HURN Huron Consulting Group Inc

SECOND QUARTER 2024 FINANCIAL HIGHLIGHTS

• Total revenues increased $24.9 million, or 7.2%, to a record $371.7 million in Q2 2024 from $346.8 million in Q2 2023.
• Net income increased $12.8 million, or 51.7%, to $37.5 million in Q2 2024, compared to $24.7 million in Q2 2023. Results for Q2 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter for which Huron was the plaintiff.
• Adjusted EBITDA(8), a non-GAAP measure, increased $7.2 million, or 14.9%, to $55.7 million in Q2 2024 from $48.5 million in Q2 2023.
• Diluted earnings per share increased $0.76, or 59.8%, to $2.03 in Q2 2024, compared to $1.27 in Q2 2023. Results for Q2 2024 include the litigation settlement gain related to a completed legal matter for which Huron was the plaintiff, which had a favorable $0.60 impact on diluted earnings per share for the quarter.
• Adjusted diluted earnings per share(8), a non-GAAP measure, increased $0.30, or 21.7%, to $1.68 in Q2 2024 from $1.38 in Q2 2023.
• Net cash provided by operating activities was a record $107.2 million in Q2 2024, compared to $78.2 million in Q2 2023.
• Huron returned $34.4 million to shareholders by repurchasing 0.4 million shares of the company's common stock in Q2 2024.

YEAR-TO-DATE 2024 HIGHLIGHTS AND 2024 GUIDANCE

• Total revenues increased $63.0 million, or 9.5%, to $727.6 million for the first six months of 2024 from $664.7 million for the same prior year period.
• Net income increased $17.4 million, or 45.5%, to $55.5 million for the first six months of 2024, compared to $38.1 million for the same prior year period. Results for the first six months of 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter for which Huron was the plaintiff.
• Adjusted EBITDA(8), a non-GAAP measure, increased $11.5 million, or 14.8%, to $89.5 million for the first six months of 2024 from $78.0 million for the same prior year period.
• Diluted earnings per share increased $1.01, or 51.8%, to $2.96 for the first six months of 2024, compared to $1.95 for the same prior year period. Results for the first six months of 2024 include the litigation settlement gain related to a completed legal matter for which Huron was the plaintiff, which had a favorable $0.59 impact on diluted earnings per share for the period.
• Adjusted diluted earnings per share(8), a non-GAAP measure, increased $0.64, or 28.4%, to $2.89 for the first six months of 2024 from $2.25 for the same prior year period.
• Huron returned $96.7 million to shareholders by repurchasing 1.0 million shares of the company's common stock in the first six months of 2024, representing 5.4% of the company's common stock outstanding as of December 31, 2023.
• Huron updates its previous earnings guidance range for full year 2024, including increasing adjusted diluted earnings per share(8) expectations to a range of $5.85 to $6.15.

OTHER HIGHLIGHTS

• Huron was named one of America’s Best Management Consulting Firms for 2024 by Forbes, one of America’s Best Mid-size Companies by Time magazine, and a Best Firm to Work For in 2024 by Consulting magazine.
• Huron was recognized as a 2024 employer of choice by U.S. News and World Report (Best Companies to Work For) and Forbes (America’s Best Employers For Women).

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the quarter ended June 30, 2024.

“In the second quarter, we achieved record revenues, led by solid growth in our Healthcare and Education segments, and we continued to expand our margins. We are raising our full year 2024 earnings guidance, reflecting our first half performance and which continues our steady progress towards our financial goals,” said Mark Hussey, chief executive officer and president of Huron. "We also generated record cash flow in the second quarter, enabling us to reduce our debt by $62 million while repurchasing $34 million of our outstanding shares.”

“I am incredibly proud of our team for delivering performance that over the past ten quarters has outpaced our 2022 investor day financial objectives,” added Hussey. “Our strengths in the Healthcare and Education industries, along with our expansive Digital capabilities, position us well to continue addressing our clients’ needs and achieve our strategic and financial objectives.”

