Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider
of business consulting services, today announced a definitive
agreement to divest its Huron Legal practice to Consilio, Inc., a
global leader in eDiscovery and document review services, for
minimum gross proceeds of $112 million in cash upon closing, plus a
cash post-closing payment contingent upon final full year 2015
financial results and subject to certain other adjustments set
forth in the agreement. The sale is expected to close in the fourth
quarter of 2015 following the satisfaction of regulatory
requirements and other customary closing conditions. In connection
with the anticipated sale, Huron’s board of directors has increased
the Company’s current share repurchase authorization to $125
million inclusive of the $36.5 million remaining on the existing
share repurchase authorization.
“With its highly experienced team and exceptional focus on
client service, Huron Legal has achieved a leading reputation in
the industry,” said James H. Roth, president and chief executive
officer, Huron Consulting Group. “Combining Consilio’s global focus
and Huron Legal’s strong domestic presence will provide the scale
and expertise necessary to support the complex issues facing
corporate law departments and law firms around the world. We have
tremendous respect for the Consilio team, and we believe the
combined business will provide a compelling set of offerings to
meet the needs of its multinational clients and users of complex
legal services.”
“Huron Legal provides a highly complementary platform to our
business in terms of both service line and geographic presence,
but, more importantly, shares our commitment to delivering
high-value, quality service to clients,” added Andy Macdonald,
chief executive officer of Consilio. “We are excited to have Huron
Legal join the Consilio team.”
After the close of the transaction, Huron will concentrate its
resources and investments in the Company’s Healthcare, Education
and Life Sciences and Business Advisory segments to drive future
growth and generate long-term value for its shareholders.
“As Huron looks to the future, we remain excited by the dynamic
markets we serve, our incredible team of professionals, and our
ability to enhance our focus and resources to accelerate growth
within our businesses,” continued Roth.
Share Repurchase Authorization
In connection with the transaction, the Company’s board of
directors authorized an increase to the current share repurchase
program to $125 million inclusive of the $36.5 million remaining
under the existing share repurchase program, which was extended
through October 31, 2016. The amount and timing of the repurchases
will be determined by management and depend on a variety of
factors, including the trading price of the Company’s common stock,
general market and business conditions, and applicable legal
requirements.
“We believe Huron is well positioned to sustain growth through
its solid cash flow generated by a portfolio of service offerings
that meet the changing needs of our growing client base,” said C.
Mark Hussey, chief operating officer and chief financial officer,
Huron Consulting Group. “With the anticipated sale of our Legal
practice, we continue to maintain a strong and flexible balance
sheet that allows us to continue to invest in our businesses, while
returning excess cash to shareholders through share
repurchases.”
Transaction Overview
Under the terms of the definitive agreement, Huron will receive
minimum gross proceeds of $112 million in cash at closing, before
taxes and transaction-related expenses, plus a cash post-closing
payment contingent upon final full year 2015 financial results. The
Company expects net proceeds at closing after taxes and
transaction-related expenses to be approximately $90 million before
the contingent post-closing payment, if any. The Company intends to
use the net proceeds from the transaction primarily to purchase
shares under the increased share repurchase authorization.
The transaction is expected to close in the fourth quarter
of 2015, and is subject to clearance under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and other customary closing
conditions.
William Blair & Company acted as financial advisor and
Skadden, Arps, Slate, Meagher & Flom, LLP served as legal
advisor to the Company.
Further information regarding the material terms and conditions
contained in the definitive agreement will be included in Huron’s
forthcoming Current Report on Form 8-K in connection with the
closing of the transaction.
Outlook for 2015(1)
As a result of the pending transaction, the Huron Legal business
will be treated as a discontinued operation for 2015, and Huron
updates its full year 2015 guidance to reflect this change. Based
on currently available information, the Company updates guidance
for full year 2015 revenues before reimbursable expenses from
continuing operations to a range of $695 million to $699 million.
The Company also updates its earnings guidance to reflect
continuing operations and now expects EBITDA from continuing
operations in a range of $134 million to $137 million, Adjusted
EBITDA from continuing operations in a range of $138 million to
$141 million, GAAP diluted earnings per share from continuing
operations in a range of $1.91 to $1.95, and non-GAAP Adjusted
diluted earnings per share from continuing operations in a range of
$2.96 to $3.00.
In connection with the sale, the Company expects to reduce its
corporate costs by approximately $11 million to more closely align
to a level required to support the ongoing scale of its continuing
operations. In addition, Huron expects to incur restructuring
charges for certain costs not assumed by the purchaser. The amount
and timing of the restructuring charges have not yet been
determined and are expected to primarily relate to reductions in
office facilities and other costs of separating the divested
business.
Management will provide a more detailed discussion of the
transaction and its 2015 outlook during the Company’s investor
webcast.
The Company expects to announce its 2016 earnings guidance in
conjunction with the release of its fourth quarter and full year
2015 earnings results, which is currently scheduled to occur on
February 22, 2016.
