Huron Announces Fourth Quarter and Full Year 2018 Financial Results, 2019 Guidance
FOURTH QUARTER 2018 HIGHLIGHTS
-
Revenues increased
$19.5 million , or 10.5%, to$205.5 million in Q4 2018 from$185.9 million in Q4 2017. -
Net income from continuing operations was
$3.1 million in Q4 2018 compared to a net loss of$29.3 million in Q4 2017. Net loss for Q4 2017 included a non-cash pre-tax goodwill impairment charge of$45.0 million related to the company's Business Advisory segment. -
Adjusted EBITDA(7), a non-GAAP measure, was
$27.9 million in Q4 2018 as compared to$31.5 million in Q4 2017. -
Diluted earnings per share from continuing operations was
$0.14 in Q4 2018 compared to diluted loss per share from continuing operations of$1.36 in Q4 2017. -
Adjusted diluted earnings per share from continuing operations(7),
a non-GAAP measure, was
$0.66 in Q4 2018 compared to$0.68 in Q4 2017.
FULL YEAR 2018 HIGHLIGHTS AND 2019 GUIDANCE
-
Revenues increased
$62.6 million , or 8.5%, to$795.1 million for full year 2018, compared to$732.6 million for full year 2017. -
Net income from continuing operations was
$13.9 million for full year 2018, compared to net loss from continuing operations of$170.5 million for full year 2017. Net loss for full year 2017 included non-cash pretax goodwill impairment charges of$253.1 million related to the company's Healthcare and Business Advisory segments. -
Adjusted EBITDA(7), a non-GAAP measure, was
$91.0 million for full year 2018, compared to$104.6 million for full year 2017. -
Diluted earnings per share from continuing operations was
$0.63 for full year 2018, compared to diluted loss per share from continuing operations of$7.95 for full year 2017. -
Adjusted diluted earnings per share from continuing operations(7),
a non-GAAP measure, was
$2.08 for full year 2018, compared to$2.15 for full year 2017. -
Huron provides full year 2019 guidance, including revenue expectations
in a range of
$800.0 million to $840.0 million .
“Led by strong growth in our Business Advisory and Education segments,
revenues grew 10% organically over the prior year quarter,” said
FOURTH QUARTER 2018 RESULTS FROM CONTINUING OPERATIONS
Revenues increased
Net income from continuing operations was
Fourth quarter 2018 earnings before interest, taxes, depreciation and
amortization ("EBITDA")(7) was
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, |
||||||||
| 2018 | 2017 | |||||||
| Restructuring charges | $ | 992 | $ | 951 | ||||
| Other losses, net | $ | 2,971 | $ | 1,333 | ||||
| Goodwill impairment charges | $ | — | $ | 43,493 | ||||
| Amortization of intangible assets | $ | 5,723 | $ | 8,595 | ||||
| Non-cash interest on convertible notes | $ | 2,095 | $ | 1,998 | ||||
| Other non-operating expense (income), net | $ | (56 | ) | $ | 235 | |||
| Tax effect | $ | (2,378 | ) | $ | (21,195 | ) | ||
| Tax expense related to the enactment of Tax Cut and Jobs Act of 2017 | $ | 2,364 | $ | 8,762 | ||||
| Tax expense related to "check-the-box" election | $ | — | $ | 20 | ||||
| Foreign currency transaction losses | $ | 279 | $ | 15 | ||||
Adjusted EBITDA(7) was
The average number of full-time billable consultants(2)
increased 4.5% to 2,236 in the fourth quarter of 2018 from 2,140 in the
same quarter last year. Full-time billable consultant utilization rate(3)
was 79.7% during the fourth quarter of 2018, compared to 74.2% during
the same period last year. Average billing rate per hour for full-time
billable consultants(4) was
FULL YEAR 2018 RESULTS FROM CONTINUING OPERATIONS
Revenues increased
Net income from continuing operations was
EBITDA(7) was
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, |
||||||||
| 2018 | 2017 | |||||||
| Restructuring charges | $ | 3,657 | $ | 6,246 | ||||
| Other losses (gains), net | $ | (2,019 | ) | $ | 1,111 | |||
| Amortization of intangible assets | $ | 23,955 | $ | 35,027 | ||||
| Goodwill impairment charges | $ | — | $ | 253,093 | ||||
| Non-cash interest on convertible notes | $ | 8,232 | $ | 7,851 | ||||
| Other non-operating expense (income), net | $ | 5,807 | $ | (696 | ) | |||
| Tax effect | $ | (9,487 | ) | $ | (91,557 | ) | ||
|
Tax expense related to the enactment of Tax Cut and Jobs Act of 2017 |
$ | 1,749 | $ | 8,762 | ||||
| Tax benefit related to "check-the-box" election | $ | — | $ | (2,728 | ) | |||
| Foreign currency transaction losses (gains) | $ | 475 | $ | (434 | ) | |||
Adjusted EBITDA(7) was
The average number of full-time billable consultants(2) increased5.9% to 2,165 for full year 2018, compared to 2,045 in the same
period last year. Full-time billable consultant utilization rate(3)
was 77.5% for full year 2018, compared to 74.5% in the same period last
year. Average billing rate per hour for full-time billable consultants(4)
was
OPERATING SEGMENTS
Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.