SECOND QUARTER 2024 RESULTS

Revenues increased $24.9 million, or 7.2%, to a record $371.7 million for the second quarter of 2024, compared to $346.8 million for the second quarter of 2023. The increase in revenues was driven by continued strength in demand for Healthcare's Consulting and Managed Services and Digital capabilities, as well as an increase in demand for Education's Consulting and Managed Services capability, reflecting the company's focus on accelerating growth in the healthcare and education industries. These increases were partially offset by a decrease in demand for Commercial's Digital capability.

Net income increased $12.8 million, or 51.7%, to $37.5 million for the second quarter of 2024, compared to $24.7 million for the same quarter last year. Results for the second quarter of 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter for which Huron was the plaintiff. Diluted earnings per share increased $0.76, or 59.8%, to $2.03 for the second quarter of 2024, compared to $1.27 for the second quarter of 2023. The litigation settlement gain recognized in the second quarter of 2024 had a favorable $0.60 impact on diluted earnings per share in the second quarter of 2024.

Second quarter 2024 earnings before interest, taxes, depreciation and amortization ("EBITDA")(8) increased $19.2 million, or 40.7%, to $66.3 million, compared to $47.1 million in the same prior year period. Results for the second quarter of 2024 include a pre-tax $15.0 million litigation settlement gain related to the completed legal matter for which Huron was the plaintiff.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands).

 

Three Months Ended

June 30,

 

2024

 

2023

Amortization of intangible assets

$

1,627

 

 

$

1,974

 

Restructuring charges

$

2,056

 

 

$

1,699

 

2024 litigation settlement gain (9)

$

(11,701

)

 

$

—

 

Other gains, net

$

(917

)

 

$

(623

)

Transaction-related expenses

$

103

 

 

$

—

 

Tax effect of adjustments

$

2,296

 

 

$

(808

)

Foreign currency transaction losses (gains), net

$

(150

)

 

$

288

 

Adjusted EBITDA(8) increased $7.2 million, or 14.9%, to $55.7 million, or 15.0% of revenues, in the second quarter of 2024, compared to $48.5 million, or 14.0% of revenues, in the same quarter last year. Adjusted net income(8) increased $4.0 million, or 14.8%, to $30.9 million, or $1.68 per diluted share, for the second quarter of 2024, compared to $27.0 million, or $1.38 per diluted share, for the same quarter in 2023.

The number of revenue-generating professionals(1) increased 13.0% to 5,848 as of June 30, 2024 from 5,174 as of June 30, 2023. The utilization rate(7) of the company's Consulting capability was 73.7% during the second quarter of 2024, compared to 76.0% during the same period last year. The utilization rate(7) for the company's Digital capability increased to 75.0% during the second quarter of 2024, compared to 74.7% during the same period last year.

Additionally, Huron returned $34.4 million to shareholders in the second quarter of 2024 by repurchasing 376,493 shares of the company's common stock.

YEAR-TO-DATE 2024 RESULTS

Revenues increased $63.0 million, or 9.5%, to $727.6 million for the first six months of 2024, compared to $664.7 million for the first six months of 2023. The increase in revenues was driven by continued strength in demand for both our Consulting and Managed Services capability and Digital capability within Healthcare and Education, reflecting the company's focus on accelerating growth in the healthcare and education industries. These increases were partially offset by a decrease in demand for Commercial's Digital capability.

Net income increased $17.4 million, or 45.5%, to $55.5 million for the first six months of 2024, compared to $38.1 million for the same prior year period. Results for the first six months of 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter for which Huron was the plaintiff. Diluted earnings per share increased $1.01, or 51.8%, to $2.96 for the first six months of 2024, compared to $1.95 for the same prior year period. The litigation settlement gain recognized in the second quarter of 2024 had a favorable $0.59 impact on diluted earnings per share for the six months ended June 30, 2024.

EBITDA(8) for the first six months of 2024 increased $21.4 million, or 28.9%, to $95.2 million, compared to $73.8 million in the same prior year period. Results for the first six months of 2024 include a pre-tax $15.0 million litigation settlement gain related to the completed legal matter for which Huron was the plaintiff.

