Huron Announces Second Quarter 2019 Financial Results and Updates 2019 Guidance

SECOND QUARTER 2019 HIGHLIGHTS

  • Revenues increased $23.2 million, or 11.7%, to $220.8 million in Q2 2019 from $197.5 million in Q2 2018.
  • Net income from continuing operations increased $4.7 million, or 80.3%, to $10.6 million in Q2 2019 from $5.9 million in Q2 2018.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $4.5 million, or 18.4%, to $29.2 million in Q2 2019 from $24.7 million in Q2 2018.
  • Diluted earnings per share from continuing operations increased $0.20, or 74.1%, to $0.47 in Q2 2019 from $0.27 in Q2 2018.
  • Adjusted diluted earnings per share from continuing operations(7), a non-GAAP measure, increased $0.18, or 31.0%, to $0.76 in Q2 2019 from $0.58 in Q2 2018.

YEAR-TO-DATE 2019 HIGHLIGHTS AND 2019 GUIDANCE

  • Revenues increased $34.0 million, or 8.7%, to $425.2 million for the first six months of 2019 from $391.2 million for the same prior year period.
  • Net income from continuing operations increased $11.3 million to $13.9 million for the first six months of 2019 from $2.6 million for the same prior year period.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $8.8 million, or 23.1%, to $47.2 million for the first six months of 2019 from $38.4 million for the first six months of 2018.
  • Diluted earnings per share from continuing operations increased $0.50 to $0.62 for the first six months of 2019 from $0.12 for the first six months of 2018.
  • Adjusted diluted earnings per share from continuing operations(7), a non-GAAP measure, increased $0.38, or 48.7%, to $1.16 for the first six months of 2019 from $0.78 for the same prior year period.
  • Huron updates its previous earnings guidance range for full year 2019, including revenue expectations in a range of $830.0 million to $860.0 million.

 

CHICAGO--()--Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the second quarter ended June 30, 2019.

We continue to drive organic growth across all of our operating segments, led by strong quarterly performance in our Healthcare and Education businesses,” said James H. Roth, chief executive officer of Huron. “As reflected in our updated annual guidance, we remain encouraged about our prospects for continued growth during 2019.”

SECOND QUARTER 2019 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $23.2 million, or 11.7%, to $220.8 million for the second quarter of 2019, compared to $197.5 million for the second quarter of 2018.

Net income from continuing operations increased $4.7 million, or 80.3%, to $10.6 million for the second quarter of 2019, compared to $5.9 million for the same quarter last year. Diluted earnings per share from continuing operations increased $0.20, or 74.1%, to $0.47 for the second quarter of 2019, compared to $0.27 for the second quarter of 2018.

Second quarter 2019 earnings before interest, taxes, depreciation and amortization (“EBITDA”)(7) increased $3.6 million, or 15.3%, to $26.9 million from $23.3 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Three Months Ended
June 30,

 

2019

 

2018

Amortization of intangible assets

$

4,314

 

 

$

5,996

 

Restructuring charges

$

754

 

 

$

1,984

 

Litigation and other gains, net

$

(485

)

 

$

(6,707

)

Non-cash interest on convertible notes

$

2,145

 

 

$

2,046

 

Loss on sale of business

$

 

 

$

5,831

 

Transaction-related expenses

$

2,050

 

 

$

 

Tax effect of adjustments

$

(2,282

)

 

$

(2,232

)

Foreign currency transaction gains, net

$

4

 

 

$

240

 

To permit comparability with prior periods, the company excluded the impact of transaction-related expenses, consisting of third-party legal and accounting fees related to the evaluation of a potential acquisition that ultimately did not consummate.

Adjusted EBITDA(7) increased $4.5 million, or 18.4%, to $29.2 million, or 13.2% of revenues, in the second quarter of 2019, from $24.7 million, or 12.5% of revenues, in the same quarter last year. Adjusted net income from continuing operations(7) increased $4.3 million to $17.1 million, or $0.76 per diluted share, for the second quarter of 2019, from $12.8 million, or $0.58 per diluted share, for the same quarter in 2018.