The company’s full year 2018 revenues by operating segment as a
percentage of total company revenues are as follows: Healthcare
(46%); Business
Advisory (30%); and Education
(24%). 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
OUTLOOK FOR2019
Based on currently available information, the company provided guidance
for full year 2019 of revenues before reimbursable expenses in a range
of
Management will provide a more detailed discussion of its outlook during the company’s earnings conference call webcast.
FOURTH QUARTER 2018 WEBCAST
The company will host a webcast to discuss its financial results today,
USE OF NON-GAAP FINANCIAL MEASURES(7)
In evaluating the company’s financial performance and outlook,
management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage
of revenues, adjusted net income 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
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 helps its clients drive growth, enhance performance and sustain leadership in the markets they serve. The company partners with clients to develop strategies and implement solutions that enable the transformative change its clients need to own their future. 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
| HURON CONSULTING GROUP INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues and reimbursable expenses: | ||||||||||||||||
| Revenues | $ | 205,454 | $ | 185,927 | $ | 795,125 | $ | 732,570 | ||||||||
| Reimbursable expenses | 23,226 | 19,313 | 82,874 | 75,175 | ||||||||||||
| Total revenues and reimbursable expenses | 228,680 | 205,240 | 877,999 | 807,745 | ||||||||||||
| Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): | ||||||||||||||||
| Direct costs | 132,581 | 111,621 | 521,537 | 454,806 | ||||||||||||
| Amortization of intangible assets and software development costs | 1,052 | 2,544 | 4,247 | 10,932 | ||||||||||||
| Reimbursable expenses | 23,213 | 19,535 | 82,923 | 75,436 | ||||||||||||
| Total direct costs and reimbursable expenses | 156,846 | 133,700 | 608,707 | 541,174 | ||||||||||||
| Operating expenses and other losses (gains), net: | ||||||||||||||||
| Selling, general and administrative expenses | 42,502 | 43,227 | 180,983 | 175,364 | ||||||||||||
| Restructuring charges | 992 | 951 | 3,657 | 6,246 | ||||||||||||
| Other losses (gains), net | 2,971 | 1,333 | (2,019 | ) | 1,111 | |||||||||||
| Depreciation and amortization | 8,294 | 9,664 | 34,575 | 38,213 | ||||||||||||
| Goodwill impairment charges | — | 43,493 | — | 253,093 | ||||||||||||
| Total operating expenses and other losses (gains), net | 54,759 | 98,668 | 217,196 | 474,027 | ||||||||||||
| Operating income (loss) | 17,075 | (27,128 | ) | 52,096 | (207,456 | ) | ||||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense, net of interest income | (4,377 | ) | (4,802 | ) | (19,013 | ) | (18,613 | ) | ||||||||
| Other income (expense), net | (2,731 | ) | 361 | (7,862 | ) | 3,565 | ||||||||||
| Total other expense, net | (7,108 | ) | (4,441 | ) | (26,875 | ) | (15,048 | ) | ||||||||
| Income (loss) from continuing operations before taxes | 9,967 | (31,569 | ) | 25,221 | (222,504 | ) | ||||||||||
| Income tax expense (benefit) | 6,912 | (2,259 | ) | 11,277 | (51,999 | ) | ||||||||||
| Net income (loss) from continuing operations | 3,055 | (29,310 | ) | 13,944 | (170,505 | ) | ||||||||||
| Income (loss) from discontinued operations, net of tax | 6 | (302 | ) | (298 | ) | 388 | ||||||||||
