Huron Consulting Group Announces First Quarter 2013 Financial Results *Revenues increased 18.3% to $164.0 million for Q1 2013 compared to $138.6 million in Q1 2012. *Operating income for Q1 2013 was $21.3 million compared to $3.6 millionin Q1 2012. *Adjusted EBITDA^(6), a non-GAAP measure, more than doubled to $25.6million in Q1 2013 compared to $11.8 million in Q1 2012. *Diluted earnings per share from continuing operations for Q1 2013 was $0.51 compared to $0.03 in Q1 2012. *Adjusted diluted earnings per share from continuing operations^(6), a non-GAAP measure, was $0.51 in Q1 2013 compared to $0.13 in Q1 2012. *Company affirms its previous earnings guidance range for full year 2013, including revenue expectations in a range of $655.0 million to $685.0 million. Business Wire CHICAGO -- April 25, 2013 Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results for the first quarter ended March 31, 2013. “Huron’s first quarter results were a solid start to 2013, primarily due to the continuing challenges within our clients’ markets,” said James H. Roth, chief executive officer and president, Huron Consulting Group. “Uncertainties brought about by healthcare reform, reimbursement issues, and the competitive environment facing most hospitals and academic medical centers provide an opportune base for us to deliver value to our provider clients. Colleges and universities are also facing a rapidly changing competitive environment. Collectively, these factors give us confidence that demand for our services will continue at a solid pace throughout 2013.” First Quarter 2013 Results The following information is reported on a “continuing operations” basis unless otherwise noted. Revenues for the first quarter of 2013 were $164.0 million, an increase of 18.3% compared to $138.6 million for the first quarter of 2012. The Company's first quarter 2013 operating income was $21.3 million, compared to $3.6 million in the first quarter of 2012. Net income from continuing operations was $11.4million, or $0.51 per diluted share, for the first quarter of 2013 compared to $0.6million, or $0.03 per diluted share, for the same period last year. Net income was $11.3 million, or $0.50 per diluted share, for the first quarter of 2013, compared to $0.9 million, or $0.04 per diluted share, for the same period last year. First quarter 2013 earnings before interest, taxes, depreciation and amortization ("EBITDA")^(6) was $26.8 million, or 16.3% of revenues, compared to $9.4 million, or 6.8% of revenues, in the comparable quarter last year. In addition to using EBITDA to evaluate the Company’s financial performance, management uses non-GAAP financial measures, which exclude the effect of the following items (in thousands): Three Months Ended March 31, 2013 2012 Amortization of intangible assets $ 1,456 $ 1,619 Restatement related expenses $ — $ 1,505 Restructuring charges $ — $ 830 Litigation settlement gain $ (1,150 ) $ — Tax effect $ (122 ) $ (1,582 ) The Company recorded a $1.15 million litigation settlement gain during the first quarter of 2013. The Company had previously recorded a $1.15 million charge in the second quarter of 2012 related to settlement discussions in a lawsuit filed against Huron and others by Associates Against Outlier Fraud.In March 2013, the court granted Huron’s motion for summary judgment and dismissed the second amended complaint in its entirety with prejudice. As a result, the Company reversed the $1.15 million charge taken in 2012. The plaintiff filed an appeal and the Company filed a cross appeal of an earlier denial of a motion to dismiss filed by Huron. Adjusted EBITDA^(6) was $25.6 million, or 15.6% of revenues, in the first quarter of 2013, compared to $11.8 million, or 8.5% of revenues, in the comparable quarter last year. Adjusted net income^(6) from continuing operations was $11.6 million, or $0.51 per diluted share for the first quarter of 2013 compared to $3.0 million, or $0.13 per diluted share, for the comparable period in 2012. The average number of full-time billable consultants^(1) was 1,501 in the first quarter of 2013 compared to 1,294 in the same quarter last year. Full-time billable consultant utilization rate^(2) was 77.9% during the first quarter of 2013 compared with 77.8% during the same period last year. Average billing rate per hour for full-time billable consultants^(3) was $212 for the first quarter of 2013 compared to $203 for the first quarter of 2012. The average number of full-time equivalent professionals^(4) totaled 1,186 in the first quarter of 2013 compared to 989 for the comparable period in 2012. Operating Segments Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges. In the first quarter of 2013, the Company reorganized its internal financial reporting structure. Under the new structure, the Company now reports information as five operating segments: Huron Healthcare; Huron Legal; Huron Education and Life Sciences; Huron Financial; and All Other. The