Huron Consulting Group Reports First Quarter 2006 Financial Results
- Revenues of $62.2 million for Q1 2006 increased 33.0% from $46.8 million in Q1 2005.
- GAAP diluted earnings per share for Q1 2006 were $0.33 compared to $0.29 in Q1 2005. Excluding secondary costs, diluted earnings per share were $0.36 for Q1 2006.
- Billable consultant headcount totaled 636 at March 31, 2006 compared to 498 at March 31, 2005.
CHICAGO - April 27, 2006 - Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of financial and operational consulting services, today announced financial results for the first quarter ended March 31, 2006.
First Quarter 2006 Results
Revenues of $62.2 million for the first quarter of 2006 increased 33.0% from $46.8 million for the first quarter of 2005. The Company's first quarter 2006 operating income was $9.7 million compared to $8.2 million in the first quarter of 2005. Net income was $5.6 million, or $0.33 per diluted share, for the first quarter of 2006 compared to $4.8 million, or $0.29 per diluted share, for the comparable quarter last year.
"Huron Consulting Group performed well in the first quarter, driven by strong demand in our Disputes & Investigations practice with its continued work on high profile financial investigations. Our Higher Education and Legal Business Consulting practices also showed impressive growth in the marketplace. The other practices in Huron's balanced portfolio continued to meet our expectations," said Gary E. Holdren, chairman and chief executive officer, Huron Consulting Group. "Demand for Huron's services in the marketplace continues to look robust and we are optimistic about the remainder of the year."
First quarter 2006 earnings before interest, taxes, depreciation and amortization ("EBITDA") (4) were $11.3 million, or 18.1% of revenues, compared to $9.1 million, or 19.4% of revenues, in the comparable quarter last year. Adjusted EBITDA (4), which excludes costs associated with a secondary offering of the Company's common stock and share-based compensation expense, totaled $14.1 million in the first quarter of 2006, or 22.7% of revenues, compared to $10.5 million, or 22.4% of revenues, in the comparable quarter last year.
Billable consultant headcount totaled 636 at March 31, 2006 compared to 498 at March 31, 2005, while the utilization rate was 77.5% during the first quarter of 2006 compared with 76.3% during the same period last year. Average billing rate per hour increased to $255 for the first quarter of 2006 from $250 for the first quarter of 2005.
First Quarter 2006 Segment Performance
Both of the Company's segments - Financial Consulting and Operational Consulting - continued to show strong improvements in demand and solid revenue growth.
Revenues for the Financial Consulting segment were $35.2 million for the first quarter of 2006, increasing 43.4% from $24.6 million in the first quarter of 2005. Segment operating income increased 34.6% to $13.4 million from $10.0 million in the same quarter a year ago. As of the end of the quarter, the Financial Consulting segment had 303 consultants, up 17.9% from a year ago. Utilization for the quarter was 83.6% compared to 74.3% a year ago. Average billing rate per hour for the segment increased to $277 from $274 the same period a year ago.
Revenues for the Operational Consulting segment were $27.0 million for the first quarter of 2006, increasing 21.5% from $22.2 million in the first quarter of 2005. Segment operating income increased 13.5% to $9.9 million from $8.8 million during the same period a year ago. As of the end of the quarter, the Operational Consulting segment had 333 consultants, up 38.2% from a year ago. Utilization for the quarter was 71.9% compared to 78.6% in the first quarter of 2005, as a large number of new consultants were integrated into the segment during the last half of 2005. Average billing rate per hour for the segment increased to $230 from $228 in the prior year.
On February 8, 2006, Huron completed its secondary offering of 6,300,000 shares of common stock by HCG Holdings LLC at the public offering price of $27.00 per share. The underwriters of the Company's secondary offering also exercised in full the over-allotment option to purchase an additional 945,000 shares of common stock from the selling stockholder in the offering. This reduces HCG Holdings LLC's ownership of the Company to 8.5%.
Acquisition of the Assets of Galt & Company
On April 3, 2006, Huron acquired the assets of Galt & Company. Galt is a specialized advisory firm that designs and implements corporate-wide programs to improve shareholder returns. The partners of Galt & Company have been associated with some of the more notable corporate revitalizations in recent years, including those at Gillette and Alcan.
Under the terms of the purchase agreement, Huron has acquired Galt & Company for approximately $20 million. Additional consideration is payable if specific performance targets are met over a four-year period. Galt & Company had unaudited 2005 calendar year revenues of approximately $17 million. For reporting purposes, Galt & Company's business will be included in Huron's Operational Consulting segment.
Outlook for Second Quarter and Remainder of 2006
Outlook for the second quarter of 2006 and the remainder of 2006 include Galt & Company revenue estimates.
Based on currently available information, the Company expects Q2 2006 revenues before reimbursable expenses in a range of $66 million to $68 million, operating income in a range of $9 million to $11 million, and between $0.29 and $0.34 in diluted earnings per share.
The Company anticipates full year 2006 revenues before reimbursable expenses in a range of $263 million to $268 million, operating income in a range of $41 million to $43 million, and between $1.36 and $1.43 in diluted earnings per share excluding secondary offering costs of approximately $0.03 per share. GAAP diluted earnings per share including secondary costs would then be in the range of $1.33 to $1.40. Share-based compensation expense of approximately $3 million and $11 million are included in the Q2 2006 and full year 2006 estimates, respectively. The operating income and diluted earnings per share guidance reflect the effects of the adoption of SFAS No. 123R and exclude costs associated with the recently completed secondary offering. Weighted average diluted share counts for 2006 are estimated to be 17.4 million for both Q2 and full year 2006.
First Quarter 2006 Webcast
The Company will host a webcast to discuss its financial results today at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). The webcast may be accessed at http://www.huronconsultinggroup.com/. A rebroadcast will be available approximately two hours after the end of the webcast and for 90 days thereafter.
About Huron Consulting Group
Huron Consulting Group helps clients effectively address complex challenges that arise in litigation, disputes, investigations, regulatory compliance, procurement, financial distress, and other sources of significant conflict or change. The Company also helps clients deliver superior customer and capital market performance through integrated strategic, operational, and organizational change. Huron provides services to a wide variety of both financially sound and distressed organizations, including Fortune 500 companies, medium-sized businesses, leading academic institutions, healthcare organizations, and the law firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.
Statements in this press release, which are not historical in nature and concern Huron Consulting Group's current expectations about the company's reported results for 2006 and future results in 2006 are "forward-looking" statements as defined in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," or "continue." These forward-looking statements reflect our current expectation about our future results, performance or achievements, including without limitation, that our business continues to grow at the current expectations with respect to, among other factors, utilization and billing rates and number of consultants; that we are able to expand our service offerings through our existing consultants and new hires; and that existing market conditions do not change from current expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Therefore you should not place undue reliance on these forward-looking statements. Please see "Risk Factors" in our Form 10-K and in other documents we file with the Securities and Exchange Commission for a complete description of the material risks we face.