| Net income (loss) | $ | 3,061 | $ | (29,612 | ) | $ | 13,646 | $ | (170,117 | ) | ||||||
| Net earnings (loss) per basic share: | ||||||||||||||||
| Net income (loss) from continuing operations | $ | 0.14 | $ | (1.36 | ) | $ | 0.64 | $ | (7.95 | ) | ||||||
| Income (loss) from discontinued operations, net of tax | — | (0.02 | ) | (0.01 | ) | 0.02 | ||||||||||
| Net income (loss) | $ | 0.14 | $ | (1.38 | ) | $ | 0.63 | $ | (7.93 | ) | ||||||
| Net earnings (loss) per diluted share: | ||||||||||||||||
| Net income (loss) from continuing operations | $ | 0.14 | $ | (1.36 | ) | $ | 0.63 | $ | (7.95 | ) | ||||||
| Income (loss) from discontinued operations, net of tax | — | (0.02 | ) | (0.01 | ) | 0.02 | ||||||||||
| Net income (loss) | $ | 0.14 | $ | (1.38 | ) | $ | 0.62 | $ | (7.93 | ) | ||||||
| Weighted average shares used in calculating earnings per share: | ||||||||||||||||
| Basic | 21,774 | 21,515 | 21,706 | 21,439 | ||||||||||||
| Diluted | 22,294 | 21,515 | 22,058 | 21,439 | ||||||||||||
| Comprehensive income (loss): | ||||||||||||||||
| Net income (loss) | $ | 3,061 | $ | (29,612 | ) | $ | 13,646 | $ | (170,117 | ) | ||||||
| Foreign currency translation adjustments, net of tax | (315 | ) | (233 | ) | (1,814 | ) | 1,602 | |||||||||
| Unrealized gain on investment, net of tax | 3,299 | 6,393 | 7,772 | 4,724 | ||||||||||||
| Unrealized gain (loss) on cash flow hedging instruments, net of tax | (654 | ) | 433 | 167 | 429 | |||||||||||
| Other comprehensive income | 2,330 | 6,593 | 6,125 | 6,755 | ||||||||||||
| Comprehensive income (loss) | $ | 5,391 | $ | (23,019 | ) | $ | 19,771 | $ | (163,362 | ) | ||||||
| HURON CONSULTING GROUP INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| (Unaudited) | ||||||||
| December 31, 2018 |
December 31, 2017 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 33,107 | $ | 16,909 | ||||
| Receivables from clients, net |
109,677 |
101,778 | ||||||
| Unbilled services, net |
69,613 |
57,618 | ||||||
| Income tax receivable | 6,612 | 4,039 | ||||||
| Prepaid expenses and other current assets | 13,922 | 10,951 | ||||||
|
Total current assets |
232,931 | 191,295 | ||||||
| Property and equipment, net | 40,374 | 45,541 | ||||||
| Deferred income taxes, net | 2,153 | 16,752 | ||||||
| Long-term investment | 50,429 | 39,904 | ||||||
| Other non-current assets | 30,525 | 25,375 | ||||||
| Intangible assets, net | 47,857 | 72,311 | ||||||
| Goodwill | 645,263 | 645,750 | ||||||
| Total assets | $ | 1,049,532 | $ | 1,036,928 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 10,020 | $ | 9,194 | ||||
| Accrued expenses and other current liabilities | 17,207 | 19,643 | ||||||
| Accrued payroll and related benefits | 109,825 | 73,698 | ||||||
| Accrued contingent consideration for business acquisitions | 9,991 | 8,515 | ||||||
| Current maturities of long-term debt | 243,132 | 501 | ||||||
| Deferred revenues | 28,130 | 27,916 | ||||||
|
Total current liabilities |
418,305 | 139,467 | ||||||
| Non-current liabilities: | ||||||||
| Deferred compensation and other liabilities | 20,875 | 20,895 | ||||||
| Accrued contingent consideration for business acquisitions, net of current portion | 1,450 | 14,313 | ||||||
| Long-term debt, net of current portion | 53,853 | 342,507 | ||||||
| Deferred lease incentives | 13,693 | 15,333 | ||||||
| Deferred income taxes, net | 732 | 1,097 | ||||||
