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Huron Announces Fourth Quarter and Full Year 2019 Financial Results, and Provides 2020 Guidance

Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the fourth quarter and full year ended December 31, 2019.

“Led by strong growth across all three operating segments, revenues grew 13%, all organic, over the prior year quarter,” said James H. Roth, chief executive officer of Huron. “We have cultivated a unique portfolio of capabilities to help clients accelerate operational, digital and cultural transformation, and we are pleased with the way our offerings are resonating in our markets. Building on this recent momentum, we believe we are well-positioned to achieve sustainable organic growth and improved profitability over time.”

FOURTH QUARTER 2019 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $26.8 million, or 13.1%, to $232.3 million for the fourth quarter of 2019, compared to $205.5 million for the fourth quarter of 2018.

Net income from continuing operations increased $11.3 million to $14.4 million for the fourth quarter of 2019, compared to $3.1 million for the same quarter last year, primarily driven by positive performance in all segments and a decrease in litigation and other losses, net. Diluted earnings per share from continuing operations increased $0.49 to $0.63 for the fourth quarter of 2019, compared to $0.14 for the fourth quarter of 2018.

Fourth quarter 2019 earnings before interest, taxes, depreciation and amortization (“EBITDA”)(6) increased $5.4 million, or 22.9%, to $29.1 million from $23.7 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
December 31,

2019

2018

Amortization of intangible assets

$

4,757

$

5,723

Restructuring charges (gains)

$

(301

)

$

992

Litigation and other losses, net

$

375

$

2,971

Transaction-related expenses

$

67

$

Non-cash interest on convertible notes

$

$

2,095

Gain on sale of business

$

$

(56

)

Tax effect of adjustments

$

(1,291

)

$

(2,378

)

Tax expense related to the enactment of Tax Cut and Jobs Act of 2017

$

$

2,364

Foreign currency transaction losses, net

$

124

$

279

Adjusted EBITDA(6) increased $1.5 million, or 5.4%, to $29.4 million, or 12.6% of revenues, in the fourth quarter of 2019, from $27.9 million, or 13.6% of revenues, in the same quarter last year. Adjusted net income from continuing operations(6) increased $3.2 million to $18.0 million, or $0.79 per diluted share, for the fourth quarter of 2019, from $14.8 million, or $0.66 per diluted share, for the same quarter in 2018.

The average number of full-time billable consultants(1) increased 15.5% to 2,582 in the fourth quarter of 2019 from 2,236 in the same quarter last year. Full-time billable consultant utilization rate(2) was 75.0% during the fourth quarter of 2019, compared to 79.7% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $223 for the fourth quarter of 2019, compared to $215 for the fourth quarter of 2018. The average number of full-time equivalent professionals(5) was 337 in the fourth quarter of 2019, compared to 285 for the same period in 2018.

FULL YEAR 2019 RESULTS FROM CONTINUING OPERATIONS

Revenues increased $81.6 million, or 10.3%, to $876.8 million for full year 2019, compared to $795.1 million for full year 2018.

Net income from continuing operations increased $28.0 million to $42.0 million for full year 2019, compared to $13.9 million for full year 2018, primarily driven by positive performance in the Healthcare and Education segments and a decrease in depreciation and amortization. Diluted earnings per share from continuing operations increased $1.24 to $1.87 for full year 2019 compared to $0.63 for full year 2018.

EBITDA(6) increased $18.8 million, or 22.7%, to $101.9 million for full year 2019, from $83.1 million for full year 2018.

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):

Twelve Months Ended
December 31,

2019

2018

Amortization of intangible assets

$

17,793

$

23,955

Restructuring charges

$

1,855

$

3,657

Litigation and other gains, net

$

(1,196

)

$

(2,019

)

Transaction-related expenses

$

2,680

$

Non-cash interest on convertible notes

$

6,436

$

8,232

Loss on sale of business

$

$

5,807

Tax effect of adjustments

$

(7,200

)

$

(9,487

)

Tax expense related to the enactment of Tax Cut and Jobs Act of 2017

$

$

1,749

Tax benefit related to "check-the-box" election

$

(736

)

$

Foreign currency transaction losses, net

$

160

$

475

Adjusted EBITDA(6) increased $14.4 million, or 15.8%, to $105.4 million, or 12.0% of revenues, for full year 2019, from $91.0 million, or 11.4% of revenues, for full year 2018. Adjusted net income from continuing operations(6) increased $15.8 million to $61.6 million, or $2.74 per diluted share, for full year 2019, from $45.8 million, or $2.08 per diluted share, for full year 2018.

