UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
November 1, 2016
Date of Report (Date of earliest event reported)
_____________________
Huron Consulting Group Inc.
(Exact name of registrant as specified in its charter)
Delaware | 000-50976 | 01-0666114 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation) | File Number) | Identification Number) |
550 West Van Buren Street
Chicago, Illinois
60607
(Address of principal executive offices)
(Zip Code)
(312) 583-8700
(Registrant’s telephone number, including area code)
_____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On November 1, 2016, Huron Consulting Group Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished pursuant to this Item 2.02 and the attached Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release, dated November 1, 2016
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Huron Consulting Group Inc. | |||
(Registrant) | |||
Date: | November 1, 2016 | /s/ C. Mark Hussey | |
C. Mark Hussey | |||
Executive Vice President, Chief Operating Officer and Chief Financial Officer | |||
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | Press release, dated November 1, 2016 | |
Exhibit 99.1
NEWS | MEDIA CONTACT | |
Sarah McHugh | ||
FOR IMMEDIATE RELEASE | 312-880-2624 | |
smchugh@huronconsultinggroup.com | ||
INVESTOR CONTACT | ||
C. Mark Hussey | ||
or | ||
John D. Kelly | ||
312-583-8722 | ||
investor@huronconsultinggroup.com | ||
Huron Consulting Group Announces
Third Quarter 2016 Financial Results
• | Revenues increased 4.5% to $183.4 million in Q3 2016 from $175.5 million in Q3 2015, and increased 6.7% to $548.1 million for the first nine months of 2016 from $513.9 million for the same period in 2015. |
• | Net income from continuing operations was $12.3 million in Q3 2016 compared to $14.3 million in Q3 2015, and increased 20.1% to $35.3 million for the first nine months of 2016 from $29.4 million for the same period in 2015. |
• | Adjusted EBITDA(6), a non-GAAP measure, was $36.9 million in Q3 2016 compared to $41.7 million in Q3 2015, and increased 5.6% to $104.8 million for the first nine months of 2016 from $99.3 million for the same period in 2015. |
• | Diluted earnings per share from continuing operations was $0.57 in Q3 2016 compared to $0.63 in Q3 2015, and increased 26.9% to $1.65 for the first nine months of 2016 compared to $1.30 for the first nine months of 2015. |
• | Adjusted diluted earnings per share from continuing operations(6), a non-GAAP measure, increased to $0.92 in Q3 2016 from $0.90 in Q3 2015, and increased 28.3% to $2.63 for the first nine months of 2016 from $2.05 for the first nine months of 2015. |
• | Company updates full year 2016 guidance, including revenue guidance to a range of $730.0 million to $740.0 million. |
CHICAGO - November 1, 2016 - Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results from continuing operations for the third quarter ended September 30, 2016.
"Our Education and Life Sciences and Business Advisory segments continued to perform well in the third quarter, while our Healthcare segment remained challenged, reflecting the cautious approach that many healthcare providers are taking as they contemplate their approach to change amidst ongoing transformation in the industry," said James H. Roth, chief executive officer and president, Huron Consulting Group. "Looking ahead, we continue to focus on expanding the array of services that we offer to our industry-focused and commercial clients in order to position Huron for growth in an environment of uncertainty within our core markets."
Third Quarter 2016 Results from Continuing Operations
Revenues for the third quarter of 2016 increased 4.5% to $183.4 million from $175.5 million for the third quarter of 2015. Third quarter 2016 revenues included $17.1 million from the acquisitions of Cloud62, Inc., My Rounding Solutions, LLC, ADI Strategies, Inc., and Healthcare Services Management, Inc., all of which were completed subsequent to the third quarter of
2015. Net income from continuing operations was $12.3 million, or $0.57 per diluted share, for the third quarter of 2016 compared to $14.3 million, or $0.63 per diluted share, for the same period last year.
Third quarter 2016 earnings before interest, taxes, depreciation and amortization ("EBITDA")(6) was $35.4 million, or 19.3% of revenues, compared to $41.3 million, or 23.6% of revenues, in the comparable quarter last year.
