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
Date of Report (Date of earliest event reported)
_____________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||
| of incorporation) | File Number) | Identification Number) | ||||||
(Address of principal executive offices)
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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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||
| Emerging growth company | |||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||
Item 2.02. Results of Operations and Financial Condition.
On April 30, 2024, Huron Consulting Group Inc. (the "Company") issued a press release announcing its financial results for the quarter ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On April 30, 2024, the Company posted supplemental headcount information on its website to revise the headcount attributable to each of its reportable segments. During the first quarter of 2024, the Company reclassified certain revenue-generating professionals within the Digital capability from the Healthcare and Education segments to the Commercial segment as these professionals are able to provide services across all of the Company's industries. This reclassification did not impact the total Digital capability headcount for any period, but the Company did revise segment headcounts reported in prior periods for consistent presentation. The supplemental headcount information includes the revised segment headcount as of each quarter-end within fiscal years 2022 and 2023 and as of March 31, 2024. A copy of the supplemental headcount information is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Additionally, on April 30, 2024, the Company posted on its website an updated investor presentation. A copy of the investor presentation is furnished as Exhibit 99.3 to this Current Report on Form 8-K.
The information furnished pursuant to this Item 7.01, Item 2.02 and the attached Exhibits 99.1, 99.2, and 99.3 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
| Exhibit Number | Exhibit Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
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: | April 30, 2024 | /s/ JOHN D. KELLY | |||||||||
| John D. Kelly | |||||||||||
| Executive Vice President, Chief Financial Officer, and Treasurer | |||||||||||
Exhibit 99.1
| NEWS | MEDIA CONTACT | |||||||
| Allie Bovis | ||||||||
| FOR IMMEDIATE RELEASE | abovis@hcg.com | |||||||
| INVESTOR CONTACT | ||||||||
| John D. Kelly | ||||||||
| investor@hcg.com | ||||||||
Huron Announces First Quarter 2024 Financial Results and Updates 2024 Guidance
FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS
•Total revenues increased $38.1 million, or 12.0%, to $356.0 million in Q1 2024 from $317.9 million in Q1 2023.
•Net income increased $4.6 million, or 34.2%, to $18.0 million in Q1 2024, compared to $13.4 million in Q1 2023.
•Adjusted EBITDA(8), a non-GAAP measure, increased $4.3 million, or 14.6%, to $33.8 million in Q1 2024 from $29.5 million in Q1 2023.
•Diluted earnings per share increased $0.27, or 39.7%, to $0.95 in Q1 2024, compared to $0.68 in Q1 2023.
•Adjusted diluted earnings per share(8), a non-GAAP measure, increased $0.36, or 41.4%, to $1.23 in Q1 2024 from $0.87 in Q1 2023.
•Huron returned $62.3 million to shareholders by repurchasing 0.6 million shares of the company's common stock in Q1 2024, representing 3.4% of the company's common stock outstanding as of December 31, 2023.
•Huron affirms its previous revenue and adjusted EBITDA as a percentage of revenues(8) expectations for full year 2024, and increases its adjusted diluted earnings per share(8) expectation to a range of $5.60 to $6.10.
OTHER HIGHLIGHTS
•On March 1, 2024, Huron closed its acquisition of GG+A, strengthening its ability to advise on the building and acceleration of philanthropic programs to support clients' missions.
•Huron posted its 2024 Investor Presentation, which provides insight into the company and its commitments to achieving its strategic and financial objectives.
CHICAGO - Apr 30, 2024 - Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the quarter ended March 31, 2024.
“Our first quarter results reflect our ongoing focus on achieving accelerated revenue growth and consistent margin expansion. Revenues grew 12% over the first quarter of 2023 driven by strong growth in our Healthcare segment as well as continued growth in our Education segment, which furthers the segment's multi-year growth trajectory,” said Mark Hussey, chief executive officer and president of Huron.
“Our unique and talented team has established Huron as one of the leading trusted advisors to our clients by delivering with the highest quality and driving innovation to meet our clients' evolving needs. Our culture of collaboration and deep dedication to our clients coupled with our aligned operating model and strong competitive advantage position us well to meet the ongoing demand for our offerings and to achieve our financial goals,” added Hussey.
FIRST QUARTER 2024 RESULTS
Revenues increased $38.1 million, or 12.0%, to $356.0 million for the first quarter of 2024, compared to $317.9 million for the first quarter of 2023. The increase in revenues was driven by continued strength in demand for Healthcare's Consulting and Managed Services and Digital capabilities, as well as an increase in demand for Education's Digital capability. These increases in revenue reflect the company's focus on accelerating growth in the healthcare and education industries.
Net income increased $4.6 million, or 34.2%, to $18.0 million for the first quarter of 2024, compared to $13.4 million for the same quarter last year. Diluted earnings per share increased $0.27, or 39.7%, to $0.95 for the first quarter of 2024, compared to $0.68 for the first quarter of 2023.
First quarter 2024 earnings before interest, taxes, depreciation and amortization ("EBITDA")(8) increased $2.2 million, or 8.2%, to $28.9 million, compared to $26.7 million in the same prior year period.
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 March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Amortization of intangible assets | $ | 1,690 | $ | 2,231 | |||||||
| Restructuring charges | $ | 2,337 | $ | 2,284 | |||||||
| Other losses | $ | 1,568 | $ | 435 | |||||||
| Transaction-related expenses | $ | 1,497 | $ | — | |||||||
| Tax effect of adjustments | $ | (1,844) | $ | (1,312) | |||||||
| Foreign currency transaction losses (gains), net | $ | (465) | $ | 80 | |||||||
Adjusted EBITDA(8) increased $4.3 million, or 14.6%, to $33.8 million, or 9.5% of revenues, in the first quarter of 2024, compared to $29.5 million, or 9.3% of revenues, in the same quarter last year. Adjusted net income(8) increased $6.2 million, or 36.3%, to $23.3 million, or $1.23 per diluted share, for the first quarter of 2024, compared to $17.1 million, or $0.87 per diluted share, for the same quarter in 2023.
The number of revenue-generating professionals(1) increased 15.8% to 5,803 as of March 31, 2024 from 5,013 as of March 31, 2023. The utilization rate(5) of the company's Consulting capability was 70.2% during the first quarter 2024, compared to 76.3% during the same period last year. The utilization rate(7) for the company's Digital capability increased to 74.3% during the first quarter 2024, compared to 71.0% during the same period last year.
Additionally, Huron returned $62.3 million to shareholders in the first three months of 2024 by repurchasing 624,698 shares of the company's common stock, representing 3.4% of the company's common stock outstanding as of December 31, 2023.
The company’s year-to-date 2024 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (51%); Education (31%); and Commercial (18%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended March 31, 2024.
OUTLOOK FOR 2024
Based on currently available information, the company is affirming guidance for full year 2024 revenues before reimbursable expenses in a range of $1.46 billion to $1.54 billion and adjusted EBITDA as a percentage of revenues(8) in a range of 12.8% to 13.3%. The company is increasing its guidance for full year 2024 adjusted diluted earnings per share(8) to a range of $5.60 to $6.10.
FIRST QUARTER 2024 WEBCAST
The company will host a webcast to discuss its financial results today, April 30, 2024, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron'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(8)
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 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 the United States.
