THIRD QUARTER 2017 HIGHLIGHTS
- Revenues were $176.4 million in Q3 2017
compared to $183.4 million in Q3 2016.
- Net income from continuing operations
was $4.1 million in Q3 2017 compared to $12.3 million in Q3
2016.
- Adjusted EBITDA(6), a non-GAAP measure,
was $21.5 million in Q3 2017 compared to $37.5 million in Q3
2016.
- Diluted earnings per share from
continuing operations was $0.19 in Q3 2017 compared to $0.57 in Q3
2016.
- Adjusted diluted earnings per share
from continuing operations(6), a non-GAAP measure, was $0.43 in Q3
2017 compared to $0.92 in Q3 2016.
2017 GUIDANCE AND YEAR-TO-DATE 2017 HIGHLIGHTS
- Huron narrows full year 2017 revenue
guidance to a range of $733.0 million to $743.0 million.
- Revenues were $546.6 million for the
first nine months of 2017 compared to $548.1 million for the same
period in 2016.
- Net loss from continuing operations for
the first nine months of 2017, which includes a non-cash pretax
goodwill impairment charge of $209.6 million related to the
company's Healthcare segment recorded in the second quarter, was
$141.2 million, compared to net income from continuing operations
of $35.3 million for the same period in 2016.
- Adjusted EBITDA(6) was $73.1 million
for the first nine months of 2017 compared to $105.8 million for
the same period in 2016.
- Diluted loss per share from continuing
operations was $6.59 for the first nine months of 2017 compared to
diluted earnings per share from continuing operations of $1.65 for
the first nine months of 2016.
- Adjusted diluted earnings per share
from continuing operations(6) was $1.47 for the first nine months
of 2017 compared to $2.63 for the first nine months of 2016.
Global professional services firm Huron (NASDAQ: HURN) today
announced financial results from continuing operations for the
third quarter ended Sept. 30, 2017.
"Led by solid growth in the Education and Business Advisory
segments, Huron's third quarter results were in line with our
full-year expectations," said James H.
Roth, chief executive officer and president of Huron. "The decline in Healthcare segment revenue
moderated while utilization continued to improve during the
quarter.”
“We remain focused on broadening our client base and enhancing
the array of services that we offer to the market in response to
the complexity in our clients’ operating environment,” added
Roth.
THIRD QUARTER 2017 RESULTS FROM CONTINUING OPERATIONS
Revenues were $176.4 million for the third quarter of 2017
compared to $183.4 million for the third quarter of 2016. Third
quarter 2017 revenues included $13.4 million from Huron's 2017
acquisitions of Innosight Holdings, LLC (Innosight) and Pope
Woodhead and Associates Limited (Pope Woodhead) and an incremental
$1.7 million of revenue due to the full quarter impact of the
company's acquisition of Healthcare Services Management, Inc. (HSM
Consulting), which was completed mid-third quarter 2016. Third
quarter 2017 revenues also included revenues from Huron's 2017
acquisition of the international assets of ADI Strategies which has
since been fully integrated into the Business Advisory segment.
Net income from continuing operations was $4.1 million for the
third quarter of 2017 compared to $12.3 million for the same period
last year. Diluted earnings per share from continuing operations
was $0.19 for the third quarter of 2017, compared to $0.57 for the
third quarter of 2016.
Third quarter 2017 earnings before interest, taxes, depreciation
and amortization ("EBITDA")(6) was $19.6 million, compared to $35.9
million in the same 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 EndedSeptember 30,
2017 2016 Amortization of intangible assets $
8,834 $ 8,771 Restructuring charges $ 1,347 $ 1,049 Other losses,
net $ 880 $ 494 Non-cash interest on convertible notes $ 1,974 $
1,883 Foreign currency transaction losses (gains), net $ (385 ) $
84 Tax effect $ (5,100 ) $ (4,794 ) Tax benefit related to
"check-the-box" election $ (2,748 ) $ —
The company has excluded the effect of a $2.7 million tax
benefit, recorded in the third quarter of 2017, from recognizing a
previously unrecognized tax benefit from a "check-the-box" election
made in 2014 to treat one of the company's wholly-owned foreign
subsidiaries as a disregarded entity for U.S. federal income tax
purposes.
