Market Overview

Huron Announces Second Quarter 2018 Financial Results and Updates 2018 Guidance

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SECOND QUARTER 2018 HIGHLIGHTS

  • Revenues increased $16.1 million, or 8.9%, to $197.5 million in Q2
    2018, compared to $181.4 million in Q2 2017.
  • Net income from continuing operations was $5.9 million in Q2 2018,
    compared to net loss from continuing operations of $150.5 million in
    Q2 2017, which included a non-cash pretax goodwill impairment charge
    of $209.6 million related to the company's Healthcare segment.
  • Adjusted EBITDA(6), a non-GAAP measure, was $24.7 million
    in Q2 2018, compared to $24.5 million in Q2 2017.
  • Diluted earnings per share from continuing operations was $0.27 in Q2
    2018 compared to diluted loss per share from continuing operations of
    $7.00 in Q2 2017.
  • Adjusted diluted earnings per share from continuing operations(6),
    a non-GAAP measure, increased $0.09, or 18.4%, to $0.58 in Q2 2018,
    compared to $0.49 in Q2 2017.

YEAR TO DATE 2018 HIGHLIGHTS AND 2018 GUIDANCE

  • Revenues increased $21.0 million, or 5.7%, to $391.2 million for the
    first six months of 2018, compared to $370.3 million for the same
    period in 2017.
  • Net income from continuing operations was $2.6 million for the first
    six months of 2018, compared to net loss from continuing operations of
    $145.3 million for the same period in 2017.
  • Adjusted EBITDA(6), a non-GAAP measure, was $38.4 million
    for the first six months of 2018, compared to $51.6 million for the
    same period in 2017.
  • Diluted earnings per share from continuing operations was $0.12 for
    the first six months of 2018, compared to diluted loss per share from
    continuing operations of $6.80 for the first six months of 2017.
  • Adjusted diluted earnings per share from continuing operations(6),
    a non-GAAP measure, was $0.78 for the first six months of 2018,
    compared to $1.04 for the first six months of 2017.
  • Huron updates full year 2018 guidance, including revenue expectations
    in a range of $755.0 million to $775.0 million.

Global professional services firm Huron (NASDAQ:HURN) today announced
financial results from continuing operations for the second quarter
ended June 30, 2018.

"Our second quarter performance was driven by organic growth across all
three segments, reflecting solid demand for our services. We remain
encouraged by our prospects for continued growth during the remainder of
2018," said James
H. Roth
, chief executive officer and president of Huron.
"We continue to make strategic investments that we believe will drive
long-term shareholder value through organic growth and increased
profitability over time."

SECOND QUARTER 2018 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $16.1 million, or 8.9%, to $197.5 million for the
second quarter of 2018, compared to $181.4 million for the second
quarter of 2017.

Net income from continuing operations was $5.9 million for the second
quarter of 2018, compared to net loss from continuing operations of
$150.5 million for the same period last year. Diluted earnings per share
from continuing operations was $0.27 for the second quarter of 2018,
compared to diluted loss per share from continuing operations of $7.00
for the second quarter of 2017.

Second quarter 2018 earnings before interest, taxes, depreciation and
amortization ("EBITDA")(6) was $23.3 million,
compared to loss before interest, taxes, depreciation and amortization(6)
of $186.6 million in the same 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):

  Three Months Ended
June 30,
2018   2017
Restructuring charges $ 1,984 $ 3,669
Litigation and other gains, net $ (6,707 ) $ (1,102 )
Amortization of intangible assets $ 5,996 $ 8,945
Goodwill impairment charge $ $ 209,600
Non-cash interest on convertible notes $ 2,046 $ 1,951
Loss (gain) on sale of businesses $ 5,831 $ (931 )
Tax effect $ (2,232 ) $ (61,070 )
Foreign currency transaction losses (gains) $ 240 $ (81 )
 

Adjusted EBITDA(6) was $24.7 million, or 12.5% of revenues,
in the second quarter of 2018, compared to $24.5 million, or 13.5% of
revenues, in the same quarter last year. Adjusted net income from
continuing operations(6) increased $2.2 million, or 20.8%, to
$12.8 million, or $0.58 per diluted share, for the second quarter of
2018, compared to $10.6 million, or $0.49 per diluted share, for the
same period in 2017.

