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Huron Announces Third Quarter 2022 Financial Results and Updates 2022 Guidance

THIRD QUARTER 2022 HIGHLIGHTS

  • Revenues increased $61.4 million, or 27.4%, to $285.4 million in Q3 2022 from $224.0 million in Q3 2021.



  • Revenues within the Digital capability increased 45.5% in Q3 2022 compared to Q3 2021.



  • Net income increased $4.0 million, or 29.2%, to $17.7 million in Q3 2022 from $13.7 million in Q3 2021.



  • Adjusted EBITDA(7), a non-GAAP measure, increased $10.1 million, or 38.1%, to $36.5 million in Q3 2022 from $26.4 million in Q3 2021.



  • Diluted earnings per share increased $0.22, or 34.4%, to $0.86 in Q3 2022 from $0.64 in Q3 2021.



  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.23, or 29.5%, to $1.01 in Q3 2022 from $0.78 in Q3 2021.



  • Huron repurchased 0.7 million shares of the company's common stock for $45.6 million in Q3 2022.



YEAR-TO-DATE 2022 HIGHLIGHTS AND 2022 GUIDANCE

  • Revenues increased $161.4 million, or 24.6%, to $818.7 million for the first nine months of 2022 from $657.3 million for the same prior year period.



  • Revenues within the Digital capability increased 43.0% for the first nine months of 2022 compared to the same prior year period.



  • Net income increased $26.5 million, or 83.1%, to $58.5 million for the first nine months of 2022 from $31.9 million for the same prior year period. Results for the first nine months of 2022 include an unrealized gain of $19.8 million, net of tax, on the company's investment in a hospital-at-home company recognized in Q1 2022.



  • Adjusted EBITDA(7), a non-GAAP measure, increased $23.3 million, or 34.0%, to $91.8 million for the first nine months of 2022 from $68.5 million for the same prior year period.



  • Diluted earnings per share increased $1.34, or 91.8%, to $2.80 for the first nine months of 2022 from $1.46 for the same prior year period.



  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.51, or 28.2%, to $2.32 for the first nine months of 2022 from $1.81 for the same prior year period.



  • Huron repurchased 1.7 million shares of the company's common stock for $97.9 million in the first nine months of 2022.



  • Huron updates its previous earnings guidance range for full year 2022, including increasing and narrowing revenue expectations to a range of $1.09 billion to $1.11 billion.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the third quarter ended September 30, 2022.

“Our third quarter performance continued to reflect strong growth across all three operating segments. We achieved 27% revenue growth over the third quarter of 2021, primarily reflecting ongoing momentum in our healthcare and education industries, and continued growth in our Digital capability,” said James H. Roth, chief executive officer of Huron. “Market conditions have been favorable across our collective set of offerings and despite increased economic uncertainties, we anticipate strong demand in the coming quarters.”

THIRD QUARTER 2022 RESULTS

Revenues increased $61.4 million, or 27.4%, to $285.4 million for the third quarter of 2022, compared to $224.0 million for the third quarter of 2021. This revenue growth was highlighted by 45.5% growth from the Digital capability across all industries and growth in the Education and Healthcare segments' Consulting and Managed Services capability of 45.9% and 16.6%, respectively, during the third quarter of 2022 compared to the same prior year period.

Net income increased $4.0 million, or 29.2%, to $17.7 million for the third quarter of 2022, compared to $13.7 million for the same quarter last year. Diluted earnings per share increased $0.22, or 34.4%, to $0.86 for the third quarter of 2022, compared to $0.64 for the third quarter of 2021.

Third quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $11.1 million, or 45.4%, to $35.5 million, compared to $24.4 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,

 

2022

 

2021

Amortization of intangible assets

$

2,818

 

 

$

2,235

 

Restructuring charges

$

1,332

 

 

$

1,677

 

Other losses (gains)

$

(67

)

 

$

56

 

Transaction-related expenses

$

 

 

$

194

 

Tax effect of adjustments

$

(1,082

)

 

$

(1,103

)

Foreign currency transaction losses (gains), net

$

(328

)

 

$

43

 

Adjusted EBITDA(7) increased $10.1 million, or 38.1%, to $36.5 million, or 12.8% of revenues, in the third quarter of 2022, compared to $26.4 million, or 11.8% of revenues, in the same quarter last year. Adjusted net income(7) increased $4.0 million to $20.7 million, or $1.01 per diluted share, for the third quarter of 2022, compared to $16.8 million, or $0.78 per diluted share, for the same quarter in 2021.