Management has provided its outlook regarding adjusted EBITDA and 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 is not provided. Management is unable to provide guidance for these reconciling items because they 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 professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. 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,” “goals,” “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 necessary 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 Annual Report on Form 10-K for the year ended December 31, 2023 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. The company disclaims 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 OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenues and reimbursable expenses: | |||||||||||
| Revenues | $ | 355,961 | $ | 317,895 | |||||||
| Reimbursable expenses | 7,424 | 8,490 | |||||||||
| Total revenues and reimbursable expenses | 363,385 | 326,385 | |||||||||
| Operating expenses: | |||||||||||
| Direct costs (exclusive of depreciation and amortization included below) | 253,303 | 228,383 | |||||||||
| Reimbursable expenses | 7,584 | 8,624 | |||||||||
| Selling, general and administrative expenses | 74,268 | 62,289 | |||||||||
| Restructuring charges | 2,337 | 2,284 | |||||||||
| Depreciation and amortization | 5,972 | 6,374 | |||||||||
| Total operating expenses | 343,464 | 307,954 | |||||||||
| Operating income | 19,921 | 18,431 | |||||||||
| Other income (expense), net: | |||||||||||
| Interest expense, net of interest income | (5,140) | (4,303) | |||||||||
| Other income, net | 2,779 | 1,719 | |||||||||
| Total other expense, net | (2,361) | (2,584) | |||||||||
| Income before taxes | 17,560 | 15,847 | |||||||||
| Income tax expense (benefit) | (446) | 2,428 | |||||||||
| Net income | $ | 18,006 | $ | 13,419 | |||||||
| Earnings per share: | |||||||||||
| Net income per basic share | $ | 0.99 | $ | 0.70 | |||||||
| Net income per diluted share | $ | 0.95 | $ | 0.68 | |||||||
| Weighted average shares used in calculating earnings per share: | |||||||||||
| Basic | 18,196 | 19,119 | |||||||||
| Diluted | 18,943 | 19,699 | |||||||||
| Comprehensive income (loss): | |||||||||||
| Net income | $ | 18,006 | $ | 13,419 | |||||||
| Foreign currency translation adjustments, net of tax | (722) | 52 | |||||||||
| Unrealized gain (loss) on investment, net of tax | (1,447) | 3,873 | |||||||||
| Unrealized gain (loss) on cash flow hedging instruments, net of tax | 1,073 | (2,329) | |||||||||
| Other comprehensive income (loss) | (1,096) | 1,596 | |||||||||
| Comprehensive income | $ | 16,910 | $ | 15,015 | |||||||
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
| March 31, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 18,642 | $ | 12,149 | |||||||
| Receivables from clients, net | 215,141 | 162,566 | |||||||||
| Unbilled services, net | 173,081 | 190,869 | |||||||||
| Income tax receivable | 9,339 | 6,385 | |||||||||
| Prepaid expenses and other current assets | 34,755 | 28,491 | |||||||||
| Total current assets | 450,958 | 400,460 | |||||||||
| Property and equipment, net | 24,578 | 23,728 | |||||||||
| Deferred income taxes, net | 2,299 | 2,288 | |||||||||
| Long-term investments | 73,467 | 75,414 | |||||||||
| Operating lease right-of-use assets | 22,898 | 24,131 | |||||||||
| Other non-current assets | 100,005 | 92,336 | |||||||||
| Intangible assets, net | 25,649 | 18,074 | |||||||||
| Goodwill | 647,100 | 625,711 | |||||||||
| Total assets | $ | 1,346,954 | $ | 1,262,142 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 13,963 | $ | 10,074 | |||||||
| Accrued expenses and other current liabilities | 36,640 | 33,087 | |||||||||
| Accrued payroll and related benefits | 87,675 | 225,921 | |||||||||
| Current maturities of long-term debt | 13,750 | — | |||||||||
| Current maturities of operating lease liabilities | 11,338 | 11,032 | |||||||||
| Deferred revenues | 24,722 | 22,461 | |||||||||
| Total current liabilities | 188,088 | 302,575 | |||||||||
| Non-current liabilities: | |||||||||||
| Deferred compensation and other liabilities | 38,932 | 35,665 | |||||||||
| Long-term debt, net of current portion | 558,897 | 324,000 | |||||||||
| Operating lease liabilities, net of current portion | 36,767 | 38,850 | |||||||||
| Deferred income taxes, net | 28,664 | 28,160 | |||||||||
| Total non-current liabilities | 663,260 | 426,675 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 21,237,828 and 21,316,441 shares issued, respectively | 212 | 212 | |||||||||
Treasury stock, at cost, 3,061,291 and 2,852,296 shares, respectively | (159,605) | (142,136) | |||||||||
| Additional paid-in capital | 200,235 | 236,962 | |||||||||
| Retained earnings | 433,033 | 415,027 | |||||||||
| Accumulated other comprehensive income | 21,731 | 22,827 | |||||||||
| Total stockholders’ equity | 495,606 | 532,892 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,346,954 | $ | 1,262,142 | |||||||
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 18,006 | $ | 13,419 | |||||||
| Adjustments to reconcile net income to cash flows from operating activities: | |||||||||||
| Depreciation and amortization | 5,972 | 6,407 | |||||||||
| Non-cash lease expense | 1,544 | 1,644 | |||||||||
| Lease-related impairment charges | 849 | 1,870 | |||||||||
| Share-based compensation | 13,949 | 11,562 | |||||||||
| Amortization of debt discount and issuance costs | 223 | 191 | |||||||||
| Allowances for doubtful accounts | 16 | 3 | |||||||||
| Deferred income taxes | 602 | — | |||||||||
| Gain on sale of property and equipment, excluding transaction costs | — | 1 | |||||||||
| Change in fair value of contingent consideration liabilities | 516 | 435 | |||||||||
| Changes in operating assets and liabilities, net of acquisitions and divestiture: | |||||||||||
| (Increase) decrease in receivables from clients, net | (51,116) | 827 | |||||||||
| (Increase) decrease in unbilled services, net | 18,097 | (31,669) | |||||||||
| (Increase) decrease in current income tax receivable / payable, net | (3,363) | 1,487 | |||||||||
| (Increase) decrease in other assets | (5,008) | (5,205) | |||||||||
| Increase (decrease) in accounts payable and other liabilities | 4,437 | (1,881) | |||||||||
| Increase (decrease) in accrued payroll and related benefits | (132,290) | (89,843) | |||||||||
| Increase (decrease) in deferred revenues | (3,158) | (1,349) | |||||||||
| Net cash used in operating activities | (130,724) | (92,101) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (1,192) | (1,956) | |||||||||
| Investment in life insurance policies | (806) | (1,833) | |||||||||
| Purchases of businesses | (21,150) | 38 | |||||||||
| Capitalization of internally developed software costs | (7,605) | (6,575) | |||||||||
| Proceeds from note receivable | 154 | 154 | |||||||||
| Net cash used in investing activities | (30,599) | (10,172) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from exercises of stock options | 1,167 | 627 | |||||||||
| Shares redeemed for employee tax withholdings | (20,927) | (9,529) | |||||||||