The average number of full-time billable consultants(2)
increased 5.0% to 2,127 in the second quarter of 2018 from 2,026 in the
same quarter last year. Full-time billable consultant utilization rate(3)
was 76.2% during the second quarter of 2018, compared to 75.1% during
the same period last year. Average billing rate per hour for full-time
billable consultants(4) was $199 for the second quarter of
2018, compared to $194 for the second quarter of 2017. The average
number of full-time equivalent professionals(5) was 278 in
the second quarter of 2018 compared to 266 for the same period in 2017.

YEAR-TO-DATE 2018 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $21.0 million, or 5.7%, to $391.2 million for the
first half of 2018, compared to $370.3 million for the first half of
2017. Revenues for the first six months of 2018 included $6.4 million of
incremental revenues due to the full period impact of Huron's
acquisition of Innosight, which was completed in March 2017, as well as
revenues from the company's acquisition of the international assets of
ADI Strategies, which was completed in April 2017 and fully integrated
into the Business Advisory segment.

Net income from continuing operations was $2.6 million for the first
half of 2018, compared to net loss from continuing operations of $145.3
million for the first half of 2017. Diluted earnings per share from
continuing operations was $0.12 for the first half of 2018, compared to
diluted loss per share from continuing operations of $6.80 for the same
prior year period.

EBITDA(6) was $35.5 million for first half of 2018, compared
to loss before interest, taxes, depreciation, and amortization(6)
of $159.8 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):

  Six Months Ended
June 30,
2018   2017
Restructuring charges $ 2,696 $ 3,948
Litigation and other gains, net $ (5,877 ) $ (1,102 )
Amortization of intangible assets $ 12,299 $ 17,597
Goodwill impairment charge $ $ 209,600
Non-cash interest on convertible notes $ 4,067 $ 3,879
Loss (gain) on sale of businesses $ 5,831 $ (931 )
Tax effect $ (4,797 ) $ (65,262 )
Tax expense related to the enactment of Tax Cut and Jobs Act of 2017 $ 132 $
Foreign currency transaction losses (gains) $ 187 $ (64 )
 

Adjusted EBITDA(6) was $38.4 million, or 9.8% of revenues, in
the first half of 2018, compared to $51.6 million, or 13.9% of revenues,
in the comparable period last year. Adjusted net income from continuing
operations(6) was $17.0 million, or $0.78 per diluted share,
for the first six months of 2018, compared to $22.4 million, or $1.04
per diluted share, for the comparable period in 2017.

The average number of full-time billable consultants(2) increased
6.8% to 2,131 in the first half of 2018, compared to 1,995 in the
same period last year. Full-time billable consultant utilization rate(3)
was 75.0% for the first six months of 2018, compared to 74.5% in the
same period last year. Average billing rate per hour for full-time
billable consultants(4) was $200 for the first half of 2018,
compared to $204 for the same period last year. The average number of
full-time equivalent professionals(5) was 271 in the
first half of 2018, compared to 270 for the comparable period in 2017.

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 2018 revenues by operating segment as a
percentage of total company revenues are as follows: Healthcare
(46%); Business
Advisory
(29%); and Education
(25%). Financial results by segment are included in the attached
schedules and in Huron's forthcoming Quarterly Report on Form 10-Q
filing for the quarter ended June 30, 2018.

OUTLOOK FOR 2018(8)

Based on currently available information, the company updated its
outlook for full year 2018. The company now anticipates full year 2018
revenues before reimbursable expenses in a range of $755.0 million to
$775.0 million. The company also anticipates net income in a range of
$19.5 million to $22.5 million, EBITDA in a range of $85.0 million to
$91.0 million, and adjusted EBITDA in a range of $87.0 million to $93.0
million. GAAP diluted earnings per share is expected in a range of $0.85
to $1.05, and non-GAAP adjusted diluted earnings per share is expected
in a range of $2.00 to $2.20.