The number of revenue-generating professionals(1) increased 22.7% to 4,571 as of September 30, 2022 from 3,724 as of September 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 72.5% during the third quarter 2022, compared to 71.5% during the same period last year. The utilization rate(5) for the company's Digital capability decreased to 70.1% during the third quarter 2022, compared to 74.2% during the same period last year.

Additionally, in the third quarter of 2022, Huron repurchased 685,641 shares of the company's common stock for $45.6 million.

YEAR-TO-DATE 2022 RESULTS

Revenues increased $161.4 million, or 24.6%, to $818.7 million for the first nine months of 2022, compared to $657.3 million for the first nine months of 2021. This revenue growth was highlighted by 43.0% growth from the Digital capability across all industries and growth in the Education and Healthcare segments' Consulting and Managed Services capability of 49.8% and 12.1%, respectively, during the first nine months of 2022 compared to the same prior year period.

Net income increased $26.5 million, or 83.1%, to $58.5 million for the first nine months of 2022, compared to $31.9 million for the first nine months of 2021. Diluted earnings per share increased $1.34, or 91.8%, to $2.80 for the third quarter of 2022, compared to $1.46 for the same period last year. Results for the first nine months of 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company.

EBITDA(7) for the first nine months of 2022 increased $49.7 million, or 77.1%, to $114.2 million, compared to $64.5 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):

 

Nine Months Ended

September 30,

 

2022

 

2021

Amortization of intangible assets

$

8,496

 

 

$

6,923

 

Restructuring charges

$

4,956

 

 

$

3,166

 

Other losses (gains)

$

(34

)

 

$

98

 

Transaction-related expenses

$

50

 

 

$

335

 

Unrealized gain on preferred stock investment

$

(26,964

)

 

$

 

Tax effect of adjustments

$

3,576

 

 

$

(2,788

)

Foreign currency transaction losses (gains), net

$

(409

)

 

$

398

 

Adjusted EBITDA(7) increased $23.3 million, or 34.0%, to $91.8 million, or 11.2% of revenues, for the first nine months of 2022, compared to $68.5 million, or 10.4% of revenues, for the same period last year. Adjusted net income(7) increased $8.9 million, or 22.4%, to $48.5 million, or $2.32 per diluted share, for the first nine months of 2022, compared to $39.7 million, or $1.81 per diluted share, for the first nine months of 2021.

The number of revenue-generating professionals(1) increased 22.7% to 4,571 as of September 30, 2022 from 3,724 as of September 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 73.0% during the first nine months of 2022, compared to 70.8% during the same period last year. The utilization rate(5) for the company's Digital capability decreased to 71.6% during the first nine months 2022, compared to 72.9% during the same period last year.

Additionally, in the first nine months of 2022, Huron repurchased 1,706,587 shares of the company's common stock for $97.9 million, representing 7.8% of the common stock outstanding as of December 31, 2021.

OPERATING INDUSTRIES

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s year-to-date 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). 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, 2022.

OUTLOOK FOR 2022

Based on currently available information, the company increased and narrowed guidance for full year 2022 revenues before reimbursable expenses to a range of $1.09 billion to $1.11 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.5% to 12.0% and non-GAAP adjusted diluted earnings per share in a range of $3.25 to $3.35.

