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Huron Announces Record Third Quarter 2023 Financial Results and Increases 2023 Guidance

THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS

  • Total revenues increased $72.8 million, or 25.5%, to $358.2 million in Q3 2023 from $285.4 million in Q3 2022.
  • Net income increased $3.8 million, or 21.3%, to $21.5 million in Q3 2023 from $17.7 million in Q3 2022.
  • Adjusted EBITDA(6), a non-GAAP measure, increased $11.5 million, or 31.6%, to $48.0 million in Q3 2023 from $36.5 million in Q3 2022.
  • Diluted earnings per share increased $0.24, or 27.9%, to $1.10 in Q3 2023 from $0.86 in Q3 2022.
  • Adjusted diluted earnings per share(6), a non-GAAP measure, increased $0.38, or 37.6%, to $1.39 in Q3 2023 from $1.01 in Q3 2022.
  • Net cash provided by operating activities increased 54.7% to $68.8 million in Q3 2023, compared to $44.5 million in Q3 2022.

YEAR-TO-DATE 2023 FINANCIAL HIGHLIGHTS AND 2023 GUIDANCE

  • Total revenues increased $204.1 million, or 24.9%, to $1.02 billion for the first nine months of 2023 from $818.7 million for the same prior year period.
  • Revenues within all segments increased; led by Healthcare, the company's largest segment, which increased 31.5% to $502.0 million for the first nine months of 2023, compared to $381.7 million for the same prior year period.
  • Net income increased $1.2 million, or 2.0%, to $59.6 million for the first nine months of 2023, compared to $58.5 million for the same prior year period. Results for the first nine months of 2022 included a non-recurring, unrealized gain of $19.8 million, net of tax, related to the company's investment in a hospital-at-home company.
  • Adjusted EBITDA(6), a non-GAAP measure, increased $34.2 million, or 37.2%, to $126.0 million for the first nine months of 2023 from $91.8 million for the same prior year period.
  • Adjusted EBITDA as a percentage of revenues(6), a non-GAAP measure, increased 110 basis points to 12.3% for the first nine months of 2023 from 11.2% for the same prior year period.
  • Diluted earnings per share increased $0.25, or 8.9%, to $3.05 for the first nine months of 2023, compared to $2.80 for the same prior year period which included the non-recurring, unrealized gain of $19.8 million, net of tax, related to the company's investment in a hospital-at-home company.
  • Adjusted diluted earnings per share(6), a non-GAAP measure, increased $1.32, or 56.9%, to $3.64 for the first nine months of 2023 from $2.32 for the same prior year period.
  • Huron returned $88.4 million to shareholders in the first nine months of 2023 by repurchasing 1.1 million shares of the company's common stock.
  • Huron increases its previous full year 2023 revenue and earnings guidance ranges, including revenue expectations in a range of $1.35 billion to $1.37 billion.

OTHER HIGHLIGHT

  • For the 13th consecutive year in a row, Huron is named by Consulting magazine as a "Best Firm to Work For," recognizing the firm's commitment to its people and fostering a collaborative and inclusive culture.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the third quarter ended September 30, 2023.

“Huron's strong performance continued in the third quarter with revenues growing 26% over the prior year quarter and a ninth consecutive quarter of year-over-year margin expansion. In the first nine months of 2023, revenues grew organically across all three operating segments, led by 32% growth in the Healthcare segment, our largest business,” said Mark Hussey, chief executive officer and president of Huron. “Our results and increased guidance reflect ongoing strong demand for our broad portfolio of offerings, our deep industry expertise, and our highly talented team. Our third quarter results continue our strong multi-year performance and further demonstrate our ability to drive more sustainable revenue growth and margin expansion across our business.”

THIRD QUARTER 2023 RESULTS

Revenues increased $72.8 million, or 25.5%, to $358.2 million for the third quarter of 2023, compared to $285.4 million for the third quarter of 2022. This revenue growth was highlighted by 37.7% growth in the Consulting and Managed Services capability in the aggregate across all segments and growth in the Education and Healthcare segments' Digital capability of 22.7% and 13.9%, respectively, during the third quarter of 2023, compared to the same prior year period; and reflects the company's focus on accelerating growth in the healthcare and education industries.

Net income increased $3.8 million, or 21.3%, to $21.5 million for the third quarter of 2023, compared to $17.7 million for the same quarter last year. Diluted earnings per share increased $0.24, or 27.9%, to $1.10 for the third quarter of 2023, compared to $0.86 for the third quarter of 2022.