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 September 30, | |||||||
2016 | 2015 | ||||||
Amortization of intangible assets | $ | 8,771 | $ | 7,913 | |||
Restructuring charges | $ | 1,049 | $ | 320 | |||
Other losses | $ | 494 | $ | — | |||
Non-cash interest on convertible notes | $ | 1,883 | $ | 1,795 | |||
Tax effect | $ | (4,794 | ) | $ | (3,951 | ) | |
Adjusted EBITDA(6) was $36.9 million, or 20.1% of revenues, in the third quarter of 2016, compared to $41.7 million, or 23.7% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations(6) was $19.7 million, or $0.92 per diluted share, for the third quarter of 2016, compared to $20.4 million, or $0.90 per diluted share, for the comparable period in 2015.
The average number of full-time billable consultants(1) increased 10.0% to 1,961 in the third quarter of 2016 compared to 1,783 in the same quarter last year. Full-time billable consultant utilization rate(2) was 73.9% during the third quarter of 2016 compared to 79.4% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $207 for the third quarter of 2016 compared to $209 for the third quarter of 2015. The average number of full-time equivalent professionals(5) was 269 in the third quarter of 2016 compared to 255 for the comparable period in 2015.
Year-to-Date 2016 Results from Continuing Operations
Revenues for the first nine months of 2016 increased 6.7% to $548.1 million from $513.9 million for the first nine months of 2015. Revenues for the first nine months of 2016 included $28.1 million of revenues from the acquisitions of Cloud62, Inc., My Rounding Solutions, LLC, ADI Strategies, Inc., and Healthcare Services Management, Inc., all of which were completed subsequent to the third quarter of 2015, and $11.2 million of incremental revenues due to the full period impact of the acquisitions of Studer Holdings, Inc., which was completed mid-first quarter 2015, and Rittman Mead Consulting Private Limited, which was completed at the start of the third quarter of 2015. Net income from continuing operations increased 20.1% to $35.3 million, or $1.65 per diluted share, for the first nine months of 2016 compared to $29.4 million, or $1.30 per diluted share, for the same period last year.
EBITDA(6) was $100.2 million, or 18.3% of revenues, for the first nine months of 2016, compared to $97.2 million, or 18.9% of revenues, for the same period in 2015.
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):
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Amortization of intangible assets | $ | 24,369 | $ | 20,685 | |||
Restructuring charges | $ | 4,129 | $ | 1,577 | |||
Other losses, net | $ | 494 | $ | 524 | |||
Non-cash interest on convertible notes | $ | 5,582 | $ | 5,324 | |||
Tax effect | $ | (13,588 | ) | $ | (11,075 | ) | |
Adjusted EBITDA(6) was $104.8 million, or 19.1% of revenues, in the first nine months of 2016 compared to $99.3 million, or 19.3% of revenues, in the comparable period last year. Adjusted net income from continuing operations(6) increased 21.2% to
$56.3 million, or $2.63 per diluted share, for the first nine months of 2016 compared to $46.4 million, or $2.05 per diluted share, for the comparable period in 2015.
The average number of full-time billable consultants(1) increased 8.5% to 1,895 in the first nine months of 2016 compared to 1,747 in the same period last year. Full-time billable consultant utilization rate(2) was 75.3% during the first nine months of 2016 compared to 76.1% during the same period last year. Average billing rate per hour for full-time billable consultants(3) was $212 for the first nine months of 2016 compared to $221 for the first nine months of 2015. The average number of full-time equivalent professionals(5) was 257 in the first nine months of 2016 compared to 219 for the comparable period in 2015.
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 2016 revenues by operating segment as a percentage of total Company revenues are as follows: Huron Healthcare (59%); Huron Education and Life Sciences (24%); and Huron Business Advisory (17%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended September 30, 2016.
Acquisitions
On August 1, 2016, Huron completed its acquisition of Healthcare Services Management, Inc. ("HSM"), a firm specializing in healthcare information technology and management consulting. The results of operations of HSM are included within the Huron Healthcare segment from the date of acquisition.
The Company is also in the process of acquiring the international assets of ADI Strategies, Inc. in Dubai and India, for which it currently expects to sign and close later in the fourth quarter of 2016 or early in 2017.
Share Repurchase Program
The Company's board of directors authorized an extension through October 31, 2017 of its existing $125 million share
repurchase program. There is currently $35.1 million remaining for share repurchases. The amount and timing of
the repurchases are determined by management and depend on a variety of factors, including the trading price of the
Company's common stock, general market and business conditions, and applicable legal requirements.