The average number of full-time billable consultants(1) increased 12.1% to 2,427 in 2019 from 2,165 in 2018. Full-time billable consultant utilization rate(2) was 76.1% during 2019, compared to 77.5% during 2018. Average billing rate per hour for full-time billable consultants(3) was $211 for full year 2019, compared to $209 for full year 2018. The average number of full-time equivalent professionals(5) was 305 in 2019, compared to 280 in 2018.

OPERATING SEGMENTS

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

The company’s full year 2019 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 Annual Report on Form 10-K filing for the year ended December 31, 2019.

OUTLOOK FOR 2020

Based on currently available information, the company provided guidance for full year 2020 of revenues before reimbursable expenses in a range of $900.0 million to $940.0 million. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 12.0% to 12.8% and non-GAAP adjusted diluted earnings per share to increase 1% to 12% over 2019.

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

FOURTH QUARTER 2019 WEBCAST

The company will host a webcast to discuss its financial results today, February 25, 2020, 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 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 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.

Management has provided its outlook regarding adjusted EBITDA and non-GAAP 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 are not provided. Management is unable to provide guidance for these reconciling items because we 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 consultancy that collaborates with clients to drive strategic growth, ignite innovation and navigate constant change. Through a combination of strategy, expertise and creativity, we help clients accelerate operational, digital and cultural transformation, enabling the change they need 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,” “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 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 forthcoming Annual Report on Form 10-K for the year ended December 31, 2019, that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2019

2018

2019

2018

Revenues and reimbursable expenses:

Revenues

$

232,269

$

205,454

$

876,757

$

795,125

Reimbursable expenses

22,930

23,226

88,717

82,874

Total revenues and reimbursable expenses

255,199

228,680

965,474

877,999

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

Direct costs

153,160

132,581

575,602

521,537

Amortization of intangible assets and software development costs

1,925

1,052

5,375

4,247

Reimbursable expenses

22,799

23,213

88,696

82,923

Total direct costs and reimbursable expenses

177,884

156,846

669,673

608,707

Operating expenses and other losses (gains), net:

Selling, general and administrative expenses

51,662

42,502

203,071

180,983

Restructuring charges

(301

)

992

1,855

3,657

Litigation and other losses (gains), net

375

2,971

(1,196

)

(2,019

)

Depreciation and amortization

7,080

8,294

28,365

34,575

Total operating expenses and other losses (gains), net

58,816

54,759

232,095

217,196

Operating income

18,499

17,075

63,706

52,096

Other income (expense), net:

Interest expense, net of interest income

(2,492

)

(4,377

)

(15,648

)

(19,013

)

Other income (expense), net

1,603

(2,731

)

4,433

(7,862

)

Total other expense, net

(889

)

(7,108

)

(11,215

)

(26,875

)

Income from continuing operations before taxes

17,610

9,967

52,491

25,221

Income tax expense

3,256

6,912

10,512

11,277

Net income from continuing operations

14,354

3,055

41,979

13,944

Income (loss) from discontinued operations, net of tax

(41

)

6

(236

)

(298

)

Net income

$

14,313

$

3,061

$

41,743

$

13,646

Net earnings per basic share:

Net income from continuing operations

$

0.65

$

0.14

$

1.91

$

0.64

Income (loss) from discontinued operations, net of tax

(0.01

)

(0.01

)

Net income

$

0.65

$

0.14

$

1.90

$

0.63

Net earnings per diluted share:

Net income from continuing operations

$

0.63

$

0.14

$

1.87

$

0.63

Income (loss) from discontinued operations, net of tax

(0.02

)

(0.01

)

Net income

$

0.63

$

0.14

$

1.85

$

0.62

Weighted average shares used in calculating earnings per share:

Basic

22,051

21,774

21,993

21,706

Diluted

22,676

22,294

22,507

22,058

Comprehensive income:

Net income

$

14,313

$

3,061

$

41,743

$

13,646

Foreign currency translation adjustments, net of tax

772

(315

)

99

(1,814

)

Unrealized gain (loss) on investment, net of tax

(8,442

)

3,299

(702

)

7,772

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

42

(654

)

(956

)

167

Other comprehensive income (loss)

(7,628

)

2,330

(1,559

)

6,125

Comprehensive income

$

6,685

$

5,391

$

40,184

$

19,771

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

December 31,
2019

December 31,
2018

Assets

Current assets:

Cash and cash equivalents

$

11,604

$

33,107

Receivables from clients, net

116,571

109,677

Unbilled services, net

79,937

69,613

Income tax receivable

2,376

6,612

Prepaid expenses and other current assets

14,248

13,922

Total current assets

224,736

232,931

Property and equipment, net

38,413

40,374

Deferred income taxes, net

1,145

2,153

Long-term investments

54,541

50,429

Operating lease right-of-use assets

54,954

Other non-current assets

52,177

30,525

Intangible assets, net

31,625

47,857

Goodwill

646,680

645,263

Total assets

$

1,104,271

$

1,049,532

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

7,944

$

10,020

Accrued expenses and other current liabilities

18,554

17,207

Accrued payroll and related benefits

141,605

109,825

Accrued contingent consideration for business acquisitions

9,991

Current maturities of long-term debt

529

243,132

Current maturities of operating lease liabilities

7,469

Deferred revenues

28,443

28,130

Total current liabilities

204,544

418,305

Non-current liabilities:

Deferred compensation and other liabilities

28,635

20,875

Accrued contingent consideration for business acquisitions, net of current portion

1,450

Long-term debt, net of current portion

208,324

53,853

Operating lease liabilities, net of current portion

69,233

Deferred lease incentives

13,693

Deferred income taxes, net

8,070

732

Total non-current liabilities

314,262

90,603

Commitments and contingencies

Stockholders’ equity

Common stock; $0.01 par value; 500,000,000 shares authorized; 25,144,764 and 25,114,739 shares issued

at December 31, 2019 and December 31, 2018, respectively

247

244

Treasury stock, at cost, 2,425,430 and 2,568,288 shares at December 31, 2019 and December 31, 2018, respectively

(128,348

)

(124,794

)

Additional paid-in capital

460,781

452,573

Retained earnings

237,849

196,106

Accumulated other comprehensive income

14,936

16,495

Total stockholders’ equity

585,465

540,624

Total liabilities and stockholders’ equity

$

1,104,271

$

1,049,532

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Twelve Months Ended
December 31,

2019

2018

Cash flows from operating activities:

Net income

$

41,743

$

13,646

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

34,405

39,311

Non-cash lease expense

8,397

Share-based compensation

24,213

18,818

Amortization of debt discount and issuance costs

8,264

10,313

Allowances for doubtful accounts and unbilled services

250

657

Deferred income taxes

8,795

10,717

Loss on sale of business

5,807

Change in fair value of contingent consideration liabilities

(1,506

)

381

Other, net

16

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

(Increase) decrease in receivables from clients, net

(10,123

)

(10,509

)

(Increase) decrease in unbilled services, net

(10,269

)

(11,094

)

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

4,442

(2,607

)

(Increase) decrease in other assets

(144

)

(1,361

)

Increase (decrease) in accounts payable and other liabilities

(6,884

)

(8,212

)

Increase (decrease) in accrued payroll and related benefits

30,339

35,481

Increase (decrease) in deferred revenues

282

310

Net cash provided by operating activities:

132,220

101,658

Cash flows from investing activities:

Purchases of property and equipment, net

(13,240

)

(8,936

)

Investment in life insurance policies

(4,703

)

(2,037

)

Purchases of businesses

(2,500

)

(215

)

Purchase of investment securities

(5,000

)

Capitalization of internally developed software costs

(10,312

)

(6,069

)

Proceeds from note receivable

1,040

Proceeds from sale of property and equipment

753

Divestiture of business

(2,345

)

Net cash used in investing activities

(35,002

)

(18,562

)

Cash flows from financing activities:

Proceeds from exercise of stock options

1,244

937

Shares redeemed for employee tax withholdings

(5,382

)

(3,187

)

Share repurchases

(12,985

)

Proceeds from borrowings under credit facility

347,000

204,300

Repayments of borrowings under credit facility

(192,515

)

(259,801

)

Repayment of convertible notes

(250,000

)

Payments for debt issuance costs

(1,524

)

(1,385

)

Payments for contingent consideration liabilities

(4,674

)

(7,554

)

Net cash used in financing activities

(118,836

)

(66,690

)

Effect of exchange rate changes on cash

115

(208

)

Net increase (decrease) in cash and cash equivalents

(21,503

)

16,198

Cash and cash equivalents at beginning of the period

33,107

16,909

Cash and cash equivalents at end of the period

$

11,604

$

33,107

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

Three Months Ended
December 31,

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

2019

2018

Healthcare:

Revenues

$

103,600

$

92,951

11.5

%

Operating income

$

31,666

$

29,897

5.9

%

Segment operating income as a percentage of segment revenues

30.6

%

32.2

%

Business Advisory:

Revenues

$

68,906

$

65,395

5.4

%

Operating income

$

16,698

$

15,594

7.1

%

Segment operating income as a percentage of segment revenues

24.2

%

23.8

%

Education:

Revenues

$

59,763

$

47,108

26.9

%

Operating income

$

12,506

$

10,549

18.6

%

Segment operating income as a percentage of segment revenues

20.9

%

22.4

%

Total Company:

Revenues

$

232,269

$

205,454

13.1

%

Reimbursable expenses

22,930

23,226

(1.3

)%

Total revenues and reimbursable expenses

$

255,199

$

228,680

11.6

%

Statements of Operations reconciliation:

Segment operating income

$

60,870

$

56,040

8.6

%

Items not allocated at the segment level:

Other operating expenses

34,916

27,700

26.1

%

Litigation and other losses, net

375

2,971

(87.4

)%

Depreciation and amortization

7,080

8,294

(14.6

)%

Total operating income

18,499

17,075

8.3

%

Other expense, net

(889

)

(7,108

)

(87.5

)%

Income from continuing operations before taxes

$

17,610

$

9,967

76.7

%

Other Operating Data:

Number of full-time billable consultants (at period end) (1):

Healthcare

890

813

9.5

%

Business Advisory

930

813

14.4

%

Education

756

621

21.7

%

Total

2,576

2,247

14.6

%

Average number of full-time billable consultants (for the period) (1):

Healthcare

889

821

Business Advisory

941

796

Education

752

619

Total

2,582

2,236

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

Three Months Ended
December 31,

Other Operating Data (continued):

2019

2018

Full-time billable consultant utilization rate (2):

Healthcare

76.5

%

81.9

%

Business Advisory

71.9

%

80.3

%

Education

77.1

%

76.2

%

Total

75.0

%

79.7

%

Full-time billable consultant average billing rate per hour (3):

Healthcare

$

251

$

220

Business Advisory (4)

$

218

$

224

Education

$

197

$

198

Total (4)

$

223

$

215

Revenue per full-time billable consultant (in thousands):

Healthcare

$

84

$

77

Business Advisory

$

70

$

79

Education

$

69

$

68

Total

$

74

$

75

Average number of full-time equivalents (for the period) (5):

Healthcare

263

231

Business Advisory

15

20

Education

59

34

Total

337

285

Revenue per full-time equivalent (in thousands):

Healthcare

$

111

$

127

Business Advisory

$

187

$

131

Education

$

141

$

156

Total

$

120

$

131

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

Twelve Months Ended
December 31,

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

2019

2018

Healthcare:

Revenues

$

399,221

$

364,763

9.4

%

Operating income

$

125,724

$

108,060

16.3

%

Segment operating income as a percentage of segment revenues

31.5

%

29.6

%

Business Advisory:

Revenues

$

252,508

$

236,185

6.9

%

Operating income

$

49,695

$

50,625

(1.8

)%

Segment operating income as a percentage of segment revenues

19.7

%

21.4

%

Education:

Revenues

$

225,028

$

194,177

15.9

%

Operating income

$

55,741

$

48,243

15.5

%

Segment operating income as a percentage of segment revenues

24.8

%

24.8

%

Total Company:

Revenues

$

876,757

$

795,125

10.3

%

Reimbursable expenses

88,717

82,874

7.1

%

Total revenues and reimbursable expenses

$

965,474

$

877,999

10.0

%

Statements of Operations reconciliation:

Segment operating income

$

231,160

$

206,928

11.7

%

Items not allocated at the segment level:

Other operating expenses

140,285

122,276

14.7

%

Litigation and other gains, net

(1,196

)

(2,019

)

(40.8

)%

Depreciation and amortization expense

28,365

34,575

(18.0

)%

Total operating income

63,706

52,096

22.3

%

Other expense, net

(11,215

)

(26,875

)

(58.3

)%

Income from continuing operations before taxes

$

52,491

$

25,221

108.1

%

Other Operating Data:

Number of full-time billable consultants (at period end) (1):

Healthcare

890

813

9.5

%

Business Advisory

930

813

14.4

%

Education

756

621

21.7

%

Total

2,576

2,247

14.6

%

Average number of full-time billable consultants (for the period) (1):