| Share repurchases | (60,998) | (45,133) | |||||||||
| Proceeds from bank borrowings | 566,000 | 201,000 | |||||||||
| Repayments of bank borrowings | (316,000) | (44,000) | |||||||||
| Payments for debt issuance costs | (1,383) | (16) | |||||||||
| Deferred payments on business acquisition | — | (500) | |||||||||
| Net cash provided by financing activities | 167,859 | 102,449 | |||||||||
| Effect of exchange rate changes on cash | (43) | 16 | |||||||||
| Net increase in cash and cash equivalents | 6,493 | 192 | |||||||||
| Cash and cash equivalents at beginning of the period | 12,149 | 11,834 | |||||||||
| Cash and cash equivalents at end of the period | $ | 18,642 | $ | 12,026 | |||||||
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
| Three Months Ended March 31, | Percent Increase (Decrease) | |||||||||||||||||||
| Segment and Consolidated Operating Results (in thousands): | 2024 | 2023 | ||||||||||||||||||
| Healthcare: | ||||||||||||||||||||
| Revenues | $ | 180,742 | $ | 149,049 | 21.3% | |||||||||||||||
| Operating income | $ | 42,694 | $ | 32,255 | 32.4% | |||||||||||||||
| Segment operating margin | 23.6 | % | 21.6 | % | ||||||||||||||||
| Education: | ||||||||||||||||||||
| Revenues | $ | 111,583 | $ | 104,147 | 7.1% | |||||||||||||||
| Operating income | $ | 21,956 | $ | 23,165 | (5.2)% | |||||||||||||||
| Segment operating margin | 19.7 | % | 22.2 | % | ||||||||||||||||
| Commercial: | ||||||||||||||||||||
| Revenues | $ | 63,636 | $ | 64,699 | (1.6)% | |||||||||||||||
| Operating income | $ | 14,039 | $ | 14,067 | (0.2)% | |||||||||||||||
| Segment operating margin | 22.1 | % | 21.7 | % | ||||||||||||||||
| Total Huron: | ||||||||||||||||||||
| Revenues | $ | 355,961 | $ | 317,895 | 12.0% | |||||||||||||||
| Reimbursable expenses | 7,424 | 8,490 | (12.6)% | |||||||||||||||||
| Total revenues and reimbursable expenses | $ | 363,385 | $ | 326,385 | 11.3% | |||||||||||||||
| Segment operating income | $ | 78,689 | $ | 69,487 | 13.2% | |||||||||||||||
| Items not allocated at the segment level: | ||||||||||||||||||||
| Other operating expenses | 52,507 | 44,056 | 19.2% | |||||||||||||||||
Restructuring charges | 2,233 | 2,284 | (2.2)% | |||||||||||||||||
| Depreciation and amortization | 4,028 | 4,716 | (14.6)% | |||||||||||||||||
| Operating income | 19,921 | 18,431 | 8.1% | |||||||||||||||||
| Other expense, net | (2,361) | (2,584) | (8.6)% | |||||||||||||||||
| Income before taxes | $ | 17,560 | $ | 15,847 | 10.8% | |||||||||||||||
| Other Operating Data: | ||||||||||||||||||||
Number of revenue-generating professionals by segment (at period end) (1)(2): | ||||||||||||||||||||
| Healthcare | 2,279 | 1,780 | 28.0% | |||||||||||||||||
| Education | 1,231 | 1,069 | 15.2% | |||||||||||||||||
Commercial (3) | 2,293 | 2,164 | 6.0% | |||||||||||||||||
| Total | 5,803 | 5,013 | 15.8% | |||||||||||||||||
| Revenue by capability: | ||||||||||||||||||||
Consulting and Managed Services (4)(5) | $ | 201,559 | $ | 177,194 | 13.8% | |||||||||||||||
| Digital | 154,402 | 140,701 | 9.7% | |||||||||||||||||
| Total | $ | 355,961 | $ | 317,895 | 12.0% | |||||||||||||||
Number of revenue-generating professionals by capability (at period end)(1): | ||||||||||||||||||||
Consulting and Managed Services (4)(6) | 2,891 | 2,360 | 22.5% | |||||||||||||||||
| Digital | 2,912 | 2,653 | 9.8% | |||||||||||||||||
| Total | 5,803 | 5,013 | 15.8% | |||||||||||||||||
Utilization rate by capability (7): | ||||||||||||||||||||
| Consulting | 70.2 | % | 76.3 | % | ||||||||||||||||
| Digital | 74.3 | % | 71.0 | % | ||||||||||||||||
(1) Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare managed services employees who provide revenue cycle billing, collections, insurance verification and change integrity services to clients.
(2) During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries. This reclassification did not impact the total Digital capability headcount for any period. The prior period headcount has been revised for consistent presentation.
(3) The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education, and the related costs of these professionals are allocated to each of the segments.
(4) During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively.
This reclassification did not impact the aggregate revenues or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues and headcount in the following footnotes have been revised for consistent presentation.
(5) Managed Services capability revenues within our Healthcare segment was $17.5 million and $19.8 million for the three months ended March 31, 2024 and 2023, respectively.
Managed Services capability revenues within our Education segment was $7.4 million for both the three months ended March 31, 2024 and 2023, respectively.
(6) The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,087 and 726 as of March 31, 2024 and 2023, respectively.
The number of Managed Services revenue-generating professionals within our Education segment was 132 and 125 as of March 31, 2024 and 2023, respectively.
(7) Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available working hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8)
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenues | $ | 355,961 | $ | 317,895 | |||||||
| Net income | $ | 18,006 | $ | 13,419 | |||||||
| Add back: | |||||||||||
Income tax expense (benefit) | (446) | 2,428 | |||||||||
| Interest expense, net of interest income | 5,140 | 4,303 | |||||||||
| Depreciation and amortization | 6,181 | 6,553 | |||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (8) | 28,881 | 26,703 | |||||||||
| Add back: | |||||||||||
| Restructuring charges | 2,337 | 2,284 | |||||||||
| Other losses | 1,568 | 435 | |||||||||
| Transaction-related expenses | 1,497 | — | |||||||||
| Foreign currency transaction losses (gains), net | (465) | 80 | |||||||||
Adjusted EBITDA (8) | $ | 33,818 | $ | 29,502 | |||||||
Adjusted EBITDA as a percentage of revenues (8) | 9.5 | % | 9.3 | % | |||||||
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (8)
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Net income | $ | 18,006 | $ | 13,419 | |||||||
| Weighted average shares - diluted | 18,943 | 19,699 | |||||||||
| Diluted earnings per share | $ | 0.95 | $ | 0.68 | |||||||
| Add back: | |||||||||||
| Amortization of intangible assets | 1,690 | 2,231 | |||||||||
| Restructuring charges | 2,337 | 2,284 | |||||||||
| Other losses | 1,568 | 435 | |||||||||
| Transaction-related expenses | 1,497 | — | |||||||||
| Tax effect of adjustments | (1,844) | (1,312) | |||||||||
| Total adjustments, net of tax | 5,248 | 3,638 | |||||||||
Adjusted net income (8) | $ | 23,254 | $ | 17,057 | |||||||
| Adjusted weighted average shares - diluted | 18,943 | 19,699 | |||||||||
Adjusted diluted earnings per share (8) | $ | 1.23 | $ | 0.87 | |||||||
(8) 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, and adjusted diluted earnings per share, 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.
Exhibit 99.2
HURON CONSULTING GROUP INC.
