Hamilton Lane INC

Previous wording

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised $94.5 billion of our assets under management (“AUM”) as of June 30, 2024.

Current wording

•Customized Separate Accounts: We design and build customized portfolios of private markets funds and direct investments to meet our clients’ specific portfolio objectives with regard to return, risk tolerance, diversification and liquidity. We generally have discretionary investment authority over our customized separate accounts, which comprised $95.1 billion of our assets under management (“AUM”) as of September 30, 2024.

Previous wording

•Specialized Funds: We organize, invest and manage specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised $35.2 billion of our AUM as of June 30, 2024.

Current wording

•Specialized Funds: We organize, invest and manage specialized primary, secondary and direct investment funds. Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds. We launched our first specialized fund in 1997. Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals. Specialized funds comprised $36.2 billion of our AUM as of September 30, 2024.

Previous wording

•Advisory Services: We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had $810.4 billion of assets under advisement (“AUA”) as of June 30, 2024.

Current wording

•Advisory Services: We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs. Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of the largest and most sophisticated private markets investors in the world. We had $816.1 billion of assets under advisement (“AUA”) as of September 30, 2024.

Previous wording

Non-operating gain consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

Current wording

Non-operating gain (loss)consists primarily of gains and losses on certain investments, changes in liability under the tax receivable agreement and other non-recurring or non-cash items.

Previous wording

Non-controlling interests reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. NCI are presented as separate components in our Condensed Consolidated Statements of Income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Current wording

NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us. NCI are presented as separate components in our Condensed Consolidated Statements of Income to clearly distinguish between our interests and the economic interests of third parties and employees in those entities.

Previous wording

The following is a discussion of our consolidated results of operations for the three months ended June 30, 2024 and 2023. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.

Current wording

The following is a discussion of our consolidated results of operations for the three and six months ended September 30, 2024 and 2023. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.

Previous wording

Three Months Ended June 30, 2024 and 2023

Current wording

Total revenues increased $23.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to increases in both management and advisory fees and incentive fees.

Previous wording

Management and advisory fees increased $34.6 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Specialized funds revenue increased $32.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to an increase of $23.4 million in revenue from our latest secondary fund and an increase of $11.2 million in revenue from our evergreen funds, which added $3.1 billion and $3.3 billion, respectively, in fee-earning AUM between periods. Revenue from our latest secondary fund included $20.7 million in retroactive fees for the three months ended June 30, 2024 compared to $3.9 million in retroactive fees for the three months ended June 30, 2023. Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period. Customized separate accounts revenue increased $1.7 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to the addition of several new accounts, additional allocations from existing accounts, and continued investment activity. Reporting, monitoring, data and analytics revenue increased by $1.4 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due to increased subscriptions of our technology solutions.

Current wording

Specialized funds revenue increased $7.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due primarily to an increase of $12.1 million in revenue from our evergreen funds, which added $3.6 billion in fee-earning AUM between periods. The increase was partially offset by a net decrease of $1.3 million in revenue from our latest secondary fund compared to the three months ended September 30, 2023 due to $6.1 million of retroactive fees in the prior year period. Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period.

Previous wording

Incentive fees increased $37.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to an increase in incentive fees from the increased tax-related portion of carried interest distributions in the current period and the proceeds realized on the sale of an underlying investment in one of our specialized funds that has an American waterfall.

Current wording

Incentive fees increased $49.7 million for the six months ended September 30, 2024 compared to the six months ended September 30, 2023, due primarily to an increase in incentive fees from the increased tax-related portion of carried interest distributions in the current period and the proceeds realized on the sale of an underlying investment in one of our specialized funds that has an American waterfall.

Previous wording

The following table shows expenses of the Company (excluding consolidated VIEs):

Current wording

The following tables show expenses of the Company (excluding consolidated VIEs):

Previous wording

Total expenses increased $36.9 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Current wording

Total expenses increased $11.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due to increases in both compensation and benefits expenses and general, administrative and other expenses.

Previous wording

Compensation and benefits expenses increased $34.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to an increase in base compensation and benefits and an increase in incentive fee compensation. Base compensation and benefits increased $24.7 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to increases in our annual bonus plan accrual related to stronger operating performance and increased incentive fees compared to the prior year period. Incentive fee compensation increased $9.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due to the increase in incentive fee revenue.