Adjusted EBITDA(6) was $21.5 million, or 12.2% of revenues, in
the third quarter of 2017, compared to $37.5 million, or 20.4% of
revenues, in the same quarter last year. Adjusted net income from
continuing operations(6) was $9.3 million, or $0.43 per diluted
share, for the third quarter of 2017, compared to $19.7 million, or
$0.92 per diluted share, for the same period in 2016.
The average number of full-time billable consultants(2)
increased 4.4% to 2,047 in the third quarter of 2017 compared to
1,961 in the same quarter last year. Full-time billable consultant
utilization rate(3) was 75.0% during the third quarter of 2017
compared to 73.9% during the same period last year. Average billing
rate per hour for full-time billable consultants(4) was $197 for
the third quarter of 2017 compared to $207 for the third quarter of
2016. The average number of full-time equivalent professionals(5)
was 275 in the third quarter of 2017 compared to 269 for the same
period in 2016.
YEAR-TO-DATE 2017 RESULTS FROM CONTINUING OPERATIONS
Revenues were $546.6 million for the first nine months of 2017
compared to $548.1 million for the first nine months of 2016.
Revenues for the nine months ended Sept. 30, 2017 included $34.1
million from Huron's 2017 acquisitions of Innosight and Pope
Woodhead, and $13.9 million of incremental revenues due to the full
period impact of the acquisitions of MyRounding Solutions, LLC, and
HSM Consulting, which were completed in Feb. 2016 and Aug. 2016,
respectively. Revenues for the first nine months of 2017 also
included a full period impact of Huron's acquisition of the U.S.
assets of ADI Strategies and revenues from the acquisition of the
international assets of ADI Strategies. These acquisitions were
completed in May 2016 and Apr. 2017, respectively, and have been
fully integrated into the Business Advisory segment.
Net loss from continuing operations was $141.2 million for the
first nine months of 2017 compared to net income from continuing
operations of $35.3 million for the same period last year. Results
for the nine months ended Sept. 30, 2017 reflect a non-cash pretax
charge of $209.6 million recorded in the second quarter to reduce
the carrying value of goodwill in the company's Healthcare segment.
The impairment charge is non-cash in nature and does not affect the
company's liquidity or debt covenants. Diluted loss per share from
continuing operations was $6.59 for the first nine months of 2017,
compared to diluted earnings per share from continuing operations
of $1.65 for the same prior year period.
Loss before interest, taxes, depreciation, and amortization(6)
for the first nine months of 2017 was $140.2 million, compared to
EBITDA of $101.4 million in the comparable period 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):
Nine Months EndedSeptember 30,
2017 2016 Amortization of intangible assets $
26,432 $ 24,369 Restructuring charges $ 5,295 $ 4,129 Other losses
(gains), net $ (222 ) $ 494 Goodwill impairment charge $ 209,600 $
— Non-cash interest on convertible notes $ 5,853 $ 5,582 Gain on
sale of business $ (931 ) $ — Foreign currency transaction gains,
net $ (449 ) $ (270 ) Tax effect $ (70,362 ) $ (13,588 ) Tax
benefit related to "check-the-box" election $ (2,748 ) $ —
The company has excluded the effect of a $2.7 million tax
benefit, recorded in the third quarter of 2017, from recognizing a
previously unrecognized tax benefit from our "check-the-box"
election made in 2014 to treat one of the company's wholly-owned
foreign subsidiaries as a disregarded entity for U.S. federal
income tax purposes.
