|
| | |
| NEWS | | MEDIA CONTACT |
| | Sarah McHugh |
| FOR IMMEDIATE RELEASE | | 312-880-2624 |
| | | smchugh@huronconsultinggroup.com |
| | | |
| | | INVESTOR CONTACT |
| | | John D. Kelly |
| | | 312-583-8722 |
| | | investor@huronconsultinggroup.com |
Huron Announces Third Quarter 2017 Financial Results and
2017 Guidance
THIRD QUARTER 2017 HIGHLIGHTS
| |
| • | Revenues were $176.4 million in Q3 2017 compared to $183.4 million in Q3 2016. |
| |
| • | Net income from continuing operations was $4.1 million in Q3 2017 compared to $12.3 million in Q3 2016. |
| |
| • | Adjusted EBITDA(6), a non-GAAP measure, was $21.5 million in Q3 2017 compared to $37.5 million in Q3 2016. |
| |
| • | Diluted earnings per share from continuing operations was $0.19 in Q3 2017 compared to $0.57 in Q3 2016. |
| |
| • | Adjusted diluted earnings per share from continuing operations(6), a non-GAAP measure, was $0.43 in Q3 2017 compared to $0.92 in Q3 2016. |
2017 GUIDANCE AND YEAR-TO-DATE 2017 HIGHLIGHTS
| |
| • | Huron narrows full year 2017 revenue guidance to a range of $733.0 million to $743.0 million. |
| |
| • | Revenues were $546.6 million for the first nine months of 2017 compared to $548.1 million for the same period in 2016. |
| |
| • | Net loss from continuing operations for the first nine months of 2017, which includes a non-cash pretax goodwill impairment charge of $209.6 million related to the company's Healthcare segment recorded in the second quarter, was $141.2 million, compared to net income from continuing operations of $35.3 million for the same period in 2016. |
| |
| • | Adjusted EBITDA(6) was $73.1 million for the first nine months of 2017 compared to $105.8 million for the same period in 2016. |
| |
| • | Diluted loss per share from continuing operations was $6.59 for the first nine months of 2017 compared to diluted earnings per share from continuing operations of $1.65 for the first nine months of 2016. |
| |
| • | Adjusted diluted earnings per share from continuing operations(6) was $1.47 for the first nine months of 2017 compared to $2.63 for the first nine months of 2016. |
CHICAGO - Nov. 1, 2017 - Global professional services firm Huron (NASDAQ: HURN) today announced financial results from continuing operations for the third quarter ended Sept. 30, 2017.
"Led by solid growth in the Education and Business Advisory segments, Huron's third quarter results were in line with our full-year expectations," said James H. Roth, chief executive officer and president of Huron. "The decline in Healthcare segment revenue moderated while utilization continued to improve during the quarter.”
“We remain focused on broadening our client base and enhancing the array of services that we offer to the market in response to the complexity in our clients’ operating environment,” added Roth.
THIRD QUARTER 2017 RESULTS FROM CONTINUING OPERATIONS
Revenues were $176.4 million for the third quarter of 2017 compared to $183.4 million for the third quarter of 2016. Third quarter 2017 revenues included $13.4 million from Huron's 2017 acquisitions of Innosight Holdings, LLC (Innosight) and Pope Woodhead and Associates Limited (Pope Woodhead) and an incremental $1.7 million of revenue due to the full quarter impact of the company's acquisition of Healthcare Services Management, Inc. (HSM Consulting), which was completed mid-third quarter 2016. Third quarter 2017 revenues also included revenues from Huron's 2017 acquisition of the international assets of ADI Strategies which has since been fully integrated into the Business Advisory segment.
Net income from continuing operations was $4.1 million for the third quarter of 2017 compared to $12.3 million for the same period last year. Diluted earnings per share from continuing operations was $0.19 for the third quarter of 2017, compared to $0.57 for the third quarter of 2016.
Third quarter 2017 earnings before interest, taxes, depreciation and amortization ("EBITDA")(6) was $19.6 million, compared to $35.9 million in the same quarter last year.
In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands): |
| | | | | | | |
| | Three Months Ended
September 30, |
| | 2017 | | 2016 |
| Amortization of intangible assets | $ | 8,834 |
| | $ | 8,771 |
|
| Restructuring charges | $ | 1,347 |
| | $ | 1,049 |
|
| Other losses, net | $ | 880 |
| | $ | 494 |
|
| Non-cash interest on convertible notes | $ | 1,974 |
| | $ | 1,883 |
|
| Foreign currency transaction losses (gains), net | $ | (385 | ) | | $ | 84 |
|
| Tax effect | $ | (5,100 | ) | | $ | (4,794 | ) |
| Tax benefit related to "check-the-box" election | $ | (2,748 | ) | | $ | — |
|
The company has excluded the effect of a $2.7 million tax benefit, recorded in the third quarter of 2017, from recognizing a previously unrecognized tax benefit from a "check-the-box" election made in 2014 to treat one of the company's wholly-owned foreign subsidiaries as a disregarded entity for U.S. federal income tax purposes.