Outlook for 2016(7)
Based on currently available information, the Company updates guidance for full year 2016 revenues before reimbursable expenses to a range of $730.0 million to $740.0 million. The Company also updates its full year 2016 earnings guidance and now expects net income from continuing operations in a range of $43.0 million to $45.0 million, EBITDA in a range of $132.0 million to $135.5 million, and adjusted EBITDA in a range of $137.0 million to $140.5 million. GAAP diluted earnings per share from continuing operations is expected in a range of $2.00 to $2.10, and non-GAAP adjusted diluted earnings per share from continuing operations is expected in a range of $3.25 to $3.35.
Management will provide a more detailed discussion of its outlook during the Company’s earnings conference call webcast.
Third Quarter 2016 Webcast
The Company will host a webcast to discuss its financial results today, November 1, 2016, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ OMX 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.
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. 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.
About Huron
Huron is a global professional services firm committed to achieving sustainable results in partnership with its clients. The company brings depth of expertise in strategy, technology, operations, advisory services and analytics to drive lasting and measurable results in the healthcare, higher education, life sciences and commercial sectors. Through focus, passion and collaboration, Huron provides guidance to support organizations as they contend with the change transforming their industries and businesses. 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 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,” “continues,” or “outlook” or similar expressions. 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 December 31, 2015, 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 AND OTHER COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues and reimbursable expenses: | |||||||||||||||
Revenues | $ | 183,400 | $ | 175,465 | $ | 548,148 | $ | 513,910 | |||||||
Reimbursable expenses | 19,093 | 16,091 | 54,636 | 53,266 | |||||||||||
Total revenues and reimbursable expenses | 202,493 | 191,556 | 602,784 | 567,176 | |||||||||||
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): | |||||||||||||||
Direct costs | 108,354 | 94,821 | 323,310 | 297,448 | |||||||||||
Amortization of intangible assets and software development costs | 4,052 | 4,738 | 11,278 | 12,102 | |||||||||||
Reimbursable expenses | 18,956 | 15,837 | 54,747 | 53,194 | |||||||||||
Total direct costs and reimbursable expenses | 131,362 | 115,396 | 389,335 | 362,744 | |||||||||||
Operating expenses and other losses, net: | |||||||||||||||
Selling, general and administrative expenses | 38,256 | 39,246 | 119,937 | 117,256 | |||||||||||
Restructuring charges | 1,049 | 320 | 4,129 | 1,577 | |||||||||||
Other losses, net | 494 | — | 494 | 524 | |||||||||||
Depreciation and amortization | 8,092 | 6,538 | 23,064 | 18,286 | |||||||||||
Total operating expenses and other losses, net | 47,891 | 46,104 | 147,624 | 137,643 | |||||||||||
Operating income | 23,240 | 30,056 | 65,825 | 66,789 | |||||||||||
Other income (expense), net: | |||||||||||||||
Interest expense, net of interest income | (4,176 | ) | (4,638 | ) | (12,270 | ) | (13,794 | ) | |||||||
Other income (expense), net | 489 | (1,400 | ) | 1,236 | (1,982 | ) | |||||||||
Total other expense, net | (3,687 | ) | (6,038 | ) | (11,034 | ) | (15,776 | ) | |||||||
Income from continuing operations before income tax expense | 19,553 | 24,018 | 54,791 | 51,013 | |||||||||||
Income tax expense | 7,265 | 9,741 | 19,498 | 21,620 | |||||||||||
Net income from continuing operations | 12,288 | 14,277 | 35,293 | 29,393 | |||||||||||