Adjusted EBITDA(6) was $73.1 million, or 13.4% of revenues, in
the first nine months of 2017, compared to $105.8 million, or 19.3%
of revenues, in the same period last year. Adjusted net income from
continuing operations(6) was $31.7 million, or $1.47 per diluted
share, for the first nine months of 2017, compared to $56.3
million, or $2.63 per diluted share, for the same period in
2016.
The average number of full-time billable consultants(2)
increased 6.2% to 2,012 in the first nine months of 2017 compared
to 1,895 in the same period last year. Full-time billable
consultant utilization rate(3) was 74.7% during the first nine
months of 2017 compared to 75.3% during the same period last year.
Average billing rate per hour for full-time billable consultants(4)
was $202 for the first nine months of 2017 compared to $212 for the
same period last year. The average number of full-time equivalent
professionals(5) was 272 in the first nine months of 2017 compared
to 257 for the same period in 2016.
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 2017 revenues by operating segment as
a percentage of total company revenues are as follows: Healthcare (48%); Education (23%); and Business Advisory (29%). 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 Sept. 30, 2017.
OUTLOOK FOR 2017(8)
Based on currently available information, the company narrowed
its full year 2017 revenue guidance to a range of $733.0 million to
$743.0 million. The company also anticipates a net loss in a range
of $132.0 million to $130.0 million, loss before interest, taxes,
depreciation and amortization in a range of $112.0 million to
$108.0 million, and GAAP diluted loss per share in a range of $6.15
to $6.05, all of which reflect the pretax non-cash goodwill
impairment charge of $209.6 million recorded in the second quarter
of 2017. The company also narrowed its guidance for full year 2017
adjusted EBITDA to a range of $102.0 million to $106.0 million. The
company reaffirmed its previously released guidance for full year
2017 non-GAAP adjusted diluted earnings per share in a range of
$2.20 to $2.30.
Management will provide a more detailed discussion of its
outlook during the company’s earnings conference call webcast.
THIRD QUARTER 2017 WEBCAST
The company will host a webcast to discuss its financial results
today, Nov. 1, 2017, 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 at Huron'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 (loss) from continuing
operations, and adjusted diluted earnings (loss) 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.
ABOUT HURON
Huron is a global professional services firm committed to
achieving sustainable results in partnership with its clients. The
company brings depth of expertise in strategy, technology,
operations, advisory services and analytics to drive lasting and
measurable results in the healthcare, higher education, life
sciences and commercial sectors. Through focus, passion and
collaboration, Huron provides guidance to support organizations as
they contend with the change transforming their industries and
businesses. 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 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, 2016 and
under Part II, Item 1A. "Risk Factors" in Huron's forthcoming
Quarterly Report on Form 10-Q for the quarter ended September 30,
2017, 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 EndedSeptember 30,
Nine Months EndedSeptember 30, 2017
2016 2017 2016 Revenues and
reimbursable expenses: Revenues $ 176,376 $ 183,400 $ 546,643 $
548,148 Reimbursable expenses 17,982 19,093 55,862
54,636 Total revenues and reimbursable expenses
194,358 202,493 602,505 602,784
Direct costs and reimbursable
expenses (exclusive of depreciation and amortization shown in
operating expenses): Direct costs 113,775 108,354 343,185 323,310
Amortization of intangible assets and software development costs
2,657 4,052 8,388 11,278 Reimbursable expenses 18,079 18,956