Adjusted EBITDA(6) was $21.5 million, or 12.2% of revenues, in the third quarter of 2017, compared to $37.5 million, or 20.4% of revenues, in the same quarter last year. Adjusted net income from continuing operations(6) was $9.3 million, or $0.43 per diluted share, for the third quarter of 2017, compared to $19.7 million, or $0.92 per diluted share, for the same period in 2016.
The average number of full-time billable consultants(2) increased 4.4% to 2,047 in the third quarter of 2017 compared to 1,961 in the same quarter last year. Full-time billable consultant utilization rate(3) was 75.0% during the third quarter of 2017 compared to 73.9% during the same period last year. Average billing rate per hour for full-time billable consultants(4) was $197 for the third quarter of 2017 compared to $207 for the third quarter of 2016. The average number of full-time equivalent professionals(5) was 275 in the third quarter of 2017 compared to 269 for the same period in 2016.
YEAR-TO-DATE 2017 RESULTS FROM CONTINUING OPERATIONS
Revenues were $546.6 million for the first nine months of 2017 compared to $548.1 million for the first nine months of 2016. Revenues for the nine months ended Sept. 30, 2017 included $34.1 million from Huron's 2017 acquisitions of Innosight and Pope Woodhead, and $13.9 million of incremental revenues due to the full period impact of the acquisitions of MyRounding Solutions, LLC, and HSM Consulting, which were completed in Feb. 2016 and Aug.
2016, respectively. Revenues for the first nine months of 2017 also included a full period impact of Huron's acquisition of the U.S. assets of ADI Strategies and revenues from the acquisition of the international assets of ADI Strategies. These acquisitions were completed in May 2016 and Apr. 2017, respectively, and have been fully integrated into the Business Advisory segment.
Net loss from continuing operations was $141.2 million for the first nine months of 2017 compared to net income from continuing operations of $35.3 million for the same period last year. Results for the nine months ended Sept. 30, 2017 reflect a non-cash pretax charge of $209.6 million recorded in the second quarter to reduce the carrying value of goodwill in the company's Healthcare segment. The impairment charge is non-cash in nature and does not affect the company's liquidity or debt covenants. Diluted loss per share from continuing operations was $6.59 for the first nine months of 2017, compared to diluted earnings per share from continuing operations of $1.65 for the same prior year period.
Loss before interest, taxes, depreciation, and amortization(6) for the first nine months of 2017 was $140.2 million, compared to EBITDA of $101.4 million in the comparable period last year.
In addition to using EBITDA to evaluate the company’s financial performance, management uses other non-GAAP financial measures, which exclude the effect of the following items (in thousands): |
| | | | | | | |
| | Nine Months Ended
September 30, |
| | 2017 | | 2016 |
| Amortization of intangible assets | $ | 26,432 |
| | $ | 24,369 |
|
| Restructuring charges | $ | 5,295 |
| | $ | 4,129 |
|
| Other losses (gains), net | $ | (222 | ) | | $ | 494 |
|
| Goodwill impairment charge | $ | 209,600 |
| | $ | — |
|
| Non-cash interest on convertible notes | $ | 5,853 |
| | $ | 5,582 |
|
| Gain on sale of business | $ | (931 | ) | | $ | — |
|
| Foreign currency transaction gains, net | $ | (449 | ) | | $ | (270 | ) |
| Tax effect | $ | (70,362 | ) | | $ | (13,588 | ) |
| Tax benefit related to "check-the-box" election | $ | (2,748 | ) | | $ | — |
|
The company has excluded the effect of a $2.7 million tax benefit, recorded in the third quarter of 2017, from recognizing a previously unrecognized tax benefit from our "check-the-box" election made in 2014 to treat one of the company's wholly-owned foreign subsidiaries as a disregarded entity for U.S. federal income tax purposes.
Adjusted EBITDA(6) was $73.1 million, or 13.4% of revenues, in the first nine months of 2017, compared to $105.8 million, or 19.3% of revenues, in the same period last year. Adjusted net income from continuing operations(6) was $31.7 million, or $1.47 per diluted share, for the first nine months of 2017, compared to $56.3 million, or $2.63 per diluted share, for the same period in 2016.
The average number of full-time billable consultants(2) increased 6.2% to 2,012 in the first nine months of 2017 compared to 1,895 in the same period last year. Full-time billable consultant utilization rate(3) was 74.7% during the first nine months of 2017 compared to 75.3% during the same period last year. Average billing rate per hour for full-time billable consultants(4) was $202 for the first nine months of 2017 compared to $212 for the same period last year. The average number of full-time equivalent professionals(5) was 272 in the first nine months of 2017 compared to 257 for the same period in 2016.
OPERATING SEGMENTS
Huron’s results reflect a portfolio of service offerings focused on helping clients address complex business challenges.
The company’s year-to-date 2017 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (48%); Education (23%); and Business Advisory (29%). Financial results by segment are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended Sept. 30, 2017.