Income (loss) from discontinued operations, net of tax | 4 | 5,097 | (1,830 | ) | 10,316 | ||||||||||
Net income | $ | 12,292 | $ | 19,374 | $ | 33,463 | $ | 39,709 | |||||||
Net earnings per basic share: | |||||||||||||||
Net income from continuing operations | $ | 0.58 | $ | 0.65 | $ | 1.67 | $ | 1.33 | |||||||
Income (loss) from discontinued operations, net of tax | — | 0.23 | (0.08 | ) | 0.46 | ||||||||||
Net income | $ | 0.58 | $ | 0.88 | $ | 1.59 | $ | 1.79 | |||||||
Net earnings per diluted share: | |||||||||||||||
Net income from continuing operations | $ | 0.57 | $ | 0.63 | $ | 1.65 | $ | 1.30 | |||||||
Income (loss) from discontinued operations, net of tax | — | 0.23 | (0.09 | ) | 0.46 | ||||||||||
Net income | $ | 0.57 | $ | 0.86 | $ | 1.56 | $ | 1.76 | |||||||
Weighted average shares used in calculating earnings per share: | |||||||||||||||
Basic | 21,076 | 22,107 | 21,084 | 22,151 | |||||||||||
Diluted | 21,445 | 22,592 | 21,427 | 22,616 | |||||||||||
Comprehensive income: | |||||||||||||||
Net income | $ | 12,292 | $ | 19,374 | $ | 33,463 | $ | 39,709 | |||||||
Foreign currency translation adjustments, net of tax | 50 | (615 | ) | 52 | (201 | ) | |||||||||
Unrealized gain (loss) on investment, net of tax | (2,038 | ) | — | (1,163 | ) | 4,135 | |||||||||
Unrealized gain (loss) on cash flow hedging instruments, net of tax | 121 | (91 | ) | (27 | ) | (252 | ) | ||||||||
Other comprehensive income (loss) | (1,867 | ) | (706 | ) | (1,138 | ) | 3,682 | ||||||||
Comprehensive income | $ | 10,425 | $ | 18,668 | $ | 32,325 | $ | 43,391 | |||||||
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 9,103 | $ | 58,437 | |||
Receivables from clients, net | 88,387 | 85,297 | |||||
Unbilled services, net | 71,594 | 56,527 | |||||
Income tax receivable | 2,711 | 406 | |||||
Prepaid expenses and other current assets | 12,772 | 27,720 | |||||
Total current assets | 184,567 | 228,387 | |||||
Property and equipment, net | 30,099 | 28,888 | |||||
Long-term investment | 32,932 | 34,831 | |||||
Other non-current assets | 23,448 | 21,045 | |||||
Intangible assets, net | 90,090 | 94,992 | |||||
Goodwill | 799,958 | 751,400 | |||||
Total assets | $ | 1,161,094 | $ | 1,159,543 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,696 | $ | 7,220 | |||
Accrued expenses | 23,013 | 24,276 | |||||
Accrued payroll and related benefits | 62,341 | 80,839 | |||||
Deferred revenues | 22,158 | 19,086 | |||||
Total current liabilities | 114,208 | 131,421 | |||||
Non-current liabilities: | |||||||
Deferred compensation and other liabilities | 33,511 | 23,768 | |||||
Long-term debt | 325,858 | 307,376 | |||||
Deferred lease incentives | 9,838 | 9,965 | |||||
Deferred income taxes, net | 38,659 | 34,688 | |||||
Total non-current liabilities | 407,866 | 375,797 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 24,120,541 and 24,775,823 shares issued at September 30, 2016 and December 31, 2015, respectively | 235 | 241 | |||||
Treasury stock, at cost, 2,395,473 and 2,249,630 shares at September 30, 2016 and December 31, 2015, respectively | (112,329 | ) | (103,734 | ) | |||
Additional paid-in capital | 401,338 | 438,367 | |||||
Retained earnings | 347,329 | 313,866 | |||||
Accumulated other comprehensive income | 2,447 | 3,585 | |||||
Total stockholders’ equity | 639,020 | 652,325 | |||||
Total liabilities and stockholders’ equity | $ | 1,161,094 | $ | 1,159,543 | |||
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 33,463 | $ | 39,709 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 34,344 | 38,220 | |||||
Share-based compensation | 13,145 | 15,288 | |||||
Amortization of debt discount and issuance costs | 7,171 | 6,985 | |||||
Allowances for doubtful accounts and unbilled services | 7,107 | (1,605 | ) | ||||
Deferred income taxes | 4,045 | 13,407 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