55,901 54,747 Total direct costs and
reimbursable expenses 134,511 131,362 407,474
389,335
Operating expenses and other losses (gains),
net: Selling, general and administrative expenses 41,576 38,256
132,137 119,937 Restructuring charges 1,347 1,049 5,295 4,129 Other
losses (gains), net 880 494 (222 ) 494 Depreciation and
amortization 9,946 8,092 28,549 23,064 Goodwill impairment charge —
— 209,600 — Total operating expenses
and other losses (gains), net 53,749 47,891 375,359
147,624 Operating income (loss) 6,098 23,240 (180,328
) 65,825
Other income (expense), net: Interest expense, net
of interest income (4,880 ) (4,176 ) (13,811 ) (12,270 ) Other
income, net 930 489 3,204 1,236 Total
other expense, net (3,950 ) (3,687 ) (10,607 ) (11,034 ) Income
(loss) from continuing operations before income tax expense 2,148
19,553 (190,935 ) 54,791 Income tax expense (benefit) (1,984 )
7,265 (49,740 ) 19,498 Net income (loss) from
continuing operations 4,132 12,288 (141,195 ) 35,293 Income (loss)
from discontinued operations, net of tax 238 4 690
(1,830 ) Net income (loss) $ 4,370 $ 12,292 $
(140,505 ) $ 33,463 Net earnings (loss) per basic share: Net
income (loss) from continuing operations $ 0.19 $ 0.58 $ (6.59 ) $
1.67 Income (loss) from discontinued operations, net of tax 0.01
— 0.03 (0.08 ) Net income (loss) $ 0.20
$ 0.58 $ (6.56 ) $ 1.59 Net earnings (loss) per
diluted share: Net income (loss) from continuing operations $ 0.19
$ 0.57 $ (6.59 ) $ 1.65 Income (loss) from discontinued operations,
net of tax 0.01 — 0.03 (0.09 ) Net income
(loss) $ 0.20 $ 0.57 $ (6.56 ) $ 1.56 Weighted
average shares used in calculating earnings per share: Basic 21,505
21,076 21,413 21,084 Diluted 21,622 21,445 21,413 21,427
Comprehensive income (loss): Net income (loss) $ 4,370 $
12,292 $ (140,505 ) $ 33,463 Foreign currency translation
adjustments, net of tax 609 50 1,835 52 Unrealized loss on
investment, net of tax (2,200 ) (2,038 ) (1,669 ) (1,163 )
Unrealized gain (loss) on cash flow hedging instruments, net of tax
23 121 (4 ) (27 ) Other comprehensive income (loss)
(1,568 ) (1,867 ) 162 (1,138 ) Comprehensive income (loss) $
2,802 $ 10,425 $ (140,343 ) $ 32,325
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per
share amounts)
(Unaudited)
September 30,2017 December
31,2016 Assets Current assets: Cash and cash
equivalents $ 8,660 $ 17,027 Receivables from clients, net 94,025
94,246 Unbilled services, net 65,432 51,290 Income tax receivable
4,018 4,211 Prepaid expenses and other current assets 15,106
13,308 Total current assets 187,241 180,082 Property and
equipment, net 47,075 32,434 Deferred income taxes, net 15,159 —
Long-term investment 31,937 34,675 Other non-current assets 26,149
24,814 Intangible assets, net 80,861 81,348 Goodwill 689,375
799,862 Total assets $ 1,077,797 $ 1,153,215
Liabilities and stockholders’ equity Current liabilities:
Accounts payable $ 10,259 $ 7,273 Accrued expenses and other
current liabilities 22,846 19,788 Accrued payroll and related
benefits 62,451 82,669 Accrued contingent consideration for
business acquisitions 7,743 1,985 Deferred revenues 25,495
24,053 Total current liabilities 128,794 135,768 Non-current
liabilities: Deferred compensation and other liabilities 20,336
24,171 Accrued contingent consideration for business acquisitions,
net of current portion 14,726 6,842 Long-term debt, net of current
portion 374,328 292,065 Deferred lease incentives 15,236 10,703
Deferred income taxes, net — 35,633 Total non-current
liabilities 424,626 369,414
Commitments and contingencies
Stockholders’ equity Common stock; $0.01 par value;
500,000,000 shares authorized; 24,560,468 and 24,126,118 shares
issued at September 30, 2017 and December 31, 2016, respectively
241 235 Treasury stock, at cost, 2,428,971 and 2,408,343 shares at
September 30, 2017 and December 31, 2016, respectively (121,395 )
(113,195 ) Additional paid-in capital 431,211 405,895 Retained