NUMBER OF REVENUE-GENERATING PROFESSIONALS BY SEGMENT
(Unaudited)
During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries. This reclassification did not impact the total Digital capability headcount for any period. The prior period headcount below has been revised for consistent presentation.
| As Of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mar. 31, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2023 | Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of revenue-generating professionals by segment (at period end)(1): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Healthcare | 1,488 | 1,456 | 1,519 | 1,719 | 1,780 | 1,852 | 1,878 | 2,050 | 2,279 | |||||||||||||||||||||||||||||||||||||||||||||||
| Education | 811 | 891 | 969 | 997 | 1,069 | 1,124 | 1,203 | 1,206 | 1,231 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial(2) | 1,724 | 1,896 | 2,083 | 2,116 | 2,164 | 2,198 | 2,260 | 2,263 | 2,293 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | 4,023 | 4,243 | 4,571 | 4,832 | 5,013 | 5,174 | 5,341 | 5,519 | 5,803 | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the Culture and Organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare Managed Services employees who provide revenue cycle billing, collections, insurance verification and change integrity services to clients.
(2)The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education, and the related costs of these professionals are allocated to each of the segments.
H UR O N I 1 © 2023 Huron Consulting Group Inc. and affiliates.huronco sulti ggroup.comA P R I L 2 0 2 4 Huron Consulting Group Inc. Investor Presentation
H UR O N I 2 © 2023 Huron Consulting Group Inc. and affiliates. Forward-Looking Statements Statements in this presentation 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,” “goals,” “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 necessary 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; di fficulties 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 Annual Report on Form 10-K for the year ended December 31, 2023 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. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.
H UR O N I 3 © 2023 Huron Consulting Group Inc. and affiliates. Use of non-GAAP financial measures In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income, adjusted diluted earnings per share, free cash flow and free cash flow yield 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 the United States. Management has provided its outlook regarding adjusted EBITDA and 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 is not provided. Management is unable to provide guidance for these reconciling items because they 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.
H UR O N I 4 © 2023 Huron Consulting Group Inc. and affiliates. Our Business 2 H UR O N I 4
H UR O N I 5 © 2023 Huron Consulting Group Inc. and affiliates. Huron is a global professional services firm that partners with clients to develop growth strategies, optimize operations and accelerate digital transformation using an enterprise portfolio of technology, data and analytics solutions to create sustainable results for the organizations we serve Healthcare 49% Education 32% Commercial 19% Focused on Serving Enduring End Markets 43% of 2023 revenues derived from our Digital capability 2023 Revenue by Segment Total Revenues $1.4B 2023 Financial Results Demonstrate Strong Execution of our Strategy Companywide Highlights 20% Revenue growth year-over-year 70 bps Adjusted EBITDA margin(2) growth year-over-year 43% Adjusted Diluted EPS growth year-over- year Business Highlights 26% Healthcare segment revenue growth year-over-year 19% Education segment revenue growth year-over-year 9% Commercial segment revenue growth year-over-year 17% Digital capability revenue growth year-over-year (1) Commercial segment includes financial services, energy and utilities and all other industries. (2) See Appendix for a reconciliation of adjusted EBITDA margin and adjusted diluted EPS, both of which are non-GAAP measures. (1) (2)
H UR O N I 6 © 2023 Huron Consulting Group Inc. and affiliates. Financial Results Q1 2024 Q1 2023 Q1 2024 vs. Q1 2023 Total Revenue $356M $318M 12% growth Net Income $18M $13M 34% growth Adj. EBITDA margins(1) 9.5% 9.3% 20 bps increase Diluted EPS $0.95 $0.68 40% growth Adj. Diluted EPS(1) $1.23 $0.87 41% growth Net Debt(1) $555M $435M Increased $120M Free Cash Flow(1) ($140M) ($101M) Decreased $39M FY 2024 Guidance(3) Q1 2024 Commentary Revenue $1.46 – 1.54B Affirmed midpoint of $1.5 billion Adj. EBITDA margins(2) 12.8% – 13.3% Affirmed midpoint of 13.0% Adj. Diluted EPS(2) $5.60 - $6.10 Increased midpoint by $0.20 (1) See Appendix A for a reconciliation of our non-GAAP measures to GAAP results. (2) Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. (3) Guidance is as of April 30th, 2024. Nothing herein should be construed as reaffirming, disaffirming or updating such guidance. Q1 2024 financial highlights
H UR O N I 7 © 2023 Huron Consulting Group Inc. and affiliates. Our strategy for driving increased shareholder value Medium Term Financial Targets: ------------------------------- • Low double-digit annual revenue growth • Mid-teen % adjusted EBITDA margins by 2025 • High teen % annual EPS growth • Strong annual cash flows with 25-50% targeted for share repurchases Commercial revenues represented 19% of total company revenues in 2023 Leading Market Positions In Two Critical Industries Focus: Accelerating growth in Healthcare and Education1 Growing Presence in Commercial Industries Focus: Expanding our growing credentials in commercial end markets 2 Rapidly Growing Global Digital Capability Focus: Advancing our integrated digital platform to support its strong growth trajectory3 Solid Foundation for Growth and Margin Expansion Focus: Executing on our primary revenue drivers and margin levers to achieve consistent growth and enhanced profitability4 Strong Balance Sheet and Cash Flows Focus: Delivering 25%-50% of deployed capital as a return to shareholders via share repurchases5 Healthcare and Education revenues grew 23% in 2023 over 2022 $124M of capital returned to shareholders via share repurchases in 2023 Adjusted EBITDA margins grew 70 bps in 2023 over 2022 Digital revenues represented 43% of total company revenues in 2023
H UR O N I 8 © 2023 Huron Consulting Group Inc. and affiliates. Digital 43% Consulting and Managed Services 57% Capabilities Mix 2023 Revenue Compelling mix of industry-differentiated offerings Digital Helping organizations: (i) design and execute technology, data and analytic strategies that accelerate transformation, facilitate data-driven decision making, and improve the customer and employee experience and (ii) implement our industry-focused proprietary software products. Consulting and Managed Services Building on our long-term client relationships to help address a variety of strategic, operational, financial, people and organizational-related challenges by providing an array of consulting, managed services and outsourcing services that best address their unique needs. 87% of Digital revenue in 2023 was comprised of technology services revenue 13% of Digital revenue in 2023 was comprised of technology product revenue Industries of Focus Healthcare Education Financial Services Energy and Utilities Public Sector
H UR O N I 9 © 2023 Huron Consulting Group Inc. and affiliates. Our global enterprise platform is designed to provide a client-centric approach and bring the full breadth of Huron’s offerings to our industries of focus Healthcare Industry Education Industry Financial Services Industry Energy & Utilities Industry Other Commercial Industries DIGITAL ORGANIZATIONAL AND PEOPLE TRANSFORMATION Commercial STRATEGY (INNOSIGHT) Creates a platform for focused growth in the commercial industries GLOBAL DELIVERY PLATFORM Industry Aligned under a common go- to-market strategy across all of our firm-wide offerings in each industry with greater accountability to achieve our industry growth goals Aligned common capabilities across the enterprise to better drive operating efficiencies and elevate our collective market position across Consulting, Digital, and Managed Services Capability OPERATIONS
© 2023 Huron Consulting Group Inc. and affiliates. H UR O N I 1 0 Unlocking value for all stakeholders through our five key corporate social responsibility commitments We are committed to investing in our people and fostering a diverse and inclusive culture We serve clients in industries that have a significant impact on the health and well-being, education and economic growth of our communities We have a long tradition of supporting the communities where we live and work We are focused on protecting and preserving our planet for future generations ACHIEVING ENVIRONMENTAL PROGRESS We hold our directors, management and employees to the highest standards of integrity and principled business conduct MANAGING RESPONSIBLY SERVING OUR COMMUNITIES INVESTING IN OUR PEOPLE ADVANCING OUR CLIENTS’ MISSIONS 80%+ of our revenue is generated in mission-driven industries, including organizations in the education, healthcare, public sector and nonprofit sectors Encouraged ongoing learning and development, which resulted in 84% of our employees using our learning platform to access a diverse skill-building curriculum Supported 1,100 unique charitable organizations encompassing a diverse range of causes, including local food banks, relief agencies, programs aimed at empowering at-risk youth, and educational institutions Grew revenues at a compound annual growth rate of 17% from 2020 to 2023, while continuing to reduce our GHG emissions by more than 50% from our 2019 baseline Enhanced various policies and practices to ensure we operate at the highest standards of integrity Illustrative Actions Taken in 2023 For more details, see the Company’s 2023 Corporate Social Responsibility Report, which can be found in the investor relations section of the Company’s website, including our Sustainability Accounting Standards Board (SASB) Index Addendum, EEO-1 Statement and environmental impact data.
