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
August 10,
2005
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 or organization) |
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 August
10, 2005, Huron Consulting Group Inc. held a webcast relating to its financial
results for the quarter and six months ended June 30, 2005. The full text
of the transcript of the webcast is furnished as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated in this report as if fully set
forth herein.
Item
7.01. Regulation
FD Disclosure.
The
information set forth under Item 2.02 of this report is incorporated herein by
reference.
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-
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: |
August 10,
2005 |
/s/
Gary L. Burge | |
|
Gary
L. Burge | |||
|
Vice
President, | |||
|
Chief
Financial Officer and Treasurer |
- 2
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EXHIBIT
INDEX
|
Exhibit
Number |
Description | |
|
99.1 |
Transcript
of August 10, 2005 webcast of Huron Consulting Group
Inc. |
EXHIBIT
99.1
HURN
- - Q2 2005 HURON CONSULTING GROUP INC
EARNINGS
CONFERENCE CALL TRANSCRIPT
EVENT
DATE/TIME: AUG. 10. 2005 / 11:00 AM ET
CORPORATE
PARTICIPANTS
Gary
Holdren
Huron
Consulting Group Inc. - Chairman & CEO
Gary
Burge
Huron
Consulting Group Inc. - VP, CFO and Treasurer
CONFERENCE
CALL PARTICIPANTS
Brandt
Sakakeeny
Deutsche
Bank Securities - Analyst
Sandra
Notardonato
Robert
W. Baird - Analyst
Andrew
Fones
UBS
Warburg - Analyst
Matt
Litfin
William
Blair & Company - Analyst
PRESENTATION
Operator
Good day,
ladies and gentlemen, and welcome to the Huron Consulting Group webcast to
discuss the results of the second quarter end June 30, 2005.
(Operator
Instructions)
And now,
I'd like to turn the call over to Mr. Gary Holdren, Chairman and Chief Executive
Officer of Huron Consulting Group. Mr. Holdren, please go ahead.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Thank you
and good morning. Thank you for joining us for today's webcast to discuss Huron
Consulting Group's second quarter results.
Before we
begin, I would like to point all of you to the disclosure at the end of our news
release, which we have posted to our website for information about any
forward-looking statements that may be made or discussed on this call. Please
review that information along with our filings with the SEC for the disclosure
of factors that may impact subjects discussed in this morning's
webcast.
Also on
this call, we will be discussing one or more non-GAAP financial measures. Please
look at our earnings release for the all the disclosures required by the SEC,
including a reconciliation of the most comparable GAAP numbers.
Joining
me on the call today here in Chicago are Gary Burge, our chief financial
officer, Mary Sawall, our vice president of human resources, and I would also
like to introduce Dan Broadhurst, our vice president of operations. Dan took on
this leadership role back in March and we are pleased that he could join us
today. We are very pleased with our second quarter results. We have made good
progress on several fronts. First, we experienced solid growth across the
majority of Huron's core practices. We have improved retention of our key
employees. We added a number of senior people to our team, including the Speltz
& Weis team, and we have had great success in the marketplace where we
continue to win meaningful engagements and build key client
relationships.
Our
second quarter revenues, which includes Speltz & Weis' contribution, were up
22% over last year's second quarter. Those of you who participated in our first
quarter call will remember that last year's second quarter numbers included a
$1.6 million success fee related to the completion of an assignment for a
Financial Consulting client.
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So, on a
same-store basis, backing out Speltz & Weis' contribution and the Q2 2004
success fees, revenues rose 19%, even though we had one less business day in
2005 because of our all-company meeting. That is consistent with our targeted
15% organic growth rate. Our Financial Consulting practice revenues were up 17%
for the quarter, reflecting the addition of Speltz & Weis and a very strong
performance of our Disputes and Investigations practice.
Disputes
and Investigations had a great quarter and continues to attract and win some of
the largest investigations in the U.S. In addition, we are seeing increased
activity in the Corporate Advisory Services practice. There is a significant
change in bankruptcy laws that make it less attractive for debtors to file for
Chapter 11 protection after October 17, 2005.
Our
Operational Consulting practice revenue growth was 28% for the quarter,
reflecting new client assignments, the expansion of existing client
relationships and the addition of a number of new consultants. You may have
noticed that utilization in this segment moderated compared to the first quarter
of 2005. This was due to changes in the timing of certain client engagements.
