Huron Consulting Group Announces First Quarter 2015 Financial Results
-
Revenues were
$187.9 million for Q1 2015 compared to$210.7 million in Q1 2014. -
Operating income for Q1 2015 was
$8.8 million compared to$41.8 million in Q1 2014. -
Adjusted EBITDA(6), a non-GAAP measure, was
$20.4 million in Q1 2015 compared to$49.1 million in Q1 2014. -
Diluted earnings per share for Q1 2015 was
$0.07 compared to$1.48 in Q1 2014. -
Adjusted diluted earnings per share(6), a non-GAAP measure,
was
$0.29 in Q1 2015 compared to$1.10 in Q1 2014. -
Company affirms its previously released revenue guidance range for
full year 2015 of
$880.0 million to $920.0 million .
“While lower than the prior year results, we believe our first quarter
performance is consistent with the path needed to achieve our full year
guidance,” said
“Our clients’ markets continue to be challenged by the dynamic and evolving environments in which they operate, driving significant demand for our services, and we remain well-positioned to help our clients achieve their future strategic and operational goals,” Roth added.
First Quarter 2015 Results
Revenues for the first quarter of 2015 were
First quarter 2015 earnings before interest, taxes, depreciation and
amortization ("EBITDA")(6) was
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, |
||||||||
| 2015 | 2014 | |||||||
| Amortization of intangible assets | $ | 5,082 | $ | 2,518 | ||||
| Restructuring charges | $ | 1,590 | $ | 129 | ||||
| Other gain | $ | (226 | ) | $ | — | |||
| Non-cash interest on convertible notes | $ | 1,754 | $ | — | ||||
| Tax effect | $ | (3,223 | ) | $ | (1,059 | ) | ||
| Net tax benefit related to “check-the-box” election | $ | — | $ | (10,244 | ) | |||
Adjusted EBITDA(6) was
The average number of full-time billable consultants(1)
increased 7.7% to 1,852 in the first quarter of 2015 compared to 1,719
in the same quarter last year. Full-time billable consultant utilization
rate(2) was 71.8% during the first quarter of 2015 compared
with 74.1% during the same period last year. Average billing rate per
hour for full-time billable consultants(3) was
Operating Segments
Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.
The Company’s year-to-date revenues by operating segment as a percentage
of total Company revenues are as follows: Huron Healthcare
(53%); Huron Legal
(18%); Huron Education
and Life
Sciences (21%); and Huron Business
Advisory, which includes EPM
& Analytics, (8%). Financial results by segment are included in
the attached schedules and in Huron's forthcoming Form 10-Q filing for
the quarter ended
Acquisitions
Effective
On
Outlook for 2015
The Company affirms its previously released guidance for full year 2015,
which includes
Management will provide a more detailed discussion of its outlook during the Company’s earnings conference call webcast.