In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

Six Months Ended

June 30,

 

2024

 

2023

Amortization of intangible assets

$

3,317

 

 

$

4,205

 

Restructuring charges

$

4,393

 

 

$

3,983

 

2024 litigation settlement gain (9)

$

(11,701

)

 

$

—

 

Other losses (gains), net

$

651

 

 

$

(188

)

Transaction-related expenses

$

1,600

 

 

$

—

 

Tax effect of adjustments

$

452

 

 

$

(2,120

)

Foreign currency transaction losses (gains), net

$

(615

)

 

$

368

 

Adjusted EBITDA(8) increased $11.5 million, or 14.8%, to $89.5 million, or 12.3% of revenues, for the first six months of 2024, compared to $78.0 million, or 11.7% of revenues, in the same prior year period. Adjusted net income(8) increased $10.2 million, or 23.2%, to $54.2 million, or $2.89 per diluted share, for the first six months of 2024, compared to $44.0 million, or $2.25 per diluted share, for the same prior year period.

The number of revenue-generating professionals(1) increased 13.0% to 5,848 as of June 30, 2024 from 5,174 as of June 30, 2023. The utilization rate(7) of the company's Consulting capability was 72.0% for the first six months of 2024, compared to 76.1% during the same period last year. The utilization rate(7) for the company's Digital capability increased to 74.6% for the first six months of 2024, compared to 72.8% during the same period last year.

Additionally, Huron returned $96.7 million to shareholders in the first six months of 2024 by repurchasing 1,001,191 shares of the company's common stock, representing 5.4% of the company's common stock outstanding as of December 31, 2023.

OPERATING INDUSTRIES

The company’s year-to-date 2024 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (51%); Education (32%); and Commercial (17%). 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 June 30, 2024.

OUTLOOK FOR 2024

Based on currently available information, the company is narrowing guidance for full year 2024 revenues before reimbursable expenses to a range of $1.46 billion to $1.50 billion. The company is increasing its guidance for full year 2024 adjusted EBITDA as a percentage of revenues(8) to a range of 13.0% to 13.5% and adjusted diluted earnings per share(8) to a range of $5.85 to $6.15.

SECOND QUARTER 2024 WEBCAST

The company will host a webcast to discuss its financial results today, July 30, 2024, 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(8)

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, 2023 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

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

371,654

 

 

$

346,759

 

 

$

727,615

 

 

$

664,654

 

Reimbursable expenses

 

9,363

 

 

 

8,140

 

 

 

16,787

 

 

 

16,630

 

Total revenues and reimbursable expenses

 

381,017

 

 

 

354,899

 

 

 

744,402

 

 

 

681,284

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

248,605

 

 

 

235,198

 

 

 

501,908

 

 

 

463,581

 

Reimbursable expenses

 

9,427

 

 

 

8,121

 

 

 

17,011

 

 

 

16,745

 

Selling, general and administrative expenses

 

71,410

 

 

 

64,642

 

 

 

144,110

 

 

 

126,496

 

Other gains, net

 

(15,917

)

 

 

(623

)

 

 

(14,349

)

 

 

(188

)

Restructuring charges

 

2,056

 

 

 

1,699

 

 

 

4,393

 

 

 

3,983

 

Depreciation and amortization

 

6,033

 

 

 

6,143

 

 

 

12,005

 

 

 

12,517

 

Total operating expenses

 

321,614

 

 

 

315,180

 

 

 

665,078

 

 

 

623,134

 

Operating income

 

59,403

 

 

 

39,719

 

 

 

79,324

 

 

 

58,150

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(7,954

)

 

 

(5,796

)

 

 

(13,094

)

 

 

(10,099

)

Other income, net

 

646

 

 

 

1,062

 

 

 

3,425

 

 

 

2,781

 

Total other expense, net

 

(7,308

)

 

 

(4,734

)

 

 

(9,669

)

 

 

(7,318

)

Income before taxes

 

52,095

 

 

 

34,985

 

 

 

69,655

 

 

 

50,832

 

Income tax expense

 

14,613

 

 

 

10,273

 

 

 

14,167

 

 

 

12,701

 

Net income

$

37,482

 

 

$

24,712

 

 

$

55,488

 

 

$

38,131

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

2.10

 

 

$

1.30

 

 

$

3.08

 

 

$

2.00

 

Net income per diluted share

$

2.03

 

 

