HURN Huron Consulting Group Inc

• Revenues were $187.9 million for Q1 2015 compared to $210.7 million in Q1 2014.
• Operating income for Q1 2015 was $8.8 million compared to $41.8 million in Q1 2014.
• Adjusted EBITDA(6), a non-GAAP measure, was $20.4 million in Q1 2015 compared to $49.1 million in Q1 2014.
• Diluted earnings per share for Q1 2015 was $0.07 compared to $1.48 in Q1 2014.
• Adjusted diluted earnings per share(6), a non-GAAP measure, was $0.29 in Q1 2015 compared to $1.10 in Q1 2014.
• Company affirms its previously released revenue guidance range for full year 2015 of $880.0 million to $920.0 million.

Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results for the first quarter ended March 31, 2015.

“While lower than the prior year results, we believe our first quarter performance is consistent with the path needed to achieve our full year guidance,” said James H. Roth, chief executive officer and president, Huron Consulting Group. “Our Huron Healthcare segment had lower revenue, primarily reflecting project timing as overall demand for our healthcare services remains solid, especially in areas impacting population health and cost and quality initiatives. Results for our recent acquisition of Studer Group exceeded our expectations with robust demand for cultural transformation at our hospital clients. Our Huron Education and Life Sciences segment and our Huron Business Advisory segment each had strong quarters, while revenues in our Huron Legal segment strengthened toward the end of the quarter.”

“Our clients’ markets continue to be challenged by the dynamic and evolving environments in which they operate, driving significant demand for our services, and we remain well-positioned to help our clients achieve their future strategic and operational goals,” Roth added.

First Quarter 2015 Results

Revenues for the first quarter of 2015 were $187.9 million, compared to $210.7 million for the first quarter of 2014. The Company's first quarter 2015 operating income was $8.8 million, compared to $41.8 million in the first quarter of 2014. Net income was $1.5 million, or $0.07 per diluted share, for the first quarter of 2015 compared to $34.1 million, or $1.48 per diluted share, for the same period last year.

First quarter 2015 earnings before interest, taxes, depreciation and amortization ("EBITDA")(6) was $19.1 million, or 10.1% of revenues, compared to $49.0 million, or 23.2% of revenues, in the comparable quarter last year.

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

  Three Months EndedMarch 31, 2015   2014 Amortization of intangible assets $ 5,082 $ 2,518 Restructuring charges $ 1,590 $ 129 Other gain $ (226 ) $ — Non-cash interest on convertible notes $ 1,754 $ — Tax effect $ (3,223 ) $ (1,059 ) Net tax benefit related to “check-the-box” election $ — $ (10,244 )  

Adjusted EBITDA(6) was $20.4 million, or 10.9% of revenues, in the first quarter of 2015, compared to $49.1 million, or 23.3% of revenues, in the comparable quarter last year. Adjusted net income(6) was $6.5 million, or $0.29 per diluted share, for the first quarter of 2015 compared to $25.5 million, or $1.10 per diluted share, for the comparable period in 2014.

The average number of full-time billable consultants(1) increased 7.7% to 1,852 in the first quarter of 2015 compared to 1,719 in the same quarter last year. Full-time billable consultant utilization rate(2) was 71.8% during the first quarter of 2015 compared with 74.1% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $218 for the first quarter of 2015 compared to $249 for the first quarter of 2014. The average number of full-time equivalent professionals(4) was 986 in the first quarter of 2015 compared to 1,511 for the comparable period in 2014.

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 revenues by operating segment as a percentage of total Company revenues are as follows: Huron Healthcare (53%); Huron Legal (18%); Huron Education and Life Sciences (21%); and Huron Business Advisory, which includes EPM & Analytics, (8%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-Q filing for the quarter ended March 31, 2015.

Acquisitions

Effective January 1, 2015, Huron completed its acquisition of Sky Analytics, Inc., a Massachusetts-based provider of legal spend management software for corporate law departments.

On February 12, 2015, Huron completed its acquisition of Studer Group®, a premier professional services firm that assists healthcare providers achieve cultural transformation to deliver and sustain exceptional improvement in clinical outcomes and financial results.