Healthcare

849

807

Business Advisory

892

769

Education

686

589

Total

2,427

2,165

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

Twelve Months Ended
December 31,

Other Operating Data (continued):

2019

2018

Full-time billable consultant utilization rate (2):

Healthcare

79.4

%

81.7

%

Business Advisory

72.5

%

73.8

%

Education

76.8

%

76.6

%

Total

76.1

%

77.5

%

Full-time billable consultant average billing rate per hour (3):

Healthcare

$

231

$

209

Business Advisory (4)

$

201

$

215

Education

$

199

$

202

Total (4)

$

211

$

209

Revenue per full-time billable consultant (in thousands):

Healthcare

$

331

$

307

Business Advisory

$

273

$

293

Education

$

285

$

289

Total

$

297

$

297

Average number of full-time equivalents (for the period) (5):

Healthcare

244

219

Business Advisory

14

22

Education

47

39

Total

305

280

Revenue per full-time equivalent (in thousands):

Healthcare

$

485

$

536

Business Advisory

$

655

$

484

Education

$

617

$

601

Total

$

513

$

541

(1)

 

Consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked.

(2)

 

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.

(3)

 

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.

(4)

 

The Business Advisory segment includes operations of Huron Eurasia India. Absent the impact of Huron Eurasia India, the average billing rate per hour for the Business Advisory segment would have been $254 and $257 for the three months ended December 31, 2019 and 2018, respectively; and $228 and $246 for the twelve months ended December 31, 2019 and 2018, respectively.

 

Absent the impact of Huron Eurasia India, Huron's consolidated average billing rate per hour would have been $235 and $226 for the three months ended December 31, 2019 and 2018, respectively; and $220 and $218 for the twelve months ended December 31, 2019 and 2018, respectively.

(5)

 

Consists of coaches and their support staff within the Culture and Organizational Excellence solution, consultants who work variable schedules as needed by clients, employees who provide managed services in our Healthcare segment, and full-time employees who provide software support and maintenance services to clients.

  

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

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

(In thousands)

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2019

2018

2019

2018

Revenues

$

232,269

$

205,454

$

876,757

$

795,125

Net income from continuing operations

$

14,354

$

3,055

$

41,979

$

13,944

Add back:

Income tax expense

3,256

6,912

10,512

11,277

Interest expense, net of interest income

2,492

4,377

15,648

19,013

Depreciation and amortization

9,005

9,346

33,740

38,822

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

29,107

23,690

101,879

83,056

Add back:

Restructuring charges (gains)

(301

)

992

1,855

3,657

Litigation and other losses (gains), net

375

2,971

(1,196

)

(2,019

)

Loss (gain) on sale of business

(56

)

5,807

Transaction-related expenses

67

2,680

Foreign currency transaction losses, net

124

279

160

475

Adjusted EBITDA (6)

$

29,372

$

27,876

$

105,378

$

90,976

Adjusted EBITDA as a percentage of revenues (6)

12.6

%

13.6

%

12.0

%

11.4

%

 

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2019

2018

2019

2018

Net income from continuing operations

$

14,354

$

3,055

$

41,979

$

13,944

Weighted average shares - diluted

22,676

22,294

22,507

22,058

Diluted earnings per share from continuing operations

$

0.63

$

0.14

$

1.87

$

0.63

Add back:

Amortization of intangible assets

4,757

5,723

17,793

23,955

Restructuring charges (gains)

(301

)

992

1,855

3,657

Litigation and other losses (gains), net

375

2,971

(1,196

)

(2,019

)

Transaction-related expenses

67

2,680

Non-cash interest on convertible notes

2,095

6,436

8,232

Loss (gain) on sale of business

(56

)

5,807

Tax effect of adjustments

(1,291

)

(2,378

)

(7,200

)

(9,487

)

Tax expense related to the enactment of Tax Cut and Jobs Act of 2017

2,364

1,749

Tax benefit related to "check-the-box" election

(736

)

Total adjustments, net of tax

3,607

11,711

19,632

31,894

Adjusted net income from continuing operations (6)

$

17,961

$

14,766

$

61,611

$

45,838

Adjusted diluted earnings per share from continuing operations (6)

$

0.79

$

0.66

$

2.74

$

2.08

(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 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 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.

Contacts:

MEDIA CONTACT
Allie Bovis
312-212-6714
abovis@huronconsultinggroup.com

INVESTOR CONTACT
John D. Kelly
312-583-8722
investor@huronconsultinggroup.com

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