The Operational Consulting utilization has improved in the third quarter and the
outlook Gary Burge will provide in a few minutes reflects that
improvement.
We are on
track with our underlying business objectives to build a broad and balanced
portfolio of core service offerings, enhance our relationships and meet the
needs of expanding client base with a talented, creative and disciplined
consulting team.
We have
made solid progress in building and enhancing the Huron team. Since the
beginning of the year, we've added a net of 16 new managing directors, including
three internal promotions announced at the beginning of this year. This reflects
our confidence in the marketplace and the confidence by these senior managers at
Huron as a place for them to be successful.
Among the
new team members are eight managing directors who joined us with the Speltz
& Weis acquisition. These talented individuals significantly strengthen our
offering in the healthcare industry. In June, we announced that Jeffrey Seymour
joined us a managing director in our Legal Business Consulting practice,
concentrating on e-discovery and forensic technology. Allen Arnett, who joined
Huron in 2003, was promoted to managing director in the Valuation practice in
June.
More
recently, three more managing directors joined us to build capabilities in two
practices. Economist Allyn Strickland joins Huron's Disputes and Iinvestigations
practice. John and Dirk VerMeulen joined the company's Strategic Sourcing
practice to specialize in telecommunications services. And just last week, we
announced that John Curry will be joining us from MIT in early September to
enhance our Higher Education practice. He brings Huron in-depth knowledge of the
complex administrative and management challenges of running research
universities and academic medical institutions.
We
finished the second quarter with 557 consultants and we are confident that we
will have 600 consultants by the end of September 30 of this year, including
Speltz & Weis. We are still looking for great senior talent and we are
actively recruiting the midlevel and junior talent to allow us leverage the
senior consultant's contacts and expertise. This summer, we also have 20 interns
working in our practice, a great way to recruit and grow junior
talent.
One of
the key challenges facing a fast-growing company like Huron is to create and
cultivate a common culture across practices and levels among our corporate staff
as well as our consultants. In June, we held an all-company meeting that lasted
a full day and allowed our people to learn more about our strategy for growth,
our capabilities and talent across practice and get to know one another. It
pulls people back from their client issues for awhile and gives them a moment to
reflect on and be proud of what we have created at Huron. We found it to be
highly productive and we plan to repeat it in future years.
We are
proud of the work our consultants do, but I would also like to take a moment to
thank the members of Huron's corporate staff, who often don't share the glory
that our client facing staff receive. The work they do is best in class and they
deserve a special note of thanks from all of us. We have made a lot of progress
in the last three months and we have a lot of reasons to be excited. Our core
businesses are growing at a fast pace.
Our
portfolio of offerings is growing with the addition of Speltz & Weis and we
are recruiting high quality talent to serve, expand and grow our offerings in
new business. Our people retention, particularly in our high-growth business is
improving, even in a competitive market for talent. Our annualized turnover for
the first half of 2005 was approximately 15% for our high-growth practices. We
also have a solid recruiting pipeline.
As we
have previously mentioned to many of you in discussions and visits over the last
two months, the market demand for Huron services is very robust. With so much
opportunity in the marketplace, our near-term goals remain the same. First and
foremost, we must focus on our employees. We are striving every day to make
Huron the best place to work in the consulting industry. Two, we need to deliver
excellent client service to all of our clients. Three, broaden our deep client
relationships. Four, develop the Huron brand and create - and continue to create
the Huron team culture. Five, recruit first-rate talent at all levels so that we
can further increase our relevance in the marketplace.
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- -
And
lastly, and I'm sure I will get this question about potential acquisitions. So,
let me just say that our current plan is to look at small acquisitions where the
people would fit our Huron-based culture - Huron performance-based culture,
which would tie multiple service offerings together for team Huron, where the
price is reasonable and which would be quickly accretive to Huron's
EPS.
We are
pleased with the progress we've made on these fronts in the first half of 2005
and we are optimistic about continued progress through the rest of the year and
in 2006. Before I turn the call over to Gary Burge, I would like to remind all
of you the quality of Huron's earnings. In Huron's GAAP earnings, we already
have the full cost of stock-based compensation. The adoption of FAS 123R will
not have a significant impact on Huron's GAAP earnings, while the same cannot be
said for other companies in our peer group.