$

1.27

 

 

$

2.96

 

 

$

1.95

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

17,887

 

 

 

18,939

 

 

 

18,042

 

 

 

19,029

 

Diluted

 

18,454

 

 

 

19,486

 

 

 

18,741

 

 

 

19,598

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

37,482

 

 

$

24,712

 

 

$

55,488

 

 

$

38,131

 

Foreign currency translation adjustments, net of tax

 

(281

)

 

 

327

 

 

 

(1,003

)

 

 

379

 

Unrealized gain (loss) on investment, net of tax

 

(6,318

)

 

 

553

 

 

 

(7,765

)

 

 

4,426

 

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

 

(1,127

)

 

 

2,463

 

 

 

(54

)

 

 

134

 

Other comprehensive income (loss)

 

(7,726

)

 

 

3,343

 

 

 

(8,822

)

 

 

4,939

 

Comprehensive income

$

29,756

 

 

$

28,055

 

 

$

46,666

 

 

$

43,070

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

June 30, 2024

 

December 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

17,646

 

 

$

12,149

 

Receivables from clients, net

 

181,074

 

 

 

162,566

 

Unbilled services, net

 

188,075

 

 

 

190,869

 

Income tax receivable

 

8,342

 

 

 

6,385

 

Prepaid expenses and other current assets

 

40,399

 

 

 

28,491

 

Total current assets

 

435,536

 

 

 

400,460

 

Property and equipment, net

 

23,357

 

 

 

23,728

 

Deferred income taxes, net

 

2,325

 

 

 

2,288

 

Long-term investments

 

64,918

 

 

 

75,414

 

Operating lease right-of-use assets

 

22,409

 

 

 

24,131

 

Other non-current assets

 

105,799

 

 

 

92,336

 

Intangible assets, net

 

24,118

 

 

 

18,074

 

Goodwill

 

647,451

 

 

 

625,711

 

Total assets

$

1,325,913

 

 

$

1,262,142

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,740

 

 

$

10,074

 

Accrued expenses and other current liabilities

 

26,495

 

 

 

33,087

 

Accrued payroll and related benefits

 

135,595

 

 

 

225,921

 

Current maturities of long-term debt

 

13,750

 

 

 

—

 

Current maturities of operating lease liabilities

 

11,588

 

 

 

11,032

 

Deferred revenues

 

28,583

 

 

 

22,461

 

Total current liabilities

 

225,751

 

 

 

302,575

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

40,038

 

 

 

35,665

 

Long-term debt, net of current portion

 

496,550

 

 

 

324,000

 

Operating lease liabilities, net of current portion

 

35,618

 

 

 

38,850

 

Deferred income taxes, net

 

27,378

 

 

 

28,160

 

Total non-current liabilities

 

599,584

 

 

 

426,675

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 20,843,283 and 21,316,441 shares issued, respectively

 

208

 

 

 

212

 

Treasury stock, at cost, 3,059,851 and 2,852,296 shares, respectively

 

(159,537

)

 

 

(142,136

)

Additional paid-in capital

 

175,387

 

 

 

236,962

 

Retained earnings

 

470,515

 

 

 

415,027

 

Accumulated other comprehensive income

 

14,005

 

 

 

22,827

 

Total stockholders’ equity

 

500,578

 

 

 

532,892

 

Total liabilities and stockholders’ equity

$

1,325,913

 

 

$

1,262,142

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Six Months Ended

June 30,

 

2024

 

2023

Cash flows from operating activities:

 

 

 

Net income

$

55,488

 

 

$

38,131

 

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

 

 

 

Depreciation and amortization

 

12,005

 

 

 

12,549

 

Non-cash lease expense

 

3,043

 

 

 

3,340

 

Lease-related impairment charges

 

2,293

 

 

 

2,086

 

Share-based compensation

 

25,284

 

 

 

23,151

 

Amortization of debt discount and issuance costs

 

508

 

 

 

382

 

Allowances for doubtful accounts

 

2,353

 

 

 

53

 

Deferred income taxes

 

1,942

 

 

 

1,755

 

(Gain) loss on sale of property and equipment

 

(101

)

 

 

1

 

Change in fair value of contingent consideration liabilities

 

