI Line of Credit”"),. whichThe HLI Line of Credit allows for borrowings of up to $100$150 million (and, subject to certain conditions, provides the Company with an uncommitted expansion option, which, if exercised in full, would provide for a total credit facility of $200 million), and matures on August 23,19, 20252030 (or if such date is not a business day, the immediately preceding business day). Borrowings under the HLI Line of Credit bear interest at a floating rate, which can be either, at the Company’sCompany's option, (i) Terma term Secured Overnight Financing Rate (“"SOFR”") plus a 0.10% SOFR adjustment plus a 1.00%0.95% margin per annum or (ii) a base rate, which is the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) Terma term SOFR rate plus a 0.10%1.00% SOFR adjustment.margin. Commitment fees apply to unused amounts. The HLI Line of Credit contains debt covenants which require that the Company maintain certain financial ratios,covenants and other restrictions, including buta notfinancial limitedloan covenant 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 includingmaintain a consolidated leverage ratio of less than 2.00 to 1.00. As of March 31, 2025,2026, we were, and expect to continue to be, in compliance with such covenants. As of March 31, 2025,2026, no principal was outstanding under the HLI Line of Credit.

The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligationsobligations, relating toincluding notes payable and contingent consideration issued in connection with businesses previously acquired (see Note 10 included in Part II, Item 8 of this Form 10-K).

Operating activities resulted in a net cash inflow of $848.6 million for the year ended March 31, 2025,million, primarily dueattributable to net income of $399.7 million,income, non-cash charges of $252.8 million,charges, and otherchanges in our operating activitiesassets ofand $196.1 million.liabilities. Investing activities resulted in a net outflow of $(265.1) million for the year ended March 31, 2025,million, primarily dueattributable to purchases of investment securities and cash consideration transferred in connection with business acquisitions. Financing activities resulted in a net outflow of $(329.1) millionmillion, primarily dueattributable to dividends paid, payments to settle employee tax obligations on share-based awards, and share repurchases made during the year ended March 31, 2025.repurchases.

FVA primarily provides financial advisory and valuation services with respect to companies, debt and equity interests (including complex illiquid investments), and other types of assets and liabilities; fairness opinions in connection with mergers and acquisitions and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions; as well as diligence, tax, transaction accounting, and other financial advisory services to companies, boards of directors, special committees, retained counsel, financial and strategic investors, trustees, and other parties. Also, our FVA business segment provides dispute resolution services to clientsclients, wherefor which fees are usually based on the hourly rates of our financial professionals. UnlikeThe ourmajority CF or FR segments, the fees generated inof our FVA segmentrevenues are generally not contingent on the successful completionconsists of aRetainer transaction.Fees, Progress Fees and/or Completion Fees.

FR provides advice to debtors, creditorscreditors, and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented through bankruptcy proceedings and 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; liability management transactions; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The majority of our FR revenues consists of Completion Fees. Although atypical,A FR transactionstransaction 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 financial advisory and valuation services with respect to companies, debt and equity interests (including complex illiquid investments), and other types of assets and liabilities; fairness opinions in connection with mergers and acquisitions and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions; as well as diligence, tax, transaction accounting, and other financial advisory services to companies, boards of directors, special committees, retained counsel, financial and strategic investors, trustees, and other parties. Also, our FVA business segment provides dispute resolution services to clients, for which fees are usually based on the hourly rates of our financial professionals. The majority of our FVA revenues consists of Retainer Fees, Progress Fees and/or Completion Fees, which are recognized on the achievement of our performance obligations.Fees.

Our operating expenses are classified as compensation expenseexpenses and non-compensation expenses; 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 onin the Consolidated Statements of Comprehensive Income.

Compensation Expenses. Our compensation expenses are comprised of employee compensation and benefits and acquisition related compensation and benefits expenses. Compensation expenses account for the majority of our operating expenses, and are 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 compensation expenses may fluctuate materially in any particular period. Accordingly, the amount of compensation expenses recognized in any particular period may not be consistent with prior periods or indicative of future periods. In connection with certain acquisitions, certain employees may be entitled to deferred consideration, primarily in the form of retention payments, should certain service and/or performance conditions be met in the future. As a result of these conditions, such deferred consideration would be expensed as compensation in current and future periods and has been accrued as liabilities on the Consolidated Balance Sheets as of DecemberJune 31,30, 20252026 and March 31, 2025.2026.

CompensationEmployee expensescompensation and benefits consist 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. Equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which typically 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, and in certain cases if certain financial metrics are not met. Certain annual equity-based bonus awards granted prior to December 31, 2024 include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performanceperformance, and are generally paid in the first quarter of each fiscal 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.