(Increase) decrease in receivables from clients | 9,442 | (14,725 | ) | ||||
(Increase) decrease in unbilled services | (21,492 | ) | 15,179 | ||||
(Increase) decrease in current income tax receivable / payable, net | (3,039 | ) | 3,704 | ||||
(Increase) decrease in other assets | 12,669 | (5,381 | ) | ||||
Increase (decrease) in accounts payable and accrued liabilities | (2,366 | ) | 8,459 | ||||
Increase (decrease) in accrued payroll and related benefits | (17,707 | ) | (43,510 | ) | |||
Increase (decrease) in deferred revenues | 2,028 | 7,507 | |||||
Net cash provided by operating activities | 78,810 | 83,237 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment, net | (9,372 | ) | (15,040 | ) | |||
Investment in life insurance policies | (1,890 | ) | (4,823 | ) | |||
Purchases of businesses, net of cash acquired | (69,133 | ) | (332,766 | ) | |||
Purchase of convertible debt investment | — | (15,138 | ) | ||||
Capitalization of internally developed software costs | (838 | ) | (735 | ) | |||
Net cash used in investing activities | (81,233 | ) | (368,502 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options | 123 | — | |||||
Shares redeemed for employee tax withholdings | (4,837 | ) | (5,194 | ) | |||
Tax benefit from share-based compensation | 935 | 3,117 | |||||
Share repurchases | (55,265 | ) | (13,498 | ) | |||
Proceeds from borrowings under credit facility | 168,000 | 272,000 | |||||
Repayments on credit facility | (156,000 | ) | (214,500 | ) | |||
Payments for capital lease obligations | — | (48 | ) | ||||
Net cash provided by (used in) financing activities | (47,044 | ) | 41,877 | ||||
Effect of exchange rate changes on cash | 133 | (22 | ) | ||||
Net decrease in cash and cash equivalents | (49,334 | ) | (243,410 | ) | |||
Cash and cash equivalents at beginning of the period | 58,437 | 256,872 | |||||
Cash and cash equivalents at end of the period | $ | 9,103 | $ | 13,462 | |||
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
Three Months Ended September 30, | Percent Increase (Decrease) | ||||||||||
Segment and Consolidated Operating Results (in thousands): | 2016 | 2015 | |||||||||
Huron Healthcare: | |||||||||||
Revenues | $ | 103,425 | $ | 112,114 | (7.8 | )% | |||||
Operating income | $ | 38,824 | $ | 47,609 | (18.5 | )% | |||||
Segment operating income as a percentage of segment revenues | 37.5 | % | 42.5 | % | |||||||
Huron Education and Life Sciences: | |||||||||||
Revenues | $ | 45,696 | $ | 42,056 | 8.7 | % | |||||
Operating income | $ | 12,124 | $ | 10,473 | 15.8 | % | |||||
Segment operating income as a percentage of segment revenues | 26.5 | % | 24.9 | % | |||||||
Huron Business Advisory: | |||||||||||
Revenues | $ | 34,279 | $ | 21,249 | 61.3 | % | |||||
Operating income | $ | 7,380 | $ | 5,231 | 41.1 | % | |||||
Segment operating income as a percentage of segment revenues | 21.5 | % | 24.6 | % | |||||||
All Other: | |||||||||||
Revenues | $ | — | $ | 46 | (100.0 | )% | |||||
Operating loss | $ | — | $ | (132 | ) | (100.0 | )% | ||||
Segment operating loss as a percentage of segment revenues | N/M | N/M | |||||||||
Total Company: | |||||||||||
Revenues | $ | 183,400 | $ | 175,465 | 4.5 | % | |||||
Reimbursable expenses | 19,093 | 16,091 | 18.7 | % | |||||||
Total revenues and reimbursable expenses | $ | 202,493 | $ | 191,556 | 5.7 | % | |||||
Statements of Earnings reconciliation: | |||||||||||
Segment operating income | $ | 58,328 | $ | 63,181 | (7.7 | )% | |||||
Items not allocated at the segment level: | |||||||||||
Other operating expenses and losses, net | 26,996 | 26,587 | 1.5 | % | |||||||
Depreciation and amortization expense | 8,092 | 6,538 | 23.8 | % | |||||||
Total operating income | 23,240 | 30,056 | (22.7 | )% | |||||||
Other expense, net | 3,687 | 6,038 | (38.9 | )% | |||||||