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

SECOND QUARTER 2018 WEBCAST

The company will host a webcast to discuss its financial results today,
July 31, 2018, 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 from continuing operations, and
adjusted diluted earnings per share from continuing operations, which
are non-GAAP measures. Management uses these non-GAAP financial measures
to gain an understanding of the company's comparative operating
performance (when comparing such results with previous periods or
forecasts). These non-GAAP financial measures are used by management in
their financial and operating decision making because management
believes they reflect the company's ongoing business in a manner that
allows for meaningful period-to-period comparisons. Management also uses
these non-GAAP financial measures when publicly providing their business
outlook, for internal management purposes, and as a basis for evaluating
potential acquisitions and dispositions. Management believes that these
non-GAAP financial measures provide useful information to investors and
others in understanding and evaluating Huron's current operating
performance and future prospects in the same manner as management does,
if they so choose, and in comparing in a consistent manner Huron's
current financial results with Huron's past financial results. Investors
should recognize that these non-GAAP measures might not be comparable to
similarly titled measures of other companies. These measures should be
considered in addition to, and not as a substitute for or superior to,
any measure of performance, cash flows or liquidity prepared in
accordance with accounting principles generally accepted in the United
States.

ABOUT HURON

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

Statements in this press release that are not historical in nature,
including those concerning the company's current expectations about its
future 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, 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 (LOSS)
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenues and reimbursable expenses:
Revenues $ 197,544 $ 181,418 $ 391,223 $ 370,267
Reimbursable expenses 20,733   20,930   38,352   37,880  
Total revenues and reimbursable expenses 218,277 202,348 429,575 408,147
Direct costs and reimbursable expenses (exclusive of
depreciation and amortization shown in operating expenses):
Direct costs 127,574 113,669 260,360 229,410
Amortization of intangible assets and software development costs 968 2,745 2,186 5,731
Reimbursable expenses 20,915   20,953   38,464   37,822  
Total direct costs and reimbursable expenses 149,457   137,367   301,010   272,963  
Operating expenses and other gains, net:
Selling, general and administrative expenses 45,488 43,705 92,566 90,561
Restructuring charges 1,984 3,669 2,696 3,948
Litigation and other gains, net (6,707 ) (1,102 ) (5,877 ) (1,102 )
Depreciation and amortization 8,917 9,684 17,720 18,603
Goodwill impairment charge   209,600     209,600  
Total operating expenses and other gains, net 49,682   265,556   107,105   321,610  
Operating income (loss) 19,138 (200,575 ) 21,460 (186,426 )
Other income (expense), net:
Interest expense, net of interest income (5,022 ) (4,927 ) (10,008 ) (8,931 )
Other income (expense), net (5,693 ) 1,516   (5,838 ) 2,274  
Total other expense, net (10,715 ) (3,411 ) (15,846 ) (6,657 )
Income (loss) from continuing operations before taxes 8,423 (203,986 ) 5,614 (193,083 )
Income tax expense (benefit) 2,561   (53,504 ) 2,974   (47,756 )
Net income (loss) from continuing operations 5,862 (150,482 ) 2,640 (145,327 )
Income (loss) from discontinued operations, net of tax (490 ) 309   (532 ) 452  
Net income (loss) $ 5,372   $ (150,173 ) $ 2,108   $ (144,875 )
Net earnings (loss) per basic share:
Net income (loss) from continuing operations $ 0.27 $ (7.00 ) $ 0.12 $ (6.80 )
Income (loss) from discontinued operations, net of tax (0.02 ) 0.01   (0.02 ) 0.02  
Net income (loss) $ 0.25   $ (6.99 ) $ 0.10   $ (6.78 )
Net earnings (loss) per diluted share:
Net income (loss) from continuing operations $ 0.27 $ (7.00 ) $ 0.12 $ (6.80 )
Income (loss) from discontinued operations, net of tax (0.02 ) 0.01   (0.02 ) 0.02  
Net income (loss) $ 0.25   $ (6.99 ) $ 0.10   $ (6.78 )
Weighted average shares used in calculating earnings per share:
Basic 21,709 21,492 21,651 21,366
Diluted 21,918 21,492 21,866 21,366
Comprehensive income (loss):
Net income (loss) $ 5,372 $ (150,173 ) $ 2,108 $ (144,875 )
Foreign currency translation adjustments, net of tax (954 ) 802 (920 ) 1,226
Unrealized gain (loss) on investment, net of tax 3,159 (1,246 ) 5,325 531
Unrealized gain (loss) on cash flow hedging instruments, net of tax 183   (72 ) 615   (27 )
Other comprehensive income (loss) 2,388   (516 ) 5,020   1,730  
Comprehensive income (loss) $ 7,760   $ (150,689 ) $ 7,128   $ (143,145 )
   