The average number of full-time billable consultants(1) increased 11.0% to 2,362 in the second quarter of 2019 from 2,127 in the same quarter last year. Full-time billable consultant utilization rate(2) was 77.2% during the second quarter of 2019, compared to 76.2% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $206 for the second quarter of 2019, compared to $205 for the second quarter of 2018. The average number of full-time equivalent professionals(6) was 327 in the second quarter of 2019, compared to 278 for the same period in 2018.

YEAR-TO-DATE 2019 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $34.0 million, or 8.7%, to $425.2 million for the first six months of 2019, compared to $391.2 million for the first six months of 2018.

Net income from continuing operations increased $11.3 million to $13.9 million for the first six months of 2019, compared to $2.6 million for the same prior year period. Diluted earnings per share from continuing operations increased $0.50 to $0.62 for the first six months of 2019 compared to $0.12 for the first six months of 2018.

EBITDA(7) increased $8.6 million, or 24.3%, to $44.2 million from $35.5 million in the same prior year period.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Six Months Ended
June 30,

 

2019

 

2018

Amortization of intangible assets

$

8,831

 

 

$

12,299

 

Restructuring charges

$

2,029

 

 

$

2,696

 

Litigation and other gains, net

$

(941

)

 

$

(5,877

)

Non-cash interest on convertible notes

$

4,265

 

 

$

4,067

 

Loss on sale of business

$

 

 

$

5,831

 

Transaction-related expenses

$

2,050

 

 

$

 

Tax effect of adjustments

$

(4,235

)

 

$

(4,797

)

Tax expense related to the enactment of Tax Cut and Jobs Act of 2017

$

 

 

$

132

 

Foreign currency transaction losses (gains), net

$

(78

)

 

$

187

 

To permit comparability with prior periods, the company excluded the impact of transaction-related expenses, consisting of third-party legal and accounting fees related to the evaluation of a potential acquisition that ultimately did not consummate.

Adjusted EBITDA(7) increased $8.8 million, or 23.1%, to $47.2 million, or 11.1% of revenues, for the first six months of 2019, from $38.4 million, or 9.8% of revenues, for the same prior year period. Adjusted net income from continuing operations(7) increased $8.9 million to $25.9 million, or $1.16 per diluted share, for the first six months of 2019, from $17.0 million, or $0.78 per diluted share, for the first six months of 2018.

The average number of full-time billable consultants(1) increased 9.2% to 2,326 in the first six months of 2019 from 2,131 in the same prior year period. Full-time billable consultant utilization rate(2) was 76.6% during the first six months of 2019, compared to 75.0% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $208 for the first six months of 2019, compared to $205 for the first six months of 2018. The average number of full-time equivalent professionals(6) was 297 in the first six months of 2019, compared to 271 for the same prior year period.

OPERATING SEGMENTS

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s year-to-date 2019 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (46%); Business Advisory (28%); and Education (26%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended June 30, 2019.

OUTLOOK FOR 2019

Based on currently available information, the company is updating guidance for full year 2019 revenues before reimbursable expenses in a range of $830.0 million to $860.0 million. The company also anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per share to increase 15% to 25% over 2018.

Management will provide a more detailed discussion of its outlook during the company’s earnings conference call webcast.

SECOND QUARTER 2019 WEBCAST

The company will host a webcast to discuss its financial results today, July 30, 2019, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ and can be accessed from Huron's website at https://ir.huronconsultinggroup.com/. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES(7)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and non-GAAP adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items are not provided. Management is unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global consultancy that helps its clients drive growth, enhance performance and sustain leadership in the markets they serve. The company partners with clients to develop strategies and implement solutions that enable the transformative change its clients need to own their future. Learn more at www.huronconsultinggroup.com.

Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2018, that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

220,754

 

 

$

197,544

 

 

$

425,199

 

 

$

391,223

 

Reimbursable expenses

23,534

 

 

20,733

 

 

42,151

 

 

38,352

 

Total revenues and reimbursable expenses

244,288

 

 

218,277

 

 

467,350

 

 

429,575

 

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

 

 

 

 

 

 

 

Direct costs

141,628

 

 

127,574

 

 

279,408

 

 

260,360

 

Amortization of intangible assets and software development costs

1,171

 

 

968

 

 

2,288

 

 

2,186

 

Reimbursable expenses

23,657

 

 

20,915

 

 

42,326

 

 

38,464

 

Total direct costs and reimbursable expenses

166,456

 

 

149,457

 

 

324,022

 

 

301,010

 

Operating expenses and other gains, net:

 

 

 

 

 

 

 

Selling, general and administrative expenses

52,537

 

 

45,488

 

 

103,286

 

 

92,566

 

Restructuring charges

754

 

 

1,984

 

 

2,029

 

 

2,696

 

Litigation and other gains, net

(485

)

 

(6,707

)

 

(941

)

 

(5,877

)

Depreciation and amortization

7,151

 

 

8,917

 

 

14,323

 

 

17,720

 

Total operating expenses and other gains, net

59,957

 

 

49,682

 

 

118,697

 

 

107,105

 

Operating income

17,875

 

 

19,138

 

 

24,631

 

 

21,460

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

(4,524

)

 

(5,022

)

 

(8,782

)

 

(10,008

)

Other income (expense), net

695

 

 

(5,693

)

 

2,912

 

 

(5,838

)

Total other expense, net

(3,829

)

 

(10,715

)

 

(5,870

)

 

(15,846

)

Income from continuing operations before taxes

14,046

 

 

8,423

 

 

18,761

 

 

5,614

 

Income tax expense

3,477

 

 

2,561

 

 

4,842

 

 

2,974

 

Net income from continuing operations

10,569

 

 

5,862

 

 

13,919

 

 

2,640

 

Loss from discontinued operations, net of tax

(97

)

 

(490

)

 

(143

)

 

(532

)

Net income

$

10,472

 

 

$

5,372

 

 

$

13,776

 

 

$

2,108

 

Net earnings per basic share:

 

 

 

 

 

 

 

Net income from continuing operations

$

0.48

 

 

$

0.27

 

 

$

0.63

 

 

$

0.12

 

Loss from discontinued operations, net of tax

 

 

(0.02

)

 

 

 

(0.02

)

Net income

$

0.48

 

 

$

0.25

 

 

$

0.63

 

 

$

0.10

 

Net earnings per diluted share:

 

 

 

 

 

 

 

Net income from continuing operations

$

0.47

 

 

$

0.27

 

 

$

0.62

 

 

$

0.12

 

Loss from discontinued operations, net of tax

 

 

(0.02

)

 

 

 

(0.02

)

Net income

$

0.47

 

 

$

0.25

 

 

$

0.62

 

 

$

0.10

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

21,997

 

 

21,709

 

 

21,933

 

 

21,651

 

Diluted

22,400

 

 

21,918

 

 

22,356

 

 

21,866

 

Comprehensive income:

 

 

 

 

 

 

 

Net income

$

10,472

 

 

$

5,372

 

 

$

13,776

 

 

$

2,108

 

Foreign currency translation adjustments, net of tax

(359

)

 

(954

)

 

(43

)

 

(920

)

Unrealized gain on investment, net of tax

3,915

 

 

3,159

 

 

6,572

 

 

5,325

 

Unrealized gain (loss) on cash flow hedging instruments, net of tax

(612

)

 

183

 

 

(849

)

 

615

 

Other comprehensive income

2,944

 

 

2,388

 

 

5,680

 

 

5,020

 

Comprehensive income

$

13,416

 

$

7,760

 

$

19,456

 

 

$

7,128

 

HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)

 

 

June 30,
2019

 

December 31,
2018

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

9,177

 

 

$

33,107

 

Receivables from clients, net

116,665

 

 

109,677

 

Unbilled services, net

91,751

 

 

69,613

 

Income tax receivable

846

 

 

6,612

 

Prepaid expenses and other current assets

14,766

 

 

13,922

 

Total current assets

233,205

 

 

232,931

 

Property and equipment, net

40,189

 

 

40,374

 

Deferred income taxes, net

1,094

 

 

2,153

 

Long-term investment

59,357

 

 

50,429

 

Operating lease right-of-use assets

55,045

 