Non-Compensation Expense.Expenses. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, other operating expenses, and gains and/or losses associated with changes in the fair value of earnout liabilities. 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 primarily includes interest income and gains earned on non-marketable and investment securities, cash and cash equivalents, loans receivable from affiliates, employee loans, and commercial paper.

The following is a discussion of our results of operations for the three and nine months ended DecemberJune 31,30, 20252026 and 2024.2025.

Revenues were $717.1$511 million for the three months ended DecemberJune 31,30, 2025,2026, compared with $634.4$605 million for the three months ended DecemberJune 31,30, 2024,2025, representing ana increasedecrease of 13%.(16)%. The increasedecrease in revenues was primarily driven by higherlower revenues from our CF and FR business segments,segment, as described in further detail below.

OperatingCompensation expenses were $556.3$328 million for the three months ended DecemberJune 31,30, 2025,2026, compared with $498.3$393 million for the three months ended DecemberJune 31,30, 2024,2025, representing ana increasedecrease of 12%. Compensation expenses, as a component of operating expenses, were $458.6 million for the three months ended December 31, 2025, compared with $403.0 million for the three months ended December 31, 2024, representing an increase of 14%.(16)%. The increasedecrease was primarily a result of ana increasedecrease in revenues for the quarter when compared with the same quarter last year. The Compensation Ratio was 64.0%64.3% for the three months ended DecemberJune 31,30, 2025,2026, compared with 63.5%64.9% for the three months ended DecemberJune 31,30, 2024. Non-compensation expense, as a component of operating expenses, was $97.8 million for the three months ended December 31, 2025, compared with $95.4 million for the three months ended December 31, 2024, representing an increase of 3%.2025.

Other (income) expense, net was relatively flat at $(8.98) million for the three months ended DecemberJune 31,30, 2025,2026, compared with $(9.08) million for the three months ended DecemberJune 31,30, 2024.2025.

The provision for income taxes for the ninethree months ended DecemberJune 31,30, 20252026 was $101.9$8 million, which reflected an effective tax rate of 23.8%.10%. The provision for income taxes for the ninethree months ended DecemberJune 31,30, 20242025 was $103.3$0 million, which reflected an effective tax rate of 27.1%.1%. The decreaseincrease in the Company’s effective tax rate was primarily a result of increaseddecreased stock-based compensation deductions and decreased state taxes.deductions.

(3)As of the end of the respective reporting period.periods.

(4)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.one thousand dollars. References to closed transactions should be understood to be the same as transactions that are “effectively closed” as described in our annual2026 reportAnnual on Form 10-K.Report.

Revenues for CF were $473.7$303 million for the three months ended DecemberJune 31,30, 2025,2026, compared with $421.6$398 million for the three months ended DecemberJune 31,30, 2024,2025, representing ana increasedecrease of 12%.(24)%. Revenues increaseddecreased due to ana increasedecrease in the average transaction fee on closed transactions, which was driven by transaction mix and we believe does not represent a short-term trend in the average fee on closed transactions. Revenues also increased due to an increase in the number of closed transactions during the quarter, which was driven by favorable market conditions.

Segment profit for CF was $424.8$89 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $341.6$127 million for the ninethree months ended DecemberJune 31,30, 2024,2025, ana increasedecrease of 24%.(30)%. Profitability increaseddecreased primarily as a result of ana increasedecrease in revenues and lower non-compensation expenses as a percentage of revenues when compared to the same periodquarter last year.

Revenues for FR were $418.3$119 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $379.9$128 million for the ninethree months ended DecemberJune 31,30, 2024,2025, representing ana increasedecrease of 10%.(8)%. Revenues increaseddecreased primarily due to a decrease in the number of closed transactions. This was partially offset by an increase in the average transaction fee on closed transactions,transactions. whichThe reduction in transaction volume was driven by timing of transaction closings, while the higher average transaction fee on closed transactions resulted from transaction mix and we believe does not represent a trend in the average fee on closed transactions.trend.

Segment profit for FR was $151.3$42 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $144.3$43 million for the ninethree months ended DecemberJune 31,30, 2024,2025, ana increasedecrease of 5%.(4)%. Profitability increaseddecreased primarily as a result of ana increasedecrease in revenues, partially offset by higher compensation expenses as a percentage of revenues when compared to the same periodquarter last year.

Revenues for FVA were $252.7$89 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $229.0$79 million for the ninethree months ended DecemberJune 31,30, 2024,2025, representing an increase of 10%.13%. TheRevenues increase in revenues was primarilyincreased due to an increase in the number of Fee Events, driven by improvementsstrong inmarket thedemand M&Aacross markets.our service lines.