| Total non-current liabilities | 90,603 | 394,145 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Common stock; $0.01 par value; 500,000,000 shares authorized; 25,114,739 and 24,560,468 shares issued at December 31, 2018 and December 31, 2017, respectively | 244 | 241 | ||||||
| Treasury stock, at cost, 2,568,288 and 2,443,577 shares at December 31, 2018 and December 31, 2017, respectively | (124,794 | ) | (121,994 | ) | ||||
| Additional paid-in capital | 452,573 | 434,256 | ||||||
| Retained earnings | 196,106 | 180,443 | ||||||
| Accumulated other comprehensive income | 16,495 | 10,370 | ||||||
| Total stockholders’ equity | 540,624 | 503,316 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,049,532 | $ | 1,036,928 | ||||
| HURON CONSULTING GROUP INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Twelve Months Ended December 31, |
||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 13,646 | $ | (170,117 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 39,311 | 50,089 | ||||||
| Share-based compensation | 18,818 | 14,838 | ||||||
| Amortization of debt discount and issuance costs | 10,313 | 10,203 | ||||||
|
Goodwill impairment charges |
— | 253,093 | ||||||
| Allowances for doubtful accounts and unbilled services | 657 | 3,217 | ||||||
| Deferred income taxes | 10,717 | (53,753 | ) | |||||
| Loss (gain) on sale of businesses | 5,807 | (931 | ) | |||||
| Change in fair value of contingent consideration liabilities | 381 | 1,111 | ||||||
| Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||||||||
| (Increase) decrease in receivables from clients, net |
(10,509 |
) | 1,650 | |||||
| (Increase) decrease in unbilled services, net |
(11,094 |
) | (4,332 | ) | ||||
| (Increase) decrease in current income tax receivable / payable, net | (2,607 | ) | 210 | |||||
| (Increase) decrease in other assets | (1,361 | ) | (366 | ) | ||||
| Increase (decrease) in accounts payable and accrued liabilities | (8,212 | ) | 3,732 | |||||
| Increase (decrease) in accrued payroll and related benefits | 35,481 | (10,966 | ) | |||||
| Increase (decrease) in deferred revenues | 310 | 2,117 | ||||||
| Net cash provided by operating activities | 101,658 | 99,795 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment, net | (8,936 | ) | (24,402 | ) | ||||
| Investment in life insurance policies | (2,037 | ) | (1,826 | ) | ||||
| Distributions from life insurance policies | — | 2,889 | ||||||
| Purchases of businesses, net of cash acquired | (215 | ) | (106,915 | ) | ||||
| Capitalization of internally developed software costs | (6,069 | ) | (1,370 | ) | ||||
| Proceeds from note receivable | 1,040 | 1,177 | ||||||
| Divestitures of businesses, net of cash sold | (2,345 | ) | 1,499 | |||||
| Net cash used in investing activities | (18,562 | ) | (128,948 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 937 | — | ||||||
| Shares redeemed for employee tax withholdings | (3,187 | ) | (4,846 | ) | ||||
| Proceeds from borrowings under credit facility | 204,300 | 277,500 | ||||||
| Repayments of debt | (259,801 | ) | (240,745 | ) | ||||
| Payments for debt issuance costs | (1,385 | ) | (408 | ) | ||||
| Deferred acquisition payments | (7,554 | ) | (2,680 | ) | ||||
| Net cash provided by (used in) financing activities | (66,690 | ) | 28,821 | |||||
| Effect of exchange rate changes on cash | (208 | ) | 214 | |||||
| Net increase (decrease) in cash and cash equivalents | 16,198 | (118 | ) | |||||
| Cash and cash equivalents at beginning of the period | 16,909 | 17,027 | ||||||