Income from continuing operations before income tax expense | $ | 19,553 | $ | 24,018 | (18.6 | )% | |||||
Other Operating Data (excluding All Other): | |||||||||||
Number of full-time billable consultants (at period end) (1): | |||||||||||
Huron Healthcare | 1,010 | 1,084 | (6.8 | )% | |||||||
Huron Education and Life Sciences | 539 | 458 | 17.7 | % | |||||||
Huron Business Advisory | 472 | 279 | 69.2 | % | |||||||
Total | 2,021 | 1,821 | 11.0 | % | |||||||
Average number of full-time billable consultants (for the period) (1): | |||||||||||
Huron Healthcare | 984 | 1,078 | |||||||||
Huron Education and Life Sciences | 523 | 444 | |||||||||
Huron Business Advisory | 454 | 261 | |||||||||
Total | 1,961 | 1,783 | |||||||||
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Three Months Ended September 30, | ||||||||
Other Operating Data (continued): | 2016 | 2015 | ||||||
Full-time billable consultant utilization rate (2): | ||||||||
Huron Healthcare | 77.0 | % | 81.1 | % | ||||
Huron Education and Life Sciences | 67.6 | % | 75.2 | % | ||||
Huron Business Advisory | 74.8 | % | 79.4 | % | ||||
Total | 73.9 | % | 79.4 | % | ||||
Full-time billable consultant average billing rate per hour (3): | ||||||||
Huron Healthcare | $ | 203 | $ | 204 | ||||
Huron Education and Life Sciences | $ | 231 | $ | 227 | ||||
Huron Business Advisory | $ | 190 | $ | 196 | ||||
Total | $ | 207 | $ | 209 | ||||
Revenue per full-time billable consultant (in thousands): | ||||||||
Huron Healthcare | $ | 73 | $ | 77 | ||||
Huron Education and Life Sciences | $ | 75 | $ | 80 | ||||
Huron Business Advisory | $ | 69 | $ | 77 | ||||
Total | $ | 72 | $ | 78 | ||||
Average number of full-time equivalents (for the period) (5): | ||||||||
Huron Healthcare | 204 | 196 | ||||||
Huron Education and Life Sciences | 42 | 49 | ||||||
Huron Business Advisory | 23 | 10 | ||||||
Total | 269 | 255 | ||||||
Revenue per full-time equivalent (in thousands): | ||||||||
Huron Healthcare | $ | 156 | $ | 148 | ||||
Huron Education and Life Sciences | $ | 156 | $ | 133 | ||||
Huron Business Advisory | $ | 126 | $ | 112 | ||||
Total | $ | 154 | $ | 144 | ||||
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Nine Months Ended September 30, | Percent Increase (Decrease) | ||||||||||
Segment and Consolidated Operating Results (in thousands): | 2016 | 2015 | |||||||||
Huron Healthcare: | |||||||||||
Revenues | $ | 323,531 | $ | 328,624 | (1.5 | )% | |||||
Operating income | $ | 119,229 | $ | 122,120 | (2.4 | )% | |||||
Segment operating income as a percentage of segment revenues | 36.9 | % | 37.2 | % | |||||||
Huron Education and Life Sciences: | |||||||||||
Revenues | $ | 134,050 | $ | 124,892 | 7.3 | % | |||||
Operating income | $ | 35,407 | $ | 35,427 | (0.1 | )% | |||||
Segment operating income as a percentage of segment revenues | 26.4 | % | 28.4 | % | |||||||
Huron Business Advisory: | |||||||||||
Revenues | $ | 90,567 | $ | 59,173 | 53.1 | % | |||||
Operating income | $ | 19,342 | $ | 13,514 | 43.1 | % | |||||
Segment operating income as a percentage of segment revenues | 21.4 | % | 22.8 | % | |||||||
All Other: | |||||||||||
Revenues | $ | — | $ | 1,221 | (100.0 | )% | |||||
Operating loss | $ | — | $ | (1,654 | ) | (100.0 | )% | ||||
Segment operating loss as a percentage of segment revenues | N/M | N/M | |||||||||
Total Company: | |||||||||||
Revenues | $ | 548,148 | $ | 513,910 | 6.7 | % | |||||
Reimbursable expenses | 54,636 | 53,266 | 2.6 | % | |||||||
Total revenues and reimbursable expenses | $ | 602,784 | $ | 567,176 | 6.3 | % | |||||
Statements of Earnings reconciliation: | |||||||||||
Segment operating income | $ | 173,978 | $ | 169,407 | 2.7 | % | |||||
Items not allocated at the segment level: | |||||||||||
Other operating expenses and losses, net | 85,089 | 84,332 | 0.9 | % | |||||||
Depreciation and amortization expense | 23,064 | 18,286 | 26.1 | % | |||||||
