Earnings call transcript Q4 2022

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Operator

Good afternoon and welcome to Huron Consulting Group's webcast to discuss Financial Results for the Fourth Quarter and Full Year 2022. At this time, all conference call lines are in a listen-only mode. Later we will conduct a question-and-answer session for conference call participants and instructions will follow at that time.

As a reminder, this conference call is being recorded.

Before we begin, I would like to point all of you up to the disclosure at the end of the company's news release for information about any forward-looking statements that may be made or discussed on this call. posted website. is release news on Huron's The Please the factors SEC information along webcast. that filings with with the afternoon's for this impact discussed review subjects that may in a disclosure of discussing company one The be or non-GAAP financial more measures. will and GAAP earnings of required numbers. SEC Please the website to reconciliations disclosures Huron's release at for on look the by including the all the most comparable

Group. like Mark President I would to Hussey, Consulting Hussey, of Executive now, call to turn ahead. And over go and Chief Officer Huron Mr. please the

Mark Hussey

earnings CEO Good ahead for and to and Group's afternoon Kelly, in and over I and the fourth to Board him our Chief last serving him to on forward I quarter our our we great clients. look engaging welcome years to Officer; all work tremendous continue lead With to this enjoyed to XX Roth and you Dail Ronnie Huron and want with I Consulting to with continuing greatly his in exceptional years. and thank months full me to and forward of Officer. look partnership build his I year it's a call. role my shareholder Financial Operating you John create company are It's pleasure today the as to our be honor our company. with value. leadership also side as with Chief Jim call by working XXXX side for first earnings

Revenue both fourth full strong segments the growing continued three XX% full across XXXX, bolstered the our Turning revenues for year in fourth revenues digital achieved the respectively. quarter XX%, all results. our to capability. and and growth was operating in We record by quarter and year growth

revenue $X.X reached Our in digital and grew XX% billion. nearly a digital XXXX record capability

the profitability well solid our momentum drive by year, returning full year believe the points XXXX deployment in provides XXXX. EBITDA to we returns foundation mid-teen margins margins our for reflecting adjusted cash improved as our EBITDA of basis as toward growth We a to for progress solid shareholders. and continued prior XX flow over Our established objective continued of

solid large positions sectors economy. Market challenged our education of leading these in remains in businesses, healthcare market and our the strengthening demand and

presence industries to digital capability, position. while represented maintaining led financial repurchase Our XXXX. by our company-wide expand solid in in of shares commercial us two cash revenue enabled the continues strong our flow our And which XX% million in to a XXXX,

made to me model we the additional business the quarter progress the color we've our strengthen and industry model deep I we highlight the performance, Before capabilities on on would expertise transformation. fourth strategy operating of to XXXX, let positioned and realignment provide full across drive Huron digital, business. our our financial efficiencies When new beginning believe advisory integrate at with strategy, better and year operating strong our announced our our go-to-market

enhance the clearly which new we The even of in the increased platform. the reinforced profitability plan rewarded as collaborative announced and we team unified realignment behaviors our and accelerated our and work business of that accompanied financial results incentive operating benefits today, more new model, growth, our reflect an

and across our of competitive comprehensive us of position operating has our always each strengthening serve model the teams best bringing markets. stronger, a that new and even further grown our and has culture with our all We together the a Huron's been clients. goals the helping and Collaboration capabilities needed our in hallmark the to attribute to businesses, market unified innovate needs in routinely extent expertise growth of manner of our achieve go full in

our capability the and achieved integration two digital deeply our have critical outcomes: industry offerings strategy For business and embedding our realignment of through improved and we together growth means are Huron, client into which more continued for will enhanced growth engagements. business, outcomes We increased and market which value. the success drive profitability believe our and us for further our will position in shareholder these expertise

XXXX XXXX, grew our full and the our fourth reflecting Healthcare performance XXXX. Healthcare XX% digital for quarter managed with services of along revenue full In year discuss XX% quarter strong a year segment year record offerings increasing $XXX basis, XXXX. of our performance I'll On prior consulting. over the to Now, capabilities, across for the over segment expectations revenues million, fourth demand the cycle million, revenue and quarter achieved improvement $XXX our

and continue year Hospitals increasing the in governmental revenue XX%. face managed costs, industry, health full labor For challenging healthcare increased the consulting a with reduced systems funding XX% to and services and increased organizations and and flows revenue digital higher interest shifts rates. Many healthcare cash as challenges part financial volume by limited and well and face supply and positions, rising sites of environment driven chain operating care. labor more inflation as in weakening in