H UR O N I 1 1 © 2023 Huron Consulting Group Inc. and affiliates. Our Market Opportunity and Growth Initiatives
© 2024 Huron Consulting Group Inc. and affiliates. Operating in a large, growing professional services industry with core end markets facing significant disruption or regulatory change Education (2) $35B Healthcare (1) $53B $32B $95B $36B Title Total Addressable Market By Capability Consulting Managed Services Energy & Utilities (3) $18B Financial Services (5) $30B Federal (4) $26B Digital Total Addressable Market By Industry (1) Internal analysis coupled with data from IBIS World’s Healthcare Consultants report dated March 2023, Gartner’s 2023 Outlook Presentation: Enterprise IT Spending Forecast for Healthcare and Life Sciences, and Markets and Markets Revenue Cycle Management/RCM Market Global Forecast to 2026 dated August 2021. (2) Internal analysis coupled with data from the Integrated Postsecondary Education System (IPEDS), Gartner’s 2023 Outlook Presen tation: Enterprise IT Spending Forecast, and HERD and NIH Funding data. (3) Internal analysis coupled with data from IBIS World’s Energy & Utilities Consulting Services in the US Report dated March 2023, Gartner’s 2023 Outlook Presentation: Enterprise IT Spending Forecast for Power and Utilities and Gartner’s 2023 Outlook Presentation: Enterprise IT Spending Forecast for Oil and Gas. (4) Internal analysis coupled with data from Administrative Management and General Management Consulting Services Report (NAICS 5 41611), ITDashboard.gov,, Department of Defense Information Technology and Cyberspace Activities 2023 Budget Overview dated May 2022, and Gartner’s 202 3 Outlook Presentation: Enterprise IT Spending Forecast for Government. (5) Internal analysis coupled with data from Source Market Research’s The Financial Services Consulting Market in 2022-2023 report, and Gartner’s 2023 Outlook Presentation: Enterprise IT Spending Forecast for Financial Services.
© 2023 Huron Consulting Group Inc. and affiliates. H UR O N I 1 3 $674 million Acute Care Providers 89% Non-Acute Care Providers 11% Healthcare Segment Revenue 2023 Managed Services 10% Digital 30% Performance Improvement 46% Financial Advisory 5% People Solutions 4% Consulting 60% Innosight 2% Revenue by Capability 2023 Business Advisory 3% Providing Proven and Innovative Solutions to Address Key Industry Challenges • Increased economic challenges driven by strained cost structures and worsening payor mix • Clinical delivery shifting from inpatient to outpatient settings • Increased number of virtual care providers and disruptive entrants coming to market • Consumer expectations shifting, including a desire for more virtual care • Disruption in the workforce with personnel shortages, the war for talent and labor costs increasing • Inadequate technology leading to a focus on digital transformation • Greater focus on community impact, including social determinants of health and health equity Healthcare industry overview Healthcare consulting and managed services and digital grew 30% and 16%, respectively, in 2023 as compared to 2022 Performance Improvement People Transformation Managed Services Digital Transformation Strategy and Financial Advisory
H UR O N I 1 4 © 2023 Huron Consulting Group Inc. and affiliates. Driving future growth in Healthcare STRONG MOMENTUM TO DATE • Grew total Healthcare segment revenues 26% in 2023 as compared to 2022 • Grew Healthcare industry consulting revenues 36% in 2023 as compared to 2022 • Grew Healthcare industry Digital revenues 16% in 2023 as compared to 2022 • Grew revenue cycle managed services offerings 4% in 2023 as compared to 2022 OPPORTUNITIES THAT LIE AHEAD STRENGTHENING OUR LEADING MARKET POSITION GROWING OUR CONSULTING OFFERINGS • Accelerating growth in revenue cycle consulting and managed services • Combining our strategic, digital and performance improvement capabilities to drive greater margin improvements for our clients • Advancing people transformation capabilities to help clients achieve greater workforce resiliency • Expanding our Innosight capability to further support our clients’ strategy and innovation needs • Integrating and advancing our healthcare-focused financial advisory offerings into our core offerings and client relationships • Advancing our financial distressed healthcare, consumer affordability, and growth strategy-related offerings • Expanding our federal health offerings ADVANCING OUR DIGITAL CAPABILITIES • Growing market share in our core healthcare digital services (e.g., EHR, ERP, CRM, etc.) and products • Further developing and deploying intelligent automation, analytics, and artificial intelligence services and products • Advancing and expanding our digital capabilities, including in data and advanced analytics (AI/ML)
© 2023 Huron Consulting Group Inc. and affiliates. H UR O N I 1 5 Providing Proven and Innovative Solutions to Address Key Industry Challenges • Disruption in the workforce and the war for talent is increasing • Enrollment challenges increasing despite rise in applications • Conventional research funding sources are becoming less stable and more uncertain • Continued governmental scrutiny, including attention to conflicts of interest and foreign influence • Increased pressure to modernize operations with shift to the cloud • Financial profile creates opportunity for strategic investment and transformation • Opportunities to drive more sustainable fundraising growth and improve the donor experience Education industry overview 4-Year Public Institution 45% 4-Year Private Institution 37% Administrative Unit or System Office 10% Research Institutes 3% Other 5% Education Segment Revenue 2023 $430 million Have worked with all 100 of the top 100 research universities in the U.S. Managed Services 5% Digital 50% Research 22% Strategy & Operations 23% Consulting 45% Revenue by Capability 2023 Strategy and Innovation People Transformation Student and Alumni Strategy Research Enterprise Digital Transformation Business Operations Education digital and consulting and managed services grew 28% and 12%, respectively, in 2023 as compared to 2022
H UR O N I 1 6 © 2023 Huron Consulting Group Inc. and affiliates. Driving future growth in Education STRONG MOMENTUM TO DATE • Grew total Education segment revenues 19% in 2023 as compared to 2022 • Grew Education industry Digital revenues 28% in 2023 as compared to 2022 • Grew research managed services offerings 24% in 2023 as compared to 2022 • Grew Education industry consulting revenues 11% in 2023 as compared to 2022 O PPORTUNITIES THAT LIE AHEAD STRENGTHENING OUR LEADING MARKET POSITION GROWING OUR CONSULTING OFFERINGS • Accelerating growth in research consulting and managed services • Strengthening and expanding our strong competitive advantage in our strategy and operations offerings • Continuing to gain momentum in student information systems (SIS) offerings, which represents a $6B total addressable market opportunity • Expanding our consulting offerings into new areas (e.g., athletics, M&A, talent strategy, etc.) • Accelerating growth in student strategy and philanthropy, including capabilities acquired via Whiteboard Higher Education and GG+A • Advancing analytics capabilities to further differentiate our consulting offerings ADVANCING OUR DIGITAL CAPABILITIES • Continuing to grow our core education digital service offerings (i.e., ERP, EPM, CRM, etc.) • Traditional HCM/FIN ERP offerings alone represent a $4B total addressable market opportunity • Further investing in our Huron Research Suite product to gain additional market share and support full research outsourcing • Strengthening our global delivery capabilities