Third quarter 2023 earnings before interest, taxes, depreciation and amortization ("EBITDA")(6) increased $7.1 million, or 20.0%, to $42.6 million, compared to $35.5 million in the same prior year period.

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

September 30,

 

2023

 

2022

Amortization of intangible assets

$

1,997

 

 

$

2,818

 

Restructuring charges

$

5,402

 

 

$

1,332

 

Other gains, net

$

(14

)

 

$

(67

)

Transaction-related expenses

$

302

 

 

$

 

Tax effect of adjustments

$

(2,037

)

 

$

(1,082

)

Foreign currency transaction gains, net

$

(332

)

 

$

(328

)

Adjusted EBITDA(6) increased $11.5 million, or 31.6%, to $48.0 million, or 13.4% of revenues, in the third quarter of 2023, compared to $36.5 million, or 12.8% of revenues, in the same quarter last year. Adjusted net income(6) increased $6.4 million, or 31.0%, to $27.2 million, or $1.39 per diluted share, for the third quarter of 2023, compared to $20.7 million, or $1.01 per diluted share, for the same quarter in 2022.

The number of revenue-generating professionals(1) increased 16.8% to 5,341 as of September 30, 2023 from 4,571 as of September 30, 2022. The utilization rate(5) of the company's Consulting capability increased to 77.3% during the third quarter 2023, compared to 72.5% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 75.4% during the third quarter 2023, compared to 70.1% during the same period last year.

YEAR-TO-DATE 2023 RESULTS

Revenues increased $204.1 million, or 24.9%, to $1.02 billion for the first nine months of 2023, compared to $818.7 million for the first nine months of 2022. This revenue growth was highlighted by 29.7% growth in the Consulting and Managed Services capability and 19.0% growth in the Digital capability in the aggregate across all industries; and reflects the company's focus on accelerating growth in the healthcare and education industries and growing its presence in commercial industries.

Net income increased $1.2 million, or 2.0%, to $59.6 million for the first nine months of 2023, compared to $58.5 million for the first nine months of 2022. Diluted earnings per share increased $0.25, or 8.9%, to $3.05 for the first nine months of 2023, compared to $2.80 for the same period last year. Results for the first nine months of 2022 included a non-recurring, unrealized gain of $19.8 million, net of tax, related to the company's investment in a hospital-at-home company.

EBITDA(6) for the first nine months of 2023 increased $2.3 million, or 2.0%, to $116.5 million; compared to $114.2 million in the same prior year period which included the non-recurring, pre-tax unrealized gain of $27.0 million related to the company's investment in a hospital-at-home company.

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 Ended

September 30,

 

2023

 

2022

Amortization of intangible assets

$

6,202

 

 

$

8,496

 

Restructuring charges

$

9,385

 

 

$

4,956

 

Other gains, net

$

(202

)

 

$

(34

)

Transaction-related expenses

$

302

 

 

$

50

 

Unrealized gain on preferred stock investment

$

 

 

$

(26,964

)

Tax effect of adjustments

$

(4,157

)

 

$

3,576

 

Foreign currency transaction losses (gains), net

$

36

 

 

$

(409

)

Adjusted EBITDA(6) increased $34.2 million, or 37.2%, to $126.0 million, or 12.3% of revenues, for the first nine months of 2023, compared to $91.8 million, or 11.2% of revenues, for the same period last year. Adjusted net income(6) increased $22.6 million, or 46.6%, to $71.2 million, or $3.64 per diluted share, for the first nine months of 2023, compared to $48.5 million, or $2.32 per diluted share, for the first nine months of 2022.

The number of revenue-generating professionals(1) increased 16.8% to 5,341 as of September 30, 2023 from 4,571 as of September 30, 2022. The utilization rate(5) of the company's Consulting capability increased to 76.5% during the first nine months of 2023, compared to 73.0% during the same period last year. The utilization rate(5) of the company's Digital capability increased to 73.7% during the first nine months 2023, compared to 71.6% during the same period last year.

Additionally, in the first nine months of 2023, Huron repurchased 1,116,830 shares of the company's common stock for $88.4 million.

OPERATING INDUSTRIES

The company’s year-to-date 2023 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (49%); Education (32%); and Commercial (19%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended September 30, 2023.