earnings 210,543 351,483 Accumulated other comprehensive income
3,777 3,615 Total stockholders’ equity 524,377
648,033 Total liabilities and stockholders’ equity $
1,077,797 $ 1,153,215
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Nine Months EndedSeptember 30,
2017 2016 Cash flows from operating
activities: Net income (loss) $ (140,505 ) $ 33,463 Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization 37,881 34,344 Share-based
compensation 11,711 13,145 Amortization of debt discount and
issuance costs 7,604 7,171 Goodwill impairment charge 209,600 —
Allowances for doubtful accounts and unbilled services 3,812 7,107
Deferred income taxes (51,062 ) 4,980 Gain on sale of business (931
) — Change in fair value of contingent consideration liabilities
(222 ) 494 Changes in operating assets and liabilities, net of
acquisitions: (Increase) decrease in receivables from clients 9,025
9,442 (Increase) decrease in unbilled services (12,251 ) (21,492 )
(Increase) decrease in current income tax receivable / payable, net
(32 ) (3,039 ) (Increase) decrease in other assets (1,802 ) 12,669
Increase (decrease) in accounts payable and accrued liabilities
1,850 (2,860 ) Increase (decrease) in accrued payroll and related
benefits (21,928 ) (17,707 ) Increase (decrease) in deferred
revenues (318 ) 2,028 Net cash provided by operating
activities 52,432 79,745
Cash flows from investing
activities: Purchases of property and equipment, net (20,139 )
(9,372 ) Investment in life insurance policies (1,826 ) (1,890 )
Distributions from life insurance policies 2,889 — Purchases of
businesses, net of cash acquired (106,915 ) (69,133 )
Capitalization of internally developed software costs (938 ) (838 )
Proceeds from note receivable 177 — Proceeds from sale of business
1,499 — Net cash used in investing activities
(125,253 ) (81,233 )
Cash flows from financing activities:
Proceeds from exercise of stock options — 123 Shares redeemed for
employee tax withholdings (4,450 ) (4,837 ) Share repurchases —
(55,265 ) Proceeds from borrowings under credit facility 241,000
168,000 Repayments of debt (170,082 ) (156,000 ) Payments for debt
issuance costs (395 ) — Payment of contingent consideration
liabilities (1,811 ) — Net cash provided by (used in)
financing activities 64,262 (47,979 ) Effect of exchange
rate changes on cash 192 133 Net decrease in cash and cash
equivalents (8,367 ) (49,334 ) Cash and cash equivalents at
beginning of the period 17,027 58,437 Cash and cash
equivalents at end of the period $ 8,660 $ 9,103
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER
OPERATING DATA
(Unaudited)
Three Months EndedSeptember 30,
Percent
Increase
(Decrease)
Segment and Consolidated Operating Results (in thousands):
2017 2016 Healthcare: Revenues $ 79,582
$ 103,425 (23.1 )% Operating income $ 25,778 $ 38,824 (33.6 )%
Segment operating income as a percentage of segment revenues 32.4 %
37.5 %
Education: Revenues $ 41,422 $ 38,621 7.3 % Operating
income $ 7,762 $ 10,896 (28.8 )% Segment operating income as a
percentage of segment revenues 18.7 % 28.2 %
Business
Advisory: Revenues $ 55,372 $ 41,354 33.9 % Operating income $
12,832 $ 8,608 49.1 % Segment operating income as a percentage of
segment revenues 23.2 % 20.8 %
Total Company: Revenues $
176,376 $ 183,400 (3.8 )% Reimbursable expenses 17,982
19,093 (5.8 )%
Total revenues and reimbursable
expenses $ 194,358 $ 202,493 (4.0 )%
Statements of Operations reconciliation: Segment operating
income $ 46,372 $ 58,328 (20.5 )% Items not allocated at the
segment level: Other operating expenses 29,448 26,502 11.1 % Other
losses, net 880 494 78.1 % Depreciation and amortization 9,946
8,092 22.9 % Total operating income 6,098 23,240
(73.8 )% Other expense, net 3,950 3,687 7.1 %
Income from continuing operations before income tax expense
$ 2,148 $ 19,553 (89.0 )%
Other Operating
Data: Number of full-time billable consultants (at period