| Cash and cash equivalents at end of the period | $ | 33,107 | $ | 16,909 | ||||
| HURON CONSULTING GROUP INC. | |||||||||||
| SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended December 31, |
Percent |
||||||||||
| Segment and Consolidated Operating Results (in thousands): | 2018 | 2017 | |||||||||
| Healthcare: | |||||||||||
| Revenues | $ | 92,951 | $ | 95,648 | (2.8 | )% | |||||
| Operating income | $ | 29,897 | $ | 35,181 | (15.0 | )% | |||||
| Segment operating income as a percentage of segment revenues | 32.2 | % | 36.8 | % | |||||||
| Business Advisory: | |||||||||||
| Revenues | $ | 65,395 | $ | 50,000 | 30.8 | % | |||||
| Operating income | $ | 15,594 | $ | 11,710 | 33.2 | % | |||||
| Segment operating income as a percentage of segment revenues | 23.8 | % | 23.4 | % | |||||||
| Education: | |||||||||||
| Revenues | $ | 47,108 | $ | 40,279 | 17.0 | % | |||||
| Operating income | $ | 10,549 | $ | 8,546 | 23.4 | % | |||||
| Segment operating income as a percentage of segment revenues | 22.4 | % | 21.2 | % | |||||||
| Total Company: | |||||||||||
| Revenues | $ | 205,454 | $ | 185,927 | 10.5 | % | |||||
| Reimbursable expenses | 23,226 | 19,313 | 20.3 | % | |||||||
| Total revenues and reimbursable expenses | $ | 228,680 | $ | 205,240 | 11.4 | % | |||||
| Statements of Operations reconciliation: | |||||||||||
| Segment operating income | $ | 56,040 | $ | 55,437 | 1.1 | % | |||||
| Items not allocated at the segment level: | |||||||||||
| Other operating expenses | 27,700 | 28,075 | (1.3 | )% | |||||||
| Other losses, net | 2,971 | 1,333 | 122.9 | % | |||||||
| Depreciation and amortization | 8,294 | 9,664 | (14.2 | )% | |||||||
| Goodwill impairment charge (1) | — | 43,493 | N/M | ||||||||
| Total operating income (loss) | 17,075 | (27,128 | ) | N/M | |||||||
| Other expense, net | (7,108 | ) | (4,441 | ) | 60.1 | % | |||||
| Income (loss) from continuing operations before taxes | $ | 9,967 | $ | (31,569 | ) | N/M | |||||
| Other Operating Data: | |||||||||||
| Number of full-time billable consultants (at period end) (2): | |||||||||||
| Healthcare | 813 | 778 | 4.5 | % | |||||||
| Business Advisory | 813 | 809 | 0.5 | % | |||||||
| Education | 621 | 549 | 13.1 | % | |||||||
| Total | 2,247 | 2,136 | 5.2 | % | |||||||
| Average number of full-time billable consultants (for the period) (2): | |||||||||||
| Healthcare | 821 | 769 | |||||||||
| Business Advisory | 796 | 828 | |||||||||
| Education | 619 | 543 | |||||||||
| Total | 2,236 | 2,140 | |||||||||
| HURON CONSULTING GROUP INC. | ||||||||
| SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| December 31, | ||||||||
| Other Operating Data (continued): | 2018 | 2017 | ||||||
| Full-time billable consultant utilization rate (3): | ||||||||
| Healthcare | 81.9 | % | 84.5 | % | ||||
| Business Advisory | 80.3 | % | 66.9 | % | ||||
| Education | 76.2 | % | 70.6 | % | ||||
| Total | 79.7 | % | 74.2 | % | ||||
| Full-time billable consultant average billing rate per hour (4): | ||||||||
| Healthcare | $ | 220 | $ | 222 | ||||
| Business Advisory (5) | $ | 224 | $ | 198 | ||||
| Education | $ |
198 |
$ | 207 | ||||
| Total (5) | $ | 215 | $ | 210 | ||||
| Revenue per full-time billable consultant (in thousands): | ||||||||
| Healthcare | $ | 77 | $ | 84 | ||||
| Business Advisory | $ | 79 | $ | 58 | ||||
| Education | $ |
68 |
$ | 65 | ||||
| Total | $ | 75 | $ | 69 | ||||
| Average number of full-time equivalents (for the period) (6): | ||||||||