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

THIRD QUARTER 2022 WEBCAST

The company will host a webcast to discuss its financial results today, November 1, 2022, 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(7)

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: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; 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, 2021 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,

 

2022

 

2021

 

2022

 

2021

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

285,370

 

 

$

224,007

 

 

$

818,744

 

 

$

657,346

 

Reimbursable expenses

 

6,816

 

 

 

3,690

 

 

 

19,034

 

 

 

8,876

 

Total revenues and reimbursable expenses

 

292,186

 

 

 

227,697

 

 

 

837,778

 

 

 

666,222

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

193,368

 

 

 

153,902

 

 

 

569,848

 

 

 

463,543

 

Reimbursable expenses

 

6,917

 

 

 

3,914

 

 

 

19,249

 

 

 

9,233

 

Selling, general and administrative expenses

 

54,458

 

 

 

43,576

 

 

 

148,886

 

 

 

128,574

 

Restructuring charges

 

1,332

 

 

 

1,677

 

 

 

4,956

 

 

 

3,166

 

Depreciation and amortization

 

6,812

 

 

 

6,322

 

 

 

20,578

 

 

 

19,031

 

Total operating expenses

 

262,887

 

 

 

209,391

 

 

 

763,517

 

 

 

623,547

 

Operating income

 

29,299

 

 

 

18,306

 

 

 

74,261

 

 

 

42,675

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(3,111

)

 

 

(2,217

)

 

 

(7,753

)

 

 

(5,965

)

Other income (expense), net

 

(785

)

 

 

(394

)

 

 

18,699

 

 

 

2,177

 

Total other income (expense), net

 

(3,896

)

 

 

(2,611

)

 

 

10,946

 

 

 

(3,788

)

Income before taxes

 

25,403

 

 

 

15,695

 

 

 

85,207

 

 

 

38,887

 

Income tax expense

 

7,662

 

 

 

1,968

 

 

 

26,739

 

 

 

6,958

 

Net income

$

17,741

 

 

$

13,727

 

 

$

58,468

 

 

$

31,929

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

0.88

 

 

$

0.65

 

 

$

2.85

 

 

$

1.48

 

Net income per diluted share

$

0.86

 

 

$

0.64

 

 

$

2.80

 

 

$

1.46

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

20,109

 

 

 

21,242

 

 

 

20,511

 

 

 

21,574

 

Diluted

 

20,615

 

 

 

21,531

 

 

 

20,899

 

 

 

21,904

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

17,741

 

 

$

13,727

 

 

$

58,468

 

 

$

31,929

 

Foreign currency translation adjustments, net of tax

 

(1,034

)

 

 

(246

)

 

 

(1,733

)

 

 

236

 

Unrealized gain (loss) on investment, net of tax

 

(830

)

 

 

1,158

 

 

 

(2,718

)

 

 

(2,068

)

Unrealized gain on cash flow hedging instruments, net of tax

 

3,762

 

 

 

309

 

 

 

9,058

 

 

 

1,956

 

Other comprehensive income

 

1,898

 

 

 

1,221

 

 

 

4,607

 

 

 

124

 

Comprehensive income

$

19,639

 

 

$

14,948

 

 

$

63,075

 

 

$

32,053

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

September 30,

2022

 

December 31,

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

8,831

 

 

$

20,781

 

Receivables from clients, net

 

166,734

 

 

 

122,316

 

Unbilled services, net

 

122,317

 

 

 

91,285

 

Income tax receivable

 

213

 

 

 

8,071

 

Prepaid expenses and other current assets

 

25,524

 

 

 

15,229

 

Total current assets

 

323,619

 

 

 

257,682

 

Property and equipment, net

 

26,187

 

 

 

31,004

 

Deferred income taxes, net

 

1,625

 

 

 

1,804

 

Long-term investments

 

95,854

 

 

 

72,584

 

Operating lease right-of-use assets

 

32,112

 

 

 

35,311

 

Other non-current assets

 

65,993

 

 

 

68,191

 

Intangible assets, net

 

25,453

 

 

 

31,894

 

Goodwill

 

623,841

 

 

 

620,879

 

Total assets

$

1,194,684

 

 

$

1,119,349

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

15,115

 

 

$

13,621

 

Accrued expenses and other current liabilities

 

32,016

 

 

 

22,519

 

Accrued payroll and related benefits

 

118,195

 

 

 

139,131

 

Current maturities of long-term debt

 

 

 

 

559

 

Current maturities of operating lease liabilities

 

10,414

 

 

 

10,142

 