Outlook for 2015

The Company affirms its previously released guidance for full year 2015, which includes Studer Group and Sky Analytics, of revenues before reimbursable expenses in a range of $880.0 million to $920.0 million. The Company also affirms EBITDA in a range of $169.0 million to $180.0 million, Adjusted EBITDA in a range of $173.0 million to $184.0 million, GAAP diluted earnings per share in a range of $2.65 to $2.95, and non-GAAP adjusted diluted earnings per share in a range of $3.70 to $4.00.

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

First Quarter 2015 Webcast

The Company will host a webcast to discuss its financial results today, April 28, 2015, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ OMX and can be accessed at Huron Consulting Group’s website at http://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(6)

In evaluating the Company’s financial performance and outlook, management uses EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income and Adjusted diluted earnings per share, which are non-GAAP measures. Management believes that such measures, as supplements to operating income, net income and diluted earnings per share and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects. 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.

About Huron Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, transform the enterprise, reduce costs, leverage technology, process and review large amounts of complex data, address regulatory changes, recover from distress and stimulate growth. Our professionals employ their expertise in finance, operations, strategy, analytics, and technology to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client's particular challenges and opportunities to deliver sustainable and measurable results. The Company provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 450 health systems, hospitals, and academic medical centers; more than 400 corporate general counsel; and more than 400 universities and research institutions. 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 requirements and needs, 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” or “continues.” These forward-looking statements reflect our current expectations about our 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 our Annual Report on Form 10-K for the year ended December 31, 2014, 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. We disclaim 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 EARNINGS (In thousands, except per share amounts) (Unaudited)     Three Months Ended

March 31,

2015 2014 Revenues and reimbursable expenses: Revenues $ 187,853 $ 210,731 Reimbursable expenses   17,155     19,103   Total revenues and reimbursable expenses 205,008 229,834 Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): Direct costs 125,001 123,610 Amortization of intangible assets and software development costs 2,512 1,101 Reimbursable expenses   17,253     19,431   Total direct costs and reimbursable expenses   144,766     144,142   Operating expenses and other operating gain: Selling, general and administrative expenses 42,333 37,688 Restructuring charges 1,590 129 Other gain (226 ) - Depreciation and amortization   7,777     6,056   Total operating expenses and other operating gain   51,474     43,873   Operating income 8,768 41,819 Other income (expense), net: Interest expense, net of interest income (4,394 ) (1,371 ) Other income (expense), net   (727 )   176   Total other expense, net   (5,121 )   (1,195 ) Income before income tax expense 3,647 40,624 Income tax expense   2,145     6,498   Net income $ 1,502   $ 34,126     Earnings per share: Basic $ 0.07 $ 1.51 Diluted $ 0.07 $ 1.48   Weighted average shares used in calculating earnings per share: Basic 22,126 22,588 Diluted 22,602 23,086   HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited)         March 31,

2015

  December 31,

2014

Assets Current assets: Cash and cash equivalents $ 7,183 $ 256,872 Receivables from clients, net 115,492 98,640 Unbilled services, net 105,714 91,392 Income tax receivable 8,413 8,125 Deferred income taxes, net 14,155 14,772 Prepaid expenses and other current assets   14,220     16,358   Total current assets 265,177 486,159 Property and equipment, net 48,978 44,677 Long-term investment 14,700 12,250 Other non-current assets 26,099 20,998 Intangible assets, net 119,110 24,684 Goodwill   807,677     567,146   Total assets $ 1,281,741   $ 1,155,914     Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 12,708 $ 11,085 Accrued expenses 22,050 17,315 Accrued payroll and related benefits 42,697 106,488 Current maturities of long-term debt - 28,750 Deferred revenues   19,600     12,738   Total current liabilities 97,055 176,376 Non-current liabilities: Deferred compensation and other liabilities 16,933 10,838 Long-term debt, net of current portion 498,356 327,852 Deferred lease incentives 13,832 13,359 Deferred income taxes, net   45,507     26,855   Total non-current liabilities 574,628 378,904   Commitments and Contingencies   Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 25,336,102 and 24,976,395 shares issued at March 31, 2015 244 241 and December 31, 2014, respectively Treasury stock, at cost, 2,168,191 and 2,097,173 shares at March 31, 2015 and December 31, 2014, respectively (98,811 ) (94,074 ) Additional paid-in capital 455,659 442,308 Retained earnings 256,316 254,814 Accumulated other comprehensive loss   (3,350 )   (2,655 ) Total stockholders’ equity   610,058     600,634   Total liabilities and stockholders’ equity $ 1,281,741   $ 1,155,914     HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)     Three Months Ended