H UR O N I 1 7 © 2023 Huron Consulting Group Inc. and affiliates. Commercial industry overview Personas of Focus: • CEO • CFO • Chief Strategy Officer • CHRO • COO • Organizational advisors, including lenders and law firms In the Commercial segment, our financial advisory offerings grew 68% in 2023 as compared to 2022 Providing Proven and Innovative Solutions to Address Key Industry Challenges Financial Services • Growing financial and operational pressure stemming from continued economic uncertainty • Increased scrutiny of capital adequacy being driven by current banking failures, compliance points of failure, presumably additional regulation Energy and Utilities • Strong financial positions fueling opportunistic M&A • Increasing operational pressures from delayed capital spending stemming from lingering supply chain issues, inflation and the possibility of a recession Public Sector • Increased congressional oversight, technology upgrade requirements, and regulatory constraints • Significant opportunity to advance public sector operations to more closely align with the private sector All Industries • Continued shift to the cloud and digitization • Unleashing the next wave of productivity in increasingly competitive and financially challenging environments • Continued focus on the power of data, advanced analytics and automation Energy and Utilities Other Industries Financial Services Public Sector Revenue by Capability 2023 Digital 65% Financial Advisory 25% Innosight 10% Consulting 35% Financial Services Energy and Utilities Public Sector Opportunistically Serve All Other Industries Industries of Focus
H UR O N I 1 8 © 2023 Huron Consulting Group Inc. and affiliates. Driving future growth in Commercial STRONG MOMENTUM TO DATE • Grew total Commercial segment revenues 9% in 2023 as compared to 2022 • Grew Commercial industry Consulting revenues 13% in 2023 as compared to 2022 • Grew Commercial industry Digital revenues 7% in 2023 as compared to 2022 O PPORTUNITIES THAT LIE AHEAD STRENGTHENING OUR PRESENCE IN THE COMMERCIAL INDUSTRIES GROWING OUR CONSULTING OFFERINGS • Integrating our strategy, digital and financial advisory capabilities into a comprehensive, global operating platform that accelerates growth across all our industries • Further establishing our foothold in oil and gas while expanding into new sectors within the Energy & Utilities value chain • Broadening our client base within the Federal government • Deepening our industry expertise in our strategy offerings • Capitalizing on favorable market conditions for our special situations offerings • Further diversifying and growing our financial advisory offerings, including in public finance advisory, bank regulatory advisory, and real estate advisory ADVANCING OUR DIGITAL CAPABILITIES • Building our industry expertise and IP into additional technology-related services and products • Growing market share in our core commercial digital services (e.g., EHR, ERP, CRM, etc.) • Advancing and expanding our digital capabilities, including in advanced data and analytics (AI/ML) • Scaling our technology-related managed services to strengthen our recurring revenue base
H UR O N I 1 9 © 2023 Huron Consulting Group Inc. and affiliates. Our Proven Results 2 H UR O N I 1 9
H UR O N I 2 0 © 2023 Huron Consulting Group Inc. and affiliates. Delivering proven results for our clients Illustrative case studies Mon Health System, in collaboration with Huron, employed disease prediction modeling to pinpoint individuals at high risk for lung cancer within their community, where the disease posed a significant threat. Utilizing the Huron Intelligence® Analytic Suite, they developed a predictive algorithm that facilitated the early identification of at-risk individuals, leading to targeted patient outreach and subsequent screening. This strategic initiative enabled over 800 patients to commence potentially lifesaving treatments, exemplifying a successful integration of advanced analytics and patient-centered communication in healthcare. The process not only streamlined the detection and treatment of lung cancer but also set a precedent for using data-driven approaches in managing other health conditions, with plans to expand the technology for predicting diseases like breast cancer and knee replacements. This approach demonstrated a significant shift towards proactive healthcare, enhancing the overall health and wellness of the community served by Mon Health System. A regional state-chartered bank based in the Northeastern U.S. partnered with Huron to upgrade its financial planning and analysis processes using Workday Adaptive Planning, focusing on modernization and integration. The initiative aimed at user-friendliness and minimizing maintenance, leveraging Huron's financial services expertise to create a banking-specific planning framework. This approach included proprietary accelerators and a phased implementation plan, leading to significant efficiency gains, enhanced insights, and greater accuracy. The results were a reduction in planning time, productivity savings, decreased need for additional staffing, improved FP&A team morale, reduced turnover, and a strong return on investment over three years. The project also promoted better collaboration and accuracy with standardized tools, following a roadmap from foundational setup to ongoing optimization. Note: For additional case studies, visit the Insights page on the Huron website. Huron played a crucial role in Baylor University's pursuit of R1 recognition and research excellence. They conducted a thorough assessment and helped redefine research administration roles and processes, creating a scalable team to support proposal and award activities. By implementing an enhanced faculty service delivery model and Oracle Cloud technology, Huron improved efficiency, transparency, and accountability. The university's commitment to innovation and collaboration, coupled with Huron's guidance, led to outstanding results. Baylor secured a $43.4 million research grant, achieved record National Science Foundation CAREER grants, increased research expenditures by 28%, and boosted research doctorates awarded by 34%, marking a transformative journey towards academic excellence and R1 status.