(416

)

 

 

(233

)

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

 

 

 

(Increase) decrease in receivables from clients, net

 

(20,372

)

 

 

(4,440

)

(Increase) decrease in unbilled services, net

 

3,057

 

 

 

(32,567

)

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

 

(2,606

)

 

 

(6,141

)

(Increase) decrease in other assets

 

(14,942

)

 

 

(4,880

)

Increase (decrease) in accounts payable and other liabilities

 

(6,978

)

 

 

(5,594

)

Increase (decrease) in accrued payroll and related benefits

 

(86,400

)

 

 

(44,277

)

Increase (decrease) in deferred revenues

 

2,339

 

 

 

2,804

 

Net cash used in operating activities

 

(23,503

)

 

 

(13,880

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(3,665

)

 

 

(3,725

)

Investments in life insurance policies

 

(1,361

)

 

 

(2,188

)

Distributions from life insurance policies

 

—

 

 

 

2,956

 

Purchases of businesses

 

(20,769

)

 

 

38

 

Capitalization of internally developed software costs

 

(14,138

)

 

 

(12,998

)

Proceeds from note receivable

 

154

 

 

 

154

 

Proceeds from sale of property and equipment

 

102

 

 

 

—

 

Net cash used in investing activities

 

(39,677

)

 

 

(15,763

)

Cash flows from financing activities:

 

 

 

Proceeds from exercises of stock options

 

1,215

 

 

 

987

 

Shares redeemed for employee tax withholdings

 

(21,080

)

 

 

(9,728

)

Share repurchases

 

(97,264

)

 

 

(60,368

)

Proceeds from bank borrowings

 

618,500

 

 

 

230,000

 

Repayments of bank borrowings

 

(430,938

)

 

 

(125,000

)

Payments for debt issuance costs

 

(1,446

)

 

 

(58

)

Deferred payments on business acquisition

 

(261

)

 

 

(1,500

)

Net cash provided by financing activities

 

68,726

 

 

 

34,333

 

Effect of exchange rate changes on cash

 

(49

)

 

 

59

 

Net increase in cash and cash equivalents

 

5,497

 

 

 

4,749

 

Cash and cash equivalents at beginning of the period

 

12,149

 

 

 

11,834

 

Cash and cash equivalents at end of the period

$

17,646

 

 

$

16,583

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

Percent Increase (Decrease)

 

Six Months Ended

June 30,

 

Percent Increase (Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2024

 

2023

 

 

2024

 

2023

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

190,098

 

 

$

173,768

 

 

9.4

%

 

$

370,840

 

 

$

322,817

 

 

14.9

%

Operating income

 

$

55,246

 

 

$

49,151

 

 

12.4

%

 

$

97,940

 

 

$

81,406

 

 

20.3

%

Segment operating margin

 

 

29.1

%

 

 

28.3

%

 

 

 

 

26.4

%

 

 

25.2

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

122,753

 

 

$

110,694

 

 

10.9

%

 

$

234,336

 

 

$

214,841

 

 

9.1

%

Operating income

 

$

30,792

 

 

$

27,397

 

 

12.4

%

 

$

52,748

 

 

$

50,562

 

 

4.3

%

Segment operating margin

 

 

25.1

%

 

 

24.8

%

 

 

 

 

22.5

%

 

 

23.5

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

58,803

 

 

$

62,297

 

 

(5.6

)%

 

$

122,439

 

 

$

126,996

 

 

(3.6

)%

Operating income

 

$

9,015

 

 

$

10,472

 

 

(13.9

)%

 

$

23,054

 

 

$

24,539

 

 

(6.1

)%

Segment operating margin

 

 

15.3

%

 

 

16.8

%

 

 

 

 

18.8

%

 

 

19.3

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

371,654

 

 

$

346,759

 

 

7.2

%

 

$

727,615

 

 

$

664,654

 

 

9.5

%

Reimbursable expenses

 

 

9,363

 

 

 

8,140

 

 

15.0

%

 

 

16,787

 

 

 

16,630

 

 

0.9

%

Total revenues and reimbursable expenses

 

$

381,017

 

 

$

354,899

 

 

7.4

%

 