Current wording

Compensation and benefits expenses increased $43.5 million for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. Base compensation and benefits increased $29.1 million, due primarily to increases in headcount, an increase in our annual bonus plan accrual related to stronger operating performance and increased incentive fees compared to the prior year period. Incentive fee compensation increased $12.4 million for the six months ended September 30, 2024, due to an increase in incentive fee revenue compared to the prior year period. Equity-based compensation increased $1.9 million for the six months ended September 30, 2024, driven primarily by the awards granted between September 30, 2023 and September 30, 2024.

Previous wording

General, administrative and other expenses increased $2.6 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This change consisted primarily of an increase of $0.8 million in third-party commissions attributed primarily to the increase in gross subscriptions to our evergreen funds, an increase of $0.7 million in consulting and professional fees and an increase of $0.7 million in conferences and marketing expenses.

Current wording

General, administrative and other expenses increased $5.5 million for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. This change consisted primarily of an increase of $1.4 million in consulting and professional fees, an increase of $1.3 million in fund reimbursement expense attributed to the timing of newly created funds and an increase of $1.2 million in third-party commissions primarily attributed to the increase in gross subscriptions to our evergreen funds.

Previous wording

Other income (expense) increased $4.9 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to an increase in non-operating gain, partially offset by a decrease in equity in income of investees.

Current wording

Other income (expense) increased $1.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, due primarily to an increase in non-operating gain (loss), partially offset by a decrease in equity in income of investees.

Previous wording

Non-operating gain increased $9.6 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to the recognition of an $8.4 million fair value adjustment on an investment during the three months ended June 30, 2024.

Current wording

Non-operating gain (loss) increased $2.7 million for the three months ended September 30, 2024, due primarily to the recognition of $2.0 million in gains on a publicly traded technology investment during the three months ended September 30, 2024, compared to the recognition of $1.2 million of unrealized losses on a technology investment in the three months ended September 30, 2023.

Previous wording

Equity in income of investees decreased $4.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This was due primarily to smaller increases in investment valuations during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Equity in income of investees decreased $1.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This was due primarily to smaller increases in investment valuations during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

Total other income of consolidated VIEs decreased $0.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, due primarily to the decrease in interest income, partially offset by an increase in equity in income of investees. Equity in income of investees increased by $0.8 million due primarily to the increases in public market valuations during the period. Interest income decreased $1.7 million due primarily to interest income of investments earned by a consolidated Partnership prior to its deconsolidation in fiscal 2024.

Current wording

Other income (expense) of consolidated VIEs decreased $2.5 million for the six months ended September 30, 2024 compared to the six months ended September 30, 2023, due primarily to $4.5 million of interest income earned during the six months ended September 30, 2023 by a previously consolidated credit fund, partially offset by an increase of $1.5 million of equity in income of investees due primarily to the increases in public market valuations during the six months ended September 30, 2024.

Previous wording

Our effective tax rate was 18.5% and 24.2% for the three months ended June 30, 2024 and 2023, respectively. These rates were different from the statutory tax rates due to the portion of income allocated to NCI, a valuation allowance recorded against deferred tax assets and discrete tax adjustments. The effective tax rate for the three months ended June 30, 2024 was lower than the effective tax rate for the three months ended June 30, 2023 due primarily to a lower valuation allowance against deferred tax assets not expected to be realized at June 30, 2024.

Current wording

Our effective tax rate was 1.5% and 2.8% for the three months ended September 30, 2024 and 2023, respectively, and 11.3% and 13.6% for the six months ended September 30, 2024 and 2023, respectively. These rates were different from the statutory tax rates due to the portion of income allocated to NCI, change in valuation allowance recorded against deferred tax assets and discrete tax adjustments recorded in the periods. The effective tax rate for the three and six months ended September 30, 2024 was lower than the effective tax rate for the three and six months ended September 30, 2023 due primarily to a reduction in valuation allowance against deferred tax assets at September 30, 2024.

Previous wording

Net income attributable to NCI increased by $7.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was driven primarily by the allocation of net income to NCI holders based upon their economic ownership percentages, partially offset by our increased economic ownership percentage in Hamilton Lane Advisors, L.L.C. during fiscal 2024.