Now, Mr.
Burge will cover the numbers.
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Thanks,
Gary, and good morning, everyone. As Gary said, we are pleased with a very solid
quarter. Some of the financial highlights for the second quarter included
revenues before reimbursable expenses of 50.5 million were up 22% year over
year.
Organic
revenue growth was approximately 19% year over year, excluding Speltz & Weis
and the one-time contingent fee of $1.6 million in Q2 2004. The next few
statistics are all before stock-based comp expense, amortization of intangibles
and other non-recurring charges recorded in the second quarter of
2004.
As Gary
mentioned, FAS 123R will not have a material impact on our reported results. It
may have a significant impact on reported results for other companies. Our
objective is to ensure that investors and analysts that follow us can make
apples to apples comparisons.
Now, for
some statistics. Adjusted EBITDA was $11.3 million in this year's quarter
compared to $9.8 million in the second quarter a year ago. As we indicated in
our press release, last year's EBITDA included a $1.3 million impact from the
one-time contingency engagement. This had a 2% positive impact on last year's
margins. We think our adjusted EBITDA margin of 22% was real solid, given the
fact that we took the time, as Gary mentioned, to bring our entire organization
together in June. This had about a $700,000 impact on revenues and around a $1
million impact at the EBITDA level. We also geared up recruiting efforts in the
second quarter, resulting in $500,000 of additional recruiting costs when
compared to a year ago. Those efforts led to the hiring of 33 net new
consultants and MDs in the quarter before the Speltz & Weis
acquisition.
Another
point I want to make to you when you compare results to a year ago is that we
have also absorbed the cost associated with being a public company - D&O
costs and annual reports, Sarbanes-Oxley compliance, et cetera. These increased
costs totaled approximately $600,000 in the second quarter. Other highlights
included the following. Utilization continued to run very strong at 76.1%, up
from 71.8% last year, even with us taking a day off for our all-company meeting.
In additional, utilization was up, even though we added 33 net new consultants
to our headcount during the quarter. As Gary said, demand for our services
remains very strong.
Average
bill rate came in at $254, up approximately 2% from a year ago. And it would
have been up approximately 6% without the contingent fee engagement last year.
You'll note that the average bill rate for operational consulting remained flat
at $223 year over year.
The
primary reason we saw no change in this rate was due to the fact that we have
had significant change in the Operational Consulting leverage ratio. This
leverage ratio increased from about 7.5 to one to 9.5 to one over the past year
and has resulted in a related increase in the number of hours billed by junior
consultants. The impact of this change in the leverage has been to pull down the
overall average bill rate for the segment, but, as we've said before, a lower
bill rate for this segment does not bother us because we make better margins at
the junior consultant level.
Next, our
managing directors continued their focus on billing and collecting, as DSOs for
the quarter came in at 59 days with Speltz & Weis included in our
numbers.
Using our
trailing 12-month net income, including stock-based comp and special charges
recorded in 2004 and using a post IPO balance sheet, we are pleased to report
that we had a 14% return on assets and a 23% return on equity over the past
year. These returns, without stock-based comp and special charges, were 19% and
30% respectively. As we mentioned last quarter, we think these returns are very
strong for a young company.
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Next, in
regards to future guidance, for the third quarter, we expect revenues to be in
the $52-54 million range with a GAAP net income margin of 8-8.5%. EPS guidance
for the coming quarter is 24-27 cents on a GAAP basis and 34-37 cents on an
adjusted non-GAAP basis without stock-based comp and intangible amortization.
These figures are all inclusive of Speltz & Weis. Our revenue forecast for
the quarter reflects what we see as strong demand throughout the summer that
will result in less Q3 seasonality than we have seen in prior
years.
On the
expense side for Q3, we will be continuing aggressive hiring and recruiting
efforts and we will hold two major client events - a general counsel summit and
a corporate advisory services summit - that is going to provide us with
marketing and brand-building opportunities. We're very excited about those
conferences.
Next, we
are raising our annual revenue guidance to $205-208 million with a GAAP net
income margin in the range of 8.5-9%. EPS guidance for the year will be
$1.07-1.12 on a GAAP basis and $1.39-1.44 on an adjusted non-GAAP basis. Again,
with Speltz & Weis included in these projections.