Deferred revenues

 

20,378

 

 

 

19,212

 

Total current liabilities

 

196,118

 

 

 

205,184

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

31,487

 

 

 

43,458

 

Long-term debt, net of current portion

 

341,000

 

 

 

232,221

 

Operating lease liabilities, net of current portion

 

48,221

 

 

 

54,313

 

Deferred income taxes, net

 

21,597

 

 

 

12,273

 

Total non-current liabilities

 

442,305

 

 

 

342,265

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 22,853,524 and 24,364,814 shares issued, respectively

 

225

 

 

 

239

 

Treasury stock, at cost, 2,696,264 and 2,495,172 shares, respectively

 

(137,000

)

 

 

(135,969

)

Additional paid-in capital

 

336,125

 

 

 

413,794

 

Retained earnings

 

335,464

 

 

 

276,996

 

Accumulated other comprehensive income

 

21,447

 

 

 

16,840

 

Total stockholders’ equity

 

556,261

 

 

 

571,900

 

Total liabilities and stockholders’ equity

$

1,194,684

 

 

$

1,119,349

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income

$

58,468

 

 

$

31,929

 

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

 

 

 

Depreciation and amortization

 

20,578

 

 

 

19,245

 

Non-cash lease expense

 

4,768

 

 

 

4,912

 

Share-based compensation

 

23,083

 

 

 

17,979

 

Amortization of debt discount and issuance costs

 

595

 

 

 

595

 

Allowances for doubtful accounts

 

47

 

 

 

7

 

Deferred income taxes

 

7,133

 

 

 

2,434

 

Gain on sale of property and equipment, excluding transaction costs

 

(1,117

)

 

 

(254

)

Change in fair value of contingent consideration liabilities

 

(34

)

 

 

98

 

Change in fair value of preferred stock investment

 

(26,964

)

 

 

 

Other, net

 

6

 

 

 

(78

)

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

 

 

 

(Increase) decrease in receivables from clients, net

 

(44,759

)

 

 

(23,294

)

(Increase) decrease in unbilled services, net

 

(31,937

)

 

 

(40,883

)

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

 

14,704

 

 

 

3,159

 

(Increase) decrease in other assets

 

3,468

 

 

 

98

 

Increase (decrease) in accounts payable and other liabilities

 

(14,538

)

 

 

2,229

 

Increase (decrease) in accrued payroll and related benefits

 

(18,883

)

 

 

(35,958

)

Increase (decrease) in deferred revenues

 

(397

)

 

 

(10,424

)

Net cash used in operating activities

 

(5,779

)

 

 

(28,206

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(9,768

)

 

 

(8,918

)

Investment in life insurance policies

 

(283

)

 

 

(574

)

Distributions from life insurance policies

 

2,958

 

 

 

 

Purchases of businesses, net of cash acquired

 

(1,948

)

 

 

(5,886

)

Capitalization of internally developed software costs

 

(6,855

)

 

 

(3,603

)

Proceeds from note receivable

 

157

 

 

 

 

Proceeds from sale of property and equipment

 

4,753

 

 

 

255

 

Divestiture of business

 

207

 

 

 

 

Net cash used in investing activities

 

(10,779

)

 

 

(18,726

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

1,421

 

 

 

613

 

Shares redeemed for employee tax withholdings

 

(7,540

)

 

 

(9,267

)

Share repurchases

 

(95,474

)

 

 

(60,229

)

Proceeds from bank borrowings

 

287,000

 

 

 

189,000

 

Repayments of bank borrowings

 

(178,780

)

 

 

(129,362

)

Deferred payment on business acquisition

 

(1,875

)

 

 

 

Net cash provided by (used in) financing activities

 

4,752

 

 

 

(9,245

)

Effect of exchange rate changes on cash

 

(144

)

 

 

189

 

Net decrease in cash and cash equivalents

 

(11,950

)

 

 

(55,988

)

Cash and cash equivalents at beginning of the period

 

20,781

 

 

 

67,177

 

Cash and cash equivalents at end of the period

$

8,831

 

 

$

11,189

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

Percent

Increase

(Decrease)