Current wording

Net income attributable to NCI decreased by $1.6 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was driven primarily by NCI in consolidated funds decreasing by $3.1 million, due to a previously consolidated credit fund for which NCI holders held a larger economic ownership in the period ended September 30, 2023, compared to the funds consolidated during the period ended September 30, 2024. NCI in Hamilton Lane Advisors, L.L.C. increased by $1.2 million due to an overall increase in net income, partially offset by a decrease in NCI holders’ economic ownership percentage of Hamilton Lane Advisors, L.L.C. between periods.

Previous wording

Customized separate accounts fee-earning AUM increased $0.6 billion during the three months ended June 30, 2024. Customized separate accounts contributions were $1.6 billion for the three months ended June 30, 2024, due primarily to new allocations from existing clients and the addition of new clients. Distributions were $1.0 billion for the three months ended June 30, 2024 due primarily to $0.4 billion from accounts moving from a committed to net invested capital fee base, $0.3 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $0.2 billion from accounts reaching the end of their fund term.

Current wording

Customized separate accounts fee-earning AUM increased $1.8 billion for the six months ended September 30, 2024. Customized separate accounts contributions were $3.3 billion for the six months ended September 30, 2024, due primarily to new allocations from existing clients and the addition of new clients. Distributions were $1.5 billion for the six months ended September 30, 2024, due primarily to $0.7 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, $0.6 billion from accounts moving from a committed to net invested capital fee base, and $0.2 billion from accounts reaching the end of their fund term.

Previous wording

Specialized funds fee-earning AUM increased $1.3 billion, during the three months ended June 30, 2024. Specialized fund contributions were $2.6 billion for the three months ended June 30, 2024, due primarily to $1.2 billion from our latest secondary fund and $1.1 billion from our evergreen funds. Distributions were $1.3 billion for the three months ended June 30, 2024, due primarily to $0.9 billion from accounts reaching the end of their fund term and $0.3 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base.

Current wording

Specialized funds fee-earning AUM increased $2.2 billion for the six months ended September 30, 2024. Specialized fund contributions were $4.0 billion for the six months ended September 30, 2024, due primarily to $2.0 billion from our evergreen funds and $1.2 billion from our latest secondary fund. Distributions were $2.1 billion for the six months ended September 30, 2024 due primarily to $1.1 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.9 billion from accounts reaching the end of their fund term.

Previous wording

Fee Related Earnings (“FRE”) is used to highlight earnings from recurring management fees. FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) non-operating gain and (f) certain other significant items that we believe are not indicative of our core performance. We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business. FRE is presented before income taxes.

Current wording

Fee Related Earnings (“FRE”) is used to highlight earnings from recurring management fees. FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) non-operating gain (loss) and (f) certain other significant items that we believe are not indicative of our core performance. We believe FRE is useful to investors because it provides additional insight into the operating profitability of our business. FRE is presented before income taxes.

Previous wording

Adjusted EBITDA is an internal measure of profitability. We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods. Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) non-operating gain and (f) certain other significant items that we believe are not indicative of our core performance.

Current wording

Adjusted EBITDA is an internal measure of profitability. We believe Adjusted EBITDA is useful to investors because it enables them to better evaluate the performance of our core business across reporting periods. Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e) non-operating gain (loss) and (f) certain other significant items that we believe are not indicative of our core performance.

Previous wording

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to FRE and Adjusted EBITDA for the three months ended June 30, 2024 and 2023:

Current wording

The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to FRE and Adjusted EBITDA for the three and six months ended September 30, 2024 and 2023:

Previous wording

Non-GAAP earnings per share measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI. Non-GAAP earnings per share is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate and excludes any impact of changes in carrying amount of our redeemable NCI. Adjusted shares outstanding for the three months ended June 30, 2024 and 2023 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP earnings per share are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.

Current wording

Non-GAAP earnings per share (“EPS”) measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI. Non-GAAP EPS is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate and excludes any impact of changes in carrying amount of our redeemable NCI. Adjusted shares outstanding for the three and six months ended September 30, 2024 and 2023 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP earnings per share are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.

Previous wording

The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated for the three months ended June 30, 2024 and 2023:

Current wording

The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated for the three and six months ended September 30, 2024 and 2023:

Previous wording

(1) Represents corporate income taxes at our estimated statutory tax rate of 23.4% and 23.6% for the three months ended June 30, 2024 and 2023, respectively, applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%.

Current wording

(1) Represents corporate income taxes at our estimated statutory tax rate of 23.4% and 23.6% for the three and six months ended September 30, 2024 and 2023, respectively, applied to adjusted pre-tax net income. The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The 23.6% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.6%.