For
modeling purposes, you should assume approximately 16.9 million diluted shares
for the rest of the year for GAAP EPS calculations. In terms of stock-based
comp, you should continue to assume approximately seven million in expense for
the full year - $4.1 million after tax - and these costs are going to run at the
rate of approximately $1.9 million on a pretax basis for the last two
quarters.
I know
it's a lot of detail and a lot of adjustments, but we thought it was important
to share with you how we analyze our business and compare ourselves to the prior
year. I think you would all agree that we've gone through a lot of change over
the last 12 months and we're showing some very positive revenue, earnings and
hiring momentum as we head into the second half of the year.
That's
enough financial detail. Let's go to the questions now.
QUESTION
AND ANSWER
Operator
(Operator
Instructions)
Sir, our
first question comes from the line of Matt Litfin with William Blair &
Company. Please proceed.
Matt
Litfin -
William Blair & Company - Analyst
Yes.
Hello. Good morning. Congratulations on the strong quarter. Question as to why
utilization in the financial consulting segment was so high. What effect did
Speltz & Weis have on that, if any?
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Matt,
this is Gary Burge. The utilization is high in the Financial Consulting segment.
We've had, as Gary mentioned, very strong demand in disputes and investigations
practice. And so, that has certainly met, if not exceeded our expectations for
the second quarter. Also, given the nature of the business that Speltz &
Weis is in, from an interim-management point of view, all of their 26 people are
very highly utilized at all points in time. And that had about, let's say, about
a 2% impact on utilization for the quarter for that group.
Matt
Litfin -
William Blair & Company - Analyst
Okay.
Thanks. And can you give us some more color on the restructuring practice? I
think you said it improved, but can you help us quantify that in any
way?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Well,
Matt, this is Gary Holden. The improvement is more what we're seeing the - more
what we're seeing as we look into Q3 and sort of the end of Q2. It's just
there's activity going on with the filing of the bankruptcy and St. Vincent's
and just - there's a lot more activity in the auto sector and the airlines
sector. And we just see a lot more calls coming in and a lot more
activity.
Matt
Litfin -
William Blair & Company - Analyst
Okay. And
one final one, if I might. What are the - in terms of the new guidance, there's
really two assumptions I want to dig into. One is what are you assuming there
for utilization and kind of what are you seeing so far in the quarter that gives
you confidence in that assumption? And then, secondly, as you look at Speltz
& Weis and the situation there at - a large client, what's your assumption
that you're making in terms of the contribution in whatever detail you can - you
feel comfortable giving us?
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Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Well, let
me handle the - I'll handle the Speltz & Weis situation. At this point,
there's been an administrative filing to have us retained, but our guidance is -
our management's best judgment as to what we think will happen. And we're not
going to give details what might happen at a client. So, all I will say it's our
best judgment, what we think will happen in our guidance for Speltz & Weis.
Just - you can never predict what will happen with client matters. I don't want
to do that. But we're very comfortable that our best assumptions are reflected
in our guidance.
And the
first question on utilization, I mean, we just don't like to give guidance on
what our utilization is going to be, but I think that you - one of the things
that - I think, that we just continue to ask you to do is not to get ahead of
us. Keep us in our range, keep us at our 15% organic growth. Keep us at our
guidance.
Matt
Litfin -
William Blair & Company - Analyst
Great.
Let me just slip in one quick one. What was cash from ops in the quarter? Thank
you very much?
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Matt, the
cash from operations in the quarter was approximately $10 million.
Matt
Litfin -
William Blair & Company - Analyst
Thank
you.
Operator
And
gentlemen, your next question comes from the line of Brandt Sakakeeny with
Deutsche Bank. Please proceed.
Brandt
Sakakeeny -
Deutsche Bank Securities - Analyst
Thanks.
Good morning. Brandt Sakakeeny. Let's see - question - actually, one quick
housekeeping item first, Gary Burge. Do you have the number of days in the
quarter, excluding, obviously, the one day where you had the group-wide
meeting?
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Yes, we
had effective 59 business days in the quarter. So again, that was less holidays
and less vacation days as well as that company meeting.
Brandt
Sakakeeny -
Deutsche Bank Securities - Analyst
Okay.
