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Huron Announces Second Quarter 2022 Financial Results and Updates 2022 Guidance

SECOND QUARTER 2022 HIGHLIGHTS

  • Revenues increased $43.2 million, or 18.8%, to $273.3 million in Q2 2022 from $230.1 million in Q2 2021.
  • Net income increased $1.1 million, or 8.4%, to $13.9 million in Q2 2022 from $12.8 million in Q2 2021.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $7.6 million, or 29.6%, to $33.2 million in Q2 2022 from $25.6 million in Q2 2021.
  • Diluted earnings per share increased $0.07, or 11.9%, to $0.66 in Q2 2022 from $0.59 in Q2 2021.
  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.14, or 20.3%, to $0.83 in Q2 2022 from $0.69 in Q2 2021.
  • Huron repurchased 0.5 million shares of the company’s common stock for $28.3 million in Q2 2022.

YEAR-TO-DATE 2022 HIGHLIGHTS AND 2022 GUIDANCE

  • Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022 from $433.3 million for the same prior year period.
  • Net income increased $22.5 million to $40.7 million for the first six months of 2022 from $18.2 million for the same prior year period. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, on the company's investment in a hospital-at-home company recognized in Q1 2022.
  • Adjusted EBITDA(7), a non-GAAP measure, increased $13.3 million, or 31.5%, to $55.3 million for the first six months of 2022 from $42.1 million for the same prior year period.
  • Diluted earnings per share increased $1.12 to $1.94 for the first six months of 2022 from $0.82 for the same prior year period.
  • Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.29, or 28.2%, to $1.32 for the first six months of 2022 from $1.03 for the same prior year period.
  • Huron repurchased 1.0 million shares of the company’s common stock for $52.2 million in the first six months of 2022.
  • Huron updates its previous earnings guidance range for full year 2022, including increasing and narrowing revenue expectations to a range of $1.04 billion to $1.08 billion.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the second quarter ended June 30, 2022.

“Strong demand across all three operating segments enabled us to achieve 19% revenue growth over the prior year quarter. Our Digital capability, serving the healthcare, education, and commercial industries, grew 47% over the prior year quarter, reflecting ongoing strong demand for our digital transformation offerings across each segment,” said James H. Roth, chief executive officer of Huron. “Despite uncertainties in the macro environment, we are raising our revenue and earnings guidance based on our view of the demand outlook for our core offerings for the remainder of the year.”

SECOND QUARTER 2022 RESULTS

Revenues increased $43.2 million, or 18.8%, to $273.3 million for the second quarter of 2022, compared to $230.1 million for the second quarter of 2021.

Net income increased $1.1 million, or 8.4%, to $13.9 million for the second quarter of 2022, compared to $12.8 million for the same quarter last year. Diluted earnings per share increased $0.07, or 11.9%, to $0.66 for the second quarter of 2022, compared to $0.59 for the second quarter of 2021.

Second quarter 2022 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) increased $6.4 million, or 25.7%, to $31.2 million, compared to $24.8 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

June 30,

 

2022

 

2021

Amortization of intangible assets

$

2,818

 

 

$

2,289

 

Restructuring charges

$

2,069

 

 

$

861

 

Other losses

$

21

 

 

$

 

Transaction-related expenses

$

 

 

$

(29

)

Tax effect of adjustments

$

(1,301

)

 

$

(827

)

Foreign currency transaction gains, net

$

(100

)

 

$

(48

)

Adjusted EBITDA(7) increased $7.6 million, or 29.6%, to $33.2 million, or 12.2% of revenues, in the second quarter of 2022, compared to $25.6 million, or 11.1% of revenues, in the same quarter last year. Adjusted net income(7) increased $2.4 million to $17.5 million, or $0.83 per diluted share, for the second quarter of 2022, compared to $15.1 million, or $0.69 per diluted share, for the same quarter in 2021.

The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability decreased to 73.2% during the second quarter 2022, compared to 74.6% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 74.3% during the second quarter 2022, compared to 73.2% during the same period last year.