OUTLOOK FOR 2023

Based on currently available information, the company increased guidance for full year 2023 revenues before reimbursable expenses to a range of $1.35 billion to $1.37 billion. The company also anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.5% and non-GAAP adjusted diluted earnings per share in a range of $4.70 to $4.90.

THIRD QUARTER 2023 WEBCAST

The company will host a webcast to discuss its financial results today, November 2, 2023, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from 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, and adjusted diluted earnings per share, 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.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. 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 results, 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,” “goals,” “guidance,” 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 necessary 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, 2022 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

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

358,178

 

 

$

285,370

 

 

$

1,022,832

 

 

$

818,744

 

Reimbursable expenses

 

9,288

 

 

 

6,816

 

 

 

25,918

 

 

 

19,034

 

Total revenues and reimbursable expenses

 

367,466

 

 

 

292,186

 

 

 

1,048,750

 

 

 

837,778

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

244,774

 

 

 

193,368

 

 

 

708,355

 

 

 

569,848

 

Reimbursable expenses

 

9,497

 

 

 

6,917

 

 

 

26,242

 

 

 

19,249

 

Selling, general and administrative expenses

 

64,347

 

 

 

54,458

 

 

 

190,655

 

 

 

148,886

 

Restructuring charges

 

5,402

 

 

 

1,332

 

 

 

9,385

 

 

 

4,956

 

Depreciation and amortization

 

6,104

 

 

 

6,812

 

 

 

18,621

 

 

 

20,578

 

Total operating expenses

 

330,124

 

 

 

262,887

 

 

 

953,258

 

 

 

763,517

 

Operating income

 

37,342

 

 

 

29,299

 

 

 

95,492

 

 

 

74,261

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(5,047

)

 

 

(3,111

)

 

 

(15,146

)

 

 

(7,753

)

Other income (expense), net

 

(1,000

)

 

 

(785

)

 

 

1,781

 

 

 

18,699

 

Total other income (expense), net

 

(6,047

)

 

 

(3,896

)

 

 

(13,365

)

 

 

10,946

 

Income before taxes

 

31,295

 

 

 

25,403

 

 

 

82,127

 

 

 

85,207

 

Income tax expense

 

9,779

 

 

 

7,662

 

 

 

22,480

 

 

 

26,739

 

Net income

$

21,516

 

 

$

17,741

 

 

$

59,647

 

 

$

58,468

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

1.15

 

 

$

0.88

 

 

$

3.15

 

 

$

2.85

 

Net income per diluted share

$

1.10

 

 

$

0.86

 

 

$

3.05

 

 

$

2.80

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

18,770

 

 

 

20,109

 

 

 

18,941

 

 

 

20,511

 

Diluted

 

19,475

 

 

 

20,615

 

 

 

19,578

 

 

 

20,899

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

21,516

 

 

$

17,741

 

 

$

59,647

 

 

$

58,468

 

Foreign currency translation adjustments, net of tax

 

(662

)

 

 

(1,034

)

 

 

(283

)

 

 

(1,733

)

Unrealized gain (loss) on investment, net of tax

 

(1,350

)

 

 

(830

)

 

 

3,076

 

 

 

(2,718

)

Unrealized gain (loss) on cash flow hedging instruments, net of tax

 

(368

)

 

 

3,762

 

 

 

(234

)

 

 

9,058

 

Other comprehensive income (loss)

 

(2,380

)

 

 

1,898

 

 

 

2,559

 

 

 

4,607

 

Comprehensive income

$

19,136

 

 

$

19,639

 

 

$

62,206

 

 

$

63,075

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

September 30,

 

December 31,

2023

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

9,398

 

 

$

11,834

 

Receivables from clients, net

 

166,330

 

 

 

147,852

 

Unbilled services, net

 

192,853

 

 

 

141,781

 

Income tax receivable

 

4,500

 

 

 

960

 

Prepaid expenses and other current assets

 

32,450

 

 

 

26,057

 

Total current assets

 

405,531

 

 

 

328,484

 

Property and equipment, net

 

22,919

 

 

 

26,107

 

Deferred income taxes, net

 

1,735

 

 

 

1,554

 

Long-term investments

 

95,387

 

 

 

91,194

 

Operating lease right-of-use assets

 

23,441

 

 

 

30,304

 

Other non-current assets

 

87,486

 

 

 

73,039

 

Intangible assets, net

 

20,090

 

 

 

23,392

 

Goodwill

 

625,711

 

 

 

624,966

 

Total assets

$

1,282,300

 

 

