HURN Huron Consulting Group Inc

• Revenues increased 16.9% to $180.5 million in Q1 2016 from $154.4 million in Q1 2015.
• Operating income increased 81.1% to $14.4 million in Q1 2016 from $7.9 million in Q1 2015.
• Adjusted EBITDA(6), a non-GAAP measure, increased 64.6% to $26.5 million in Q1 2016 from $16.1 million in Q1 2015.
• Diluted earnings per share from continuing operations increased to $0.32 in Q1 2016 from $0.04 in Q1 2015.
• Adjusted diluted earnings per share from continuing operations(6), a non-GAAP measure, increased to $0.62 in Q1 2016 from $0.23 in Q1 2015.
• Company affirms its previously released revenue guidance for full year 2016 in a range of $720.0 million to $760.0 million.

Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results from continuing operations for the first quarter ended March 31, 2016.

“Our first quarter results were in line with our expectations and consistent with our full year guidance," said James H. Roth, chief executive officer and president, Huron Consulting Group. "The Education and Life Sciences and Business Advisory segments both achieved strong results in the first quarter. Our Healthcare business grew at a more modest pace, reflective of the market shifts taking place across the provider segment."

“We are excited about Huron’s prospects for the remainder of the year. The pace of change across our client base, especially within the primary industries that we serve, and the resulting need for advisory services provide us the opportunity to achieve company-wide revenue growth at our mid-to-upper single-digit targets,” added Roth.

First Quarter 2016 Results from Continuing Operations

Revenues for the first quarter of 2016 were $180.5 million, an increase of 16.9% compared to $154.4 million for the first quarter of 2015. The Company's first quarter 2016 operating income was $14.4 million, an increase of 81.1% compared to $7.9 million in the first quarter of 2015. Net income from continuing operations increased to $6.9 million, or $0.32 per diluted share, for the first quarter of 2016 from $1.0 million, or $0.04 per diluted share, for the same period last year.

First quarter 2016 earnings before interest, taxes, depreciation and amortization ("EBITDA")(6) increased 60.6% to $25.2 million, or 13.9% of revenues, compared to $15.7 million, or 10.2% of revenues, in the comparable quarter last year.

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 EndedMarch 31, 2016   2015 Amortization of intangible assets $ 7,445 $ 4,631 Restructuring charges $ 1,333 $ 656 Other gain $ — $ (226 ) Non-cash interest on convertible notes $ 1,839 $ 1,754 Tax effect $ (4,172 ) $ (2,685 )

Adjusted EBITDA(6) increased 64.6% to $26.5 million, or 14.7% of revenues, in the first quarter of 2016, from $16.1 million, or 10.4% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations(6) increased 161.1% to $13.3 million, or $0.62 per diluted share, for the first quarter of 2016 from $5.1 million, or $0.23 per diluted share, for the comparable period in 2015.

The average number of full-time billable consultants(1) increased 5.4% to 1,829 in the first quarter of 2016 compared to 1,736 in the same quarter last year. Full-time billable consultant utilization rate(2) was 76.6% during the first quarter of 2016 compared to 73.1% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $214 for the first quarter of 2016 compared to $217 for the first quarter of 2015. The average number of full-time equivalent professionals(5) was 245 in the first quarter of 2016 compared to 170 for the comparable period in 2015.

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 2016 revenues by operating segment as a percentage of total Company revenues are as follows: Huron Healthcare (63%); Huron Education and Life Sciences (24%); and Huron Business Advisory (13%). 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 March 31, 2016.

Acquisitions

Effective February 1, 2016, Huron completed its acquisition of My Rounding Solutions, LLC ("MyRounding"), a Denver, Colorado-based firm specializing in digital health solutions to improve patient care. The MyRounding application is designed to standardize, automate and track rounding activity, allowing nurses and staff to improve the care and experience of patients in real time. The addition of MyRounding expands the integration of Huron’s software and consulting solutions and strengthens the Company's transformation services for healthcare providers. The results of operations of MyRounding are included within the Huron Healthcare segment from the date of acquisition.