end) (2): Healthcare 761 1,010 (24.7 )% Education
536 466 15.0 % Business Advisory 830 545 52.3 % Total
2,127 2,021 5.2 %
Average number of full-time billable
consultants (for the period) (2): Healthcare 741
984 Education 527 447 Business Advisory 779 530 Total
2,047 1,961
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER
OPERATING DATA (CONTINUED)
(Unaudited)
Three Months Ended September 30,
Other Operating Data (continued): 2017
2016 Full-time billable consultant utilization rate
(3): Healthcare 80.3 % 77.0 % Education 70.9 % 68.0 %
Business Advisory 72.9 % 73.5 % Total 75.0 % 73.9 %
Full-time
billable consultant average billing rate per hour
(4): Healthcare $ 190 $ 203 Education $ 210 $ 220
Business Advisory $ 197 $ 203 Total $ 197 $ 207
Revenue per
full-time billable consultant (in thousands): Healthcare $ 69 $
73 Education $ 69 $ 72 Business Advisory $ 67 $ 72 Total $ 68 $ 72
Average number of full-time equivalents (for the period)
(5): Healthcare 214 204 Education 35 40 Business
Advisory 26 25 Total 275 269
Revenue per full-time
equivalent (in thousands): Healthcare $ 134 $ 156 Education $
138 $ 158 Business Advisory $ 108 $ 126 Total $ 132 $ 154
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER
OPERATING DATA (CONTINUED)
(Unaudited)
Nine Months EndedSeptember 30,
Percent
Increase
(Decrease)
Segment and Consolidated Operating Results (in thousands):
2017 2016 Healthcare: Revenues $
261,261 $ 323,531 (19.2 )% Operating income $ 83,580 $ 119,229
(29.9 )% Segment operating income as a percentage of segment
revenues 32.0 % 36.9 %
Education: Revenues $ 127,629 $
111,816 14.1 % Operating income $ 31,772 $ 31,474 0.9 % Segment
operating income as a percentage of segment revenues 24.9 % 28.1 %
Business Advisory: Revenues $ 157,753 $ 112,801 39.9 %
Operating income $ 34,890 $ 23,275 49.9 % Segment operating income
as a percentage of segment revenues 22.1 % 20.6 %
Total
Company: Revenues $ 546,643 $ 548,148 (0.3 )% Reimbursable
expenses 55,862 54,636 2.2 %
Total revenues and
reimbursable expenses $ 602,505 $ 602,784 — %
Statements of Operations reconciliation: Segment operating
income $ 150,242 $ 173,978 (13.6 )% Items not allocated at the
segment level: Other operating expenses 92,643 84,595 9.5 % Other
losses (gains), net (222 ) 494 N/M Depreciation and amortization
expense 28,549 23,064 23.8 % Goodwill impairment charge (1) 209,600
— N/M Total operating income (loss) (180,328 ) 65,825
N/M Other expense, net 10,607 11,034 (3.9 )%
Income (loss) from continuing operations before income tax
expense $ (190,935 ) $ 54,791 N/M
Other Operating
Data: Number of full-time billable consultants (at period
end) (2): Healthcare 761 1,010 (24.7 )% Education
536 466 15.0 % Business Advisory 830 545 52.3 % Total
2,127 2,021 5.2 %
Average number of full-time billable
consultants (for the period) (2): Healthcare 805
1,005 Education 497 425 Business Advisory 710 465
Total 2,012 1,895
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER
OPERATING DATA (CONTINUED)
(Unaudited)
Nine Months EndedSeptember 30, Other
Operating Data (continued): 2017 2016
Full-time billable consultant utilization rate
(3): Healthcare 76.6 % 78.6 % Education 73.6 % 71.2 %
Business Advisory 73.4 % 72.4 % Total 74.7 % 75.3 %
Full-time
billable consultant average billing rate per hour
(4): Healthcare $ 200 $ 209 Education $ 215 $ 217
Business Advisory $ 195 $ 216 Total $ 202 $ 212
Revenue per
full-time billable consultant (in thousands): Healthcare $ 211
$ 231 Education $ 226 $ 224 Business Advisory $ 212 $ 229 Total $
215 $ 229
Average number of full-time equivalents (for the
period) (5): Healthcare 215 201 Education 36 37
Business Advisory 21 19 Total 272 257
Revenue per
full-time equivalent (in thousands): Healthcare $ 427 $ 456
Education $ 419 $ 436 Business Advisory $ 342 $ 335 Total $ 420 $
444
__________
(1) The non-cash goodwill impairment charge is not allocated
at the segment level because the underlying goodwill asset is