Additionally, in the second quarter of 2022, Huron repurchased 497,547 shares of the company’s common stock for $28.3 million.

YEAR-TO-DATE 2022 RESULTS

Revenues increased $100.0 million, or 23.1%, to $533.4 million for the first six months of 2022, compared to $433.3 million for the first six months of 2021.

Net income increased $22.5 million to $40.7 million for the first six months of 2022, compared to $18.2 million for the first six months of 2021. Diluted earnings per share increased $1.12 to $1.94 for the second quarter of 2022, compared to $0.82 for the same period last year. Results for the first six months of 2022 include an unrealized gain of $19.8 million, net of tax, related to the increase in fair value of the company's investment in a hospital-at-home company.

EBITDA(7) for the first six months of 2022 increased $38.6 million, or 96.4%, to $78.7 million, compared to $40.0 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):

 

Six Months Ended

June 30,

 

2022

 

2021

Amortization of intangible assets

$

5,678

 

 

$

4,688

 

Restructuring charges

$

3,624

 

 

$

1,489

 

Other losses

$

33

 

 

$

42

 

Transaction-related expenses

$

50

 

 

$

141

 

Unrealized gain on preferred stock investment

$

(26,964

)

 

$

 

Tax effect of adjustments

$

4,658

 

 

$

(1,685

)

Foreign currency transaction losses (gains), net

$

(81

)

 

$

355

 

Adjusted EBITDA(7) increased $13.3 million, or 31.5%, to $55.3 million, or 10.4% of revenues, for the first six months of 2022, compared to $42.1 million, or 9.7% of revenues, for the same period last year. Adjusted net income(7) increased $4.9 million, or 21.5%, to $27.8 million, or $1.32 per diluted share, for the first six months of 2022, compared to $22.9 million, or $1.03 per diluted share, for the first six months of 2021.

The number of revenue-generating professionals(1) increased 22.7% to 4,243 as of June 30, 2022 from 3,459 as of June 30, 2021. The utilization rate(5) of the company's Consulting capability increased to 72.4% during the first six months of 2022, compared to 70.5% during the same period last year. The utilization rate(5) for the company's Digital capability increased to 73.6% during the first six months 2022, compared to 72.3% during the same period last year.

Additionally, in the first six months of 2022, Huron repurchased 1,020,946 shares of the company’s common stock for $52.2 million, representing 4.7% of the common stock outstanding as of December 31, 2021.

OPERATING INDUSTRIES

Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.

The company’s year-to-date 2022 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (47%); Education (32%); and Commercial (21%). 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 June 30, 2022.

OUTLOOK FOR 2022

Based on currently available information, the company increased and narrowed guidance for full year 2022 revenues before reimbursable expenses to a range of $1.04 billion to $1.08 billion. The company anticipates adjusted EBITDA as a percentage of revenues in a range of 11.5% to 12.0% and non-GAAP adjusted diluted earnings per share in a range of $3.15 to $3.45.

Management will provide a more detailed discussion of its outlook during the company's earnings conference call webcast.

SECOND QUARTER 2022 WEBCAST

The company will host a webcast to discuss its financial results today, July 28, 2022, 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(7)

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: the impact of the COVID-19 pandemic on the economy, our clients and client demand for our services, and our ability to sell and provide services, including the measures taken by governmental authorities and businesses in response to the pandemic, which may cause or contribute to other risks and uncertainties that we face; failure to achieve expected utilization rates, billing rates and the number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2021 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

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

273,325

 

 

$

230,126

 

 

$

533,374

 

 

$

433,339

 

Reimbursable expenses

 

7,492

 

 

 

3,252

 

 

 

12,218

 

 

 

5,186

 

Total revenues and reimbursable expenses

 

280,817

 

 

 

233,378

 

 

 

545,592

 

 

 

438,525

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

189,233

 

 

 

161,526

 

 

 

376,480

 

 

 

309,641

 

Reimbursable expenses

 

7,576

 

 

 

3,316

 

 

 

12,332

 

 

 

5,319

 

Selling, general and administrative expenses

 

46,033

 

 

 

45,190

 

 

 

94,428

 