Company’s year-to-date revenues by operating segment are as follows: Huron Healthcare (48%); Huron Legal (25%); Huron Education and Life Sciences (22%); and Huron Financial (5%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-Q filing for the quarter ended March 31, 2013. Outlook for 2013 Based on currently available information, the Company affirmed guidance, which was previously announced on February 20, 2013, for full year 2013 revenues before reimbursable expenses in a range of $655.0 million to $685.0 million. The Company also anticipatesEBITDAin a range of $118.5 million to$127.0 million, Adjusted EBITDAin a range of $120.5 million to $129.0 million, GAAP diluted earnings per share in a range of $2.25 to $2.45, and non-GAAP adjusted diluted earnings per share in a range of $2.45 to $2.65. Management will provide a more detailed discussion of its outlook during the Company’s earnings conference call webcast. First Quarter 2013 Webcast The Company will host a webcast to discuss its financial results today, April 25, 2013, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by ThomsonReuters and can be accessed at Huron Consulting Group’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. About Huron Consulting Group Huron Consulting Group helps clients in diverse industries improve performance, reduce costs, leverage technology, process and review large amounts of complex data, address regulatory changes, recover from distress and stimulate growth. Our professionals employ their expertise in administration, management, finance and operations to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client's particular challenges and opportunities to deliver sustainable and measurable results. The Company provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 95 of the top 100 research universities, more than 400 corporate general counsel, and more than 385 hospitals and academic medical centers. Learn more at www.huronconsultinggroup.com. 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 believes that such measures, as supplements to operating income, net income from continuing operations and diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects. 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. Statements in this press release, including the information incorporated by reference herein, that are not historical in nature, including those concerning the Company’s current expectations about its future requirements and needs, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) 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,” “meets,” “could,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans” or “continues.” These forward-looking statements reflect our current expectation about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, current expectations with respect to, among other factors, utilization rates, billing rates, and the number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions continue to trend upward. These statements involve known and unknown risks, uncertainties and other factors, including, among others, those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 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. We disclaim 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 EARNINGS (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2013 2012 Revenues and reimbursable expenses: Revenues $ 164,036 $ 138,637 Reimbursable expenses 15,336 13,796 Total revenues and reimbursable expenses 179,372 152,433 Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): Direct costs 106,128 96,781 Amortization of intangible assets and software 658 1,142 development costs Reimbursable expenses 15,351 13,818 Total direct costs and reimbursable expenses 122,137 111,741 Operating expenses: Selling, general and administrative 32,263 30,067 Restructuring charges - 830 Restatement related expenses - 1,505 Litigation settlement gain (1,150 ) - Depreciation and amortization 4,779 4,653 Total operating expenses 35,892 37,055 Operating income 21,343 3,637 Other income (expense), net: Interest expense, net of interest income (1,863 ) (1,866 ) Other income, net 13 333 Total other expense, net (1,850 ) (1,533 ) Income from continuing operations before income 19,493 2,104 tax expense Income tax expense 8,124 1,517 Net income from continuing operations 11,369 587 (Loss) income from discontinued operations, net of (32 ) 269 tax Net income $ 11,337 $ 856 Net earnings per basic share: Net income from continuing operations $ 0.51 $ 0.03 Income from discontinued operations, net of tax $ - $ 0.01 Net income $ 0.51 $ 0.04 Net earnings per diluted share: Net income from continuing operations $ 0.51 $ 0.03 Income from discontinued operations, net of tax $ (0.01 ) $ 0.01 Net income $ 0.50 $ 0.04 Weighted average shares used in calculating earnings per share: Basic 22,139 21,775 Diluted 22,487 22,164 HURON CONSULTING GROUP INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) March 