H UR O N I 2 1 © 2023 Huron Consulting Group Inc. and affiliates. Our Digital Capability 2 H UR O N I 2 1
H UR O N I 2 2 © 2023 Huron Consulting Group Inc. and affiliates. Grew a $580M Digital platform since 2010 through organic investments and $200M+ in deployed capital 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • Acquired Blue Stone International (Oracle EPM) • 11% of total company revenue generated by Digital capability (Mix of Oracle services and software products) • Entered Workday Partnership • Acquired Vonlay (EHR) and Threshold Consulting (Data and Analytics) • Entered Salesforce partnership • Acquired Rittman Mead India (Global Delivery) and Cloud62 (CRM) • Entered into Cerner and Meditech partnerships • Acquired ADI Strategies (EPM, Analytics and Financial Services Regulatory & Compliance) and HSM (EHR) • Expanded into intelligent automation (RPA) • Invested in Oracle commercial ERP capabilities • Expanded into Workday Healthcare • Entered AWS partnership • Invested in Oracle Healthcare expansion • Expanded into Workday Commercial and Adaptive Planning • Invested in machine learning and predictive modeling analytics • Entered Informatica Partnership • Acquired ForceIQ (CRM) and B3i Analytics (Proprietary Research Analytics) • Acquired Unico Solution (Data and Analytics) and Perception Health (Proprietary Healthcare Analytics) • Acquired AIMDATA (Data Governance and Platforms) and Customer Evolution (Digital Marketing and CRM) • Expanded into ServiceNow and Snowflake • Invested in advanced analytics / AI expansion (Predictive modeling and digital twins) Huron’s Digital Journey 2013 to Present Illustrative investments 2023 • Acquired Roundtable Analytics, Inc. (Proprietary Healthcare Analytics) • Expanded into cloud migration and cloud infrastructure • Invested in generative AI through partnerships with Microsoft and AWS • 43% of total company revenues generated by Digital capability
H UR O N I 2 3 © 2023 Huron Consulting Group Inc. and affiliates. Education 37% Healthcare 34% Commercial 29% Digital Capability Revenue 2023 Deeply integrating our industry focus with our Digital capabilities to strengthen our competitive advantage and accelerate growth $580 million Providing Proven and Innovative Solutions to Address Key Industry Challenges He althcare • Leveraging technology to generate cost savings and catalyze organizational growth • Improving business and clinical operations with technology-led innovation and reimagined care delivery models, including virtual care Education • Need to modernize operations with a shift to the cloud • Connecting seamlessly throughout the student‘s collegiate journey (pre-, during and post-graduation) • Providing researchers with innovative support models Commercial • Continued shift to the cloud and digitization • Unleashing the next wave of productivity in increasingly competitive and financially challenging environments • Continued focus on the power of data, advanced analytics and automation All Industries • Delivering on the power of a data-driven enterprise through the use of analytics, machine learning and artificial intelligence (AI) Technology Strategy & Advisory Pre- Implementation Implementation Managed Services Optimization 25+ technology vendorsRecognized partner to over 2023 Salesforce Partner Innovation Award in Education Epic
H UR O N I 2 4 © 2023 Huron Consulting Group Inc. and affiliates. Our Financial Outlook 2 H UR O N I 2 4
H UR O N I 2 5 © 2023 Huron Consulting Group Inc. and affiliates. Strong 2023 performance demonstrates commitment to consistent revenue growth and margin expansion 26% Healthcare segment revenue growth year-over-year 19% Education segment revenue growth year-over-year 17% Digital capability revenue growth year-over-year 20% Revenue growth year-over-year 70 bps Adjusted EBITDA margin growth year-over-year 43% Adjusted Diluted EPS growth year-over-year COMPANYWIDE HIGHLIGHTS 9% Commercial segment organic revenue growth year-over-year BUSINESS HIGHLIGHTS (1) (1) (1) See Appendix for a reconciliation of adjusted EBITDA margin and adjusted diluted EPS, both of which are non-GAAP measures.
H UR O N I 2 6 © 2023 Huron Consulting Group Inc. and affiliates. Building on our primary revenue drivers to achieve consistent revenue growth $844 $906 $1,132 2020 2021 2022 2023 2024 Guidance Revenue ($ in millions) Low double-digit % annual growth Low double-digit percentage growth target expected to be driven by organic revenue • Strong market tailwinds create growth opportunities in each of our core end markets and capabilities • Deep industry client relationships with opportunities in which to expand wallet share by strengthening collaboration across industries and capabilities • Accelerating growth in areas with recurring revenue $1,362 (1) (1) Guidance is as of April 30th, 2024. Nothing herein should be construed as reaffirming, disaffirming or updating such guidance. $1,460 – $1,540
H UR O N I 2 7 © 2023 Huron Consulting Group Inc. and affiliates. Building on our primary revenue drivers, including our foundation of recurring revenue, to drive consistent growth Other recurring revenue models generated approx. 2% of total company revenues in 2023 Multi-year strategic and digital transformations have historically represented more than 25% of total company revenues Managed services generated 7% of total company revenues in 2023 of which approx. 50% was recurring Healthcare and Education products generated approx. 5% of total company revenues in 2023 90% of Huron’s revenue in 2023 was from repeat clients, including 12 clients who have worked with Huron each year since 2004 ANNUAL RECURRING REVENUES COMPRISED 11% OF TOTAL COMPANY REVENUES IN 2023 ADDITIONAL RECURRING REVENUE MODELS Multi-year subscription- based contracts or business models with new recurring revenue streams MULTI-YEAR TRANSFORMATIONS Multi-year strategic or digital transformation engagements MANAGED SERVICES Multi-year managed services and/or outsourcing engagements that take on more permanent roles in a clients’ operating structure PRODUCTS AND ACCELERATORS Digital products or accelerators drive recurring revenue and/or new consulting engagements DEEP CLIENT RELATIONSHIPS Sticky client relationships lead to new or expanded engagement opportunities
H UR O N I 2 8 © 2023 Huron Consulting Group Inc. and affiliates. Adjusted EBITDA margin % is on a trajectory to achieve mid-teen % in 2025 10.3% 10.8% 11.6% 12.3% 20 20 20 21 20 22 20 23 20 24 Gu idance Uti li zati on Improvem ent Prici ng E nhance men t SG& A Scal in g Gl oba l De livery Mix Bu si ness Mix Shift Investm ents for Grow th 20 25 Adjusted EBITDA Margin %(1) Committed to annual expansion while maintaining flexibility to optimally manage the business • Operating income margin expansion driven by improved utilization and pricing and shift in business mix • Improved SG&A leverage to continue as we scale the business • Approx. 30%(4) of total employee base is based in India in 6 cities across multiple capabilities: digital services and products, managed services, and corporate functions • Commitment to margin expansion includes continued investments in organic and inorganic growth and mix shift to digital offerings Mid-teen % (1) See Appendix for a reconciliation of adjusted EBITDA margin %, a non-GAAP measure. (2) Business mix shift represents the impact of the rapid growth of our Digital capability, which has lower margins than our Consulting and Ma naged Services capability. (3) Guidance is as of April 30, 2024. Nothing herein should be construed as reaffirming, disaffirming or updating such guidance. (4) Headcount as of December 31, 2023 (2) (3) 12.8% – 13.3%
© 2022 Huron Consulting Group Inc. and affiliates. H UR O N I 2 9 Rapidly growing global delivery platform enables Huron to accelerate growth and expand margins 300+ 410+ 550+ 840+ 1570+ 2075+ 2018 2019 2020 2021 2022 2023 India Headcount Growth Digital 52% Managed Services 31% Corporate 17% India Headcount 5-Year CAGR 47% 2023