$

1,199,040

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

11,987

 

 

$

14,254

 

Accrued expenses and other current liabilities

 

31,591

 

 

 

27,268

 

Accrued payroll and related benefits

 

183,872

 

 

 

171,723

 

Current maturities of operating lease liabilities

 

11,116

 

 

 

10,530

 

Deferred revenues

 

26,217

 

 

 

21,909

 

Total current liabilities

 

264,783

 

 

 

245,684

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

32,700

 

 

 

33,614

 

Long-term debt

 

358,000

 

 

 

290,000

 

Operating lease liabilities, net of current portion

 

39,207

 

 

 

45,556

 

Deferred income taxes, net

 

34,256

 

 

 

32,146

 

Total non-current liabilities

 

464,163

 

 

 

401,316

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 21,597,274 and 22,507,159 shares issued, respectively

 

215

 

 

 

223

 

Treasury stock, at cost, 2,848,126 and 2,711,712 shares, respectively

 

(141,729

)

 

 

(137,556

)

Additional paid-in capital

 

261,995

 

 

 

318,706

 

Retained earnings

 

412,195

 

 

 

352,548

 

Accumulated other comprehensive income

 

20,678

 

 

 

18,119

 

Total stockholders’ equity

 

553,354

 

 

 

552,040

 

Total liabilities and stockholders’ equity

$

1,282,300

 

 

$

1,199,040

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

September 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

59,647

 

 

$

58,468

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

Depreciation and amortization

 

18,653

 

 

 

20,578

 

Non-cash lease expense

 

4,840

 

 

 

4,768

 

Lease-related impairment charges

 

5,584

 

 

 

 

Share-based compensation

 

35,398

 

 

 

23,083

 

Amortization of debt discount and issuance costs

 

577

 

 

 

595

 

Allowances for doubtful accounts

 

53

 

 

 

47

 

Deferred income taxes

 

890

 

 

 

7,133

 

Gain on sale of property and equipment, excluding transaction costs

 

(61

)

 

 

(1,117

)

Change in fair value of contingent consideration liabilities

 

(251

)

 

 

(34

)

Change in fair value of preferred stock investment

 

 

 

 

(26,964

)

Other, net

 

 

 

 

6

 

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

 

(18,508

)

 

 

(44,759

)

(Increase) decrease in unbilled services, net

 

(51,092

)

 

 

(31,937

)

(Increase) decrease in current income tax receivable / payable, net

 

(4,365

)

 

 

14,704

 

(Increase) decrease in other assets

 

(6,243

)

 

 

3,468

 

Increase (decrease) in accounts payable and other liabilities

 

(5,361

)

 

 

(14,538

)

Increase (decrease) in accrued payroll and related benefits

 

10,805

 

 

 

(18,883

)

Increase (decrease) in deferred revenues

 

4,328

 

 

 

(397

)

Net cash provided by (used in) operating activities

 

54,894

 

 

 

(5,779

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(5,147

)

 

 

(9,768

)

Investment in life insurance policies

 

(2,601

)

 

 

(283

)

Distributions from life insurance policies

 

2,956

 

 

 

2,958

 

Purchases of businesses

 

(1,613

)

 

 

(1,948

)

Capitalization of internally developed software costs

 

(19,610

)

 

 

(6,855

)

Proceeds from note receivable

 

154

 

 

 

157

 

Proceeds from sale of property and equipment

 

62

 

 

 

4,753

 

Divestiture of business

 

 

 

 

207

 

Net cash used in investing activities

 

(25,799

)

 

 

(10,779

)

Cash flows from financing activities:

 

 

 

Proceeds from exercises of stock options

 

987

 

 

 

1,421

 

Shares redeemed for employee tax withholdings

 

(10,050

)

 

 

(7,540

)

Share repurchases

 

(88,897

)

 

 

(95,474

)

Proceeds from bank borrowings

 

292,000

 

 

 

287,000

 

Repayments of bank borrowings

 

(224,000

)

 

 

(178,780

)

Payments for debt issuance costs

 

(58

)

 

 

 

Deferred payments on business acquisition

 

(1,500

)

 

 

(1,875

)

Net cash provided by (used in) financing activities

 

(31,518

)

 

 

4,752

 

Effect of exchange rate changes on cash

 

(13

)

 

 

(144

)

Net decrease in cash and cash equivalents

 

(2,436

)

 

 

(11,950

)

Cash and cash equivalents at beginning of the period

 