Total operating income | 65,825 | 66,789 | (1.4 | )% | |||||||
Other expense, net | 11,034 | 15,776 | (30.1 | )% | |||||||
Income from continuing operations before income tax expense | $ | 54,791 | $ | 51,013 | 7.4 | % | |||||
Other Operating Data (excluding All Other): | |||||||||||
Number of full-time billable consultants (at period end) (1): | |||||||||||
Huron Healthcare | 1,010 | 1,084 | (6.8 | )% | |||||||
Huron Education and Life Sciences | 539 | 458 | 17.7 | % | |||||||
Huron Business Advisory | 472 | 279 | 69.2 | % | |||||||
Total | 2,021 | 1,821 | 11.0 | % | |||||||
Average number of full-time billable consultants (for the period) (1): | |||||||||||
Huron Healthcare | 1,005 | 1,092 | |||||||||
Huron Education and Life Sciences | 503 | 431 | |||||||||
Huron Business Advisory | 387 | 224 | |||||||||
Total | 1,895 | 1,747 | |||||||||
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
Nine Months Ended September 30, | ||||||||
Other Operating Data (continued): | 2016 | 2015 | ||||||
Full-time billable consultant utilization rate (2): | ||||||||
Huron Healthcare | 78.6 | % | 76.4 | % | ||||
Huron Education and Life Sciences | 70.1 | % | 75.9 | % | ||||
Huron Business Advisory | 74.0 | % | 75.2 | % | ||||
Total | 75.3 | % | 76.1 | % | ||||
Full-time billable consultant average billing rate per hour (3): | ||||||||
Huron Healthcare | $ | 209 | $ | 215 | ||||
Huron Education and Life Sciences | $ | 229 | $ | 230 | ||||
Huron Business Advisory (4) | $ | 201 | $ | 234 | ||||
Total | $ | 212 | $ | 221 | ||||
Revenue per full-time billable consultant (in thousands): | ||||||||
Huron Healthcare | $ | 231 | $ | 230 | ||||
Huron Education and Life Sciences | $ | 233 | $ | 248 | ||||
Huron Business Advisory | $ | 220 | $ | 254 | ||||
Total | $ | 229 | $ | 238 | ||||
Average number of full-time equivalents (for the period) (5): | ||||||||
Huron Healthcare | 201 | 171 | ||||||
Huron Education and Life Sciences | 40 | 40 | ||||||
Huron Business Advisory | 16 | 8 | ||||||
Total | 257 | 219 | ||||||
Revenue per full-time equivalent (in thousands): | ||||||||
Huron Healthcare | $ | 456 | $ | 449 | ||||
Huron Education and Life Sciences | $ | 428 | $ | 455 | ||||
Huron Business Advisory | $ | 339 | $ | 301 | ||||
Total | $ | 444 | $ | 445 | ||||
(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) | The Huron Business Advisory segment includes our India EPM&A practice, formerly known as Rittman Mead Consulting Private Limited, a business that we acquired in July 2015. Absent the impact of our India EPM&A practice, the average billing rate per hour for Huron Business Advisory for the nine months ended September 30, 2016 and 2015 would have been $234 and $255, respectively. |
(5) | Consists of cultural transformation consultants within our Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by our clients, and full-time employees who provide software support and maintenance services to our clients. |
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 September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 183,400 | $ | 175,465 | $ | 548,148 | $ | 513,910 | |||||||
Net income from continuing operations | $ | 12,288 | $ | 14,277 | $ | 35,293 | $ | 29,393 | |||||||
Add back: | |||||||||||||||
Income tax expense | 7,265 | 9,741 | 19,498 | 21,620 | |||||||||||
Interest and other expenses | 3,687 | 6,038 | 11,034 | 15,776 | |||||||||||
Depreciation and amortization | 12,144 | 11,276 | 34,342 | 30,388 | |||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (6) | 35,384 | 41,332 | 100,167 | 97,177 | |||||||||||
Add back: | |||||||||||||||
Restructuring charges | 1,049 | 320 | 4,129 | 1,577 | |||||||||||
Other losses, net | 494 | — | 494 | 524 | |||||||||||
Adjusted EBITDA (6) | $ | 36,927 | $ | 41,652 | $ | 104,790 | $ | 99,278 | |||||||