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
June 30, December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 10,452 $ 16,909
Receivables from clients, net 105,095 101,778
Unbilled services, net 78,227 57,618
Income tax receivable 2,540 4,039
Prepaid expenses and other current assets 13,552   10,951  
Total current assets 209,866 191,295
Property and equipment, net 42,958 45,541
Deferred income taxes, net 13,952 16,752
Long-term investment 47,099 39,904
Other non-current assets 30,783 25,375
Intangible assets, net 59,690 72,311
Goodwill 645,655   645,750  
Total assets $ 1,050,003   $ 1,036,928  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 9,570 $ 9,194
Accrued expenses and other current liabilities 20,461 20,144
Accrued payroll and related benefits 69,219 73,698
Accrued contingent consideration for business acquisitions 7,197 8,515
Deferred revenues 29,480   27,916  
Total current liabilities 135,927 139,467
Non-current liabilities:
Deferred compensation and other liabilities 22,457 20,895
Accrued contingent consideration for business acquisitions, net of
current portion
4,829 14,313
Long-term debt, net of current portion 352,438 342,507
Deferred lease incentives 14,544 15,333
Deferred income taxes, net 1,069   1,097  
Total non-current liabilities 395,337 394,145
Commitments and contingencies
Stockholders' equity

Common stock; $0.01 par value; 500,000,000 shares authorized;
24,987,534 and
24,560,468 shares issued at June 30, 2018 and
December 31, 2017, respectively

244 241

Treasury stock, at cost, 2,521,246 and 2,443,577 shares at June
30, 2018 and
December 31, 2017, respectively

(123,215 ) (121,994 )
Additional paid-in capital 441,813 434,256
Retained earnings 184,507 180,443
Accumulated other comprehensive income 15,390   10,370  
Total stockholders' equity 518,739   503,316  
Total liabilities and stockholders' equity $ 1,050,003   $ 1,036,928  
 