First Quarter 2015 Webcast
The Company will host a webcast to discuss its financial results today,
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 and Adjusted diluted earnings per
share, which are non-GAAP measures. Management believes that such
measures, as supplements to operating income, net income and diluted
earnings per share 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
About
Statements in this press release 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, 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” or “continues.” These
forward-looking statements reflect our current expectations about our
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 our Annual Report on Form
10-K for the year ended
| HURON CONSULTING GROUP INC. | ||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||
| (In thousands, except per share amounts) | ||||||||
| (Unaudited) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2015 | 2014 | |||||||
| Revenues and reimbursable expenses: | ||||||||
| Revenues | $ | 187,853 | $ | 210,731 | ||||
| Reimbursable expenses | 17,155 | 19,103 | ||||||
| Total revenues and reimbursable expenses | 205,008 | 229,834 | ||||||
| Direct costs and reimbursable expenses (exclusive of depreciation | ||||||||
| and amortization shown in operating expenses): | ||||||||
| Direct costs | 125,001 | 123,610 | ||||||
| Amortization of intangible assets and software development costs | 2,512 | 1,101 | ||||||
| Reimbursable expenses | 17,253 | 19,431 | ||||||
| Total direct costs and reimbursable expenses | 144,766 | 144,142 | ||||||
| Operating expenses and other operating gain: | ||||||||
| Selling, general and administrative expenses | 42,333 | 37,688 | ||||||
| Restructuring charges | 1,590 | 129 | ||||||
| Other gain | (226 | ) | - | |||||
| Depreciation and amortization | 7,777 | 6,056 | ||||||
| Total operating expenses and other operating gain | 51,474 | 43,873 | ||||||
| Operating income | 8,768 | 41,819 | ||||||
| Other income (expense), net: | ||||||||
| Interest expense, net of interest income | (4,394 | ) | (1,371 | ) | ||||
| Other income (expense), net | (727 | ) | 176 | |||||
| Total other expense, net | (5,121 | ) | (1,195 | ) | ||||
| Income before income tax expense | 3,647 | 40,624 | ||||||
| Income tax expense | 2,145 | 6,498 | ||||||
| Net income | $ | 1,502 | $ | 34,126 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.07 | $ | 1.51 | ||||
| Diluted | $ | 0.07 | $ | 1.48 | ||||
| Weighted average shares used in calculating earnings per share: | ||||||||
| Basic | 22,126 | 22,588 | ||||||
| Diluted | 22,602 | 23,086 | ||||||
| HURON CONSULTING GROUP INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and per share amounts) | ||||||||
| (Unaudited) | ||||||||
|
March 31,
2015 |
December 31,
2014 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,183 | $ | 256,872 | ||||
| Receivables from clients, net | 115,492 | 98,640 | ||||||
| Unbilled services, net | 105,714 | 91,392 | ||||||
| Income tax receivable | 8,413 | 8,125 | ||||||
| Deferred income taxes, net | 14,155 | 14,772 | ||||||
| Prepaid expenses and other current assets | 14,220 | 16,358 | ||||||
| Total current assets | 265,177 | 486,159 | ||||||
| Property and equipment, net | 48,978 | 44,677 | ||||||
| Long-term investment | 14,700 | 12,250 | ||||||
| Other non-current assets | 26,099 | 20,998 | ||||||
| Intangible assets, net | 119,110 | 24,684 | ||||||
| Goodwill | 807,677 | 567,146 | ||||||
| Total assets | $ | 1,281,741 | $ | 1,155,914 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 12,708 | $ | 11,085 | ||||
| Accrued expenses | 22,050 | 17,315 | ||||||
| Accrued payroll and related benefits | 42,697 | 106,488 | ||||||
| Current maturities of long-term debt | - | 28,750 | ||||||
| Deferred revenues | 19,600 | 12,738 | ||||||