 

 

Other non-current assets

41,482

 

 

30,525

 

Intangible assets, net

39,037

 

 

47,857

 

Goodwill

645,266

 

 

645,263

 

Total assets

$

1,114,675

 

 

$

1,049,532

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,456

 

 

$

10,020

 

Accrued expenses and other current liabilities

20,663

 

 

17,207

 

Accrued payroll and related benefits

78,619

 

 

109,825

 

Accrued contingent consideration for business acquisitions

535

 

 

9,991

 

Current maturities of long-term debt

248,034

 

 

243,132

 

Current maturities of operating lease liabilities

10,536

 

 

 

Deferred revenues

27,575

 

 

28,130

 

Total current liabilities

395,418

 

 

418,305

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

27,367

 

 

20,875

 

Accrued contingent consideration for business acquisitions, net of current portion

95

 

 

1,450

 

Long-term debt, net of current portion

59,590

 

 

53,853

 

Operating lease liabilities, net of current portion

62,130

 

 

 

Deferred lease incentives

 

 

13,693

 

Deferred income taxes, net

1,714

 

 

732

 

Total non-current liabilities

150,896

 

 

90,603

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 25,316,458 and 25,114,739 shares issued at June 30, 2019 and December 31, 2018, respectively

247

 

 

244

 

Treasury stock, at cost, 2,399,279 and 2,568,288 shares at June 30, 2019 and December 31, 2018, respectively

(127,133

)

 

(124,794

)

Additional paid-in capital

463,190

 

 

452,573

 

Retained earnings

209,882

 

 

196,106

 

Accumulated other comprehensive income

22,175

 

 

16,495

 

Total stockholders’ equity

568,361

 

 

540,624

 

Total liabilities and stockholders’ equity

$

1,114,675

 

 

$

1,049,532

 

HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 

 

Six Months Ended
June 30,

 

2019

 

2018

Cash flows from operating activities:

 

 

 

Net income

$

13,776

 

 

$

2,108

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

21,682

 

 

20,394

 

Lease impairment charge

805

 

 

 

Share-based compensation

11,483

 

 

9,117

 

Amortization of debt discount and issuance costs

5,264

 

 

5,155

 

Allowances for doubtful accounts and unbilled services

170

 

 

390

 

Loss on sale of business

 

 

5,831

 

Change in fair value of contingent consideration liabilities

(876

)

 

(3,350

)

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

(6,984

)

 

(5,384

)

(Increase) decrease in unbilled services, net

(22,105

)

 

(19,693

)

(Increase) decrease in current income tax receivable / payable, net

6,486

 

 

600

 

(Increase) decrease in other assets

(4,743

)

 

(4,140

)

Increase (decrease) in accounts payable and other liabilities

(133

)

 

(996

)

Increase (decrease) in accrued payroll and related benefits

(30,462

)

 

(4,736

)

Increase (decrease) in deferred revenues

(570

)

 

1,617

 

Net cash provided by (used in) operating activities:

(6,207

)

 

6,913

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment, net

(6,384

)

 

(5,131

)

Investment in life insurance policies

(4,087

)

 

(1,689

)

Purchases of businesses, net of cash acquired

 

 

(215

)

Capitalization of internally developed software costs

(4,409

)

 

(2,149

)

Proceeds from note receivable

 

 

1,040

 

Divestiture of business

 

 

(1,862

)

Net cash used in investing activities

(14,880

)

 

(10,006

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

469

 

 

469

 

Shares redeemed for employee tax withholdings

(4,460

)

 

(2,720

)

Proceeds from borrowings under credit facility

87,500

 

 

139,300

 

Repayments of debt

(81,756

)

 

(134,049

)

Payments for debt issuance costs

 

 

(1,385

)

Payments for contingent consideration liabilities

(4,674

)

 

(4,906

)

Net cash provided by financing activities

(2,921

)

 

(3,291

)

Effect of exchange rate changes on cash

78

 

 

(73

)

Net decrease in cash and cash equivalents

(23,930

)

 

(6,457

)

Cash and cash equivalents at beginning of the period

33,107

 

 