 

 

84,998

 

Restructuring charges

 

2,069

 

 

 

861

 

 

 

3,624

 

 

 

1,489

 

Depreciation and amortization

 

6,902

 

 

 

6,356

 

 

 

13,766

 

 

 

12,709

 

Total operating expenses

 

251,813

 

 

 

217,249

 

 

 

500,630

 

 

 

414,156

 

Operating income

 

29,004

 

 

 

16,129

 

 

 

44,962

 

 

 

24,369

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(2,446

)

 

 

(2,029

)

 

 

(4,642

)

 

 

(3,748

)

Other income (expense), net

 

(4,881

)

 

 

2,151

 

 

 

19,484

 

 

 

2,571

 

Total other income (expense), net

 

(7,327

)

 

 

122

 

 

 

14,842

 

 

 

(1,177

)

Income before taxes

 

21,677

 

 

 

16,251

 

 

 

59,804

 

 

 

23,192

 

Income tax expense

 

7,802

 

 

 

3,454

 

 

 

19,077

 

 

 

4,990

 

Net income

$

13,875

 

 

$

12,797

 

 

$

40,727

 

 

$

18,202

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

0.67

 

 

$

0.59

 

 

$

1.97

 

 

$

0.84

 

Net income per diluted share

$

0.66

 

 

$

0.59

 

 

$

1.94

 

 

$

0.82

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

20,582

 

 

 

21,555

 

 

 

20,715

 

 

 

21,743

 

Diluted

 

20,967

 

 

 

21,871

 

 

 

21,047

 

 

 

22,105

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

13,875

 

 

$

12,797

 

 

$

40,727

 

 

$

18,202

 

Foreign currency translation adjustments, net of tax

 

(656

)

 

 

82

 

 

 

(699

)

 

 

482

 

Unrealized gain (loss) on investment, net of tax

 

773

 

 

 

1,422

 

 

 

(1,888

)

 

 

(3,226

)

Unrealized gain on cash flow hedging instruments, net of tax

 

971

 

 

 

218

 

 

 

5,296

 

 

 

1,647

 

Other comprehensive income (loss)

 

1,088

 

 

 

1,722

 

 

 

2,709

 

 

 

(1,097

)

Comprehensive income

$

14,963

 

 

$

14,519

 

 

$

43,436

 

 

$

17,105

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

June 30,

2022

 

December 31,

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

11,958

 

 

$

20,781

 

Receivables from clients, net

 

150,973

 

 

 

122,316

 

Unbilled services, net

 

118,825

 

 

 

91,285

 

Income tax receivable

 

677

 

 

 

8,071

 

Prepaid expenses and other current assets

 

21,279

 

 

 

15,229

 

Total current assets

 

303,712

 

 

 

257,682

 

Property and equipment, net

 

27,214

 

 

 

31,004

 

Deferred income taxes, net

 

1,775

 

 

 

1,804

 

Long-term investments

 

96,982

 

 

 

72,584

 

Operating lease right-of-use assets

 

32,018

 

 

 

35,311

 

Other non-current assets

 

64,096

 

 

 

68,191

 

Intangible assets, net

 

28,271

 

 

 

31,894

 

Goodwill

 

623,841

 

 

 

620,879

 

Total assets

$

1,177,909

 

 

$

1,119,349

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,983

 

 

$

13,621

 

Accrued expenses and other current liabilities

 

25,549

 

 

 

22,519

 

Accrued payroll and related benefits

 

92,738

 

 

 

139,131

 

Current maturities of long-term debt

 

 

 

 

559

 

Current maturities of operating lease liabilities

 

10,241

 

 

 

10,142

 

Deferred revenues

 

18,969

 

 

 

19,212

 

Total current liabilities

 

158,480

 

 

 

205,184

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

32,370

 

 

 

43,458

 

Long-term debt, net of current portion

 

342,000

 

 

 

232,221

 

Operating lease liabilities, net of current portion

 

49,093

 

 

 

54,313

 

Deferred income taxes, net

 

20,607

 

 

 

12,273

 

Total non-current liabilities

 