in need including healthcare invest to to services initiatives, and for demand offerings. to our These their improvement-related long-term are and increasingly respond heavily financial To headwinds, pressures. growth at to systems these a business, in driving address health fuel interested performance in more time the pressures and technology competitive consulting organizational organizations analytics digital managed come when pursuing

offerings increase our improvement our XXXX our will demand In saw the we XXXX, address second performance as these that steady sales to for of half seek we and in challenges. into expect clients continue a funnel

experience. addition, the drive on more simplified digital the relies In a deploying their providers healthcare as industry with while of greater new interaction consumers operational comprehensive increasing attempting including its expectations heavily and healthcare meet are digital to to consumers, efficiencies more technologies

developing us enhanced Health patients. industry digital believe a and managed our The these our which systems innovative their expertise, comprehensive demand consulting, on to provide offerings, to drive for and services solutions analytic combination of care continued results delivering track record ability for business. market proven advantage to take challenges, of we of will clients, well delivery are deep our the capabilities and focused positions

grew In in the XXXX, revenues million. driven $XXX the of revenues to quarter XX% offerings by over for segment Education achieving across segment. increased our year quarter demand revenues segment. million, to fourth now prior XX% segment $XX strength record the to Education Turning the of in the XXXX, the Annual compared

year full Consulting increased education Managed revenue industry, and XX%. the XX% Services in digital and For increased the revenue

Our Education consistent growth. revenue achieved strong historically business

our in market widespread XXXX digital student strategy and services was in across are education taking changes offerings place the the with Demand industry. our all research, how the significant pleased and we're resonating operations in higher and amidst

and higher increased education Similar to interest endowment returns. by inflation our driven labor trends clients, and rates, face financial pressures, enrollment rising institutions pressures, declining mixed higher healthcare

investments experience, interaction the changing it the capital of need student balance Our financial to improve dramatically clients facilities university and particularly college operational seek to more to as their infrastructure, and and enhance needs continued digital with communities. spending a and their to broadly decisions, relates pressures

will to believe need while environment. challenges that investing these set the foreseeable macro continued industry-focused manage for in uncertain comprehensive future, exacerbated by And of The areas our driving demand we costs the growth of is persist solutions. further for

of provides research research US continued for encouraged a our of universities their funding government billion our helping to and strong we're conduct federal and unique manage funding enterprises. has by market growth Finally, Huron business. research source annually research research $XX clients. The the in to only in our one over hospitals that's position clients

research clients Huron the manage helping administration. risks has of offerings with set many the in associated complexities most comprehensive the our and country,

Our represent and XX% revenues the growth in our comprehensive we consulting, significant services research-focused over coming offerings anticipate managed of in and years. Education digital XXXX

Commercial to $XXX the full to revenues million. Turning grew segment. On basis, year segment a X% year-over-year

segment Commercial financial of which sciences fourth $XX quarter divested life business, digital XXXX, to grew QX revenues the the was to segment our XXXX, over in attributable offerings. year-over-year. and Commercial prior the million, In of primarily advisory for XX% demand Excluding grew XX% revenues strong year quarter

growing our analytics we in presence by highly delivered portfolio financial in landscape. and particularly continue our utility team and a share energy gained by industries, sectors. offerings, Led digital of services and technology have our market commercial the competitive the offerings in talented expand the to The

a returns We have for needs to client expanding offerings base Huron. in rapidly and address our continue changing the investments invest strong delivered to those of broad

our our to platform technology consulting conjunction our services address continue offerings and to in digital will clients. We and the managed of needs global develop analytics with growing

briefly fourth inflation and high in demand quarter, the our advisory turnaround resurgence saw rates restructuring offerings, also capital and financial interest on me a our for as for In disruption markets, we Let turbulent clients. the high offerings. and strategy uncertain environment, caused touch macro our

we forward, whether their that we and the we're business. look be believe healthy well more strategy As new establishing those operating path or both best ahead, growth distress a to in organizations efficiently that help navigate positioned

now Let to me XXXX. for expectations and guidance our turn

is $X.XX billion to for billion. guidance year revenue Our the $X.XX

to at XX.X% $X.XX. we're in for We a growth midpoint also organic XXXX. range earnings diluted revenues of adjusted $X.XX EBITDA to per to and revenue guiding share expect XX% of adjusted of Company-wide, the XX%

in We into achieved XXXX, experienced believe and we significant XXXX we in growth will that the continue XXXX. that demand