reflective of Huron's corporate investment in the segments. Huron
does not include the impact of goodwill impairment charges in its
evaluation of segment performance. (2) Consists of full-time
professionals who provide consulting services and generate revenues
based on the number of hours worked. (3) Utilization rate
for full-time billable consultants is calculated by dividing the
number of hours all 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.
(4) 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. (5) Consists of cultural transformation consultants
within the Studer Group solution, which include coaches and their
support staff, consultants who work variable schedules as needed by
clients, and full-time employees who provide software support and
maintenance services to clients. N/M - Not Meaningful
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME (LOSS)
FROM CONTINUING OPERATIONS
TO ADJUSTED EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION (6)
(In thousands)
(Unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30, 2017
2016 2017 2016 Revenues $
176,376 $ 183,400 $ 546,643 $ 548,148
Net income (loss) from continuing operations $ 4,132 $ 12,288 $
(141,195 ) $ 35,293 Add back: Income tax expense (benefit) (1,984 )
7,265 (49,740 ) 19,498 Interest expense, net of interest income
4,880 4,176 13,811 12,270 Depreciation and amortization 12,603
12,144 36,937 34,342
Earnings (loss)
before interest, taxes, depreciation and amortization (EBITDA)
(6) 19,631 35,873 (140,187 ) 101,403 Add back: Restructuring
charges 1,347 1,049 5,295 4,129 Other losses (gains), net 880 494
(222 ) 494 Goodwill impairment charge — — 209,600 — Gain on sale of
business — — (931 ) — Foreign currency transaction losses (gains),
net (385 ) 84 (449 ) (270 )
Adjusted EBITDA
(6) $ 21,473 $ 37,500 $ 73,106 $
105,756
Adjusted EBITDA as a percentage of revenues
(6) 12.2 % 20.4 % 13.4 % 19.3 %
RECONCILIATION OF NET INCOME (LOSS)
FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME (LOSS) FROM
CONTINUING OPERATIONS (6)
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30, 2017
2016 2017 2016 Net income (loss)
from continuing operations $ 4,132 $ 12,288 $
(141,195 ) $ 35,293
Weighted average shares – diluted
21,622 21,445 21,413 21,427
Diluted earnings (loss) per share
from continuing operations $ 0.19 $ 0.57 $ (6.59
) $ 1.65 Add back: Amortization of intangible assets 8,834
8,771 26,432 24,369 Restructuring charges 1,347 1,049 5,295 4,129
Other losses (gains), net 880 494 (222 ) 494 Goodwill impairment
charge — — 209,600 — Non-cash interest on convertible notes 1,974
1,883 5,853 5,582 Gain on sale of business — — (931 ) — Tax effect
(5,100 ) (4,794 ) (70,362 ) (13,588 ) Tax benefit related to
"check-the-box" election (2,748 ) — (2,748 ) — Total
adjustments, net of tax 5,187 7,403 172,917
20,986
Adjusted net income from continuing operations
(6) $ 9,319 $ 19,691 $ 31,722 $ 56,279
Adjusted weighted average shares - diluted (7)
21,622 21,445 21,585 21,427
Adjusted diluted earnings per share
from continuing operations (6) $ 0.43 $ 0.92
$ 1.47 $ 2.63
____________
(6) In evaluating the company’s financial performance and
outlook, management uses earnings (loss) before interest, taxes,
depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted
EBITDA as a percentage of revenues, adjusted net income (loss) from
continuing operations, and adjusted diluted earnings (loss) 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. (7) As the company reported a
net loss for the nine months ended September 30, 2017, GAAP diluted
weighted average shares outstanding equals the basic weighted
average shares outstanding for that period. The non-GAAP
adjustments described above resulted in adjusted net income from
continuing operations for those periods. Therefore, dilutive common
stock equivalents have been included in the calculation of adjusted
diluted weighted average shares outstanding.