444,070

 

 

 

342,265

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 23,492,632 and 24,364,814 shares issued, respectively

 

232

 

 

 

239

 

Treasury stock, at cost, 2,681,730 and 2,495,172 shares, respectively

 

(136,425

)

 

 

(135,969

)

Additional paid-in capital

 

374,280

 

 

 

413,794

 

Retained earnings

 

317,723

 

 

 

276,996

 

Accumulated other comprehensive income

 

19,549

 

 

 

16,840

 

Total stockholders’ equity

 

575,359

 

 

 

571,900

 

Total liabilities and stockholders’ equity

$

1,177,909

 

 

$

1,119,349

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income

$

40,727

 

 

$

18,202

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

Depreciation and amortization

 

13,766

 

 

 

12,923

 

Non-cash lease expense

 

3,174

 

 

 

3,301

 

Share-based compensation

 

15,166

 

 

 

11,566

 

Amortization of debt discount and issuance costs

 

397

 

 

 

397

 

Allowances for doubtful accounts

 

47

 

 

 

 

Deferred income taxes

 

7,089

 

 

 

(48

)

Gain on sale of property and equipment, excluding transaction costs

 

(1,117

)

 

 

(158

)

Change in fair value of contingent consideration liabilities

 

33

 

 

 

42

 

Change in fair value of preferred stock investment

 

(26,964

)

 

 

 

Other, net

 

 

 

 

(78

)

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

 

(28,825

)

 

 

(27,749

)

(Increase) decrease in unbilled services, net

 

(28,329

)

 

 

(36,088

)

(Increase) decrease in current income tax receivable / payable, net

 

9,394

 

 

 

3,366

 

(Increase) decrease in other assets

 

3,984

 

 

 

(1,117

)

Increase (decrease) in accounts payable and other liabilities

 

(13,524

)

 

 

5,038

 

Increase (decrease) in accrued payroll and related benefits

 

(43,420

)

 

 

(42,487

)

Increase (decrease) in deferred revenues

 

(1,834

)

 

 

(9,080

)

Net cash used in operating activities

 

(50,236

)

 

 

(61,970

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(6,800

)

 

 

(5,439

)

Investment in life insurance policies

 

 

 

 

(77

)

Purchases of businesses, net of cash acquired

 

(1,948

)

 

 

(5,886

)

Capitalization of internally developed software costs

 

(3,974

)

 

 

(2,508

)

Proceeds from note receivable

 

157

 

 

 

 

Proceeds from sale of property and equipment

 

4,750

 

 

 

158

 

Divestiture of business

 

207

 

 

 

 

Net cash used in investing activities

 

(7,608

)

 

 

(13,752

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

1,185

 

 

 

422

 

Shares redeemed for employee tax withholdings

 

(7,011

)

 

 

(8,651

)

Share repurchases

 

(52,443

)

 

 

(35,243

)

Proceeds from bank borrowings

 

224,000

 

 

 

139,000

 

Repayments of bank borrowings

 

(114,780

)

 

 

(74,270

)

Deferred payment on business acquisition

 

(1,875

)

 

 

 

Net cash used in financing activities

 

49,076

 

 

 

21,258

 

Effect of exchange rate changes on cash

 

(55

)

 

 

269

 

Net decrease in cash and cash equivalents

 

(8,823

)

 

 

(54,195

)

Cash and cash equivalents at beginning of the period

 

20,781

 

 

 

67,177

 

Cash and cash equivalents at end of the period

$

11,958

 

 

$

12,982

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Percent

Increase

(Decrease)

 

Six Months Ended

June 30,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

2022

 

2021

 

 

2022

 

2021

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

128,474

 

 

$

114,750

 

 

12.0

%

 

$

250,350

 

 

$

210,725

 

 

18.8

%

Operating income

 

$

30,364

 

 

$

30,527

 

 

(0.5

)%

 

$

58,396

 

 

$

54,354

 

 

7.4

%

Segment operating margin

 

 

23.6

%

 

 

26.6

%

 

 

 

 

23.3

%

 

 

25.8

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

88,225

 