16,909

 

Cash and cash equivalents at end of the period

$

9,177

 

 

$

10,452

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2019

 

2018

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

101,939

 

 

$

91,500

 

 

11.4

%

Operating income

 

$

33,344

 

 

$

27,072

 

 

23.2

%

Segment operating income as a percentage of segment revenues

 

32.7

%

 

29.6

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

62,277

 

 

$

57,720

 

 

7.9

%

Operating income

 

$

11,474

 

 

$

14,218

 

 

(19.3

)%

Segment operating income as a percentage of segment revenues

 

18.4

%

 

24.6

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

56,538

 

 

$

48,324

 

 

17.0

%

Operating income

 

$

16,204

 

 

$

11,255

 

 

44.0

%

Segment operating income as a percentage of segment revenues

 

28.7

%

 

23.3

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

220,754

 

 

$

197,544

 

 

11.7

%

Reimbursable expenses

 

23,534

 

 

20,733

 

 

13.5

%

Total revenues and reimbursable expenses

 

$

244,288

 

 

$

218,277

 

 

11.9

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

61,022

 

 

$

52,545

 

 

16.1

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

36,481

 

 

31,197

 

 

16.9

%

Litigation and other gains, net

 

(485

)

 

(6,707

)

 

(92.8

)%

Depreciation and amortization

 

7,151

 

 

8,917

 

 

(19.8

)%

Total operating income

 

17,875

 

 

19,138

 

 

(6.6

)%

Other expense, net

 

(3,829

)

 

(10,715

)

 

(64.3

)%

Income from continuing operations before taxes

 

$

14,046

 

 

$

8,423

 

 

66.8

%

Other Operating Data:

 

 

 

 

 

 

Number of full-time billable consultants (at period end) (1):

 

 

 

 

 

 

Healthcare

 

833

 

 

820

 

 

1.6

%

Business Advisory

 

883

 

 

738

 

 

19.6

%

Education

 

673

 

 

583

 

 

15.4

%

Total

 

2,389

 

 

2,141

 

 

11.6

%

Average number of full-time billable consultants (for the period) (1):

 

 

 

 

 

 

Healthcare

 

828

 

 

805

 

 

 

Business Advisory

 

870

 

 

753

 

 

 

Education

 

664

 

 

569

 

 

 

Total

 

2,362

 

 

2,127

 

 

 

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)

 

 

 

Three Months Ended June 30,

Other Operating Data (continued):

 

2019

 

2018

Full-time billable consultant utilization rate (2):

 

 

 

 

Healthcare

 

80.8

%

 

82.2

%

Business Advisory

 

73.1

%

 

69.3

%

Education

 

78.3

%

 

77.9

%

Total

 

77.2

%

 

76.2

%

Full-time billable consultant average billing rate per hour (3):

 

 

 

 

Healthcare

 

$

224

 

 

$

202

 

Business Advisory (4)(5)

 

$

193

 

 

$

215

 

Education

 

$

200

 

 

$

197

 

Total (4)(5)

 

$

206

 

 

$

205

 

Revenue per full-time billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

84

 

 

$

77

 

Business Advisory

 

$

69

 

 

$

73

 

Education

 

$

74

 

 

$

74

 

Total

 

$

76

 

 

$

75

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

271

 

 

209

 

Business Advisory

 

13

 

 

25

 

Education

 

43

 

 

44

 

Total

 

327

 

 

278

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

120

 

 

$

140

 

Business Advisory

 

$

166

 

 

$

119

 

Education

 

$

167

 

 

$

142

 

Total

 

$

128

 

 

$

139

 

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)

 

 

 

Six Months Ended
June 30,

 

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2019

 

2018

 

Healthcare:

 

 

 

 

 

 

Revenues

 

$

195,621

 

 

$

181,395

 

 

7.8

%

Operating income

 

$

61,195

 

 

$

51,532

 

 

18.8

%

Segment operating income as a percentage of segment revenues

 

31.3

%

 

28.4

%

 

 

Business Advisory:

 

 

 

 

 

 

Revenues

 

$

121,083

 

 

$

113,615

 

 