Segment profit for FVA was $65.2$23 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $60.4$18 million for the ninethree months ended DecemberJune 31,30, 2024,2025, an increase of 8%.34%. Profitability increased primarily as a result of increased revenues, partially offset by an increase in non-compensation expenses as a percentage of revenues when compared to the same periodquarter last year.

Corporate expenses were $239.4$76 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared with $184.8$98 million for the ninethree months ended DecemberJune 31,30, 2024.2025, Thisa 30%decrease increaseof was(22)%. drivenCorporate expenses decreased primarily byas increaseda compensationresult expenseof anda increaseddecrease in revaluation of acquisition contingent consideration and a decrease in depreciation and amortization when compared towith the same periodquarter last year.

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 DecemberJune 31,30, 20252026 and March 31, 2025,2026, we had $825.7$546 million and $686.2$860 million of cash and cash equivalents 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 and government debt securities. Please refer to Note 6 for further detail.

As of DecemberJune 31,30, 20252026 and March 31, 2025,2026, our unrestricted cash and cash equivalents and investment securities were as follows:

Our liquidity is highly dependent upon cash receipts from clients that are generally dependent upon the successful completion of transactions,transactions as well as the timing of receivables collections, which typically occur within 60 days of billing. As of DecemberJune 31,30, 2025,2026, accountsAccounts receivable, net of allowance for credit losses was $210.9$224 million. As of DecemberJune 31,30, 2025,2026, unbilledUnbilled work in progress, net of allowance for credit losses was $232.7$255 million.

On August 23, 2019, the Company entered into a syndicated revolving line of credit with Bank of America, N.A. and certain other financial institutions party thereto, which was amended by the First Amendment to Credit Agreement dated as of August 2, 2022, and further amended by the Second Amendment to Credit Agreement ondated as of August 19, 2025 (as amended, the "HLI Line of Credit"). The HLI Line of Credit allows for borrowings of up to $150 million (and, subject to certain conditions, provides the Company with an uncommitted expansion option, which, if exercised in full, would provide for a total credit facility of $200 million), and matures on August 19, 2030 (or if such date is not a business day, the immediately preceding business day). Borrowings under the HLI Line of Credit bear interest at a floating rate, which can be either, at the Company's option, (i) a term Secured Overnight Financing Rate ("SOFR") plus a 0.95% margin per annum or (ii) a base rate, which is the highest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) a term SOFR rate plus a 1.00% margin. Commitment fees apply to unused amounts. The HLI Line of Credit contains certain financial covenants and other restrictions, including a financial loan covenant to maintain a consolidated leverage ratio of less than 2.00 to 1.00. As of DecemberJune 31,30, 2025,2026, we were, and expect to continue to be, in compliance with the financialsuch covenants. As of DecemberJune 31,30, 20252026 and March 31, 2025,2026, no principal was outstanding under the HLI Line of Credit.

The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligationsobligations, relating toincluding notes payable and contingent consideration issued in connection with businesses previously acquired (see Note 10 included in Part I, Item 1 of this Form 10-Q).acquired.

NineThree Months Ended DecemberJune 31,30, 20252026

Operating activities resulted in a net inflowoutflow of $411.1$(336) million, primarily attributable to net income, partially offset by changes in our operating assets and liabilities, which includes the cash bonus payments in May 2025.2026. Investing activities resulted in a net inflow of $51.8$112 million, primarily attributable to sales or maturities of investment securities, partially offset by purchases of investment securities and purchases of property and equipment.securities. Financing activities resulted in a net outflow of $400.2$(217) million, primarily attributable to payments made to settle employee tax obligations on share-based awards, dividends paid, and share repurchases.

NineThree Months Ended DecemberJune 31,30, 20242025

Operating activities resulted in a net outflow of $(132) million, primarily attributable to cash bonus payments in May 2025. Investing activities resulted in a net inflow of $490.2$110 million, primarily attributable to netsales income,or partially offset by cash bonus payments paid in May 2024. Investing activities resulted in a net outflow of $158.7 million, primarily attributable to the purchasematurities of investment securities and several acquisitions closing during the nine months ended December 31, 2024.securities. Financing activities resulted in a net outflow of $238.0$(197) million, primarily attributable to dividends paid and payments made to settle employee tax obligations on share-based awards.awards and dividends paid.

There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are included in Item 7 of our 20252026 Annual Report. We entered into a new routine lease commitment during the quarter to support ongoing operations (see Note 16 included in Part I, Item 1 of this Form 10-Q).

During the ninethree months ended DecemberJune 31,30, 2025,2026, there were no significant changes to our critical accounting policies and estimates. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our 2026 Annual Report on Form 10-K for the year ended March 31, 2025,Report, for a more complete discussion of our critical accounting policies and estimates.