$

744,402

 

 

$

681,284

 

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

95,053

 

 

$

87,020

 

 

9.2

%

 

$

173,742

 

 

$

156,507

 

 

11.0

%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

45,626

 

 

 

43,044

 

 

6.0

%

 

 

96,565

 

 

 

86,665

 

 

11.4

%

Other gains, net

 

 

(15,917

)

 

 

(623

)

 

N/M

 

 

 

(14,349

)

 

 

(188

)

 

N/M

 

Restructuring charges

 

 

2,047

 

 

 

502

 

 

N/M

 

 

 

4,280

 

 

 

2,786

 

 

53.6

%

Depreciation and amortization

 

 

3,894

 

 

 

4,378

 

 

(11.1

)%

 

 

7,922

 

 

 

9,094

 

 

(12.9

)%

Operating income

 

 

59,403

 

 

 

39,719

 

 

49.6

%

 

 

79,324

 

 

 

58,150

 

 

36.4

%

Other expense, net

 

 

(7,308

)

 

 

(4,734

)

 

54.4

%

 

 

(9,669

)

 

 

(7,318

)

 

32.1

%

Income before taxes

 

$

52,095

 

 

$

34,985

 

 

48.9

%

 

$

69,655

 

 

$

50,832

 

 

37.0

%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (1)(2):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

2,339

 

 

 

1,852

 

 

26.3

%

 

 

2,339

 

 

 

1,852

 

 

26.3

%

Education

 

 

1,243

 

 

 

1,124

 

 

10.6

%

 

 

1,243

 

 

 

1,124

 

 

10.6

%

Commercial (3)

 

 

2,266

 

 

 

2,198

 

 

3.1

%

 

 

2,266

 

 

 

2,198

 

 

3.1

%

Total

 

 

5,848

 

 

 

5,174

 

 

13.0

%

 

 

5,848

 

 

 

5,174

 

 

13.0

%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)(5)

 

$

218,339

 

 

$

197,255

 

 

10.7

%

 

$

419,898

 

 

$

374,449

 

 

12.1

%

Digital

 

 

153,315

 

 

 

149,504

 

 

2.5

%

 

 

307,717

 

 

 

290,205

 

 

6.0

%

Total

 

$

371,654

 

 

$

346,759

 

 

7.2

%

 

$

727,615

 

 

$

664,654

 

 

9.5

%

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

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)(6)

 

 

2,935

 

 

 

2,473

 

 

18.7

%

 

 

2,935

 

 

 

2,473

 

 

18.7

%

Digital

 

 

2,913

 

 

 

2,701

 

 

7.8

%

 

 

2,913

 

 

 

2,701

 

 

7.8

%

Total

 

 

5,848

 

 

 

5,174

 

 

13.0

%

 

 

5,848

 

 

 

5,174

 

 

13.0

%

Utilization rate by capability (7):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

73.7

%

 

 

76.0

%

 

 

 

 

72.0

%

 

 

76.1

%

 

 

Digital

 

 

75.0

%

 

 

74.7

%

 

 

 

 

74.6

%

 

 

72.8

%

 

 

(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)

 

During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries. This reclassification did not impact the total Digital capability headcount for any period. The prior period headcount has been revised for consistent presentation.

 

(3)

 

The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education, and the related costs of these professionals are allocated to each of the segments.

 

(4)

 

During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively. This reclassification did not impact the aggregate revenues or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues and headcount in the following footnotes have been revised for consistent presentation.

 

(5)

 

Managed Services capability revenues within our Healthcare segment was $16.7 million and $17.3 million for the three months ended June 30, 2024 and 2023, respectively; and $34.2 million and $37.1 million for the six months ended June 30, 2024 and 2023, respectively. Managed Services capability revenues within our Education segment was $6.8 million and $7.1 million for the three months ended June 30, 2024 and 2023, respectively; and $14.2 million and $14.5 million for the six months ended June 30, 2024 and 2023, respectively.

 

(6)

 

The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,116 and 772 as of June 30, 2024 and 2023, respectively. The number of Managed Services revenue-generating professionals within our Education segment was 128 and 130 as of June 30, 2024 and 2023, respectively.