On April 26, 2016, Huron entered into an agreement to acquire the U.S. assets of ADI Strategies, Inc. ("ADI"), a leading enterprise performance management, risk management, and business intelligence firm focused on implementing the Oracle enterprise application suite. The financial results of ADI will be included within the Huron Business Advisory segment from the close date, which the Company anticipates will be in the second quarter of 2016. The Company is also in the process of acquiring the international assets of ADI in Dubai and India. An agreement for these assets is expected to be signed in the second quarter of 2016.

Outlook for 2016

Based on currently available information, the Company affirms guidance, which was previously announced on February 22, 2016, for full year 2016 revenues before reimbursable expenses in a range of $720.0 million to $760.0 million. The Company also affirms EBITDA in a range of $136.0 million to $145.5 million, Adjusted EBITDA in a range of $138.0 million to $147.5 million, GAAP diluted earnings per share from continuing operations in a range of $2.10 to $2.30, and non-GAAP adjusted diluted earnings per share from continuing operations in a range of $3.20 to $3.40.

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

First Quarter 2016 Webcast

The Company will host a webcast to discuss its financial results today, April 28, 2016, 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 from continuing operations, and adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that such measures, as supplements to operating income, net income from continuing operations, and diluted earnings per share from continuing operations, and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of the Company's 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 is a global professional services firm focused on assisting clients with their most complex business issues by delivering high-value, quality solutions to support their long-term strategic objectives. Huron specializes in serving clients in the healthcare, higher education, life sciences, and commercial sectors as these organizations face significant transformational change and regulatory or economic pressures in dynamic market environments. With its deep industry and technical expertise, Huron provides advisory, consulting, technology, and analytic solutions to deliver sustainable and measurable results. 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,” “continues,” or "outlook" or similar expressions. 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, 2015, 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 AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

    Three Months EndedMarch 31, 2016   2015 Revenues and reimbursable expenses: Revenues $ 180,489 $ 154,426 Reimbursable expenses 16,561   16,308   Total revenues and reimbursable expenses 197,050 170,734 Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): Direct costs 111,857 101,394 Amortization of intangible assets and software development costs 3,386 2,454 Reimbursable expenses 16,627   16,407   Total direct costs and reimbursable expenses 131,870   120,255   Operating expenses and other operating gain: Selling, general and administrative expenses 42,057 36,824 Restructuring charges 1,333 656 Other gain — (226 ) Depreciation and amortization 7,414   5,289   Total operating expenses and other operating gain 50,804   42,543   Operating income 14,376 7,936 Other income (expense), net: Interest expense, net of interest income (3,971 ) (4,393 ) Other income (expense), net 471   (683 ) Total other expense, net (3,500 ) (5,076 ) Income from continuing operations before income tax expense 10,876 2,860 Income tax expense 4,010   1,892   Net income from continuing operations 6,866 968 Income (loss) from discontinued operations, net of tax (864 ) 534   Net income $ 6,002   $ 1,502   Net earnings per basic share: Net income from continuing operations $ 0.33 $ 0.04 Income (loss) from discontinued operations, net of tax (0.05 ) 0.03   Net income $ 0.28   $ 0.07   Net earnings per diluted share: Net income from continuing operations $ 0.32 $ 0.04 Income (loss) from discontinued operations, net of tax (0.04 ) 0.03   Net income $ 0.28   $ 0.07   Weighted average shares used in calculating earnings per share: Basic 21,114 22,126 Diluted 21,460 22,602 Comprehensive income: Net income $ 6,002 $ 1,502 Foreign currency translation gain (loss), net of tax 21 (436 ) Unrealized gain (loss) on investment, net of tax 1,472 (50 ) Unrealized loss on cash flow hedging instruments, net of tax (114 ) (209 ) Other comprehensive income (loss) 1,379   (695 ) Comprehensive income $ 7,381   $ 807  

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

   

March 31,2016

 