31, December 31, 2013 2012 Assets Current assets: Cash and cash equivalents $ 5,749 $ 25,162 Receivables from clients, net 101,549 97,510 Unbilled services, net 59,123 47,232 Income tax receivable 1,003 192 Deferred income taxes, net 9,631 14,751 Prepaid expenses and other current assets 13,914 15,525 Total current assets 190,969 200,372 Property and equipment, net 33,269 33,805 Other non-current assets 15,584 15,322 Intangible assets, net 17,337 18,879 Goodwill 518,916 519,522 Total assets $ 776,075 $ 787,900 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 6,978 $ 8,461 Accrued expenses 15,786 17,692 Accrued payroll and related benefits 32,869 61,672 Bank borrowings, current portion 25,000 - Accrued consideration for business acquisitions, 5,586 5,640 current portion Income tax payable 165 7,872 Deferred revenues 15,345 15,388 Total current liabilities 101,729 116,725 Non-current liabilities: Deferred compensation and other liabilities 7,140 6,973 Bank borrowings, net of current portion 177,500 192,500 Deferred lease incentives 6,874 6,936 Deferred income taxes 15,784 14,560 Accrued consideration for business acquisitions, 4,956 4,885 net of current portion Total non-current liabilities 212,254 225,854 Commitments and Contingencies Stockholders’ equity Common stock; $0.01 par value; 500,000,000 shares authorized; 25,184,665 and 24,793,327 shares issued at March 31, 2013 and December 31, 2012, respectively 243 240 Treasury stock, at cost, 1,893,745 and 1,880,809 shares at March 31, 2013 and December 31, 2012, (84,137 ) (83,715 ) respectively Additional paid-in capital 427,607 420,825 Retained earnings 120,667 109,330 Accumulated other comprehensive loss (2,288 ) (1,359 ) Total stockholders’ equity 462,092 445,321 Total liabilities and stockholders’ equity $ 776,075 $ 787,900 HURON CONSULTING GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2013 2012 Cash flows from operating activities: Net income $ 11,337 $ 856 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,437 6,621 Share-based compensation 4,635 4,842 Allowances for doubtful accounts and unbilled 6,953 2,246 services Deferred income taxes 6,083 3,344 Changes in operating assets and liabilities, net of businesses acquired: (Increase) decrease in receivables from clients (4,742 ) 2,133 (Increase) decrease in unbilled services (18,423 ) 4,456 (Increase) decrease in current income tax (8,513 ) 2,379 receivable / payable, net (Increase) decrease in other assets 2,459 1,853 Increase (decrease) in accounts payable and (3,000 ) 3,492 accrued liabilities Increase (decrease) in accrued payroll and related (27,018 ) (36,795 ) benefits Increase (decrease) in deferred revenues (34 ) (7,978 ) Net cash used in operating activities (24,826 ) (12,551 ) Cash flows from investing activities: Purchases of property and equipment, net (3,576 ) (5,267 ) Net investment in life insurance policies (507 ) (361 ) Purchases of businesses, net of cash acquired - (31,298 ) Capitalization of internally developed software (692 ) - Net cash used in investing activities (4,775 ) (36,926 ) Cash flows from financing activities: Proceeds from exercise of stock options 27 29 Shares redeemed for employee tax withholdings (565 ) (3,710 ) Tax benefit from share-based compensation 803 1,116 Proceeds from borrowings under credit facility 22,000 93,000 Repayments on credit facility (12,000 ) (42,500 ) Payments of capital lease obligations - (5 ) Net cash provided by financing activities 10,265 47,930 Effect of exchange rate changes on cash (77 ) 430 Net decrease in cash and cash equivalents (19,413 ) (1,117 ) Cash and cash equivalents at beginning of the 25,162 5,080 period Cash and cash equivalents at end of the period $ 5,749 $ 3,963 HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (Unaudited) Three Months Ended Percent March 31, Increase Segment and Consolidated Operating 2013 2012 (Decrease) Results (in thousands): Huron Healthcare: Revenues $ 78,745 $ 63,465 24.1 % Operating income $ 31,161 $ 15,838 96.7 % Segment operating income as a percent 39.6 % 25.0 % of segment revenues Huron Legal: Revenues $ 40,944 $ 41,383 (1.1 %) Operating income $ 2,938 $ 9,511 (69.1 %) Segment operating income as a percent 7.2 % 23.0 % of segment revenues Huron Education and Life Sciences: Revenues $ 35,726 $ 27,676 29.1 % Operating income $ 9,352 $ 6,458 44.8 % Segment operating income as a percent 26.2 % 23.3 % of segment revenues Huron Financial: Revenues $ 8,582 $ 5,849 46.7 % Operating income $ 3,379 $ 233 N/M Segment operating income as a percent 39.4 % 4.0 % of segment revenues All Other: Revenues $ 39 $ 264 (85.2 %) Operating loss $ (172 ) $ (799 ) (78.5 %) Segment operating loss as a percent N/M N/M of segment revenues Total Company: Revenues $ 164,036 $ 138,637 18.3 % Reimbursable expenses 15,336 13,796 11.2 % Total revenues and reimbursable $ 179,372 $ 152,433 17.7 % expenses Statement of Earnings reconciliation: Segment operating income $ 46,658 $ 