In terms at of XXXX. in our XXXX, the expect XXXX over a the basis improvement of XX we XX point achieved off we point margins, building guidance, improvement basis midpoint

while of mid-teen long-term potential. do will further profitability. areas financial believe we'll in our We remain our EBITDA we objectives. so And growth investing achieving to with improved margins greatest with committed percent adjusted the business We continue consistent drive to

company commitment our and a me and is achieved let incredibly to we for that of was record Huron only because Finally, to one clients, performance team another. reiterate, to the our XXXX year their our and that possible talented

Day-in our the clients, offerings and to the and supporting collaborate and for day-out market, they development going push business highest innovating us our to and to be better, of delivered with people. new ways new to continue and identifying growth quality our

revenue health remind consistent we In me commercial and help broadening areas our analytics care more sustainable our and of drive believe closing, digital, financial achieve platform, global technology offerings and end-markets focus education, strategic building expanding base us capabilities core objectives, growing in to our and advancing growth of let our business, accelerating our and a will that growth. you our of of

in a to position our strong as excited that strong for start prospects our that year, our profitability led market we We're We're achieving the lie XXXX, a such momentum for the building XXXX. take opportunities competitive about goals the and advantage and strengthen start ahead. off in to of revenue on

me discussion results. John? for a financial to of detailed let more it our now And turn over John,

John Kelly

and Mark everyone. good you, Thank afternoon

adjusted cash net Before that, and begin, adjusted measures will I I income, EPS adjusted financial free EBITDA, EBITDA, be flow. such note non-GAAP as discussing please

press results. Huron the measures non-GAAP XX-K they information and page our the with most measures, Our why to these of the management why GAAP provide of and condition along website believes and operating discussion financial comparable useful on reconciliations have these regarding release, Investor uses investors management non-GAAP to Relations measures

up of some quarter Revenues of $XXX.X XX.X% quarter from and million full fourth quarter was revenues by Consulting in you fourth operating and for segments through Now XXXX. strong XXXX the let million, driven across me quarter record Digital, of were year a Services the growth in the financial the results walk in $XXX.X key same three the The XXXX. capabilities. Managed our and all increase across for

of XXXX our results, quarter was share, to operating we For XXXX. ongoing million, was from fourth our or income of revenue $XXX.X strategically segments of aligned million per achieved compared diluted year $X.XX the for reflecting million, in record billion, diluted fourth XXXX. Similar model. per quarter net the $X.XX offerings share $XX.X full or in demand in for $XX.X Net XXXX up income quarter the in the XXXX across portfolio revenues $X.XXX to of XX% company-wide

from $XX.X includes tax million As the sciences sale a fourth gain of the of net our XXXX. XXXX, reminder a quarter of QX in life income business net

XXXX. net or full million, $XX year $X.XX million, $XX.X $X.XX to per This diluted income per income net For diluted XXXX, compares in or share of was share.

an of year the company's include company. company's of XXXX in net gain million includes XXXX. for a aforementioned million net the full on results business sciences quarter unrealized investment of net in hospital tax XXXX And at gain from $XX.X reminder fourth As the life of of tax a the income sale recognized $XX.X QX the home XXXX, in

expense and impact non-taxable taxes fourth quarter inclusive the our compensation our gains of was of approximates Our certain investments rate the our largely non-deductible which effective statutory by fund offset items of rate deferred state tax on XX.X%, used reflects to in income liability. XXXX income

certain for due taxes state rate losses used the than On on which to a items. was less tax primarily non-deductible our deferred inclusive non-deductible statutory rate compensation favorable was full income of XX.X%, fund and year basis our impact to our income expense effective of investments the liability XXXX

XXXX, XX.X% $XX to of EBITDA Adjusted revenues compared QX of XXXX, million was million $XX.X in or or in QX revenues. XX.X%

XXXX. expense compared points percentage XXXX income higher XXXX adjusted of a of of $X.XX increase by SG&A reduction full The compared growth of per million, fourth revenues to corporate diluted For XX to diluted year XX.X%, revenues offset to business. the XX.X% was reflects the in $X.XX in utilization XXXX net basis increased XXXX, adjusted as share in a in quarter EBITDA for $XX.X as $XX.X in or to continued EBITDA share a year compared partially our percentage Adjusted investment consultant and per million, XXXX. of quarter of the fourth full or

For the share XXXX, was $XX.X share per $XX.X full $X.XX or in per income year net compared $X.XX million, XXXX. adjusted to diluted or diluted million,