December 31,2015

Assets Current assets: Cash and cash equivalents $ 13,457 $ 58,437 Receivables from clients, net 71,314 85,297 Unbilled services, net 73,452 56,527 Income tax receivable 7,618 406 Prepaid expenses and other current assets 14,887   27,720   Total current assets 180,728 228,387 Property and equipment, net 27,294 28,888 Long-term investment 37,256 34,831 Other non-current assets 22,487 21,045 Intangible assets, net 94,256 94,992 Goodwill 765,533   751,400   Total assets $ 1,127,554   $ 1,159,543   Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 5,206 $ 7,220 Accrued expenses 22,237 24,276 Accrued payroll and related benefits 41,813 80,839 Deferred revenues 19,944   19,086   Total current liabilities 89,200 131,421 Non-current liabilities: Deferred compensation and other liabilities 28,916 23,768 Long-term debt 350,013 307,376 Deferred lease incentives 9,668 9,965 Deferred income taxes, net 42,555   34,688   Total non-current liabilities 431,152 375,797 Commitments and contingencies Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 24,084,277 and 24,775,823 shares issued at March 31, 2016 and December 31, 2015, respectively 234 241 Treasury stock, at cost, 2,344,975 and 2,249,630 shares at March 31, 2016 and December 31, 2015, respectively (109,146 ) (103,734 ) Additional paid-in capital 391,282 438,367 Retained earnings 319,868 313,866 Accumulated other comprehensive income 4,964   3,585   Total stockholders’ equity 607,202   652,325   Total liabilities and stockholders’ equity $ 1,127,554   $ 1,159,543  

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

    Three Months EndedMarch 31, 2016   2015 Cash flows from operating activities: Net income $ 6,002 $ 1,502 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 10,799 10,289 Share-based compensation 5,208 5,280 Amortization of debt discount and issuance costs 2,367 2,365 Allowances for doubtful accounts and unbilled services 2,418 (1,904 ) Deferred income taxes 6,332 2,716 Changes in operating assets and liabilities, net of acquisitions: (Increase) decrease in receivables from clients 14,834 (6,547 ) (Increase) decrease in unbilled services (19,363 ) (7,984 ) (Increase) decrease in current income tax receivable / payable, net (8,247 ) (359 ) (Increase) decrease in other assets 10,983 1,816 Increase (decrease) in accounts payable and accrued liabilities (3,960 ) 9,886 Increase (decrease) in accrued payroll and related benefits (37,451 ) (62,450 ) Increase (decrease) in deferred revenues 198   3,236   Net cash used in operating activities (9,880 ) (42,154 ) Cash flows from investing activities: Purchases of property and equipment, net (1,980 ) (6,482 ) Investment in life insurance policies (866 ) (4,941 ) Purchases of businesses (14,000 ) (331,807 ) Purchase of convertible debt investment — (2,500 ) Capitalization of internally developed software costs (252 ) —   Net cash used in investing activities (17,098 ) (345,730 ) Cash flows from financing activities: Proceeds from exercise of stock options 123 — Shares redeemed for employee tax withholdings (4,377 ) (4,485 ) Tax benefit from share-based compensation 859 2,734 Share repurchases (55,265 ) — Proceeds from borrowings under credit facility 70,500 197,500 Repayments on credit facility (30,000 ) (57,500 ) Payments for capital lease obligations —   (20 ) Net cash provided by (used in) financing activities (18,160 ) 138,229   Effect of exchange rate changes on cash 158 (34 ) Net decrease in cash and cash equivalents (44,980 ) (249,689 ) Cash and cash equivalents at beginning of the period 58,437   256,872   Cash and cash equivalents at end of the period $ 13,457   $ 7,183  

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): 2016   2015 Huron Healthcare: Revenues $ 114,018 $ 98,004 16.3 % Operating income $ 39,006 $ 28,980 34.6 % Segment operating income as a percentage of segment revenues 34.2 % 29.6 % Huron Education and Life Sciences: Revenues $ 43,238 $ 39,897 8.4 % Operating income $ 10,208 $ 11,780 (13.3 )% Segment operating income as a percentage of segment revenues 23.6 % 29.5 % Huron Business Advisory: Revenues $ 23,233 $ 15,738 47.6 % Operating income $ 2,699 $ 1,599 68.8 % Segment operating income as a percentage of segment revenues 11.6 % 10.2 % All Other: Revenues $ — $ 787 (100.0 )% Operating loss $ — $ (992 ) (100.0 )% Segment operating loss as a percentage of segment revenues N/M N/M Total Company: Revenues $ 180,489 $ 154,426 16.9 % Reimbursable expenses 16,561   16,308   1.6 % Total revenues and reimbursable expenses $ 197,050   $ 170,734   15.4 % Statements of Earnings reconciliation: Segment operating income $ 51,913 $ 41,367 25.5 % Items not allocated at the segment level: Other operating expenses and gain 30,123 28,142 7.0 % Depreciation and amortization expense 7,414   5,289   40.2 % Total operating income 14,376 7,936 81.1 % Other expense, net 3,500   5,076   (31.0 )% Income from continuing operations before income tax expense $ 10,876   $ 2,860   280.3 % Other Operating Data (excluding All Other): Number of full-time billable consultants (at period end) (1): Huron Healthcare 1,023 1,105 (7.4 )% Huron Education and Life Sciences 497 425 16.9 % Huron Business Advisory 322   211   52.6 % Total 1,842 1,741 5.8 % Average number of full-time billable consultants (for the period) (1): Huron Healthcare 1,026 1,108 Huron Education and Life Sciences 487 423 Huron Business Advisory 316   205   Total 1,829 1,736