Adjusted EBITDA as a percentage of revenues (6) | 20.1 | % | 23.7 | % | 19.1 | % | 19.3 | % | |||||||
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (6)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income from continuing operations | $ | 12,288 | $ | 14,277 | $ | 35,293 | $ | 29,393 | |||||||
Weighted average shares – diluted | 21,445 | 22,592 | 21,427 | 22,616 | |||||||||||
Diluted earnings per share from continuing operations | $ | 0.57 | $ | 0.63 | $ | 1.65 | $ | 1.30 | |||||||
Add back: | |||||||||||||||
Amortization of intangible assets | 8,771 | 7,913 | 24,369 | 20,685 | |||||||||||
Restructuring charges | 1,049 | 320 | 4,129 | 1,577 | |||||||||||
Other losses, net | 494 | — | 494 | 524 | |||||||||||
Non-cash interest on convertible notes | 1,883 | 1,795 | 5,582 | 5,324 | |||||||||||
Tax effect | (4,794 | ) | (3,951 | ) | (13,588 | ) | (11,075 | ) | |||||||
Total adjustments, net of tax | 7,403 | 6,077 | 20,986 | 17,035 | |||||||||||
Adjusted net income from continuing operations (6) | $ | 19,691 | $ | 20,354 | $ | 56,279 | $ | 46,428 | |||||||
Adjusted diluted earnings per share from continuing operations (6) | $ | 0.92 | $ | 0.90 | $ | 2.63 | $ | 2.05 | |||||||
(6) | In evaluating the Company’s financial performance and outlook, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income 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 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. |
HURON CONSULTING GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2016 OUTLOOK
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)
(In millions)
(Unaudited)
Year Ending | |||||||
December 31, 2016 | |||||||
Guidance Range | |||||||
Low | High | ||||||
Projected revenues - GAAP | $ | 730.0 | $ | 740.0 | |||
Projected net income from continuing operations - GAAP | $ | 43.0 | $ | 45.0 | |||
Add back: | |||||||
Income tax expense | 26.0 | 27.5 | |||||
Interest and other expenses | 16.0 | 16.0 | |||||
Depreciation and amortization | 47.0 | 47.0 | |||||
Projected earnings before interest, taxes, depreciation and amortization (EBITDA) (7) | 132.0 | 135.5 | |||||
Add back: | |||||||
Restructuring charges | 4.5 | 4.5 | |||||
Other losses, net | 0.5 | 0.5 | |||||
Projected adjusted EBITDA (7) | $ | 137.0 | $ | 140.5 | |||
Projected adjusted EBITDA as a percentage of projected revenues (7) | 18.8 | % | 19.0 | % | |||
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS (7)
(In millions, except per share amounts)
(Unaudited)
Year Ending | |||||||
December 31, 2016 | |||||||
Guidance Range | |||||||
Low | High | ||||||
Projected net income from continuing operations - GAAP | $ | 43.0 | $ | 45.0 | |||
Projected diluted earnings per share from continuing operations - GAAP | $ | 2.00 | $ | 2.10 | |||
Add back: | |||||||
Amortization of intangible assets | 33.0 | 33.0 | |||||
Restructuring charges | 4.5 | 4.5 | |||||
Other losses, net | 0.5 | 0.5 | |||||
Non-cash interest on convertible notes | 7.5 | 7.5 | |||||
Tax effect | (18.5 | ) | (18.5 | ) | |||
Total adjustments, net of tax | 27.0 | 27.0 | |||||
Projected adjusted net income from continuing operations (7) | $ | 70.0 | $ | 72.0 | |||
Projected adjusted diluted earnings per share from continuing operations (7) | $ | 3.25 | $ | 3.35 | |||
(7) | In evaluating the Company’s outlook, management uses projected EBITDA, projected adjusted EBITDA, projected adjusted EBITDA as a percentage of revenues, projected adjusted net income from continuing operations, and projected adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that the use of such measures, as supplements to projected net income from continuing operations and projected 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 the Company’s core operating results and future prospects without the effect of non-cash or other one-time items. 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. |