11,834

 

 

 

20,781

 

Cash and cash equivalents at end of the period

$

9,398

 

 

$

8,831

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

Three Months Ended

September 30,

 

Percent

Increase

 

Nine Months Ended

September 30,

 

Percent

Increase

Segment and Consolidated Operating Results (in thousands):

 

2023

 

2022

 

(Decrease)

 

2023

 

2022

 

(Decrease)

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

179,177

 

 

$

131,319

 

 

36.4%

 

$

501,994

 

 

$

381,669

 

 

31.5%

Operating income

 

$

46,888

 

 

$

33,045

 

 

41.9%

 

$

128,294

 

 

$

91,441

 

 

40.3%

Segment operating margin

 

 

26.2

%

 

 

25.2

%

 

 

 

 

25.6

%

 

 

24.0

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

111,043

 

 

$

94,347

 

 

17.7%

 

$

325,884

 

 

$

263,234

 

 

23.8%

Operating income

 

$

26,550

 

 

$

22,851

 

 

16.2%

 

$

77,112

 

 

$

58,848

 

 

31.0%

Segment operating margin

 

 

23.9

%

 

 

24.2

%

 

 

 

 

23.7

%

 

 

22.4

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

67,958

 

 

$

59,704

 

 

13.8%

 

$

194,954

 

 

$

173,841

 

 

12.1%

Operating income

 

$

15,432

 

 

$

14,153

 

 

9.0%

 

$

39,971

 

 

$

38,282

 

 

4.4%

Segment operating margin

 

 

22.7

%

 

 

23.7

%

 

 

 

 

20.5

%

 

 

22.0

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

358,178

 

 

$

285,370

 

 

25.5%

 

$

1,022,832

 

 

$

818,744

 

 

24.9%

Reimbursable expenses

 

 

9,288

 

 

 

6,816

 

 

36.3%

 

 

25,918

 

 

 

19,034

 

 

36.2%

Total revenues and reimbursable expenses

 

$

367,466

 

 

$

292,186

 

 

25.8%

 

$

1,048,750

 

 

$

837,778

 

 

25.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

88,870

 

 

$

70,049

 

 

26.9%

 

$

245,377

 

 

$

188,571

 

 

30.1%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

43,086

 

 

 

34,875

 

 

23.5%

 

 

129,563

 

 

 

96,376

 

 

34.4%

Restructuring charges

 

 

4,095

 

 

 

804

 

 

N/M

 

 

6,881

 

 

 

2,763

 

 

N/M

Depreciation and amortization

 

 

4,347

 

 

 

5,071

 

 

(14.3)%

 

 

13,441

 

 

 

15,171

 

 

(11.4)%

Total operating income

 

 

37,342

 

 

 

29,299

 

 

27.5%

 

 

95,492

 

 

 

74,261

 

 

28.6%

Other income (expense), net

 

 

(6,047

)

 

 

(3,896

)

 

55.2%

 

 

(13,365

)

 

 

10,946

 

 

N/M

Income before taxes

 

$

31,295

 

 

$

25,403

 

 

23.2%

 

$

82,127

 

 

$

85,207

 

 

(3.6)%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (1):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

2,083

 

 

 

1,686

 

 

23.5%

 

 

2,083

 

 

 

1,686

 

 

23.5%

Education

 

 

1,799

 

 

 

1,543

 

 

16.6%

 

 

1,799

 

 

 

1,543

 

 

16.6%

Commercial (2)

 

 

1,459

 

 

 

1,342

 

 

8.7%

 

 

1,459

 

 

 

1,342

 

 

8.7%

Total

 

 

5,341

 

 

 

4,571

 

 

16.8%

 

 

5,341

 

 

 

4,571

 

 

16.8%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (3)

 

$

214,688

 

 

$

155,901

 

 

37.7%

 

$

589,137

 

 

$

454,356

 

 

29.7%

Digital

 

 

143,490

 

 

 

129,469

 

 

10.8%

 

 

433,695

 

 

 

364,388

 

 

19.0%

Total

 

$

358,178

 

 

$

285,370

 

 

25.5%

 

$

1,022,832

 

 

$

818,744

 

 

24.9%

Number of revenue-generating professionals by capability (at period end)(1):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)

 

 

2,483

 

 

 

2,098

 

 

18.4%

 

 

2,483

 

 

 

2,098

 

 

18.4%

Digital

 

 

2,858

 

 

 

2,473

 

 

15.6%

 

 

2,858

 

 

 

2,473

 

 

15.6%

Total

 

 

5,341

 

 

 

4,571

 

 

16.8%

 

 

5,341

 

 

 

4,571

 

 

16.8%

Utilization rate by capability (5):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

77.3

%

 

 

72.5

%

 

 

 

 

76.5

%

 

 

73.0

%

 

 

Digital

 

 

75.4

%

 

 

70.1

%

 

 

 

 

73.7

%

 

 

71.6

%

 

 

(1)

Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare managed services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients.