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
June 30,
2018   2017
Cash flows from operating activities:
Net income (loss) $ 2,108 $ (144,875 )
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 20,394 24,705
Share-based compensation 9,117 7,601
Amortization of debt discount and issuance costs 5,155 5,031
Goodwill impairment charge 209,600
Allowances for doubtful accounts and unbilled services 390 1,292
Deferred income taxes (52,685 )
Loss (gain) on sale of businesses 5,831 (931 )
Change in fair value of contingent consideration liabilities (3,350 ) (1,102 )
Changes in operating assets and liabilities, net of acquisitions and
divestitures:
(Increase) decrease in receivables from clients, net (5,384 ) 10,948
(Increase) decrease in unbilled services, net (19,693 ) (7,751 )
(Increase) decrease in current income tax receivable / payable, net 600 959
(Increase) decrease in other assets (4,140 ) (2,951 )
Increase (decrease) in accounts payable and accrued liabilities (996 ) 6,976
Increase (decrease) in accrued payroll and related benefits (4,736 ) (32,426 )
Increase (decrease) in deferred revenues 1,617   (1,105 )
Net cash provided by operating activities 6,913   23,286  
Cash flows from investing activities:
Purchases of property and equipment, net (5,131 ) (15,287 )
Investment in life insurance policies (1,689 ) (1,826 )
Purchases of businesses, net of cash acquired (215 ) (103,456 )
Capitalization of internally developed software costs (2,149 ) (528 )
Proceeds from note receivable 1,040 177
Divestitures of businesses (1,862 ) 1,499  
Net cash used in investing activities (10,006 ) (119,421 )
Cash flows from financing activities:
Proceeds from exercise of stock options 469
Shares redeemed for employee tax withholdings (2,720 ) (4,259 )
Proceeds from borrowings under credit facility 139,300 205,500
Repayments of debt (134,049 ) (106,500 )
Payments for debt issuance costs (1,385 ) (395 )
Payment of contingent consideration liabilities (4,906 ) (1,811 )
Net cash provided by (used in) financing activities (3,291 ) 92,535  
Effect of exchange rate changes on cash (73 ) 165
Net decrease in cash and cash equivalents (6,457 ) (3,435 )
Cash and cash equivalents at beginning of the period 16,909   17,027  
Cash and cash equivalents at end of the period $ 10,452   $ 13,592  
   
 
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
 

Three Months Ended
June 30,

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands): 2018   2017
Healthcare:
Revenues $ 91,500 $ 83,227 9.9 %
Operating income $ 27,072 $ 23,652 14.5 %
Segment operating income as a percentage of segment revenues 29.6 % 28.4 %
Business Advisory:
Revenues $ 57,720 $ 54,265 6.4 %
Operating income $ 14,218 $ 12,192 16.6 %
Segment operating income as a percentage of segment revenues 24.6 % 22.5 %
Education:
Revenues $ 48,324 $ 43,926 10.0 %
Operating income $ 11,255 $ 12,495 (9.9 )%
Segment operating income as a percentage of segment revenues 23.3 % 28.4 %
Total Company:
Revenues $ 197,544 $ 181,418 8.9 %
Reimbursable expenses 20,733   20,930   (0.9 )%
Total revenues and reimbursable expenses $ 218,277   $ 202,348   7.9 %
Statements of Operations reconciliation:
Segment operating income $ 52,545 $ 48,339 8.7 %
Items not allocated at the segment level:
Other operating expenses 31,197 30,732 1.5 %
Litigation and other gains, net (6,707 ) (1,102 ) N/M
Depreciation and amortization 8,917 9,684 (7.9 )%
Goodwill impairment charge (1)   209,600   N/M
Total operating income (loss) 19,138 (200,575 ) N/M
Other expense, net (10,715 ) (3,411 ) 214.1 %
Income (loss) from continuing operations before taxes $ 8,423   $ (203,986 ) N/M
Other Operating Data:
Number of full-time billable consultants (at period end) (2):
Healthcare 820 750 9.3 %
Business Advisory 738 737 0.1 %
Education 583   519   12.3 %
Total 2,141 2,006 6.7 %
Average number of full-time billable consultants (for the period)
(2)
:
Healthcare 805 807
Business Advisory 753 725
Education 569   494  
Total 2,127 2,026
 
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
 
Three Months Ended
June 30,
Other Operating Data (continued): 2018   2017
Full-time billable consultant utilization rate (3):
Healthcare 82.2 % 77.7 %
Business Advisory 69.3 % 72.4 %
Education 77.9 % 75.1 %
Total 76.2 % 75.1 %
Full-time billable consultant average billing rate per hour (4):
Healthcare $ 202 $ 182
Business Advisory $ 198 $ 190
Education $ 196 $ 219
Total $ 199 $ 194
Revenue per full-time billable consultant (in thousands):
Healthcare $ 77 $ 65
Business Advisory $ 73 $ 72
Education $ 74 $ 80
Total $ 75 $ 71
Average number of full-time equivalents (for the period) (5):
Healthcare 209 215
Business Advisory 25 17
Education 44   34  
Total 278 266
Revenue per full-time equivalent (in thousands):
Healthcare $ 140 $ 143
Business Advisory $ 119 $ 133
Education $ 147 $ 134
Total $ 139 $ 141
 