OUTLOOK FOR 2017(8)
Based on currently available information, the company narrowed its full year 2017 revenue guidance to a range of $733.0 million to $743.0 million. The company also anticipates a net loss in a range of $132.0 million to $130.0 million, loss before interest, taxes, depreciation and amortization in a range of $112.0 million to $108.0 million, and GAAP diluted loss per share in a range of $6.15 to $6.05, all of which reflect the pretax non-cash goodwill impairment charge of $209.6 million recorded in the second quarter of 2017. The company also narrowed its guidance for full year 2017 adjusted EBITDA to a range of $102.0 million to $106.0 million. The company reaffirmed its previously released guidance for full year 2017 non-GAAP adjusted diluted earnings per share in a range of $2.20 to $2.30.
Management will provide a more detailed discussion of its outlook during the company’s earnings conference call webcast.
THIRD QUARTER 2017 WEBCAST
The company will host a webcast to discuss its financial results today, Nov. 1, 2017, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ and can be accessed at 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(6)
In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income (loss) from continuing operations, and adjusted diluted earnings (loss) per share from continuing operations, 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.
ABOUT HURON
Huron is a global professional services firm committed to achieving sustainable results in partnership with its clients. The company brings depth of expertise in strategy, technology, operations, advisory services and analytics to drive lasting and measurable results in the healthcare, higher education, life sciences and commercial sectors. Through focus, passion and collaboration, Huron provides guidance to support organizations as they contend with the change transforming their industries and businesses. Learn more at www.huronconsultinggroup.com.
###
Statements in this press release that are not historical in nature, including those concerning the company’s current expectations about its future requirements and needs, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” or “outlook” or similar expressions. These forward-looking statements reflect 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 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, 2016 and under Part II, Item 1A. "Risk Factors" in Huron's forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, 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
(In thousands, except per share amounts)
(Unaudited) |
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenues and reimbursable expenses: | | | | | | | |
| Revenues | $ | 176,376 |
| | $ | 183,400 |
| | $ | 546,643 |
| | $ | 548,148 |
|
| Reimbursable expenses | 17,982 |
| | 19,093 |
| | 55,862 |
| | 54,636 |
|
| Total revenues and reimbursable expenses | 194,358 |
| | 202,493 |
| | 602,505 |
| | 602,784 |
|
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses): | | | | | | | |
| Direct costs | 113,775 |
| | 108,354 |
| | 343,185 |
| | 323,310 |
|
| Amortization of intangible assets and software development costs | 2,657 |
| | 4,052 |
| | 8,388 |
| | 11,278 |
|
| Reimbursable expenses | 18,079 |
| | 18,956 |
| | 55,901 |
| | 54,747 |
|
| Total direct costs and reimbursable expenses | 134,511 |
| | 131,362 |
| | 407,474 |
| | 389,335 |
|
| Operating expenses and other losses (gains), net: | | | | | | | |
| Selling, general and administrative expenses | 41,576 |
| | 38,256 |
| | 132,137 |
| | 119,937 |
|
| Restructuring charges | 1,347 |
| | 1,049 |
| | 5,295 |
| | 4,129 |
|
| Other losses (gains), net | 880 |
| | 494 |
| | (222 | ) | | 494 |
|
| Depreciation and amortization | 9,946 |
| | 8,092 |
| | 28,549 |
| | 23,064 |
|
| Goodwill impairment charge | — |
| | — |
| | 209,600 |
| | — |
|
| Total operating expenses and other losses (gains), net | 53,749 |
| | 47,891 |
| | 375,359 |
| | 147,624 |
|
| Operating income (loss) | 6,098 |
| | 23,240 |
| | (180,328 | ) | | 65,825 |
|
| Other income (expense), net: | | | | | | | |
| Interest expense, net of interest income | (4,880 | ) | | (4,176 | ) | | (13,811 | ) | | (12,270 | ) |
| Other income, net | 930 |
| | 489 |
| | 3,204 |
| | 1,236 |
|
| Total other expense, net | (3,950 | ) | | (3,687 | ) | | (10,607 | ) | | (11,034 | ) |
| Income (loss) from continuing operations before income tax expense | 2,148 |
| | 19,553 |
| | (190,935 | ) | | 54,791 |
|
| Income tax expense (benefit) | (1,984 | ) | | 7,265 |