Investor Webcast
The Company will host a conference call and webcast today,
December 10, 2015, at 6:00pm Eastern Time (5:00pm 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. To participate by telephone,
the dial-in number is (855) 789-8162 with passcode 3236844. A
replay of the webcast will be available approximately two hours
after the conclusion of the call and for 90 days thereafter.
A supplemental presentation that will be discussed on the
conference call and webcast will be made available in the Investor
Relations section of the Company’s website at
http://ir.huronconsultinggroup.com prior to the conference call,
and will be available for 90 days thereafter.
Investor Day 2016
The Company will host an investor day in Chicago on Wednesday,
February 24, 2016 at 10:00am Eastern Time (9:00am Central Time)
with presentations given by James H. Roth, president and chief
executive officer, and members of executive and practice
management. The presentations will include a question and answer
session.
Use of Non-GAAP Financial Measures(1)
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 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 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. With respect to our
proposed sale of Huron Legal, additional factors that could cause
actual results to differ materially from those indicated or implied
by the forward-looking statements include, among others: the
occurrence of any event, change or other circumstances that could
give rise to the termination of the definitive agreement we entered
into in connection with the proposed sale, the ability to satisfy
all conditions to closing, including obtaining clearances under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and complete
the proposed sale, the disruption of management’s attention from
our ongoing business operations due to the proposed sale and the
failure to achieve projected corporate cost savings. 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. RECONCILIATION
OF NON-GAAP MEASURES FOR FULL YEAR 2015 OUTLOOK
RECONCILIATION OF NET INCOME TO
ADJUSTED EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION (1)
(In millions) (Unaudited) Guidance
Ranges For the Year Ending December 31, 2015
Continuing Discontinued Total
Operations Operations Company
Low High Low High
Low High Projected revenues - GAAP $ 695.0
$ 699.0 $ 140.0 $ 142.0 $
835.0 $ 841.0 Projected net income (loss) -
GAAP $ 42.0 $ 44.0 $ (10.0 ) $ (9.0 ) $ 32.0 $ 35.0
Add back: Income tax expense 31.0 32.0 3.0 3.0 34.0 35.0 Interest
and other expenses 19.0 19.0 1.0 1.0 20.0 20.0 Depreciation and
amortization 42.0 42.0
9.0 9.0 51.0
51.0 Projected earnings before interest, taxes,
depreciation and
amortization (EBITDA) (1)
134.0 137.0 3.0 4.0 137.0 141.0 Add back: Loss on sale of Huron
Legal, net of taxes - - 17.0 17.0 17.0 17.0 Transaction expenses
related to sale of Huron Legal - - 8.0 8.0 8.0 8.0 Restructuring
charges 3.0 3.0 1.0 1.0 4.0 4.0 Litigation and other (gains) losses
1.0 1.0 -
- 1.0 1.0
Projected adjusted EBITDA (1) $ 138.0 $ 141.0
$ 29.0 $ 30.0 $ 167.0 $ 171.0
Projected adjusted EBITDA as a percentage of projected
revenues (1) 19.8 % 20.2 % 20.7 %
21.1 % 20.0 % 20.4 %
RECONCILIATION OF NET INCOME TO
ADJUSTED NET INCOME (1)
(In millions) (Unaudited) Guidance
Ranges For the Year Ending December 31, 2015
Continuing Discontinued Total
Operations Operations Company
Low High Low High
Low High Projected net income (loss) - GAAP $
42.0 $ 44.0 $ (10.0 ) $ (9.0 ) $ 32.0
$ 35.0 Projected diluted earnings (loss) per
share - GAAP $ 1.91 $ 1.95 $ (0.45 ) $
(0.43 ) $ 1.46 $ 1.52 Add back:
Loss on sale of Huron Legal, net of taxes - - 17.0 17.0 17.0 17.0
Transaction expenses related to sale of Huron Legal - - 8.0 8.0 8.0
8.0 Amortization of intangibles assets 29.0 29.0 1.0 1.0 30.0 30.0
Restructuring charges 3.0 3.0 1.0 1.0 4.0 4.0 Litigation and other
(gains) losses 1.0 1.0 - - 1.0 1.0 Non-cash interest on convertible
notes 7.0 7.0 - - 7.0 7.0 Tax effect (16.0 )
(16.0 ) (5.0 ) (5.0 ) (21.0 )
(21.0 ) Total adjustments, net of tax 24.0 24.0 22.0 22.0
46.0 46.0 Projected adjusted net income (1) 66.0
68.0 12.0 13.0
78.0 81.0 Projected
adjusted diluted earnings per share (1) $ 2.96 $ 3.00
$ 0.58 $ 0.60 $ 3.54 $
3.60 (1) 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 income and
Projected diluted earnings 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151210006518/en/
Huron Consulting Group Inc.Media Contact:Jenna
Nichols312-880-5693jnichols@huronconsultinggroup.comorInvestor
Contact:C. Mark HusseyorJohn
Kelly312-583-8722investor@huronconsultinggroup.com
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