Previous wording

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of June 30, 2024 and March 31, 2024, our cash and cash equivalents were $151.7 million and $114.6 million, respectively.

Current wording

We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues. Our primary cash flow activities involve: (1) generating cash flow from operations, which largely includes management and advisory fees; (2) realizations generated from our investment activities; (3) funding capital commitments that we have made to certain of our specialized funds and customized separate accounts; (4) making dividend payments to our stockholders and distributions to holders of HLA units; and (5) borrowings, interest payments and repayments under our outstanding debt. As of September 30, 2024 and March 31, 2024, our cash and cash equivalents were $193.8 million and $114.6 million, respectively.

Previous wording

We maintain a Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”), a 2020 Multi-Draw Term Loan and Security Agreement (as amended, the “2020 Multi-Draw Term Loan Agreement”) and a 2022 Multi-Draw Term Loan and Security Agreement (the “2022 Multi-Draw Term Loan Agreement” and, together with the Term Loan Agreement, Revolving Loan Agreement and 2020 Multi-Draw Term Loan Agreement, the “Loan Agreements”) with JPMorgan Chase & Co. (“JPMorgan”), as successor to First Republic Bank. In early May 2023, JPMorgan announced its purchase of First Republic Bank after that bank’s failure. The purchase included the Loan Agreements. The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

Current wording

We maintain a Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), Revolving Loan and Security Agreement (as amended, the “Revolving Loan Agreement”), a 2020 Multi-Draw Term Loan and Security Agreement (as amended, the “2020 Multi-Draw Term Loan Agreement”) and a 2022 Multi-Draw Term Loan and Security Agreement (the “2022 Multi-Draw Term Loan Agreement” and, together with the Term Loan Agreement, Revolving Loan Agreement and 2020 Multi-Draw Term Loan Agreement, the “Loan Agreements”) with JPMorgan Chase Bank, N.A. (“JPMorgan”). On October 7, 2024, HLA and JPMorgan amended each of the Loan Agreements in connection with HLA’s entry into the Note Purchase Agreement. The amendments included naming JP Morgan Chase Bank, N.A. as the successor-in-interest to First Republic Bank, updating the maturity dates for the Loan Agreements and allowing for incurring additional indebtedness. The Loan Agreements are cross-collateralized and cross-defaulted and the aggregate principal amount of loans that may be outstanding under all of the Loan Agreements is subject to an aggregate cap of $325 million (the “Cap”).

Previous wording

The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 3.00%. As of June 30, 2024, we did not have an outstanding balance under the 2022 Multi-Draw Term Loan Agreement. We are entitled to request term loans not to exceed $75 million in the aggregate, subject to the Cap, through September 30, 2025.

Current wording

The 2022 Multi-Draw Term Loan Agreement has a maturity date of the earlier of (i) five business days prior to the earlier of the date the Notes or any subsequent notes are repaid or (ii) October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 3.00%. As of September 30, 2024, we did not have an outstanding balance under the 2022 Multi-Draw Term Loan Agreement. We are entitled to request term loans not to exceed $75 million in the aggregate, subject to the Cap, through September 30, 2025.

Previous wording

The Term Loan Agreement has a maturity date of January 1, 2030 and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of June 30, 2024, we had an outstanding balance of $96 million under the Term Loan Agreement. We were entitled to request additional uncommitted term advances not to exceed $25 million in the aggregate, subject to the Cap, through December 31, 2023.

Current wording

The Term Loan Agreement has a maturity date of the earlier of (i) five business days prior to the earlier of the date the Notes or any subsequent notes are repaid or (ii) July 1, 2029, and the interest rate is a floating per annum rate equal to the prime rate minus 1.25% subject to a floor of 3.00%. As of September 30, 2024, we had an outstanding balance of $96 million under the Term Loan Agreement.

Previous wording

The Revolving Loan Agreement provides that the aggregate outstanding balance will not exceed $50 million, subject to the Cap, and has a maturity date of March 24, 2025. The interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. As of June 30, 2024, we did not have an outstanding balance under the Revolving Loan Agreement.