6.6

%

Operating income

 

$

21,055

 

 

$

23,216

 

 

(9.3

)%

Segment operating income as a percentage of segment revenues

 

17.4

%

 

20.4

%

 

 

Education:

 

 

 

 

 

 

Revenues

 

$

108,495

 

 

$

96,213

 

 

12.8

%

Operating income

 

$

28,822

 

 

$

22,680

 

 

27.1

%

Segment operating income as a percentage of segment revenues

 

26.6

%

 

23.6

%

 

 

Total Company:

 

 

 

 

 

 

Revenues

 

$

425,199

 

 

$

391,223

 

 

8.7

%

Reimbursable expenses

 

42,151

 

 

38,352

 

 

9.9

%

Total revenues and reimbursable expenses

 

$

467,350

 

 

$

429,575

 

 

8.8

%

Statements of Operations reconciliation:

 

 

 

 

 

 

Segment operating income

 

$

111,072

 

 

$

97,428

 

 

14.0

%

Items not allocated at the segment level:

 

 

 

 

 

 

Other operating expenses

 

73,059

 

 

64,125

 

 

13.9

%

Litigation and other gains, net

 

(941

)

 

(5,877

)

 

(84.0

)%

Depreciation and amortization expense

 

14,323

 

 

17,720

 

 

(19.2

)%

Total operating income

 

24,631

 

 

21,460

 

 

14.8

%

Other expense, net

 

(5,870

)

 

(15,846

)

 

(63.0

)%

Income from continuing operations before taxes

 

$

18,761

 

 

$

5,614

 

 

234.2

%

Other Operating Data:

 

 

 

 

 

 

Number of full-time billable consultants (at period end) (1):

 

 

 

 

 

 

Healthcare

 

833

 

 

820

 

 

1.6

%

Business Advisory

 

883

 

 

738

 

 

19.6

%

Education

 

673

 

 

583

 

 

15.4

%

Total

 

2,389

 

 

2,141

 

 

11.6

%

Average number of full-time billable consultants (for the period) (1):

 

 

 

 

 

 

Healthcare

 

824

 

 

792

 

 

 

Business Advisory

 

854

 

 

773

 

 

 

Education

 

648

 

 

566

 

 

 

Total

 

2,326

 

 

2,131

 

 

 

HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)

 

 

 

Six Months Ended
June 30,

Other Operating Data (continued):

 

2019

 

2018

Full-time billable consultant utilization rate (2):

 

 

 

 

Healthcare

 

79.7

%

 

81.8

%

Business Advisory

 

73.1

%

 

67.7

%

Education

 

77.4

%

 

76.5

%

Total

 

76.6

%

 

75.0

%

Full-time billable consultant average billing rate per hour (3):

 

 

 

 

Healthcare

 

$

224

 

 

$

202

 

Business Advisory (4)(5)

 

$

196

 

 

$

212

 

Education

 

$

202

 

 

$

202

 

Total (4)(5)

 

$

208

 

 

$

205

 

Revenue per full-time billable consultant (in thousands):

 

 

 

 

Healthcare

 

$

163

 

 

$

153

 

Business Advisory

 

$

137

 

 

$

140

 

Education

 

$

147

 

 

$

148

 

Total

 

$

149

 

 

$

147

 

Average number of full-time equivalents (for the period) (6):

 

 

 

 

Healthcare

 

247

 

 

208

 

Business Advisory

 

11

 

 

21

 

Education

 

39

 

 

42

 

Total

 

297

 

 

271

 

Revenue per full-time equivalent (in thousands):

 

 

 

 

Healthcare

 

$

248

 

 

$

288

 

Business Advisory

 

$

361

 

 

$

261

 

Education

 

$

332

 

 

$

297

 

Total

 

$

263

 

 

$

287

 

(1)

Consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked.

(2)

Utilization rate for full-time billable consultants is calculated by dividing the number of hours full-time billable consultants worked on client assignments during a period by the total available working hours for these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days.

(3)

Average billing rate per hour for full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period.

(4)

The Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $215 and $246 for the three months ended June 30, 2019 and 2018, respectively; and $219 and $243 for the six months ended June 30, 2019 and 2018, respectively.