| Healthcare | 231 | 207 | ||||||
| Business Advisory | 20 | 17 | ||||||
| Education | 34 | 32 | ||||||
| Total | 285 | 256 | ||||||
| Revenue per full-time equivalent (in thousands): | ||||||||
| Healthcare | $ | 127 | $ | 149 | ||||
| Business Advisory | $ | 131 | $ | 125 | ||||
| Education | $ |
156 |
$ | 146 | ||||
| Total | $ |
131 |
$ | 147 | ||||
| HURON CONSULTING GROUP INC. | |||||||||||
| SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED) | |||||||||||
| (Unaudited) | |||||||||||
| Twelve Months Ended December 31, |
Percent |
||||||||||
| Segment and Consolidated Operating Results (in thousands): | 2018 | 2017 | |||||||||
| Healthcare: | |||||||||||
| Revenues | $ | 364,763 | $ | 356,909 | 2.2 | % | |||||
| Operating income | $ | 108,060 | $ | 118,761 | (9.0 | )% | |||||
| Segment operating income as a percentage of segment revenues | 29.6 | % | 33.3 | % | |||||||
| Business Advisory: | |||||||||||
| Revenues | $ | 236,185 | $ | 207,753 | 13.7 | % | |||||
| Operating income | $ | 50,625 | $ | 46,600 | 8.6 | % | |||||
| Segment operating income as a percentage of segment revenues | 21.4 | % | 22.4 | % | |||||||
| Education: | |||||||||||
| Revenues | $ | 194,177 | $ | 167,908 | 15.6 | % | |||||
| Operating income | $ | 48,243 | $ | 40,318 | 19.7 | % | |||||
| Segment operating income as a percentage of segment revenues | 24.8 | % | 24.0 | % | |||||||
| Total Company: | |||||||||||
| Revenues | $ | 795,125 | $ | 732,570 | 8.5 | % | |||||
| Reimbursable expenses | 82,874 | 75,175 | 10.2 | % | |||||||
| Total revenues and reimbursable expenses | $ | 877,999 | $ | 807,745 | 8.7 | % | |||||
| Statements of Operations reconciliation: | |||||||||||
| Segment operating income | $ | 206,928 | $ | 205,679 | 0.6 | % | |||||
| Items not allocated at the segment level: | |||||||||||
| Other operating expenses | 122,276 | 120,718 | 1.3 | % | |||||||
| Other losses (gains), net | (2,019 | ) | 1,111 | N/M | |||||||
| Depreciation and amortization expense | 34,575 | 38,213 | (9.5 | )% | |||||||
| Goodwill impairment charges (1) | — | 253,093 | N/M | ||||||||
| Total operating income (loss) | 52,096 | (207,456 | ) | N/M | |||||||
| Other expense, net | (26,875 | ) | (15,048 | ) | 78.6 | % | |||||
| Income (loss) from continuing operations before taxes | $ | 25,221 | $ | (222,504 | ) | N/M | |||||
| Other Operating Data: | |||||||||||
| Number of full-time billable consultants (at period end) (2): | |||||||||||
| Healthcare | 813 | 778 | 4.5 | % | |||||||
| Business Advisory | 813 | 809 | 0.5 | % | |||||||
| Education | 621 | 549 | 13.1 | % | |||||||
| Total | 2,247 | 2,136 | 5.2 | % | |||||||
| Average number of full-time billable consultants (for the period) (2): | |||||||||||
| Healthcare | 807 | 796 | |||||||||
| Business Advisory | 769 | 740 | |||||||||
| Education | 589 | 509 | |||||||||
| Total | 2,165 | 2,045 | |||||||||
| HURON CONSULTING GROUP INC. | ||||||||
| SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED) | ||||||||
| (Unaudited) | ||||||||
| Twelve Months Ended December 31, |
||||||||
| Other Operating Data (continued): | 2018 | 2017 | ||||||
| Full-time billable consultant utilization rate (3): | ||||||||
| Healthcare | 81.7 | % | 78.4 | % | ||||
| Business Advisory | 73.8 | % | 71.5 | % | ||||
| Education | 76.6 | % | 72.8 | % | ||||
| Total | 77.5 | % | 74.5 | % | ||||
| Full-time billable consultant average billing rate per hour (4): | ||||||||