| | (49,740 | ) | | 19,498 |
|
| Net income (loss) from continuing operations | 4,132 |
| | 12,288 |
| | (141,195 | ) | | 35,293 |
|
| Income (loss) from discontinued operations, net of tax | 238 |
| | 4 |
| | 690 |
| | (1,830 | ) |
| Net income (loss) | $ | 4,370 |
| | $ | 12,292 |
| | $ | (140,505 | ) | | $ | 33,463 |
|
| Net earnings (loss) per basic share: | | | | | | | |
| Net income (loss) from continuing operations | $ | 0.19 |
| | $ | 0.58 |
| | $ | (6.59 | ) | | $ | 1.67 |
|
| Income (loss) from discontinued operations, net of tax | 0.01 |
| | — |
| | 0.03 |
| | (0.08 | ) |
| Net income (loss) | $ | 0.20 |
| | $ | 0.58 |
| | $ | (6.56 | ) | | $ | 1.59 |
|
| Net earnings (loss) per diluted share: | | | | | | | |
| Net income (loss) from continuing operations | $ | 0.19 |
| | $ | 0.57 |
| | $ | (6.59 | ) | | $ | 1.65 |
|
| Income (loss) from discontinued operations, net of tax | 0.01 |
| | — |
| | 0.03 |
| | (0.09 | ) |
| Net income (loss) | $ | 0.20 |
| | $ | 0.57 |
| | $ | (6.56 | ) | | $ | 1.56 |
|
| Weighted average shares used in calculating earnings per share: | | | | | | | |
| Basic | 21,505 |
| | 21,076 |
| | 21,413 |
| | 21,084 |
|
| Diluted | 21,622 |
| | 21,445 |
| | 21,413 |
| | 21,427 |
|
| Comprehensive income (loss): | | | | | | | |
| Net income (loss) | $ | 4,370 |
| | $ | 12,292 |
| | $ | (140,505 | ) | | $ | 33,463 |
|
| Foreign currency translation adjustments, net of tax | 609 |
| | 50 |
| | 1,835 |
| | 52 |
|
| Unrealized loss on investment, net of tax | (2,200 | ) | | (2,038 | ) | | (1,669 | ) | | (1,163 | ) |
| Unrealized gain (loss) on cash flow hedging instruments, net of tax | 23 |
| | 121 |
| | (4 | ) | | (27 | ) |
| Other comprehensive income (loss) | (1,568 | ) | | (1,867 | ) | | 162 |
| | (1,138 | ) |
| Comprehensive income (loss) | $ | 2,802 |
| | $ | 10,425 |
| | $ | (140,343 | ) | | $ | 32,325 |
|
HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
|
| | | | | | | |
| | September 30,
2017 | | December 31,
2016 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 8,660 |
| | $ | 17,027 |
|
| Receivables from clients, net | 94,025 |
| | 94,246 |
|
| Unbilled services, net | 65,432 |
| | 51,290 |
|
| Income tax receivable | 4,018 |
| | 4,211 |
|
| Prepaid expenses and other current assets | 15,106 |
| | 13,308 |
|
| Total current assets | 187,241 |
| | 180,082 |
|
| Property and equipment, net | 47,075 |
| | 32,434 |
|
| Deferred income taxes, net | 15,159 |
| | — |
|
| Long-term investment | 31,937 |
| | 34,675 |
|
| Other non-current assets | 26,149 |
| | 24,814 |
|
| Intangible assets, net | 80,861 |
| | 81,348 |
|
| Goodwill | 689,375 |
| | 799,862 |
|
| Total assets | $ | 1,077,797 |
| | $ | 1,153,215 |
|
| Liabilities and stockholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 10,259 |
| | $ | 7,273 |
|
| Accrued expenses and other current liabilities | 22,846 |
| | 19,788 |
|
| Accrued payroll and related benefits | 62,451 |
| | 82,669 |
|
| Accrued contingent consideration for business acquisitions | 7,743 |
| | 1,985 |
|
| Deferred revenues | 25,495 |
| | 24,053 |
|
| Total current liabilities | 128,794 |
| | 135,768 |
|
| Non-current liabilities: | | | |
| Deferred compensation and other liabilities | 20,336 |
| | 24,171 |
|
| Accrued contingent consideration for business acquisitions, net of current portion | 14,726 |
| | 6,842 |
|
| Long-term debt, net of current portion | 374,328 |
| | 292,065 |
|
| Deferred lease incentives | 15,236 |
| | 10,703 |
|
| Deferred income taxes, net | — |
| | 35,633 |
|
| Total non-current liabilities | 424,626 |
| | 369,414 |
|
| Commitments and contingencies |
| |
|
| Stockholders’ equity | | | |
| Common stock; $0.01 par value; 500,000,000 shares authorized; 24,560,468 and 24,126,118 shares issued at September 30, 2017 and December 31, 2016, respectively | 241 |
| | 235 |
|
| Treasury stock, at cost, 2,428,971 and 2,408,343 shares at September 30, 2017 and December 31, 2016, respectively | (121,395 | ) | | (113,195 | ) |
| Additional paid-in capital | 431,211 |
| | 405,895 |
|
| Retained earnings | 210,543 |
| | 351,483 |
|
| Accumulated other comprehensive income | 3,777 |
| | 3,615 |
|
| Total stockholders’ equity | 524,377 |
| | 648,033 |
|
| Total liabilities and stockholders’ equity | $ | 1,077,797 |
| | $ | 1,153,215 |
|
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
| | | | | | | |
| | Nine Months Ended
September 30, |
| | 2017 | | 2016 |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | (140,505 | ) | | $ | 33,463 |
|