Great. And I guess, next question is just more broadly, can you talk to the
competitive landscape? I think we saw earlier that Navigant purchased a disputes
and resolutions business from Marsh McLennan. Are you generally in these line
engagements and covering other competitors or do you generally have exclusive
relationships?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Make sure
I understand your question. You're talking about trying to win business,
Brandt?
Brandt
Sakakeeny -
Deutsche Bank Securities - Analyst
Yes, both
in winning business and then in - and maintaining existing business,
Gary.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Well, you
- - as I think I've said to many of you before, sometimes you don't really know if
you're competing. You get a call for a particular investigation or a dispute and
they ask you to clear conflicts or they ask you to come to a proposal. And
sometimes you don't know exactly who you're competing against.
And then,
other times you'll just get a call and you can pretty well tell that it's -
you're the first call and can you get people there right away. So, I don't think
there's any one - any one type answer that fits all. One thing I will tell you
that I - we do see is that because we're continuing to be mature and we've been
here around for a little over three years, we continue to see repeat calls from
the same buyers, increasingly every day that we're in business.
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Brandt
Sakakeeny -
Deutsche Bank Securities - Analyst
Okay.
Great. Thanks. That's all I have.
Operator
And your
next question comes from Kelly Flynn with UBS. Please proceed. Mr. Flynn, your
line is open.
Andrew
Fones -
UBS Warburg - Analyst
Hi. This
is Andrew for Kelly. I wanted to ask if you could discuss seasonality a little
bit. I noticed that last year, in the second quarter, utilization and revenue in
the Operational Cconsulting group was a little bit lower than it was in Q1. Was
there any seasonality in Q2 that could have caused the sequential decline in
revenue or, otherwise, could you kind of explain what you think was kind of
timing related and what could come back in Q3?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
It was
not seasonality, Andrew. It was the fact that we thought and we planned on a big
engagement starting, which was going to consume 20 or 25 people and that
engagement didn't get started, for the most part, until July. And you can't put
- - and if you thought it was going to start in May and it didn't, you can't put
clients - you can put 25 people on an assignment for a month and then try to
find other people. So, it was just the nature of major assignments, some
stopping and some not starting when we had planned, but no seasonality. And that
- - those assignments are now starting in Q3 and that's why we said we were
confident that the utilization has come back in those practices.
Andrew
Fones -
UBS Warburg - Analyst
Okay. It
also appears that you had a very strong quarter in Q2 in the financial
consulting practice. As I look at your guidance for Q3 of $52-54 million in
revenue, it looks like you're looking for about a 2.5% increase sequentially.
Should we expect financial consulting to remain about flat and expect the pickup
to come on the operational consulting side? Or is there any color that you can
give on that basis?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Not
really. I don't think, at this point. I think that - I think that they - I
wouldn't look at it quite like that. I think the issue is that, I think, you
ought to look at them both - both of them meeting their growth of, on an
annualized basis, 15%. So, if you take a quarter, just look at that, divide 15
by four and that's sort of the way I look at both businesses.
Andrew
Fones -
UBS Warburg - Analyst
Okay.
Also, in terms of the Speltz & Weis acquisition , could you kind of detail a
little bit some of the strategic reasons - the acquisitions, how you see that
fitting and are there any kind of synergies, any cross-selling opportunities
there?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Yes. Why
we wanted to get into that business is, first and foremost, we thought that the
healthcare sector was particularly - the provider business was something that we
wanted to be in to expand an offering across the sector. When you - and we did
not have an interim management service, which is a pretty lucrative business
right now. And when you get in and can become interim management, you can also -
you can buy some of our others, whether it's revenue cycle or supply chain.
Those services can be used. And at the same time, if needed, our Corporate
Advisory people can be used. And right now, that's the plans of what will happen
if we go forward at St. Vincent?s, all those services will be used.
Andrew
Fones -
UBS Warburg - Analyst
Okay.
Thanks, guys.
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- -
Operator
And your
next question comes from the line of Sandra Notardonato with Robert W. Baird.
Please proceed.
Sandra
Notardonato -
Robert W. Baird - Analyst
Thank
you. I guess the first question - and I just want to make sure I have the right
number of MDs versus juniors. Can you give the actuals as to how you ended the
quarter - total number?