 

(7)

 

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 working 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 (8)

(In thousands)

(Unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Revenues

$

371,654

 

 

$

346,759

 

 

$

727,615

 

 

$

664,654

 

Net income

$

37,482

 

 

$

24,712

 

 

$

55,488

 

 

$

38,131

 

Add back:

 

 

 

 

 

 

 

Income tax expense

 

14,613

 

 

 

10,273

 

 

 

14,167

 

 

 

12,701

 

Interest expense, net of interest income

 

7,954

 

 

 

5,796

 

 

 

13,094

 

 

 

10,099

 

Depreciation and amortization

 

6,244

 

 

 

6,330

 

 

 

12,425

 

 

 

12,883

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (8)

 

66,293

 

 

 

47,111

 

 

 

95,174

 

 

 

73,814

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

2,056

 

 

 

1,699

 

 

 

4,393

 

 

 

3,983

 

2024 litigation settlement gain (9)

 

(11,701

)

 

 

—

 

 

 

(11,701

)

 

 

—

 

Other losses (gains), net

 

(917

)

 

 

(623

)

 

 

651

 

 

 

(188

)

Transaction-related expenses

 

103

 

 

 

—

 

 

 

1,600

 

 

 

—

 

Foreign currency transaction losses (gains), net

 

(150

)

 

 

288

 

 

 

(615

)

 

 

368

 

Adjusted EBITDA (8)

$

55,684

 

 

$

48,475

 

 

$

89,502

 

 

$

77,977

 

Adjusted EBITDA as a percentage of revenues (8)

 

15.0

%

 

 

14.0

%

 

 

12.3

%

 

 

11.7

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (8)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Net income

$

37,482

 

 

$

24,712

 

 

$

55,488

 

 

$

38,131

 

Weighted average shares - diluted

 

18,454

 

 

 

19,486

 

 

 

18,741

 

 

 

19,598

 

Diluted earnings per share

$

2.03

 

 

$

1.27

 

 

$

2.96

 

 

$

1.95

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

1,627

 

 

 

1,974

 

 

 

3,317

 

 

 

4,205

 

Restructuring charges

 

2,056

 

 

 

1,699

 

 

 

4,393

 

 

 

3,983

 

2024 litigation settlement gain (9)

 

(11,701

)

 

 

—

 

 

 

(11,701

)

 

 

—

 

Other losses (gains), net

 

(917

)

 

 

(623

)

 

 

651

 

 

 

(188

)

Transaction-related expenses

 

103

 

 

 

—

 

 

 

1,600

 

 

 

—

 

Tax effect of adjustments

 

2,296

 

 

 

(808

)

 

 

452

 

 

 

(2,120

)

Total adjustments, net of tax

 

(6,536

)

 

 

2,242

 

 

 

(1,288

)

 

 

5,880

 

Adjusted net income (8)

$

30,946

 

 

$

26,954

 

 

$

54,200

 

 

$

44,011

 

Adjusted weighted average shares - diluted

 

18,454

 

 

 

19,486

 

 

 

18,741

 

 

 

19,598

 

Adjusted diluted earnings per share (8)

$

1.68

 

 

$

1.38

 

 

$

2.89

 

 

$

2.25

 

(8)

 

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.

 

(9)

 

The non-GAAP financial measures for the three and six months ended June 30, 2024 include an adjustment for the 2024 litigation settlement gain. In the second quarter of 2024, the company settled a litigation matter for which Huron was the plaintiff for $15.0 million, on a pre-tax basis. This $15.0 million settlement gain was recorded as a component of other gains, net on the consolidated statement of operations. The company has excluded from the non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of Huron's business. Of the $3.3 million third-party legal costs incurred for this matter in the first half of 2024, $2.7 million was incurred in the first quarter and $0.6 million was incurred in the second quarter. Third-party legal expenses are recorded as a component of selling, general and administrative expenses on the statement of operations. Third-party legal costs incurred for this litigation matter during the three and six months ended June 30, 2023 were $0.4 million and $1.0 million, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730204141/en/

MEDIA CONTACT Allie Bovis abovis@hcg.com INVESTOR CONTACT John D. Kelly investor@hcg.com