 

$

60,475

 

 

45.9

%

 

$

168,887

 

 

$

111,817

 

 

51.0

%

Operating income

 

$

21,691

 

 

$

14,142

 

 

53.4

%

 

$

35,997

 

 

$

22,679

 

 

58.7

%

Segment operating margin

 

 

24.6

%

 

 

23.4

%

 

 

 

 

21.3

%

 

 

20.3

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

56,626

 

 

$

54,901

 

 

3.1

%

 

$

114,137

 

 

$

110,797

 

 

3.0

%

Operating income

 

$

11,915

 

 

$

11,040

 

 

7.9

%

 

$

24,129

 

 

$

20,890

 

 

15.5

%

Segment operating margin

 

 

21.0

%

 

 

20.1

%

 

 

 

 

21.1

%

 

 

18.9

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

273,325

 

 

$

230,126

 

 

18.8

%

 

$

533,374

 

 

$

433,339

 

 

23.1

%

Reimbursable expenses

 

 

7,492

 

 

 

3,252

 

 

130.4

%

 

 

12,218

 

 

 

5,186

 

 

135.6

%

Total revenues and reimbursable expenses

 

$

280,817

 

 

$

233,378

 

 

20.3

%

 

$

545,592

 

 

$

438,525

 

 

24.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

63,970

 

 

$

55,709

 

 

14.8

%

 

$

118,522

 

 

$

97,923

 

 

21.0

%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

29,912

 

 

 

34,325

 

 

(12.9

)%

 

 

63,460

 

 

 

63,134

 

 

0.5

%

Depreciation and amortization

 

 

5,054

 

 

 

5,255

 

 

(3.8

)%

 

 

10,100

 

 

 

10,420

 

 

(3.1

)%

Total operating income

 

 

29,004

 

 

 

16,129

 

 

79.8

%

 

 

44,962

 

 

 

24,369

 

 

84.5

%

Other income (expense), net

 

 

(7,327

)

 

 

122

 

 

N/M

 

 

 

14,842

 

 

 

(1,177

)

 

N/M

 

Income before taxes

 

$

21,677

 

 

$

16,251

 

 

33.4

%

 

$

59,804

 

 

$

23,192

 

 

157.9

%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end)(1)(6):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

1,619

 

 

 

1,443

 

 

12.2

%

 

 

1,619

 

 

 

1,443

 

 

12.2

%

Education

 

 

1,407

 

 

 

885

 

 

59.0

%

 

 

1,407

 

 

 

885

 

 

59.0

%

Commercial (2)

 

 

1,217

 

 

 

1,131

 

 

7.6

%

 

 

1,217

 

 

 

1,131

 

 

7.6

%

Total

 

 

4,243

 

 

 

3,459

 

 

22.7

%

 

 

4,243

 

 

 

3,459

 

 

22.7

%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (3)

 

$

147,871

 

 

$

145,004

 

 

2.0

%

 

$

298,455

 

 

$

267,555

 

 

11.5

%

Digital

 

 

125,454

 

 

 

85,122

 

 

47.4

%

 

 

234,919

 

 

 

165,784

 

 

41.7

%

Total

 

$

273,325

 

 

$

230,126

 

 

18.8

%

 

$

533,374

 

 

$

433,339

 

 

23.1

%

Number of revenue-generating professionals by capability (at period end)(1):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)

 

 

2,018

 

 

 

1,736

 

 

16.2

%

 

 

2,018

 

 

 

1,736

 

 

16.2

%

Digital

 

 

2,225

 

 

 

1,723

 

 

29.1

%

 

 

2,225

 

 

 

1,723

 

 

29.1

%

Total

 

 

4,243

 

 

 

3,459

 

 

22.7

%

 

 

4,243

 

 

 

3,459

 

 

22.7

%

Utilization rate by capability(5):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

73.2

%

 

 

74.6

%

 

 

 

 

72.4

%

 

 

70.5

%

 

 

Digital

 

 

74.3

%

 

 

73.2

%

 

 

 

 

73.6

%

 

 

72.3

%

 

 

(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.