 

Nine Months Ended

September 30,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2022

 

2021

 

 

2022

 

2021

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

131,319

 

 

$

104,620

 

 

25.5

%

 

$

381,669

 

 

$

315,345

 

 

21.0

%

Operating income

 

$

33,045

 

 

$

32,157

 

 

2.8

%

 

$

91,441

 

 

$

86,511

 

 

5.7

%

Segment operating margin

 

 

25.2

%

 

 

30.7

%

 

 

 

 

24.0

%

 

 

27.4

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

94,347

 

 

$

63,244

 

 

49.2

%

 

$

263,234

 

 

$

175,061

 

 

50.4

%

Operating income

 

$

22,851

 

 

$

14,516

 

 

57.4

%

 

$

58,848

 

 

$

37,195

 

 

58.2

%

Segment operating margin

 

 

24.2

%

 

 

23.0

%

 

 

 

 

22.4

%

 

 

21.2

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

59,704

 

 

$

56,143

 

 

6.3

%

 

$

173,841

 

 

$

166,940

 

 

4.1

%

Operating income

 

$

14,153

 

 

$

8,262

 

 

71.3

%

 

$

38,282

 

 

$

29,152

 

 

31.3

%

Segment operating margin

 

 

23.7

%

 

 

14.7

%

 

 

 

 

22.0

%

 

 

17.5

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

285,370

 

 

$

224,007

 

 

27.4

%

 

$

818,744

 

 

$

657,346

 

 

24.6

%

Reimbursable expenses

 

 

6,816

 

 

 

3,690

 

 

84.7

%

 

 

19,034

 

 

 

8,876

 

 

114.4

%

Total revenues and reimbursable expenses

 

$

292,186

 

 

$

227,697

 

 

28.3

%

 

$

837,778

 

 

$

666,222

 

 

25.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

70,049

 

 

$

54,935

 

 

27.5

%

 

$

188,571

 

 

$

152,858

 

 

23.4

%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

35,679

 

 

 

31,430

 

 

13.5

%

 

 

99,139

 

 

 

94,634

 

 

4.8

%

Depreciation and amortization

 

 

5,071

 

 

 

5,199

 

 

(2.5

)%

 

 

15,171

 

 

 

15,549

 

 

(2.4

)%

Total operating income

 

 

29,299

 

 

 

18,306

 

 

60.1

%

 

 

74,261

 

 

 

42,675

 

 

74.0

%

Other income (expense), net

 

 

(3,896

)

 

 

(2,611

)

 

49.2

%

 

 

10,946

 

 

 

(3,788

)

 

N/M

 

Income before taxes

 

$

25,403

 

 

$

15,695

 

 

61.9

%

 

$

85,207

 

 

$

38,887

 

 

119.1

%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (1)(6):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

1,686

 

 

 

1,575

 

 

7.0

%

 

 

1,686

 

 

 

1,575

 

 

7.0

%

Education

 

 

1,543

 

 

 

958

 

 

61.1

%

 

 

1,543

 

 

 

958

 

 

61.1

%

Commercial (2)

 

 

1,342

 

 

 

1,191

 

 

12.7

%

 

 

1,342

 

 

 

1,191

 

 

12.7

%

Total

 

 

4,571

 

 

 

3,724

 

 

22.7

%

 

 

4,571

 

 

 

3,724

 

 

22.7

%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (3)

 

$

155,901

 

 

$

135,021

 

 

15.5

%

 

$

454,356

 

 

$

402,576

 

 

12.9

%

Digital

 

 

129,469

 

 

 

88,986

 

 

45.5

%

 

 

364,388

 

 

 

254,770

 

 

43.0

%

Total

 

$

285,370

 

 

$

224,007

 

 

27.4

%

 

$

818,744

 

 

$

657,346

 

 

24.6

%

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

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)

 

 

2,098

 

 

 

1,871

 

 

12.1

%

 

 

2,098

 

 

 

1,871

 

 

12.1

%

Digital

 

 

2,473

 

 

 

1,853

 

 

33.5

%

 

 

2,473

 

 

 

1,853

 

 