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
   

Six Months Ended
June 30,

Percent
Increase
(Decrease)

Segment and Consolidated Operating Results (in thousands): 2018   2017
Healthcare:
Revenues $ 181,395 $ 181,679 (0.2 )%
Operating income $ 51,532 $ 57,802 (10.8 )%
Segment operating income as a percentage of segment revenues 28.4 % 31.8 %
Business Advisory:
Revenues $ 113,615 $ 102,381 11.0 %
Operating income $ 23,216 $ 22,058 5.2 %
Segment operating income as a percentage of segment revenues 20.4 % 21.5 %
Education:
Revenues $ 96,213 $ 86,207 11.6 %
Operating income $ 22,680 $ 24,010 (5.5 )%
Segment operating income as a percentage of segment revenues 23.6 % 27.9 %
Total Company:
Revenues $ 391,223 $ 370,267 5.7 %
Reimbursable expenses 38,352   37,880   1.2 %
Total revenues and reimbursable expenses $ 429,575   $ 408,147   5.3 %
Statements of Operations reconciliation:
Segment operating income $ 97,428 $ 103,870 (6.2 )%
Items not allocated at the segment level:
Other operating expenses 64,125 63,195 1.5 %
Litigation and other gains, net (5,877 ) (1,102 ) N/M
Depreciation and amortization expense 17,720 18,603 (4.7 )%
Goodwill impairment charge (1)   209,600   N/M
Total operating income (loss) 21,460 (186,426 ) N/M
Other expense, net (15,846 ) (6,657 ) 138.0 %
Income (loss) from continuing operations before taxes $ 5,614   $ (193,083 ) N/M
Other Operating Data:
Number of full-time billable consultants (at period end) (2):
Healthcare 820 750 9.3 %
Business Advisory 738 737 0.1 %
Education 583   519   12.3 %
Total 2,141 2,006 6.7 %
Average number of full-time billable consultants (for the period)
(2)
:
Healthcare 792 837
Business Advisory 773 675
Education 566   483  

Total

2,131 1,995
 
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
 
Six Months Ended
June 30,
Other Operating Data (continued): 2018   2017
Full-time billable consultant utilization rate (3):
Healthcare 81.8 % 74.9 %
Business Advisory 67.7 % 73.7 %
Education 76.5 % 75.0 %
Total 75.0 % 74.5 %
Full-time billable consultant average billing rate per hour (4):
Healthcare $ 202 $ 205
Business Advisory $ 197 $ 194
Education $ 201 $ 218
Total $ 200 $ 204
Revenue per full-time billable consultant (in thousands):
Healthcare $ 153 $ 142
Business Advisory $ 140 $ 145
Education $ 148 $ 157
Total $ 147 $ 147
Average number of full-time equivalents (for the period) (5):
Healthcare 208 215
Business Advisory 21 18
Education 42   37  
Total 271 270
Revenue per full-time equivalent (in thousands):
Healthcare $ 288 $ 293
Business Advisory $ 261 $ 236
Education $ 302 $ 281
Total $ 288 $ 288
                       
    (1)   The non-cash goodwill impairment charge is not allocated at the
segment level because the underlying goodwill asset is reflective of
our corporate investment in the segments. We do not include the
impact of goodwill impairment charges in our 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 full-time billable consultants worked
on client assignments during a period by the total available working
hours for these consultants during the same period, assuming a
forty-hour work week, less paid holidays and vacation days.
 