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

   

Three Months EndedMarch 31,

Other Operating Data (continued): 2016   2015 Full-time billable consultant utilization rate (2): Huron Healthcare 80.5 % 72.5 % Huron Education and Life Sciences 71.4 % 76.4 % Huron Business Advisory 72.0 % 69.5 % Total 76.6 % 73.1 % Full-time billable consultant average billing rate per hour (3): Huron Healthcare $ 213 $ 211 Huron Education and Life Sciences $ 227 $ 225 Huron Business Advisory (4) $ 199 $ 227 Total $ 214 $ 217 Revenue per full-time billable consultant (in thousands): Huron Healthcare $ 82 $ 72 Huron Education and Life Sciences $ 79 $ 81 Huron Business Advisory $ 71 $ 74 Total $ 79 $ 74 Average number of full-time equivalents (for the period) (5): Huron Healthcare 199 127 Huron Education and Life Sciences 39 38 Huron Business Advisory 7   5   Total 245 170 Revenue per full-time equivalent (in thousands): Huron Healthcare $ 151 $ 145 Huron Education and Life Sciences $ 123 $ 149 Huron Business Advisory $ 126 $ 89 Total $ 146 $ 144

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(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) The Huron Business Advisory segment includes the operations of Rittman Mead India, a business that we acquired in July 2015. Absent the impact of Rittman Mead India, the average billing rate per hour for Huron Business Advisory for the three months ended March 31, 2016 would have been $230. (5) Consists of consultants who work variable schedules as needed by our clients, including full-time employees who provide software support and maintenance services to our clients, and cultural transformation consultants within our Studer Group solution, which include coaches and their support staff.

N/M - Not meaningful

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

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

(In thousands)

(Unaudited)

  Three Months EndedMarch 31, 2016   2015 Revenues $ 180,489   $ 154,426   Net income from continuing operations $ 6,866 $ 968 Add back: Income tax expense 4,010 1,892 Interest and other expenses 3,500 5,076 Depreciation and amortization 10,800   7,743   Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) 25,176 15,679 Add back: Restructuring charges 1,333 656 Other gain —   (226 ) Adjusted EBITDA (6) $ 26,509   $ 16,109   Adjusted EBITDA as a percentage of revenues (6) 14.7 % 10.4 %

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)

(In thousands)

(Unaudited)

    Three Months EndedMarch 31, 2016   2015 Net income from continuing operations $ 6,866   $ 968   Weighted average shares – diluted 21,460 22,602 Diluted earnings per share from continuing operations $ 0.32   $ 0.04   Add back: Amortization of intangible assets 7,445 4,631 Restructuring charges 1,333 656 Other gain — (226 ) Non-cash interest on convertible notes 1,839 1,754 Tax effect (4,172 ) (2,685 ) Total adjustments, net of tax 6,445   4,130   Adjusted net income from continuing operations (6) $ 13,311   $ 5,098   Adjusted diluted earnings per share from continuing operations (6) $ 0.62   $ 0.23  

__________________________

(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 from continuing operations, and adjusted diluted earnings per share from continuing operations, 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.

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Huron Consulting Group Inc.Media Contact:Jenna Nichols312-880-5693jnichols@huronconsultinggroup.comorInvestor Contact:C. Mark HusseyorJohn Kelly312-583-8722investor@huronconsultinggroup.com