31,241 49.3 % Charges not allocated at the segment level: Other selling, general and 20,536 22,951 (10.5 %) administrative expenses Depreciation and amortization expense 4,779 4,653 2.7 % Total operating income 21,343 3,637 486.8 % Other expense, net 1,850 1,533 20.7 % Income from continuing operations $ 19,493 $ 2,104 826.5 % before income tax expense Other Operating Data (excluding All Other): Number of full-time billable consultants (at period end) ^ (1): Huron Healthcare ^(5) 870 809 7.5 % Huron Legal 151 118 28.0 % Huron Education and Life Sciences 436 328 32.9 % Huron Financial 62 67 (7.5 %) Total 1,519 1,322 14.9 % Average number of full-time billable consultants (for the period) ^(1): Huron Healthcare ^(5) 863 788 Huron Legal 146 116 Huron Education and Life Sciences 430 322 Huron Financial 62 68 Total 1,501 1,294 Full-time billable consultant utilization rate ^(2): Huron Healthcare ^(5) 85.6 % 83.2 % Huron Legal 52.0 % 70.7 % Huron Education and Life Sciences 70.0 % 70.8 % Huron Financial 84.7 % 59.6 % Total 77.9 % 77.8 % HURON CONSULTING GROUP INC. SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED) (Unaudited) Three Months Ended March 31, Other Operating Data (continued): 2013 2012 Full-time billable consultant average billing rate per hour ^(3): Huron Healthcare ^(5) $ 205 $ 192 Huron Legal $ 222 $ 234 Huron Education and Life Sciences $ 206 $ 212 Huron Financial $ 331 $ 275 Total $ 212 $ 203 Revenue per full-time billable consultant (in thousands): Huron Healthcare ^(5) $ 85 $ 74 Huron Legal $ 53 $ 80 Huron Education and Life Sciences $ 70 $ 73 Huron Financial $ 135 $ 81 Total $ 79 $ 74 Average number of full-time equivalents (for the period) ^(4): Huron Healthcare ^(5) 56 62 Huron Legal 1,089 897 Huron Education and Life Sciences 39 28 Huron Financial 2 2 Total 1,186 989 Revenue per full-time equivalents (in thousands): Huron Healthcare ^(5) $ 104 $ 88 Huron Legal $ 31 $ 36 Huron Education and Life Sciences $ 151 $ 145 Huron Financial $ 149 $ 187 Total $ 38 $ 43 (1) Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked. Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all our full-time billable consultants (2) worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days. Average billing rate per hour for our full-time billable consultants is (3) calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period. Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who (4) generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes full-time employees who provide software support and maintenance services to our clients. Effective January 1, 2013, a group within the Huron Healthcare segment that provides post-implementation services that was previously (5) classified as full-time equivalents will be classified as full-time billable consultants due to the evolving nature of the services that they offer. Prior periods have been restated to reflect this change. N/M – Not meaningful 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 March 31, 2013 2012 Revenues $ 164,036 $ 138,637 Net income from continuing operations $ 11,369 $ 587 Add back: Income tax expense 8,124 1,517 Interest and other expenses 1,850 1,533 Depreciation and amortization 5,437 5,795 Earnings before interest, taxes, depreciation and 26,780 9,432 amortization (EBITDA) ^(6) Add back: Restatement related expenses - 1,505 Restructuring charges - 830 Litigation settlement gain (1,150 ) - Adjusted EBITDA ^(6) $ 25,630 $ 11,767 Adjusted EBITDA as a percentage of revenues ^(6) 15.6 % 8.5 % HURON CONSULTING GROUP INC. RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS ^(6) (In thousands) (Unaudited) Three Months Ended March 31, 2013 2012 Net income from continuing operations $ 11,369 $ 587 Weighted average shares - diluted 22,487 22,164 Diluted earnings per share from continuing $ 0.51 $ 0.03 operations Add back: Amortization of intangible assets 1,456 1,619 Restatement related expenses - 1,505 Restructuring charges - 830 Litigation settlement gain (1,150 ) - Tax effect (122 ) (1,582 ) Total adjustments, net of tax 184 2,372 Adjusted net income from continuing operations ^(6) $ 11,553 $ 2,959 Adjusted diluted earnings per share from continuing $ 0.51 $ 0.13 operations ^(6) In evaluating the Company’s financial performance, 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. Our management uses these non-GAAP financial measures to gain an understanding of our 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 our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP (6) financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe 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. Contact: Huron Consulting Group Inc. Media Contact: Jennifer Frost Hennagir, 312-880-3260 firstname.lastname@example.org or Investor Contact: C. Mark Hussey or Ellen Wong 312-583-8722 email@example.com
Huron Consulting Group Announces First Quarter 2013 Financial Results
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