March 31,

2015 2014 Cash flows from operating activities: Net income $ 1,502 $ 34,126 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 10,289 7,157 Share-based compensation 5,280 5,136 Amortization of debt discount and issuance costs 2,365 342 Allowances for doubtful accounts and unbilled services (1,904 ) (72 ) Deferred income taxes 2,716 9,829 Changes in operating assets and liabilities, net of acquisitions: (Increase) decrease in receivables from clients (6,547 ) 27,757 (Increase) decrease in unbilled services (7,984 ) (34,329 ) (Increase) decrease in current income tax receivable / payable, net (359 ) (13,703 ) (Increase) decrease in other assets 1,816 5,436 Increase (decrease) in accounts payable and accrued liabilities 9,886 8,289 Increase (decrease) in accrued payroll and related benefits (62,450 ) (57,169 ) Increase (decrease) in deferred revenues   3,236     (1,964 ) Net cash used in operating activities   (42,154 )   (9,165 )   Cash flows from investing activities: Purchases of property and equipment, net (6,482 ) (4,840 ) Investment in life insurance policies (4,941 ) (167 ) Purchases of businesses (331,807 ) (17,430 ) Purchase of convertible debt investment (2,500 ) - Proceeds from note receivable   -     219   Net cash used in investing activities   (345,730 )   (22,218 )   Cash flows from financing activities: Proceeds from exercise of stock options - 740 Shares redeemed for employee tax withholdings (4,485 ) (3,067 ) Tax benefit from share-based compensation 2,734 3,477 Proceeds from borrowings under credit facility 197,500 - Repayments on credit facility (57,500 ) (6,250 ) Payments for capital lease obligations   (20 )   (21 ) Net cash provided by (used in) financing activities   138,229     (5,121 )   Effect of exchange rate changes on cash (34 ) 14   Net decrease in cash and cash equivalents (249,689 ) (36,490 ) Cash and cash equivalents at beginning of the period   256,872     58,131   Cash and cash equivalents at end of the period $ 7,183   $ 21,641    

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

  Three Months EndedMarch 31,

Percent Increase (Decrease)

Segment and Consolidated Operating Results (in thousands): 2015   2014   Huron Healthcare:   Revenues $ 98,004   $ 107,548 (8.9 )% Operating income $ 28,980 $ 51,220 (43.4 )% Segment operating income as a percentage of segment revenues 29.6 % 47.6 % Huron Legal: Revenues $ 33,427 $ 54,975 (39.2 )% Operating income $ 3,592 $ 12,488 (71.2 )% Segment operating income as a percentage of segment revenues 10.7 % 22.7 % Huron Education and Life Sciences: Revenues $ 39,897 $ 33,576 18.8 % Operating income $ 11,780 $ 6,447 82.7 % Segment operating income as a percentage of segment revenues 29.5 % 19.2 % Huron Business Advisory: Revenues $ 15,738 $ 13,382 17.6 % Operating income $ 1,599 $ 2,555 (37.4 )% Segment operating income as a percentage of segment revenues 10.2 % 19.1 % All Other: Revenues $ 787 $ 1,250 (37.0 )% Operating loss $ (992 ) $ (458 ) 116.6 % Segment operating loss as a percentage of segment revenues N/M N/M Total Company: Revenues $ 187,853 $ 210,731 (10.9 )% Reimbursable expenses   17,155   19,103   (10.2 )% Total revenues and reimbursable expenses $ 205,008   $ 229,834   (10.8 )%   Statement of Earnings reconciliation: Segment operating income $ 44,959 $ 72,252 (37.8 )% Items not allocated at the segment level: Other operating expenses and gains 28,414 24,377 16.6 % Depreciation and amortization expense   7,777   6,056   28.4 % Total operating income 8,768 41,819 (79.0 )% Other expense, net   5,121   1,195   328.5 % Income before income tax expense $ 3,647   $ 40,624   (91.0 )%   Other Operating Data (excluding All Other):           Number of full-time billable consultants (at period end) (1): Huron Healthcare 1,105 995 11.1 % Huron Legal 107 138 (22.5 )% Huron Education and Life Sciences 425 429 (0.9 )% Huron Business Advisory   211   166   27.1 % Total 1,848 1,728 6.9 % Average number of full-time billable consultants (for the period) (1): Huron Healthcare 1,108 985 Huron Legal 116 139 Huron Education and Life Sciences 423 434 Huron Business Advisory   205   161   Total 1,852 1,719  