| Total current liabilities | 97,055 | 176,376 | ||||||
| Non-current liabilities: | ||||||||
| Deferred compensation and other liabilities | 16,933 | 10,838 | ||||||
| Long-term debt, net of current portion | 498,356 | 327,852 | ||||||
| Deferred lease incentives | 13,832 | 13,359 | ||||||
| Deferred income taxes, net | 45,507 | 26,855 | ||||||
| Total non-current liabilities | 574,628 | 378,904 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Common stock; $0.01 par value; 500,000,000 shares authorized; | ||||||||
| 25,336,102 and 24,976,395 shares issued at March 31, 2015 | 244 | 241 | ||||||
| and December 31, 2014, respectively | ||||||||
| Treasury stock, at cost, 2,168,191 and 2,097,173 shares at | ||||||||
| March 31, 2015 and December 31, 2014, respectively | (98,811 | ) | (94,074 | ) | ||||
| Additional paid-in capital | 455,659 | 442,308 | ||||||
| Retained earnings | 256,316 | 254,814 | ||||||
| Accumulated other comprehensive loss | (3,350 | ) | (2,655 | ) | ||||
| Total stockholders’ equity | 610,058 | 600,634 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,281,741 | $ | 1,155,914 | ||||
| HURON CONSULTING GROUP INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2015 | 2014 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 1,502 | $ | 34,126 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 10,289 | 7,157 | ||||||
| Share-based compensation | 5,280 | 5,136 | ||||||
| Amortization of debt discount and issuance costs | 2,365 | 342 | ||||||
| Allowances for doubtful accounts and unbilled services | (1,904 | ) | (72 | ) | ||||
| Deferred income taxes | 2,716 | 9,829 | ||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||
| (Increase) decrease in receivables from clients | (6,547 | ) | 27,757 | |||||
| (Increase) decrease in unbilled services | (7,984 | ) | (34,329 | ) | ||||
| (Increase) decrease in current income tax receivable / payable, net | (359 | ) | (13,703 | ) | ||||
| (Increase) decrease in other assets | 1,816 | 5,436 | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | 9,886 | 8,289 | ||||||
| Increase (decrease) in accrued payroll and related benefits | (62,450 | ) | (57,169 | ) | ||||
| Increase (decrease) in deferred revenues | 3,236 | (1,964 | ) | |||||
| Net cash used in operating activities | (42,154 | ) | (9,165 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment, net | (6,482 | ) | (4,840 | ) | ||||
| Investment in life insurance policies | (4,941 | ) | (167 | ) | ||||
| Purchases of businesses | (331,807 | ) | (17,430 | ) | ||||
| Purchase of convertible debt investment | (2,500 | ) | - | |||||
| Proceeds from note receivable | - | 219 | ||||||
| Net cash used in investing activities | (345,730 | ) | (22,218 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | - | 740 | ||||||
| Shares redeemed for employee tax withholdings | (4,485 | ) | (3,067 | ) | ||||
| Tax benefit from share-based compensation | 2,734 | 3,477 | ||||||
| Proceeds from borrowings under credit facility | 197,500 | - | ||||||
| Repayments on credit facility | (57,500 | ) | (6,250 | ) | ||||
| Payments for capital lease obligations | (20 | ) | (21 | ) | ||||
| Net cash provided by (used in) financing activities | 138,229 | (5,121 | ) | |||||
| Effect of exchange rate changes on cash | (34 | ) | 14 | |||||
| Net decrease in cash and cash equivalents | (249,689 | ) | (36,490 | ) | ||||
| Cash and cash equivalents at beginning of the period | 256,872 | 58,131 | ||||||
| Cash and cash equivalents at end of the period | $ | 7,183 | $ | 21,641 | ||||
|
HURON CONSULTING GROUP INC. |
||||||||||||
|
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA |
||||||||||||
|
(Unaudited) |
||||||||||||
|
Three Months Ended March 31, |
Percent |
|||||||||||
| Segment and Consolidated Operating Results (in thousands): | 2015 | 2014 | ||||||||||
| Huron Healthcare: | ||||||||||||