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Depreciation and amortization | 37,881 |
| | 34,344 |
|
| Share-based compensation | 11,711 |
| | 13,145 |
|
| Amortization of debt discount and issuance costs | 7,604 |
| | 7,171 |
|
| Goodwill impairment charge | 209,600 |
| | — |
|
| Allowances for doubtful accounts and unbilled services | 3,812 |
| | 7,107 |
|
| Deferred income taxes | (51,062 | ) | | 4,980 |
|
| Gain on sale of business | (931 | ) | | — |
|
| Change in fair value of contingent consideration liabilities | (222 | ) | | 494 |
|
| Changes in operating assets and liabilities, net of acquisitions: | | | |
| (Increase) decrease in receivables from clients | 9,025 |
| | 9,442 |
|
| (Increase) decrease in unbilled services | (12,251 | ) | | (21,492 | ) |
| (Increase) decrease in current income tax receivable / payable, net | (32 | ) | | (3,039 | ) |
| (Increase) decrease in other assets | (1,802 | ) | | 12,669 |
|
| Increase (decrease) in accounts payable and accrued liabilities | 1,850 |
| | (2,860 | ) |
| Increase (decrease) in accrued payroll and related benefits | (21,928 | ) | | (17,707 | ) |
| Increase (decrease) in deferred revenues | (318 | ) | | 2,028 |
|
| Net cash provided by operating activities | 52,432 |
| | 79,745 |
|
| Cash flows from investing activities: | | | |
| Purchases of property and equipment, net | (20,139 | ) | | (9,372 | ) |
| Investment in life insurance policies | (1,826 | ) | | (1,890 | ) |
| Distributions from life insurance policies | 2,889 |
| | — |
|
| Purchases of businesses, net of cash acquired | (106,915 | ) | | (69,133 | ) |
| Capitalization of internally developed software costs | (938 | ) | | (838 | ) |
| Proceeds from note receivable | 177 |
| | — |
|
| Proceeds from sale of business | 1,499 |
| | — |
|
| Net cash used in investing activities | (125,253 | ) | | (81,233 | ) |
| Cash flows from financing activities: | | | |
| Proceeds from exercise of stock options | — |
| | 123 |
|
| Shares redeemed for employee tax withholdings | (4,450 | ) | | (4,837 | ) |
| Share repurchases | — |
| | (55,265 | ) |
| Proceeds from borrowings under credit facility | 241,000 |
| | 168,000 |
|
| Repayments of debt | (170,082 | ) | | (156,000 | ) |
| Payments for debt issuance costs | (395 | ) | | — |
|
| Payment of contingent consideration liabilities | (1,811 | ) | | — |
|
| Net cash provided by (used in) financing activities | 64,262 |
| | (47,979 | ) |
| Effect of exchange rate changes on cash | 192 |
| | 133 |
|
| Net decrease in cash and cash equivalents | (8,367 | ) | | (49,334 | ) |
| Cash and cash equivalents at beginning of the period | 17,027 |
| | 58,437 |
|
| Cash and cash equivalents at end of the period | $ | 8,660 |
| | $ | 9,103 |
|
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA
(Unaudited)
|
| | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Percent Increase (Decrease) |
| Segment and Consolidated Operating Results (in thousands): | | 2017 | | 2016 | |
| Healthcare: | | | | | | |
| Revenues | | $ | 79,582 |
| | $ | 103,425 |
| | (23.1 | )% |
| Operating income | | $ | 25,778 |
| | $ | 38,824 |
| | (33.6 | )% |
| Segment operating income as a percentage of segment revenues | | 32.4 | % | | 37.5 | % | |
|
| Education: | | | | | |
|
| Revenues | | $ | 41,422 |
| | $ | 38,621 |
| | 7.3 | % |
| Operating income | | $ | 7,762 |
| | $ | 10,896 |
| | (28.8 | )% |
| Segment operating income as a percentage of segment revenues | | 18.7 | % | | 28.2 | % | |
|
| Business Advisory: | | | | | |
|
| Revenues | | $ | 55,372 |
| | $ | 41,354 |
| | 33.9 | % |
| Operating income | | $ | 12,832 |
| | $ | 8,608 |
| | 49.1 | % |
| Segment operating income as a percentage of segment revenues | | 23.2 | % | | 20.8 | % | |
|
| Total Company: | | | | | |
|
| Revenues | | $ | 176,376 |
| | $ | 183,400 |
| | (3.8 | )% |
| Reimbursable expenses | | 17,982 |
| | 19,093 |
| | (5.8 | )% |
| Total revenues and reimbursable expenses | | $ | 194,358 |
| | $ | 202,493 |
| | (4.0 | )% |
| Statements of Operations reconciliation: | | | | | |
|
| Segment operating income | | $ | 46,372 |
| | $ | 58,328 |
| | (20.5 | )% |
| Items not allocated at the segment level: | | | | | |
|
| Other operating expenses | | 29,448 |
| | 26,502 |
| | 11.1 | % |
| Other losses, net | | 880 |
| | 494 |
| | 78.1 | % |
| Depreciation and amortization | | 9,946 |
| | 8,092 |
| | 22.9 | % |
| Total operating income | | 6,098 |
| | 23,240 |
| | (73.8 | )% |
| Other expense, net | | 3,950 |
| | 3,687 |
| | 7.1 | % |