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

  Three Months EndedMarch 31, Other Operating Data (excluding All Other): 2015   2014 Full-time billable consultant utilization rate (2):   Huron Healthcare 72.5 % 78.9 % Huron Legal 52.7 % 64.5 % Huron Education and Life Sciences 76.4 % 68.3 % Huron Business Advisory 69.5 % 68.5 % Total 71.8 % 74.1 % Full-time billable consultant average billing rate per hour (3): Huron Healthcare $ 211 $ 272 Huron Legal (5) $ 249 $ 231 Huron Education and Life Sciences $ 225 $ 200 Huron Business Advisory $ 227 $ 238 Total (5) $ 218 $ 249 Revenue per full-time billable consultant (in thousands): Huron Healthcare $ 72 $ 102 Huron Legal (5) $ 60 $ 67 Huron Education and Life Sciences $ 81 $ 65 Huron Business Advisory $ 74 $ 79 Total (5) $ 73 $ 88 Average number of full-time equivalents (for the period) (4): Huron Healthcare 127 51 Huron Legal 816 1,413 Huron Education and Life Sciences 38 39 Huron Business Advisory   5     8   Total 986 1,511 Revenue per full-time equivalent (in thousands): Huron Healthcare $ 145 $ 129 Huron Legal (5) $ 32 $ 32 Huron Education and Life Sciences $ 149 $ 139 Huron Business Advisory $ 89 $ 84 Total (5) $ 52 $ 38 (1)   Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked. (2) Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants worked on client assignments during a period by the total available working hours for all of 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 our 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) Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes our cultural transformation consultants from the Studer Group acquisition, which include coaches and their support staff, and full-time employees who provide software support and maintenance services to our clients. (5) During the second quarter of 2014, we revised the methodology we use to allocate revenue between our billable consultants and our full-time equivalents in our Huron Legal segment to better reflect the nature of the work being provided. Operating data for the three months ended March 31, 2015 and 2014, as presented above, reflects this change. N/M – Not meaningful  

HURON CONSULTING GROUP INC.

 

RECONCILIATION OF NET INCOME TO

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)

(In thousands)

(Unaudited)

 

 

Three Months EndedMarch 31, 2015   2014 Revenues $ 187,853   $ 210,731     Net income $ 1,502 $ 34,126 Add back: Income tax expense 2,145 6,498 Interest and other expenses 5,121 1,195 Depreciation and amortization   10,289     7,157   Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) 19,057 48,976 Add back: Restructuring charges 1,590 129 Other gain   (226 )   —   Adjusted EBITDA (6) $ 20,421   $ 49,105   Adjusted EBITDA as a percentage of revenues (6)   10.9 %   23.3 %  

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (6)

(In thousands)

(Unaudited)

  Three Months EndedMarch 31, 2015   2014 Net income

$

1,502

  $ 34,126   Weighted average shares - diluted 22,602

23,086

Diluted earnings per share $ 0.07  

$

1.48

  Add back: Amortization of intangible assets 5,082 2,518 Restructuring charges 1,590 129 Other gain (226 ) — Non-cash interest on convertible notes 1,754 — Tax effect (3,223 ) (1,059 ) Net tax benefit related to “check-the-box” election —    

(10,244

)

Total adjustments, net of tax 4,977     (8,656 ) Adjusted net income (6)

$

6,479

  $ 25,470   Adjusted diluted earnings per share (6)

$

0.29

  $ 1.10   (6)   In evaluating the Company’s financial performance, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income, and Adjusted diluted earnings per share, which are non-GAAP measures. Our management uses these non-GAAP financial measures to gain an understanding of our 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 our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe 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.  

Huron Consulting GroupMedia Contact:Jennifer Frost Hennagir312-880-3260jfrost-hennagir@huronconsultinggroup.comInvestor Contact:C. Mark Hussey312-583-8722investor@huronconsultinggroup.com