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Yes, at
the end of the quarter, Sandy - this is Gary Burge - we had 71 total MDs and
that included eight with Speltz & Weis.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay.
Since we're on Speltz & Weis, can you talk a little bit about the pipeline
there and are you willing to give what you think the contribution, in terms of
the guidance is going to be? Just somewhat of a follow-up to Matt's question.
And if you can't answer that, should we be assuming the organic growth rate for
the year is at 15%, just on a year-over-year basis, not taking into account the
fee that you collected last year?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Yes. I
think the answer - we're not going to give specific guidance on Speltz &
Weis, but you, I mean, you should just assume the 15% organic growth
rate.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay. And
do you have any comments on the pipeline that Speltz & Weis has
currently?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Speltz
& Weis has got - they've got a lot - they've got good market opportunities.
Right now, we're - we don't have enough people right now to grow that business
much more than what you've seen in the projections in the 8-K.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay. And
the 600 folk that you're looking to hire for this year, can you give a sense of
how many you've hired already in the September quarter and it sounds like
they're all going to be in the - at the junior level. I just want to make sure
that that's right.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
I think
you should just continue to, from your modeling purposes, I think you ought to
just continue to know that we're going to fill out our pyramid.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
It will
be broad-based. It won't all be just junior people.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay. And
can you give a sense of how many you've hired already in the September
quarter?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
We're
trying to - we're well on our way to making that 600 number.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay. And
that's the number for - I just want to make sure I understand. That's the number
for the year or that's the number just for Q3?
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Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Just for
Q3.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay.
Good. And then, next question is the number of independent contractors that you
use, do you share that number?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
No.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay. Is
it a significant number? If you look at it on a percentage revenue, would it be
less than 5%? Can you give any color on that?
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Much less
than 5%.
Sandra
Notardonato -
Robert W. Baird - Analyst
Much
less. Okay. And let's see, what else did I want to ask? Oh, the reserve for bad
debt. I know you didn't put it in your financial statements today. Do you have a
sense of whether that's going to be up or down in 2005 in comparison to '04 and
is there anything that we should be reading into it other than revenue growth on
that line? Just a little color as to how that can come out when you put your SEC
filings out.
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
No, we -
in terms of the bad debt reserve percentage that we were using, Sandy, it's
remained somewhat consistent and we wouldn't, at this point, have any reason to
change the outlook as we go forward.
Sandra
Notardonato -
Robert W. Baird - Analyst
Okay.
Great. Great quarter.
Gary
Burge -
Huron Consulting Group Inc. - VP, CFO and Treasurer
Thanks.
Operator
(Operator
Instructions) And gentlemen, you have a follow-up question from the line of Matt
Litfin with William Blair & Company. Please proceed.
Matt
Litfin -
William Blair & Company - Analyst
Yes. Hi.
My follow-up question relates to your long-term growth expectations. I know
you've talked about mid-teens organic revenue growth. I guess, the last piece of
that is where are we in the margin game here? So, we've moved up to mid-teens
operating margins. Where do you guys see a cap on that or a ceiling? I assume
there's some kind of a ceiling somewhere that you've seen in your 30 plus years
running consulting firms. And, I guess, that will help me figure out what the
potential growth on top of that organic revenue growth can be on the bottom line
over time.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
I think,
Matt, I think we've been fairly consistent on this and over the 30 years and I
think that - I think I've told you and told others is there's a cap on it
because, at some point, you have to start giving it back to your people and you
have to continue growing your business. So, I don't think we can ever get ahead
of 25% EBITDA and I think that's the absolute, probably, cap. And it probably
will continue to be in the 22-23 range for some period of time and maybe a
quarter higher or lower than, but that's sort of the range.
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Matt
Litfin -
William Blair & Company - Analyst
Okay.
That's helpful. Thank you.
Operator
Mr.
Holden, we have concluded the allotted time for this call. I'd like to turn the
call back over to you for closing.
Gary
Holdren -
Huron Consulting Group Inc. - Chairman & CEO
Thank you
to all of you for participating today and we look forward to speaking to you
again when we're done with our third quarter results. Thanks.
Operator
That
concludes today's conference call. Thank you, everyone for your participation.
You may now disconnect.