 

Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $214 for both the three months ended June 30, 2019 and 2018; and $216 and $214 for the six months ended June 30, 2019 and 2018, respectively.

(5)

Beginning in the third quarter of 2018, the average billing rate per hour excludes the number of hours charged on internal assignments by consultants within Huron Eurasia India to provide a more meaningful average billing rate charged to external clients. Prior year periods have been revised for consistent presentation.

(6)

Consists of leadership coaches and their support staff within the Healthcare Leadership solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients.

HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)
(In thousands)
(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Revenues

$

220,754

 

 

$

197,544

 

 

$

425,199

 

 

$

391,223

 

Net income from continuing operations

$

10,569

 

 

$

5,862

 

 

$

13,919

 

 

$

2,640

 

Add back:

 

 

 

 

 

 

 

Income tax expense

3,477

 

 

2,561

 

 

4,842

 

 

2,974

 

Interest expense, net of interest income

4,524

 

 

5,022

 

 

8,782

 

 

10,008

 

Depreciation and amortization

8,322

 

 

9,885

 

 

16,611

 

 

19,906

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)

26,892

 

 

23,330

 

 

44,154

 

 

35,528

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

754

 

 

1,984

 

 

2,029

 

 

2,696

 

Litigation and other gains, net

(485

)

 

(6,707

)

 

(941

)

 

(5,877

)

Loss on sale of business

 

 

5,831

 

 

 

 

5,831

 

Transaction-related expenses

2,050

 

 

 

 

2,050

 

 

 

Foreign currency transaction losses (gains), net

4

 

 

240

 

 

(78

)

 

187

 

Adjusted EBITDA (7)

$

29,215

 

 

$

24,678

 

 

$

47,214

 

 

$

38,365

 

Adjusted EBITDA as a percentage of revenues (7)

13.2

%

 

12.5

%

 

11.1

%

 

9.8

%

HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)
(In thousands, except per share amounts)
(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Net income from continuing operations

$

10,569

 

 

$

5,862

 

 

$

13,919

 

 

$

2,640

 

Weighted average shares - diluted

22,400

 

 

21,918

 

 

22,356

 

 

21,866

 

Diluted earnings per share from continuing operations

$

0.47

 

 

$

0.27

 

 

$

0.62

 

 

$

0.12

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

4,314

 

 

5,996

 

 

8,831

 

 

12,299

 

Restructuring charges

754

 

 

1,984

 

 

2,029

 

 

2,696

 

Litigation and other gains, net

(485

)

 

(6,707

)

 

(941

)

 

(5,877

)

Non-cash interest on convertible notes

2,145

 

 

2,046

 

 

4,265

 

 

4,067

 

Loss on sale of business

 

 

5,831

 

 

 

 

5,831

 

Transaction-related expenses

2,050

 

 

 

 

2,050

 

 

 

Tax effect of adjustments

(2,282

)

 

(2,232

)

 

(4,235

)

 

(4,797

)

Tax expense related to the enactment of Tax Cut and Jobs Act of 2017

 

 

 

 

 

 

132

 

Total adjustments, net of tax

6,496

 

 

6,918

 

 

11,999

 

 

14,351

 

Adjusted net income from continuing operations (7)

$

17,065

 

 

$

12,780

 

 

$

25,918

 

 

$

16,991

 

Weighted average shares - diluted

22,400

 

 

21,918

 

 

22,356

 

 

21,866

 

Adjusted diluted earnings per share from continuing operations (7)

$

0.76

 

 

$

0.58

 

 

$

1.16

 

 

$

0.78

 

(7)

In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing the company's business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

 

Contacts

MEDIA CONTACT
Sarah McHugh
312-880-2624
smchugh@huronconsultinggroup.com

INVESTOR CONTACT
John D. Kelly
312-583-8722
investor@huronconsultinggroup.com

Contacts

MEDIA CONTACT
Sarah McHugh
312-880-2624
smchugh@huronconsultinggroup.com

INVESTOR CONTACT
John D. Kelly
312-583-8722
investor@huronconsultinggroup.com