| Income from continuing operations before income tax expense | | $ | 2,148 |
| | $ | 19,553 |
| | (89.0 | )% |
| Other Operating Data: | | | | | |
|
Number of full-time billable consultants (at period end) (2): | | | | | |
|
| Healthcare | | 761 |
| | 1,010 |
| | (24.7 | )% |
| Education | | 536 |
| | 466 |
| | 15.0 | % |
| Business Advisory | | 830 |
| | 545 |
| | 52.3 | % |
| Total | | 2,127 |
| | 2,021 |
| | 5.2 | % |
Average number of full-time billable consultants (for the period) (2): | | | | | | |
| Healthcare | | 741 |
| | 984 |
| | |
| Education | | 527 |
| | 447 |
| | |
| Business Advisory | | 779 |
| | 530 |
| | |
| Total | | 2,047 |
| | 1,961 |
| | |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
|
| | | | | | | | |
| | | Three Months Ended September 30, |
| Other Operating Data (continued): | | 2017 | | 2016 |
Full-time billable consultant utilization rate (3): | | | | |
| Healthcare | | 80.3 | % | | 77.0 | % |
| Education | | 70.9 | % | | 68.0 | % |
| Business Advisory | | 72.9 | % | | 73.5 | % |
| Total | | 75.0 | % | | 73.9 | % |
Full-time billable consultant average billing rate per hour (4): | | | | |
| Healthcare | | $ | 190 |
| | $ | 203 |
|
| Education | | $ | 210 |
| | $ | 220 |
|
| Business Advisory | | $ | 197 |
| | $ | 203 |
|
| Total | | $ | 197 |
| | $ | 207 |
|
| Revenue per full-time billable consultant (in thousands): | | | | |
| Healthcare | | $ | 69 |
| | $ | 73 |
|
| Education | | $ | 69 |
| | $ | 72 |
|
| Business Advisory | | $ | 67 |
| | $ | 72 |
|
| Total | | $ | 68 |
| | $ | 72 |
|
Average number of full-time equivalents (for the period) (5): | | | | |
| Healthcare | | 214 |
| | 204 |
|
| Education | | 35 |
| | 40 |
|
| Business Advisory | | 26 |
| | 25 |
|
| Total | | 275 |
| | 269 |
|
| Revenue per full-time equivalent (in thousands): | | | | |
| Healthcare | | $ | 134 |
| | $ | 156 |
|
| Education | | $ | 138 |
| | $ | 158 |
|
| Business Advisory | | $ | 108 |
| | $ | 126 |
|
| Total | | $ | 132 |
| | $ | 154 |
|
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited)
|
| | | | | | | | | | | |
| | | Nine Months Ended
September 30, | | Percent Increase (Decrease) |
| Segment and Consolidated Operating Results (in thousands): | | 2017 | | 2016 | |
| Healthcare: | | | | | | |
| Revenues | | $ | 261,261 |
| | $ | 323,531 |
| | (19.2 | )% |
| Operating income | | $ | 83,580 |
| | $ | 119,229 |
| | (29.9 | )% |
| Segment operating income as a percentage of segment revenues | | 32.0 | % | | 36.9 | % | | |
| Education: | | | | | | |
| Revenues | | $ | 127,629 |
| | $ | 111,816 |
| | 14.1 | % |
| Operating income | | $ | 31,772 |
| | $ | 31,474 |
| | 0.9 | % |
| Segment operating income as a percentage of segment revenues | | 24.9 | % | | 28.1 | % | | |
| Business Advisory: | | | | | | |
| Revenues | | $ | 157,753 |
| | $ | 112,801 |
| | 39.9 | % |
| Operating income | | $ | 34,890 |
| | $ | 23,275 |
| | 49.9 | % |
| Segment operating income as a percentage of segment revenues | | 22.1 | % | | 20.6 | % | | |
| Total Company: | | | | | | |
| Revenues | | $ | 546,643 |
| | $ | 548,148 |
| | (0.3 | )% |
| Reimbursable expenses | | 55,862 |
| | 54,636 |
| | 2.2 | % |
| Total revenues and reimbursable expenses | | $ | 602,505 |
| | $ | 602,784 |
| | — | % |
| Statements of Operations reconciliation: | | | | | | |
| Segment operating income | | $ | 150,242 |
| | $ | 173,978 |
| | (13.6 | )% |
| Items not allocated at the segment level: | | | | | | |
| Other operating expenses | | 92,643 |
| | 84,595 |
| | 9.5 | % |
| Other losses (gains), net | | (222 | ) | | 494 |
| | N/M |
|
| Depreciation and amortization expense | | 28,549 |
| | 23,064 |
| | 23.8 | % |
Goodwill impairment charge (1) | | 209,600 |
| | — |
| | N/M |
|
| Total operating income (loss) | | (180,328 | ) | | 65,825 |
| | N/M |
|
| Other expense, net | | 10,607 |
| | 11,034 |
| | (3.9 | )% |
| Income (loss) from continuing operations before income tax expense | | $ | (190,935 | ) | | $ | 54,791 |
| | N/M |
|
| Other Operating Data: | | | | | | |
Number of full-time billable consultants (at period end) (2): | | | | | | |
| Healthcare | | 761 |
| | 1,010 |
| | (24.7 | )% |
| Education | | 536 |
| | 466 |
| | 15.0 | % |
| Business Advisory | | 830 |
| | 545 |
| | 52.3 | % |
| Total | | 2,127 |
| | 2,021 |
| | 5.2 | % |
Average number of full-time billable consultants (for the period) (2): | | | | | | |
| Healthcare | | 805 |
| | 1,005 |
| | |
| Education | | 497 |
| | 425 |
| | |
| Business Advisory | | 710 |
| | 465 |
| | |
| Total | | 2,012 |
| | 1,895 |
| | |
HURON CONSULTING GROUP INC.
SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)
(Unaudited) |
| | | | | | | | |
| | | Nine Months Ended
September 30, |
| Other Operating Data (continued): | | 2017 | | 2016 |
Full-time billable consultant utilization rate (3): | | | | |
| Healthcare | | 76.6 | % | | 78.6 | % |
| Education | | 73.6 | % | | 71.2 | % |
| Business Advisory | | 73.4 | % | | 72.4 | % |
| Total | | 74.7 | % | | 75.3 | % |
Full-time billable consultant average billing rate per hour (4): | | | | |
| Healthcare | | $ | 200 |
| | $ | 209 |
|
| Education | | $ | 215 |
| | $ | 217 |
|
| Business Advisory | | $ | 195 |
| | $ | 216 |
|
| Total | | $ | 202 |
| | $ | 212 |
|
| Revenue per full-time billable consultant (in thousands): | | | | |
| Healthcare | | $ | 211 |
| | $ | 231 |
|
| Education | | $ | 226 |
| | $ | 224 |
|
| Business Advisory | | $ | 212 |
| | $ | 229 |
|
| Total | | $ | 215 |
| | $ | 229 |
|
Average number of full-time equivalents (for the period) (5): | | | | |
| Healthcare | | 215 |
| | 201 |
|
| Education | | 36 |
| | 37 |
|
| Business Advisory | | 21 |
| | 19 |
|
| Total | | 272 |
| | 257 |
|
| Revenue per full-time equivalent (in thousands): | | | | |
| Healthcare | | $ | 427 |
| | $ | 456 |
|
| Education | | $ | 419 |
| | $ | 436 |
|
| Business Advisory | | $ | 342 |
| | $ | 335 |
|
| Total | | $ | 420 |
| | $ | 444 |
|
| |
| (1) | The non-cash goodwill impairment charge is not allocated at the segment level because the underlying goodwill asset is reflective of Huron's corporate investment in the segments. Huron does not include the impact of goodwill impairment charges in its evaluation of segment performance. |
| |
| (2) | Consists of full-time professionals who provide consulting services and generate revenues based on the number of hours worked. |
| |
| (3) | Utilization rate for full-time billable consultants is calculated by dividing the number of hours all full-time billable consultants worked on client assignments during a period by the total available working hours for all of these consultants during the same period, assuming a forty-hour work week, less paid holidays and vacation days. |
| |
| (4) | Average billing rate per hour for full-time billable consultants is calculated by dividing revenues for a period by the number of hours worked on client assignments during the same period. |
| |
| (5) | Consists of cultural transformation consultants within the Studer Group solution, which include coaches and their support staff, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients. |
N/M - Not Meaningful
HURON CONSULTING GROUP INC.
RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (6)
(In thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenues | $ | 176,376 |
| | $ | 183,400 |
| | $ | 546,643 |
| | $ | 548,148 |
|
| Net income (loss) from continuing operations | $ | 4,132 |
| | $ | 12,288 |
| | $ | (141,195 | ) | | $ | 35,293 |
|
| Add back: | | | | | | | |
| Income tax expense (benefit) | (1,984 | ) | | 7,265 |
| | (49,740 | ) | | 19,498 |
|
| Interest expense, net of interest income | 4,880 |
| | 4,176 |
| | 13,811 |
| | 12,270 |
|
| Depreciation and amortization | 12,603 |
| | 12,144 |
| | 36,937 |
| | 34,342 |
|
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) (6) | 19,631 |
| | 35,873 |
| | (140,187 | ) | | 101,403 |
|
| Add back: | | | | | | | |
| Restructuring charges | 1,347 |
| | 1,049 |
| | 5,295 |
| | 4,129 |
|
| Other losses (gains), net | 880 |
| | 494 |
| | (222 | ) | | 494 |
|
| Goodwill impairment charge | — |
| | — |
| | 209,600 |
| | — |
|
| Gain on sale of business | — |
| | — |
| | (931 | ) | | — |
|
| Foreign currency transaction losses (gains), net | (385 | ) | | 84 |
| | (449 | ) | | (270 | ) |
Adjusted EBITDA (6) | $ | 21,473 |
| | $ | 37,500 |
| | $ | 73,106 |
| | $ | 105,756 |
|
Adjusted EBITDA as a percentage of revenues (6) | 12.2 | % | | 20.4 | % | | 13.4 | % | | 19.3 | % |
RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS
TO ADJUSTED NET INCOME (LOSS) FROM CONTINUING OPERATIONS (6)
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Net income (loss) from continuing operations | $ | 4,132 |
| | $ | 12,288 |
| | $ | (141,195 | ) | | $ | 35,293 |
|
| Weighted average shares – diluted | 21,622 |
| | 21,445 |
| | 21,413 |
| | 21,427 |
|
| Diluted earnings (loss) per share from continuing operations | $ | 0.19 |
| | $ | 0.57 |
| | $ | (6.59 | ) | | $ | 1.65 |
|
| Add back: | | | | | | | |
| Amortization of intangible assets | 8,834 |
| | 8,771 |
| | 26,432 |
| | 24,369 |
|
| Restructuring charges | 1,347 |