HURON CONSULTING GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES FOR
FULL YEAR 2017 OUTLOOK
RECONCILIATION OF NET LOSS
TO ADJUSTED EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION (8)
(In millions)
(Unaudited)
Year Ending December 31, 2017
Guidance Range Low High Projected
revenues - GAAP $ 733.0 $ 743.0
Projected net
loss - GAAP $ (132.0 ) $ (130.0 ) Add back: Income tax benefit
(47.0 ) (45.0 ) Interest expense, net of interest income 18.0 18.0
Depreciation and amortization 49.0 49.0
Projected
loss before interest, taxes, depreciation and amortization
(EBITDA) (8) (112.0 ) (108.0 ) Add back: Restructuring
charges 6.0 6.0 Other gains, net (1.0 ) (1.0 ) Goodwill impairment
charge 210.0 210.0 Gain on sale of business and foreign currency
transaction gains, net (1.0 ) (1.0 )
Projected adjusted
EBITDA (8) $ 102.0 $ 106.0
Projected
adjusted EBITDA as a percentage of projected revenues
(8) 13.9 % 14.2 %
RECONCILIATION OF NET LOSS
TO ADJUSTED NET INCOME
(8)
(In millions, except per share
amounts)
(Unaudited)
Year Ending December
31, 2017 Guidance Range Low High
Projected net loss - GAAP $ (132.0 ) $ (130.0 )
Projected
diluted loss per share - GAAP $ (6.15 ) $ (6.05 ) Add back:
Amortization of intangible assets 35.0 35.0 Restructuring charges
6.0 6.0 Other gains, net (1.0 ) (1.0 ) Goodwill impairment charge
210.0 210.0 Non-cash interest on convertible notes 8.0 8.0 Gain on
sale of business (1.0 ) (1.0 ) Tax effect (74.5 ) (74.5 ) Tax
benefit related to "check-the-box" election (3.0 ) (3.0 ) Total
adjustments, net of tax 179.5 179.5
Projected
adjusted net income (8) $ 47.5 $ 49.5
Projected adjusted diluted earnings per share (8) $
2.20 $ 2.30
__________
(8) In evaluating the company’s outlook, management uses
projected EBITDA, projected adjusted EBITDA, projected adjusted
EBITDA as a percentage of revenues, projected adjusted net income,
and projected adjusted diluted earnings per share, which are
non-GAAP measures. Management believes that the use of such
measures, as supplements to projected net loss and projected
diluted loss per share, 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 without the effect of non-cash or
other one-time items. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171101006734/en/
HuronMEDIA CONTACTSarah McHugh,
312-880-2624smchugh@huronconsultinggroup.comorINVESTOR
CONTACTJohn D. Kelly,
312-583-8722investor@huronconsultinggroup.com
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