Current wording

The Revolving Loan Agreement provides that the aggregate outstanding balance will not exceed $50 million, subject to the Cap, and has a maturity date of the earlier of (i) five business days prior to the earlier of the date the Notes or any subsequent notes are repaid or (ii) October 7, 2027. The interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. As of September 30, 2024, we did not have an outstanding balance under the Revolving Loan Agreement.

Previous wording

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of July 1, 2030. The interest rate is a fixed per annum rate of 3.50%. As of June 30, 2024, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.

Current wording

The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of the earlier of (i) five business days prior to the earlier of the date the Notes or any subsequent notes are repaid, or (ii) April 1, 2030. The interest rate is a fixed per annum rate of 3.50%. As of September 30, 2024, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.

Previous wording

The Loan Agreements contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of June 30, 2024 and March 31, 2024, the principal amount of debt outstanding equaled $196.3 million and $196.9 million, respectively. We had $128.8 million in availability under the Loan Agreements as of June 30, 2024.

Current wording

The Loan Agreements and Note Purchase Agreement contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees. The Loan Agreements also require HLA to maintain, among other requirements, (i) a specified amount of management fees, (ii) a specified amount of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified minimum tangible net worth, during the term of each of the Loan Agreements. The Note Purchase Agreement requires HLA to maintain (i) a consolidated leverage ratio within a specified range and (ii) specified amounts of management fees, (as described in the Note Purchase Agreement). The obligations under the Loan Agreements are secured by substantially all the assets of HLA. As of September 30, 2024 and March 31, 2024, the principal amount of debt outstanding equaled $195.6 million and $196.9 million, respectively. We had $125.0 million in availability under the Loan Agreements as of September 30, 2024.

Previous wording

We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets for working capital or to use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement. The timing or size of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs. There can be no assurance that any such transactions will be completed on favorable terms, or at all.

Current wording

We will also continue to evaluate opportunities, based on market conditions, to access the capital markets for working capital or to use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement. The timing or size of any potential transactions will depend on a number of factors, including market opportunities and our views regarding our capital and liquidity positions and potential future needs. There can be no assurance that any such transactions will be completed on favorable terms, or at all.

Previous wording

We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary. These net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of June 30, 2024 and March 31, 2024, we were required to maintain approximately $4.8 million and approximately $5.0 million, respectively, in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.

Current wording

We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary. These net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of September 30, 2024 and March 31, 2024, we were required to maintain approximately $5.9 million and approximately $5.0 million, respectively, in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.

Previous wording

Operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income of investees, equity-based compensation, lease expense and depreciation and amortization, all of which are included in earnings. For the three months ended June 30, 2024 and 2023, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.

Current wording

Operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income of investees, equity-based compensation, lease expense and depreciation and amortization, all of which are included in earnings. For the six months ended September 30, 2024 and 2023, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.

Previous wording

Investing activities generally reflect cash used for acquisitions, fixed asset purchases and contributions to and distributions from our funds. For the three months ended June 30, 2024 and 2023, our net cash provided by (used in) investing activities was driven primarily by purchases of furniture, fixtures and equipment, net contributions to our funds, cash from consolidating funds and purchases of non-fund investments.

Current wording

Investing activities generally reflect cash used for acquisitions, fixed asset purchases and contributions to and distributions from our funds. For the six months ended September 30, 2024 and 2023, our net cash used in investing activities was driven primarily by purchases of furniture, fixtures and equipment, net contributions to our funds and purchase of investments by consolidated funds, partially offset by cash from consolidating funds.

Previous wording

Financing activities generally reflect cash received from debt and equity financings, payments to owners in the form of dividends, distributions and repurchases of shares and scheduled repayments of our outstanding debt. For the three months ended June 30, 2024 and 2023, our net cash used in financing activities was driven primarily by dividends paid to stockholders and distributions to HLA members. Additionally, the three months ended June 30, 2023 included draw-downs and repayment of borrowings under our Revolving Loan Agreement and contributions from NCI interest in our previously consolidated fund.

Current wording

Financing activities generally reflect cash received from debt and equity financings, payments to owners in the form of dividends, distributions and repurchases of shares and scheduled repayments of our outstanding debt. For the six months ended September 30, 2024 and 2023, our net cash (used in) provided by financing activities was driven primarily by dividends paid to stockholders, distributions to HLA members and contributions from NCI in consolidated funds. Net cash (used in) provided by financing activities for the six months ended September 30, 2023 was also impacted by repayment of our outstanding debt.