H UR O N I 30 © 2023 Huron Consulting Group Inc. and affiliates. Healthy balance sheet and strong cash flows create flexibility to return capital to shareholders and drive future growth $120 $21 $61 $100 $115 - $145 9.3% 1.9% 4.1% 4.9% 0% 5% 10% 15% 20% $- $40 $80 $120 2020 2021 2022 2023 2024 Guidance F re e C a sh F lo w Y ie ld $ in m ill io n s Free Cash Flow(3) (1) 2021 free cash flow is adjusted for the impact of our Life Sciences divestiture, which excludes transaction -related employee and third-party costs as well as estimated tax payments and net working capital adjustments. 2021 free cash flow yield is lower than historical amounts, reflecting record low DSO as of December 31, 2020 and the pull forward of certain cash receipts into Q4 2020, the repayment in 2021 of 2020 FICA deferrals under the CARES ACT, and a DSO higher than our target of 60 days as of December 31, 2021 due to the impact of certain larger projects with extended contractual payment terms. (2) As of December 31, 2023, the Company had $86M remaining under its share repurchase authorization. (3) See Appendix for a reconciliation of free cash flow and free cash flow yield, both of which are non-GAAP measures. (4) Cash flows from operating activities of $155 million to $185 million less capital expenditures of $40 million. Guidance is as of April 30th, 2024. Nothing herein should be construed as reaffirming, disaffirming or updating such guidance . • Based on our revenue and adjusted EBITDA margin % expectations, we anticipate having $750 million to $1 billion available for deployment over the five-year period ending in 2027 • Targeting 25%-50% of deployed capital returned to shareholders via share repurchases through 2025(2) • Invest in the business to strengthen our competitive position, including through the execution of strategic, tuck-in M&A • Manage debt levels to achieve approximately 2.0x leverage ratio Strategic capital deployment framework balances growth, flexibility and return of capital to shareholders (1) Expected Deployment of Capital 5-Year Framework (2022 to 2027) • Target 25%-50% in annual share repurchases • 50%-75% available to invest in our business, inclusive of M&A and organic investment in our consulting, digital and managed services capabilities (4)
H UR O N I 31 © 2023 Huron Consulting Group Inc. and affiliates. Disciplined approach to M&A will continue to provide opportunities to accelerate growth Criteria used to evaluate acquisition opportunities 1. Aligns with our business strategy • Expands our capabilities into adjacent offerings • Strengthens our industry expertise 2. Enhances our financial strategy • Has a strong growth trajectory on a standalone basis • Is accretive to EBITDA margins 3. Are a strong cultural fit • Two-thirds of our recent acquisitions were Huron partners or teams we worked side- by-side with at a client prior to discussing a potential transaction Strengthening our track record of success • Huron named Informatica’s 2022 North America Partner of the Year, building on the combined strength of Huron’s data management and analytics capabilities and our acquisitions of Unico Solution and AIMDATA (closed in 2021 and 2022, respectively) • Huron is the market leader ranked #1 in the Digital Rounding – 2024 Best in KLAS® report, building on Huron’s acquisition of MyRounding (closed in 2016) Recent Acquisitions
H UR O N I 32 © 2023 Huron Consulting Group Inc. and affiliates. Disciplined and balanced capital allocation framework underscores commitment to growth and returning capital to shareholders Operating in a large, growing professional services industry with core end markets facing significant disruption and/or regulatory change Supporting sustained and consistent revenue growth through expansion in areas of greatest growth potential, capitalizing on industry tailwinds and growing global digital platform New operating model and focused execution on improved profitability creates significant room for margin expansion Leading global consultancy with deep industry focus and growing digital and managed services capabilities A clear and compelling investment thesis STRONG CASH FLOW AND BALANCE SHEET MEANINGFUL GROWTH OPPORTUNITY IN OUR CORE INDUSTRIES EXPANSION OF INDUSTRY EXPERTISE AND CAPABILITIES MATERIAL MARGIN EXPANSION OPPORTUNITY A PREEMINENT GLOBAL CONSULTANCY AND DIGITAL PARTNER
H UR O N I 33 © 2023 Huron Consulting Group Inc. and affiliates. Appendix
H UR O N I 34 © 2023 Huron Consulting Group Inc. and affiliates. Reconciliations of non-GAAP measures Reconciliation of net income (loss) from continuing operations to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) (in millions) 2020 2021 2022 2023 Q1 2023 Q1 2024 Revenues $ 844 $ 906 $ 1,132 $ 1,362 $ 318 $ 356 Net income (loss) from continuing operations (24) 63 76 62 13 18 Add back: Income tax expense (benefit) (10) 17 33 21 2 (0) Interest expense, net of interest income 9 8 12 20 4 5 Depreciation and amortization 30 26 28 26 7 6 EBITDA $ 5 $ 115 $ 149 $ 129 $ 27 $ 29 Add back: Restructuring and other charges 21 12 10 12 2 2 Litigation and other (gains) / losses, net (0) 0 (0) (0) 0 2 Unrealized (gains) / losses on preferred stock investment (2) - (27) 26 - - Goodwill impairment charges 60 - - - - - (Gain) / loss on sales of businesses 2 (32) - - - - Transaction-related expenses 1 2 0 0 - 1 Foreign currency transaction (gains) / losses, net (0) 0 (1) 0 0 (0) Adjusted EBITDA $ 87 $ 98 $ 131 $ 167 $ 30 $ 34 Adjusted EBITDA as a percentage of revenues 10.3% 10.8% 11.6% 12.3% 9.3% 9.5%
H UR O N I 35 © 2023 Huron Consulting Group Inc. and affiliates. Reconciliations of non-GAAP measures Reconciliation of net income (loss) from continuing operations to adjusted net income from continuing operations (in millions, except earnings per share) 2020 2021 2022 2023 Q1 2023 Q1 2024 Net income (loss) from continuing operations $ (24) $ 63 $ 76 $ 62 $ 13 $ 18 Weighted average shares – diluted 22 22 21 20 20 19 Diluted earnings (loss) per share (EPS) from continuing operations $ (1.08) $ 2.89 $ 3.64 $ 3.19 $ 0.68 $ 0.95 Add back: Amortization of intangible assets 13 9 11 8 2 2 Restructuring and other charges 21 12 10 12 2 2 Litigation and other (gains) / losses, net (0) 0 (0) (0) 0 2 Goodwill impairment charges 60 - - - - - Unrealized (gains) / losses on preferred stock investment (2) - (27) 26 0 - (Gain) / loss on sales of businesses 2 (32) - - - - Transaction-related expenses 1 2 0 0 - 1 Non-cash interest on convertible notes - - - - - - Tax effect (23) 2 2 (12) (1) (2) Total adjustments, net of tax 72 (6) (4) 34 4 5 Adjusted net income from continuing operations $ 48 $ 57 $ 71 $ 96 $ 17 $ 23 Adjusted weighted average shares – diluted 22 22 21 20 20 19 Adjusted diluted EPS from continuing operations $ 2.15 $ 2.61 $ 3.43 $ 4.91 $0.87 $1.23
H UR O N I 36 © 2023 Huron Consulting Group Inc. and affiliates. Reconciliations of non-GAAP measures Reconciliation of cash from operating activities to free cash flow (in millions) 2020 2021 2022 2023 Q1 2023 Q1 2024 Cash from operating activities $ 137 $ 18 $ 85 $ 135 $ (92) $ (131) Less: Capital expenditures (17) (16) (24) (35) (9) (9) Free cash flow $ 120 $ 2 $ 61 $ 100 $ (101) $ (140) Add back: Life Sciences divestiture(1) - 19 - - - - Adjusted free cash flow [A] $ 120 $ 21 $ 61 $ 100 $ (101) $ (140) Weighted average shares – diluted [B] 22 22 21 20 End of period stock price [C] $ 58.95 $ 49.90 $72.60 $102.80 Free cash flow yield (A / B / C) 9.3% 1.9%(2) 4.0% 4.9% (1) 2021 free cash flow is adjusted for the impact of our Life Sciences divestiture, which excludes transaction -related employee and third-party costs as well as estimated tax payments and net working capital adjustments. (2) 2021 free cash flow yield is lower than historical amounts, reflecting record low DSO as of December 31, 2020 and the pull forward of certain cash receipts into Q4 2020, the repayment in 2021 of 2020 FICA deferrals under the CARES ACT, and a DSO higher than our target of 60 days as of December 31, 2021 due to the impact of certain larger projects with extended contract ual payment terms.