| Healthcare | $ | 209 | $ | 206 | ||||
| Business Advisory (5) | $ | 215 | $ | 205 | ||||
| Education | $ |
202 |
$ | 213 | ||||
| Total (5) | $ | 209 | $ | 207 | ||||
| Revenue per full-time billable consultant (in thousands): | ||||||||
| Healthcare | $ | 307 | $ | 295 | ||||
| Business Advisory | $ | 293 | $ | 268 | ||||
| Education | $ |
289 |
$ | 291 | ||||
| Total | $ | 297 | $ | 284 | ||||
| Average number of full-time equivalents (for the period) (6): | ||||||||
| Healthcare | 219 | 213 | ||||||
| Business Advisory | 22 | 20 | ||||||
| Education | 39 | 35 | ||||||
| Total | 280 | 268 | ||||||
| Revenue per full-time equivalent (in thousands): | ||||||||
| Healthcare | $ | 536 | $ | 576 | ||||
| Business Advisory | $ | 484 | $ | 464 | ||||
| Education | $ |
601 |
$ | 564 | ||||
| Total | $ |
541 |
$ | 566 | ||||
| (1) | The non-cash goodwill impairment charges are not allocated at the segment level because the underlying goodwill asset is reflective of our corporate investment in the segments. We do not include the impact of goodwill impairment charges in our evaluation of segment performance. | |
| (2) | Consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked. | |
| (3) | 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. | |
| (4) | 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. | |
| (5) | Beginning in the third quarter of 2018, the average billing rate per hour excludes the number of hours charged on internal assignments by consultants within Huron Eurasia India to provide a more meaningful average billing rate charged to external clients. Prior year periods have been revised for consistent presentation. | |
| Absent the hours worked by the Huron Eurasia India consultants on internal assignments, the average billing rate per hour for Business Advisory for the first, second, third and fourth quarters of 2018 were $209, $215, $213, and $224 respectively; compared to $209, $203, $209 and $198 for the same prior year periods. The average billing rate per hour for Business Advisory for the six months ended June 30, 2018, nine months ended September 30, 2018, and twelve months ended December 31, 2018 were $212, $212 and $215, respectively, compared to $206, $207 and $205 for the same prior year periods. | ||
| Absent the hours worked by the Huron Eurasia India consultants on internal assignments, Huron's consolidated average billing rate per hour for the first, second, third and fourth quarters of 2018 were $206, $205, $209 and $215, respectively; compared to $219, $199, $202 and $210 for the same prior year periods. Huron's consolidated average billing rate per hour for the six months ended June 30, 2018, nine months ended September 30, 2018 and twelve months ended December 31, 2018 were $205, $206 and $209, respectively; compared to $209, $206 and $207 for the same prior year periods. | ||
| (6) | Consists of leadership coaches and their support staff within the Studer Group solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients. |
N/M - Not Meaningful
| HURON CONSULTING GROUP INC. | ||||||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS | ||||||||||||||||
|
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7) |
||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | $ | 205,454 | $ | 185,927 | $ | 795,125 | $ | 732,570 | ||||||||
| Net income (loss) from continuing operations | $ | 3,055 | $ | (29,310 | ) | $ | 13,944 | $ | (170,505 | ) | ||||||
| Add back: | ||||||||||||||||