 

(3)

Managed Services capability revenue within our Healthcare segment was $16.1 million and $14.0 million for the three months ended June 30, 2022 and 2021, respectively; and $29.9 million and $21.6 million for the six months ended June 30, 2022 and 2021, respectively.

 

 

Managed Services capability revenue within our Education segment was $3.9 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively; and $7.3 million and $4.5 million for the six months ended June 30, 2022 and 2021, respectively.

 

(4)

The number of Managed Services revenue-generating professionals within our Healthcare segment as of June 30, 2022 and June 30, 2021 was 504 and 448, respectively.

 

 

The number of Managed Services revenue-generating professionals within our Education segment as of June 30, 2022 and June 30, 2021 was 96 and 51, respectively.

 

(5)

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 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.

 

(6)

During the first quarter of 2022, we reclassified certain Digital revenue-generating professionals within our Healthcare and Education segments to our Commercial segment as these professionals can provide services across all of our industries. This reclassification did not impact the total headcount within our Digital capability for any period. The prior period headcount has been revised for consistent presentation.

 

N/M - Not Meaningful

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (7)

(In thousands)

(Unaudited)

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

Revenues

$

273,325

 

 

$

230,126

 

 

$

533,374

 

 

$

433,339

 

Net income

$

13,875

 

 

$

12,797

 

 

$

40,727

 

 

$

18,202

 

Add back:

 

 

 

 

 

 

 

Income tax expense

 

7,802

 

 

 

3,454

 

 

 

19,077

 

 

 

4,990

 

Interest expense, net of interest income

 

2,446

 

 

 

2,029

 

 

 

4,642

 

 

 

3,748

 

Depreciation and amortization

 

7,097

 

 

 

6,555

 

 

 

14,219

 

 

 

13,106

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)

 

31,220

 

 

 

24,835

 

 

 

78,665

 

 

 

40,046

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

2,069

 

 

 

861

 

 

 

3,624

 

 

 

1,489

 

Other losses

 

21

 

 

 

 

 

 

33

 

 

 

42

 

Transaction-related expenses

 

 

 

 

(29

)

 

 

50

 

 

 

141

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Foreign currency transaction losses (gains), net

 

(100

)

 

 

(48

)

 

 

(81

)

 

 

355

 

Adjusted EBITDA (7)

$

33,210

 

 

$

25,619

 

 

$

55,327

 

 

$

42,073

 

Adjusted EBITDA as a percentage of revenues (7)

 

12.2

%

 

 

11.1

%

 

 

10.4

%

 

 

9.7

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

13,875

 

 

$

12,797

 

 

$

40,727

 

 

$

18,202

 

Weighted average shares - diluted

 

20,967

 

 

 

21,871

 

 

 

21,047

 

 

 

22,105

 

Diluted earnings per share

$

0.66

 

 

$

0.59

 

 

$

1.94

 

 

$

0.82

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,818

 

 

 

2,289

 

 

 

5,678

 

 

 

4,688

 

Restructuring charges

 

2,069

 

 

 

861

 

 

 

3,624

 

 

 

1,489

 

Other losses

 

21

 

 

 

 

 

 

33

 

 

 

42

 

Transaction-related expenses

 

 

 

 

(29

)

 

 

50

 

 

 

141

 

Unrealized gain on preferred stock investment

 

 

 

 

 

 

 

(26,964

)

 

 

 

Tax effect of adjustments

 

(1,301

)

 

 

(827

)

 

 

4,658

 

 

 

(1,685

)

Total adjustments, net of tax

 

3,607

 

 

 

2,294

 

 

 

(12,921

)

 

 

4,675

 

Adjusted net income (7)

$

17,482

 

 

$

15,091

 

 

$

27,806

 

 

$

22,877

 

Adjusted weighted average shares - diluted

 

20,967

 

 

 

21,871

 

 

 

21,047

 

 

 

22,105

 

Adjusted diluted earnings per share (7)

$

0.83

 

 

$

0.69

 

 

$

1.32

 

 

$

1.03

 

(7)

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.

 

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