 

(2)

The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education.

 

(3)

Managed Services capability revenues within our Healthcare segment was $16.7 million and $17.6 million for the three months ended September 30, 2023 and 2022, respectively; and $53.8 million and $47.5 million for the nine months ended September 30, 2023 and 2022, respectively.

 

 

Managed Services capability revenues within our Education segment was $5.0 million and $4.1 million for the three months ended September 30, 2023 and 2022, respectively; and $14.6 million and $11.3 million for the nine months ended September 30, 2023 and 2022, respectively.

 

(4)

The number of Managed Services revenue-generating professionals within our Healthcare segment as of September 30, 2023 and 2022 was 757 and 547, respectively.

 

 

The number of Managed Services revenue-generating professionals within our Education segment as of September 30, 2023 and 2022 was 105 and 97, respectively.

 

(5)

Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

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

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Revenues

$

358,178

 

 

$

285,370

 

 

$

1,022,832

 

 

$

818,744

 

Net income

$

21,516

 

 

$

17,741

 

 

$

59,647

 

 

$

58,468

 

Add back:

 

 

 

 

 

 

 

Income tax expense

 

9,779

 

 

 

7,662

 

 

 

22,480

 

 

 

26,739

 

Interest expense, net of interest income

 

5,047

 

 

 

3,111

 

 

 

15,146

 

 

 

7,753

 

Depreciation and amortization

 

6,300

 

 

 

7,019

 

 

 

19,183

 

 

 

21,238

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (6)

 

42,642

 

 

 

35,533

 

 

 

116,456

 

 

 

114,198

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

5,402

 

 

 

1,332

 

 

 

9,385

 

 

 

4,956

 

Other gains, net

 

(14

)

 

 

(67

)

 

 

(202

)

 

 

(34

)

Transaction-related expenses

 

302

 

 

 

 

 

 

302

 

 

 

50

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

 

 

 

(26,964

)

Foreign currency transaction losses (gains), net

 

(332

)

 

 

(328

)

 

 

36

 

 

 

(409

)

Adjusted EBITDA (6)

$

48,000

 

 

$

36,470

 

 

$

125,977

 

 

$

91,797

 

Adjusted EBITDA as a percentage of revenues (6)

 

13.4

%

 

 

12.8

%

 

 

12.3

%

 

 

11.2

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (6)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Net income

$

21,516

 

 

$

17,741

 

 

$

59,647

 

 

$

58,468

 

Weighted average shares - diluted

 

19,475

 

 

 

20,615

 

 

 

19,578

 

 

 

20,899

 

Diluted earnings per share

$

1.10

 

 

$

0.86

 

 

$

3.05

 

 

$

2.80

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

1,997

 

 

 

2,818

 

 

 

6,202

 

 

 

8,496

 

Restructuring charges

 

5,402

 

 

 

1,332

 

 

 

9,385

 

 

 

4,956

 

Other gains, net

 

(14

)

 

 

(67

)

 

 

(202

)

 

 

(34

)

Transaction-related expenses

 

302

 

 

 

 

 

 

302

 

 

 

50

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

 

 

 

(26,964

)

Tax effect of adjustments

 

(2,037

)

 

 

(1,082

)

 

 

(4,157

)

 

 

3,576

 

Total adjustments, net of tax

 

5,650

 

 

 

3,001

 

 

 

11,530

 

 

 

(9,920

)

Adjusted net income (6)

$

27,166

 

 

$

20,742

 

 

$

71,177

 

 

$

48,548

 

Adjusted weighted average shares - diluted

 

19,475

 

 

 

20,615

 

 

 

19,578

 

 

 

20,899

 

Adjusted diluted earnings per share (6)

$

1.39

 

 

$

1.01

 

 

$

3.64

 

 

$

2.32

 

(6)

In evaluating the company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, and adjusted diluted earnings per share, which are non-GAAP measures. 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.

 

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