| Income tax expense (benefit) | 6,912 | (2,259 | ) | 11,277 | (51,999 | ) | ||||||||||
| Interest expense, net of interest income | 4,377 | 4,802 | 19,013 | 18,613 | ||||||||||||
| Depreciation and amortization | 9,346 | 12,208 | 38,822 | 49,145 | ||||||||||||
| Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (7) | 23,690 | (14,559 | ) | 83,056 | (154,746 | ) | ||||||||||
| Add back: | ||||||||||||||||
| Restructuring charges | 992 | 951 | 3,657 | 6,246 | ||||||||||||
| Other losses (gains), net | 2,971 | 1,333 | (2,019 | ) | 1,111 | |||||||||||
| Goodwill impairment charges | — | 43,493 | — | 253,093 | ||||||||||||
| Other non-operating expense (income), net | (56 | ) | 235 | 5,807 | (696 | ) | ||||||||||
| Foreign currency transaction losses (gains), net | 279 | 15 | 475 | (434 | ) | |||||||||||
| Adjusted EBITDA (7) | $ | 27,876 | $ | 31,468 | $ | 90,976 | $ | 104,574 | ||||||||
| Adjusted EBITDA as a percentage of revenues (7) | 13.6 | % | 16.9 | % | 11.4 | % | 14.3 | % | ||||||||
| HURON CONSULTING GROUP INC. | ||||||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS | ||||||||||||||||
|
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7) |
||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Net income (loss) from continuing operations | $ | 3,055 | $ | (29,310 | ) | $ | 13,944 | $ | (170,505 | ) | ||||||
| Weighted average shares – diluted | 22,294 | 21,515 | 22,058 | 21,439 | ||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | 0.14 | $ | (1.36 | ) | $ | 0.63 | $ | (7.95 | ) | ||||||
| Add back: | ||||||||||||||||
| Restructuring charges | 992 | 951 | 3,657 | 6,246 | ||||||||||||
| Other losses (gains), net | 2,971 | 1,333 | (2,019 | ) | 1,111 | |||||||||||
| Amortization of intangible assets | 5,723 | 8,595 | 23,955 | 35,027 | ||||||||||||
| Goodwill impairment charges | — | 43,493 | — | 253,093 | ||||||||||||
| Non-cash interest on convertible notes | 2,095 | 1,998 | 8,232 | 7,851 | ||||||||||||
| Other non-operating expense (income), net | (56 | ) | 235 | 5,807 | (696 | ) | ||||||||||
| Tax effect | (2,378 | ) | (21,195 | ) | (9,487 | ) | (91,557 | ) | ||||||||
| Tax expense related to the enactment of Tax Cut and Jobs Act of 2017 | 2,364 | 8,762 | 1,749 | 8,762 | ||||||||||||
| Tax expense (benefit) related to "check-the-box" election | — | 20 | — | (2,728 | ) | |||||||||||
| Total adjustments, net of tax | 11,711 | 44,192 | 31,894 | 217,109 | ||||||||||||
| Adjusted net income from continuing operations (7) | $ | 14,766 | $ | 14,882 | $ | 45,838 | $ | 46,604 | ||||||||
| Adjusted weighted average shares - diluted (8) | 22,294 | 21,738 | 22,058 | 21,627 | ||||||||||||
| Adjusted diluted earnings per share from continuing operations (7) | $ | 0.66 | $ | 0.68 | $ | 2.08 | $ | 2.15 | ||||||||
| (7) | In evaluating the company’s financial performance and outlook, management uses earnings (loss) 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. | |
| (8) | As the company reported a net loss for the three and twelve months ended December 31, 2017, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for those periods. The non-GAAP adjustments described above resulted in adjusted net income from continuing operations for those periods. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190226006099/en/
Source: Huron
MEDIA CONTACT
Sarah McHugh
312-880-2624
smchugh@huronconsultinggroup.com
INVESTOR
CONTACT
John D. Kelly
312-583-8722
investor@huronconsultinggroup.com