| | 1,049 |
| | 5,295 |
| | 4,129 |
|
| Other losses (gains), net | 880 |
| | 494 |
| | (222 | ) | | 494 |
|
| Goodwill impairment charge | — |
| | — |
| | 209,600 |
| | — |
|
| Non-cash interest on convertible notes | 1,974 |
| | 1,883 |
| | 5,853 |
| | 5,582 |
|
| Gain on sale of business | — |
| | — |
| | (931 | ) | | — |
|
| Tax effect | (5,100 | ) | | (4,794 | ) | | (70,362 | ) | | (13,588 | ) |
| Tax benefit related to "check-the-box" election | (2,748 | ) | | — |
| | (2,748 | ) | | — |
|
| Total adjustments, net of tax | 5,187 |
| | 7,403 |
| | 172,917 |
| | 20,986 |
|
Adjusted net income from continuing operations (6) | $ | 9,319 |
| | $ | 19,691 |
| | $ | 31,722 |
| | $ | 56,279 |
|
Adjusted weighted average shares - diluted (7) | 21,622 |
| | 21,445 |
| | 21,585 |
| | 21,427 |
|
Adjusted diluted earnings per share from continuing operations (6) | $ | 0.43 |
| | $ | 0.92 |
| | $ | 1.47 |
| | $ | 2.63 |
|
| |
| (6) | In evaluating the company’s financial performance and outlook, management uses earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA as a percentage of revenues, adjusted net income (loss) from continuing operations, and adjusted diluted earnings (loss) per share from continuing operations, 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. |
| |
| (7) | As the company reported a net loss for the nine months ended September 30, 2017, GAAP diluted weighted average shares outstanding equals the basic weighted average shares outstanding for that period. The non-GAAP adjustments described above resulted in adjusted net income from continuing operations for those periods. Therefore, dilutive common stock equivalents have been included in the calculation of adjusted diluted weighted average shares outstanding. |
HURON CONSULTING GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2017 OUTLOOK
RECONCILIATION OF NET LOSS
TO ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (8)
(In millions)
(Unaudited)
|
| | | | | | | |
| | Year Ending |
| | December 31, 2017 |
| | Guidance Range |
| | Low | | High |
| Projected revenues - GAAP | $ | 733.0 |
| | $ | 743.0 |
|
| Projected net loss - GAAP | $ | (132.0 | ) | | $ | (130.0 | ) |
| Add back: | | | |
| Income tax benefit | (47.0 | ) | | (45.0 | ) |
| Interest expense, net of interest income | 18.0 |
| | 18.0 |
|
| Depreciation and amortization | 49.0 |
| | 49.0 |
|
Projected loss before interest, taxes, depreciation and amortization (EBITDA) (8) | (112.0 | ) | | (108.0 | ) |
| Add back: | | | |
| Restructuring charges | 6.0 |
| | 6.0 |
|
| Other gains, net | (1.0 | ) | | (1.0 | ) |
| Goodwill impairment charge | 210.0 |
| | 210.0 |
|
| Gain on sale of business and foreign currency transaction gains, net | (1.0 | ) | | (1.0 | ) |
Projected adjusted EBITDA (8) | $ | 102.0 |
| | $ | 106.0 |
|
Projected adjusted EBITDA as a percentage of projected revenues (8) | 13.9 | % | | 14.2 | % |
RECONCILIATION OF NET LOSS
TO ADJUSTED NET INCOME (8)
(In millions, except per share amounts)
(Unaudited)
|
| | | | | | | |
| | Year Ending |
| | December 31, 2017 |
| | Guidance Range |
| | Low | | High |
| Projected net loss - GAAP | $ | (132.0 | ) | | $ | (130.0 | ) |
| Projected diluted loss per share - GAAP | $ | (6.15 | ) | | $ | (6.05 | ) |
| Add back: | | | |
| Amortization of intangible assets | 35.0 |
| | 35.0 |
|
| Restructuring charges | 6.0 |
| | 6.0 |
|
| Other gains, net | (1.0 | ) | | (1.0 | ) |
| Goodwill impairment charge | 210.0 |
| | 210.0 |
|
| Non-cash interest on convertible notes | 8.0 |
| | 8.0 |
|
| Gain on sale of business | (1.0 | ) | | (1.0 | ) |
| Tax effect | (74.5 | ) | | (74.5 | ) |
| Tax benefit related to "check-the-box" election | (3.0 | ) | | (3.0 | ) |
| Total adjustments, net of tax | 179.5 |
| | 179.5 |
|
Projected adjusted net income (8) | $ | 47.5 |
| | $ | 49.5 |
|
Projected adjusted diluted earnings per share (8) | $ | 2.20 |
| | $ | 2.30 |
|
| |
| (8) | In evaluating the company’s outlook, management uses projected EBITDA, projected adjusted EBITDA, projected adjusted EBITDA as a percentage of revenues, projected adjusted net income, and projected adjusted diluted earnings per share, which are non-GAAP measures. Management believes that the use of such measures, as supplements to projected net loss and projected diluted loss per share, and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of the company’s core operating results and future prospects without the effect of non-cash or other one-time items. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. |