| Revenues | $ | 98,004 | $ 107,548 | (8.9 | )% | |||||||
| Operating income | $ | 28,980 | $ 51,220 | (43.4 | )% | |||||||
| Segment operating income as a percentage of segment revenues | 29.6 | % | 47.6 | % | ||||||||
| Huron Legal: | ||||||||||||
| Revenues | $ | 33,427 | $ 54,975 | (39.2 | )% | |||||||
| Operating income | $ | 3,592 | $ 12,488 | (71.2 | )% | |||||||
| Segment operating income as a percentage of segment revenues | 10.7 | % | 22.7 | % | ||||||||
| Huron Education and Life Sciences: | ||||||||||||
| Revenues | $ | 39,897 | $ 33,576 | 18.8 | % | |||||||
| Operating income | $ | 11,780 | $ 6,447 | 82.7 | % | |||||||
| Segment operating income as a percentage of segment revenues | 29.5 | % | 19.2 | % | ||||||||
| Huron Business Advisory: | ||||||||||||
| Revenues | $ | 15,738 | $ 13,382 | 17.6 | % | |||||||
| Operating income | $ | 1,599 | $ 2,555 | (37.4 | )% | |||||||
| Segment operating income as a percentage of segment revenues | 10.2 | % | 19.1 | % | ||||||||
| All Other: | ||||||||||||
| Revenues | $ | 787 | $ 1,250 | (37.0 | )% | |||||||
| Operating loss | $ | (992 | ) | $ (458 | ) | 116.6 | % | |||||
| Segment operating loss as a percentage of segment revenues | N/M | N/M | ||||||||||
| Total Company: | ||||||||||||
| Revenues | $ | 187,853 | $ 210,731 | (10.9 | )% | |||||||
| Reimbursable expenses | 17,155 | 19,103 | (10.2 | )% | ||||||||
| Total revenues and reimbursable expenses | $ | 205,008 | $ 229,834 | (10.8 | )% | |||||||
| Statement of Earnings reconciliation: | ||||||||||||
| Segment operating income | $ | 44,959 | $ 72,252 | (37.8 | )% | |||||||
| Items not allocated at the segment level: | ||||||||||||
| Other operating expenses and gains | 28,414 | 24,377 | 16.6 | % | ||||||||
| Depreciation and amortization expense | 7,777 | 6,056 | 28.4 | % | ||||||||
| Total operating income | 8,768 | 41,819 | (79.0 | )% | ||||||||
| Other expense, net | 5,121 | 1,195 | 328.5 | % | ||||||||
| Income before income tax expense | $ | 3,647 | $ 40,624 | (91.0 | )% | |||||||
| Other Operating Data (excluding All Other): | ||||||||||||
| Number of full-time billable consultants (at period end) (1): | ||||||||||||
| Huron Healthcare | 1,105 | 995 | 11.1 | % | ||||||||
| Huron Legal | 107 | 138 | (22.5 | )% | ||||||||
| Huron Education and Life Sciences | 425 | 429 | (0.9 | )% | ||||||||
| Huron Business Advisory | 211 | 166 | 27.1 | % | ||||||||
| Total | 1,848 | 1,728 | 6.9 | % | ||||||||
| Average number of full-time billable consultants (for the period) (1): | ||||||||||||
| Huron Healthcare | 1,108 | 985 | ||||||||||
| Huron Legal | 116 | 139 | ||||||||||
| Huron Education and Life Sciences | 423 | 434 | ||||||||||
| Huron Business Advisory | 205 | 161 | ||||||||||
| Total | 1,852 | 1,719 | ||||||||||
|
HURON CONSULTING GROUP INC. |
|||||||
|
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED) |
|||||||
|
(Unaudited) |
|||||||
|
Three Months Ended March 31, |
|||||||
| Other Operating Data (excluding All Other): | 2015 | 2014 | |||||
| Full-time billable consultant utilization rate (2): | |||||||
| Huron Healthcare | 72.5 | % | 78.9 | % | |||
| Huron Legal | 52.7 | % | 64.5 | % | |||
| Huron Education and Life Sciences | 76.4 | % | 68.3 | % | |||
| Huron Business Advisory | 69.5 | % | 68.5 | % | |||
| Total | 71.8 | % | 74.1 | % | |||
| Full-time billable consultant average billing rate per hour (3): | |||||||
| Huron Healthcare | $ | 211 | $ | 272 | |||
| Huron Legal (5) | $ | 249 | $ | 231 | |||
| Huron Education and Life Sciences | $ | 225 | $ | 200 | |||
| Huron Business Advisory | $ | 227 | $ | 238 | |||
| Total (5) | $ | 218 | $ | 249 | |||
| Revenue per full-time billable consultant (in thousands): | |||||||
| Huron Healthcare | $ | 72 | $ | 102 | |||
| Huron Legal (5) | $ | 60 | $ | 67 | |||
| Huron Education and Life Sciences | $ | 81 | $ | 65 | |||