(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 Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenues $ 197,544   $ 181,418   $ 391,223   $ 370,267  
Net income (loss) from continuing operations $ 5,862 $ (150,482 ) $ 2,640 $ (145,327 )
Add back:

Income tax expense (benefit)

2,561 (53,504 ) 2,974 (47,756 )
Interest expense, net of interest income 5,022 4,927 10,008 8,931
Depreciation and amortization 9,885   12,429   19,906   24,334  
Earnings (loss) before interest, taxes, depreciation and
amortization (EBITDA)
(6)
23,330 (186,630 ) 35,528 (159,818 )
Add back:
Restructuring charges 1,984 3,669 2,696 3,948
Litigation and other gains, net (6,707 ) (1,102 ) (5,877 ) (1,102 )
Goodwill impairment charges 209,600 209,600
Loss (gain) on sale of businesses 5,831 (931 ) 5,831 (931 )
Foreign currency transaction losses (gains), net 240   (81 ) 187   (64 )
Adjusted EBITDA (6) $ 24,678   $ 24,525   $ 38,365   $ 51,633  
Adjusted EBITDA as a percentage of revenues (6) 12.5 % 13.5 % 9.8 % 13.9 %
     
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)

(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018   2017
Net income (loss) from continuing operations $ 5,862   $ (150,482 ) $ 2,640   $ (145,327 )
Weighted average shares – diluted 21,918 21,492 21,866 21,366
Diluted earnings (loss) per share from continuing operations $ 0.27   $ (7.00 ) $ 0.12   $ (6.80 )
Add back:
Restructuring charges 1,984 3,669 2,696 3,948
Litigation and other gains, net (6,707 ) (1,102 ) (5,877 ) (1,102 )
Amortization of intangible assets 5,996 8,945 12,299 17,597
Goodwill impairment charge 209,600 209,600
Non-cash interest on convertible notes 2,046 1,951 4,067 3,879
Loss (gain) on sale of businesses 5,831 (931 ) 5,831 (931 )
Tax effect (2,232 ) (61,070 ) (4,797 ) (65,262 )
Tax expense related to the enactment of Tax Cut and Jobs Act of 2017     132    
Total adjustments, net of tax 6,918   161,062   14,351   167,729  
Adjusted net income from continuing operations (6) $ 12,780   $ 10,580   $ 16,991   $ 22,402  
Adjusted weighted average shares - diluted (7) 21,918 21,657 21,866 21,566
Adjusted diluted earnings per share from continuing operations (6) $ 0.58   $ 0.49   $ 0.78   $ 1.04  
               
(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 three and six months
ended June 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 2018 OUTLOOK
 
RECONCILIATION OF NET INCOME

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION
(8)

(In millions)
(Unaudited)
 
Year Ending
December 31, 2018
Guidance Range
Low   High
Projected revenues - GAAP $ 755.0   $ 775.0  
Projected net income - GAAP $ 19.5 $ 22.5
Add back:
Income tax expense 8.5 11.5
Interest expense, net of interest income 19.0 19.0
Depreciation and amortization 38.0   38.0  
Projected earnings before interest, taxes, depreciation and
amortization (EBITDA)
(8)
85.0 91.0
Add back:
Restructuring charges 2.5 2.5
Litigation and other gains, net (6.0 ) (6.0 )
Loss on sale of business 5.5   5.5  
Projected adjusted EBITDA (8) $ 87.0   $ 93.0  
Projected adjusted EBITDA as a percentage of projected revenues
(8)
11.5 % 12.0 %
 
RECONCILIATION OF NET INCOME

TO ADJUSTED NET INCOME (8)

(In millions, except per share amounts)
(Unaudited)
 
Year Ending
December 31, 2018
Guidance Range
Low   High
Projected net income - GAAP $ 19.5   $ 22.5  
Projected diluted earnings per share - GAAP $ 0.85   $ 1.05  
Add back:
Restructuring charges 2.5 2.5
Litigation and other gains, net (6.0 ) (6.0 )
Amortization of intangible assets 24.0 24.0
Non-cash interest on convertible notes 8.0 8.0
Loss on sale of business 5.5 5.5
Tax effect (9.0 ) (9.0 )
Total adjustments, net of tax 25.0   25.0  
Projected adjusted net income (8) $ 44.5   $ 47.5  
Projected adjusted diluted earnings per share (8) $ 2.00   $ 2.20  
               
(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 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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