33.5

%

Total

 

 

4,571

 

 

 

3,724

 

 

22.7

%

 

 

4,571

 

 

 

3,724

 

 

22.7

%

Utilization rate by capability (5):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

72.5

%

 

 

71.5

%

 

 

 

 

73.0

%

 

 

70.8

%

 

 

Digital

 

 

70.1

%

 

 

74.2

%

 

 

 

 

71.6

%

 

 

72.9

%

 

 

(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 revenue within our Healthcare segment was $17.6 million and $13.6 million for the three months ended September 30, 2022 and 2021, respectively; and $47.5 million and $35.4 million for the nine months ended September 30, 2022 and 2021, respectively.

 

 

Managed Services capability revenue within our Education segment was $4.1 million and $2.3 million for the three months ended September 30, 2022 and 2021, respectively; and $11.3 million and $6.8 million for the nine months ended September 30, 2022 and 2021, respectively.

 

(4)

The number of Managed Services revenue-generating professionals within our Healthcare segment as of September 30, 2022 and September 30, 2021 was 547 and 518, respectively.

 

 

The number of Managed Services revenue-generating professionals within our Education segment as of September 30, 2022 and September 30, 2021 was 97 and 68, 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.

 

(6)

During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation.

 

N/M - Not Meaningful

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenues

$

285,370

 

 

$

224,007

 

 

$

818,744

 

 

$

657,346

 

Net income

$

17,741

 

 

$

13,727

 

 

$

58,468

 

 

$

31,929

 

Add back:

 

 

 

 

 

 

 

Income tax expense

 

7,662

 

 

 

1,968

 

 

 

26,739

 

 

 

6,958

 

Interest expense, net of interest income

 

3,111

 

 

 

2,217

 

 

 

7,753

 

 

 

5,965

 

Depreciation and amortization

 

7,019

 

 

 

6,534

 

 

 

21,238

 

 

 

19,640

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)

 

35,533

 

 

 

24,446

 

 

 

114,198

 

 

 

64,492

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

1,332

 

 

 

1,677

 

 

 

4,956

 

 

 

3,166

 

Other losses (gains)

 

(67

)

 

 

56

 

 

 

(34

)

 

 

98

 

Transaction-related expenses

 

 

 

 

194

 

 

 

50

 

 

 

335

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Foreign currency transaction losses (gains), net

 

(328

)

 

 

43

 

 

 

(409

)

 

 

398

 

Adjusted EBITDA (7)

$

36,470

 

 

$

26,416

 

 

$

91,797

 

 

$

68,489

 

Adjusted EBITDA as a percentage of revenues (7)

 

12.8

%

 

 

11.8

%

 

 

11.2

%

 

 

10.4

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

17,741

 

 

$

13,727

 

 

$

58,468

 

 

$

31,929

 

Weighted average shares - diluted

 

20,615

 

 

 

21,531

 

 

 

20,899

 

 

 

21,904

 

Diluted earnings per share

$

0.86

 

 

$

0.64

 

 

$

2.80

 

 

$

1.46

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,818

 

 

 

2,235

 

 

 

8,496

 

 

 

6,923

 

Restructuring charges

 

1,332

 

 

 

1,677

 

 

 

4,956

 

 

 

3,166

 

Other losses (gains)

 

(67

)

 

 

56

 

 

 

(34

)

 

 

98

 

Transaction-related expenses

 

 

 

 

194

 

 

 

50

 

 

 

335

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Tax effect of adjustments

 

(1,082

)

 

 

(1,103

)

 

 

3,576

 

 

 

(2,788

)

Total adjustments, net of tax

 

3,001

 

 

 

3,059

 

 

 

(9,920

)

 

 

7,734

 

Adjusted net income (7)

$

20,742

 

 

$

16,786

 

 

$

48,548

 

 

$

39,663

 

Adjusted weighted average shares - diluted

 

20,615

 

 

 

21,531

 

 

 

20,899

 

 

 

21,904

 

Adjusted diluted earnings per share (7)

$

1.01

 

 

$

0.78

 

 

$

2.32

 

 

$

1.81

(7)

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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