| Huron Business Advisory | $ | 74 | $ | 79 | |||
| Total (5) | $ | 73 | $ | 88 | |||
| Average number of full-time equivalents (for the period) (4): | |||||||
| Huron Healthcare | 127 | 51 | |||||
| Huron Legal | 816 | 1,413 | |||||
| Huron Education and Life Sciences | 38 | 39 | |||||
| Huron Business Advisory | 5 | 8 | |||||
| Total | 986 | 1,511 | |||||
| Revenue per full-time equivalent (in thousands): | |||||||
| Huron Healthcare | $ | 145 | $ | 129 | |||
| Huron Legal (5) | $ | 32 | $ | 32 | |||
| Huron Education and Life Sciences | $ | 149 | $ | 139 | |||
| Huron Business Advisory | $ | 89 | $ | 84 | |||
| Total (5) | $ | 52 | $ | 38 | |||
| (1) | Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked. | |
| (2) | Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our full-time billable consultants 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. | |
| (3) | Average billing rate per hour for our full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period. | |
| (4) | Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes our cultural transformation consultants from the Studer Group acquisition, which include coaches and their support staff, and full-time employees who provide software support and maintenance services to our clients. | |
| (5) | During the second quarter of 2014, we revised the methodology we use to allocate revenue between our billable consultants and our full-time equivalents in our Huron Legal segment to better reflect the nature of the work being provided. Operating data for the three months ended March 31, 2015 and 2014, as presented above, reflects this change. | |
| N/M – Not meaningful | ||
|
HURON CONSULTING GROUP INC. |
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|
RECONCILIATION OF NET INCOME TO |
|||||||
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6) |
|||||||
|
(In thousands) |
|||||||
|
(Unaudited) |
|||||||
|
|
Three Months Ended March 31, |
||||||
| 2015 | 2014 | ||||||
| Revenues | $ | 187,853 | $ | 210,731 | |||
| Net income | $ | 1,502 | $ | 34,126 | |||
| Add back: | |||||||
| Income tax expense | 2,145 | 6,498 | |||||
| Interest and other expenses | 5,121 | 1,195 | |||||
| Depreciation and amortization | 10,289 | 7,157 | |||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) | 19,057 | 48,976 | |||||
| Add back: | |||||||
| Restructuring charges | 1,590 | 129 | |||||
| Other gain | (226 | ) | — | ||||
| Adjusted EBITDA (6) | $ | 20,421 | $ | 49,105 | |||
| Adjusted EBITDA as a percentage of revenues (6) | 10.9 | % | 23.3 | % | |||
|
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (6) |
|||||||
|
(In thousands) |
|||||||
|
(Unaudited) |
|||||||
|
Three Months Ended March 31, |
|||||||
| 2015 | 2014 | ||||||
| Net income |
$ |
1,502 |
$ | 34,126 | |||
| Weighted average shares - diluted | 22,602 |
23,086 |
|||||
| Diluted earnings per share | $ | 0.07 |
$ |
1.48 |
|||
| Add back: | |||||||
| Amortization of intangible assets | 5,082 | 2,518 | |||||
| Restructuring charges | 1,590 | 129 | |||||
| Other gain | (226 | ) | — | ||||
| Non-cash interest on convertible notes | 1,754 | — | |||||
| Tax effect | (3,223 | ) | (1,059 | ) | |||
| Net tax benefit related to “check-the-box” election | — |
(10,244 |
) |
||||
| Total adjustments, net of tax | 4,977 | (8,656 | ) | ||||
| Adjusted net income (6) |
$ |
6,479 |
$ | 25,470 | |||
| Adjusted diluted earnings per share (6) |
$ |
0.29 |
$ | 1.10 | |||
| (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, and Adjusted diluted earnings per share, 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 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. | |
Source:
Huron Consulting Group
Media Contact:
Jennifer
Frost Hennagir
312-880-3260
jfrost-hennagir@huronconsultinggroup.com
Investor
Contact:
C. Mark Hussey
312-583-8722
investor@huronconsultinggroup.com