XXXX from The of revenues the cycle or and XX.X% few increase acquisition services total the for The our revenue fourth was company of fourth Health, which of of during revenues of each quarter revenues completed about Healthcare up consulting of comments the demand fourth of XXXX. Now XX% million our $X I'll our posted XXXX. of operating in performance Perception performance in digital million, quarter driven improvement for make offerings. generated by of from in segments. managed $XXX.X strong was quarter the quarter million, XXXX a December Revenues $XX.X the included segment and

our compensation consulting increased On our to for performance to strong offerings. and our compared as contractor The for an cycle expense. growth the in margin by basis, improvement million, and income quarter-over-quarter outpaced for $XXX professionals, quarter driven costs services XX.X% well managed Operating for in QX also XX.X% margin primarily was Healthcare a offerings, full for revenue in revenue was as Healthcare demand increase year that in XX.X% by partially due XXXX revenue-generating offset XXXX. increase same the increase to digital revenue

digital strong basis, year-over-year margin in than income mix year XXXX, decrease compared exceptionally primarily operating corresponding increased to full generates of growth by which consulting care margin XX.X% our the driven was and in XX.X% a health income revenue The our in a was On margin business. typically XXXX. lower operating

the offerings in operating opportunity represents digital and industry, revenue the term. an long health over continued growth care Our above-average for income

fourth inorganic for segment The of from strong and the of posted generated quarter million fourth included $XX.X million, XX.X% during quarter revenues services up the company quarter or Education X, the portfolio strong offerings. the from demand quarter $X.X XXXX. consulting completed acquisition Whiteboard, on was XX% revenues XXXX December our of revenues of $XX.X of digital, The increase of in by Revenues our of contributions of the million which fourth XXXX managed in total was driven and XXXX. across

year-over-year, for On revenues year research, XX.X% full strong student and strategy margin was this the same in by a basis, and income segment The XXXX. decrease Education operating demand QX for of our margin, grew XX.X% XX.X% reflects offerings. the Education for primarily growth capacity in for continued operations, driven digital compared to quarter XXXX The quarter-over-quarter in investments our business XXXX. during

XX% posted during million the of the million, fourth $XX.X segment XXXX. On a of basis, inorganic from and in acquisition Revenues strong XXXX. primarily XXXX, for of fourth quarter of advisory of included of the financial which XXXX. January The our increase of completed revenue to digital quarter-over-quarter was and to full XX.X% margin revenues company year $XX.X quarter total up XXXX of our in from in AIMDATA, generated quarter income or for Commercial demand attributable XX.X% XX.X% was offerings. compared revenue operating The fourth was $XXX,XXX revenues

year quarter our business grew of full basis, X.X% divestiture strong XXXX. $XXX.X revenues year-over-year, in offset the digital segment and financial and the for partially Commercial the by offerings, life of were a by On our sciences driven advisory of fourth demand million, impact

and in XXXX. Commercial sciences XXXX, in to increasedXX.X% the from compared life generated acquisition revenue the XXXX XXXX AIMDATA business by the revenues of revenue Excluding in our

compared segment by sciences quarter compensation-related mainly XXXX, business the The for the same operating costs our professionals. related in was which was The Commercial in XX.X% charges, for for increase quarter-over-quarter in XXXX. QX income margin for the offset XXXX life the XX% due of increase in restructuring to revenue-generating decrease partially to the primarily divestiture an to margin

that margin On professionals revenue charges. a the in restructuring compensation-related to was in our decrease operating full costs for primarily increase and by growth year basis, XXXX, income the XX.X% outpaced driven revenue-generating compared XX.X% in

fund million quarter Other XXXX. segment million XXXX the XXXX in $XX level corporate the and were corporate investment expenses approximately included both compared not the plan Other in of $XX.X XXXX quarter the to of increase assets gain expenses in at QX our allocated used with related reflected that QX fourth fourth liability $X.X million to plan of by offset expense the of the in compensation in other income. is which deferred and

due of partially expenses software in to expenses quarter compensation increases The support XXXX and expenses and our primarily costs fourth decreases license personnel, increase offset in expenses, was corporate the restructuring in travel-related legal in charges. for by

segment compared reduction corporate million a at increased the $X.X the to On million, included a of included million which deferred XXXX, which $XXX.X to plan expense the $XXX.X related with compensation to year full of not allocated expenses related basis, million compensation in deferred level plan. $X expense

legal practice compensation Excluding license to the million, hosting unallocated deferred primarily costs increased compensation the in impact software of and expenses and corporate data $XX.X in expenses as personnel travel-related well increases increased and as and expenses other both XXXX. administration for meeting costs to partially costs due our plan periods, in-person support in decreased as These expenses percentage corporate unallocated return plan, from offset in XX% to by events. deferred increases costs XXXX compensation restructuring of the more a the in and Similarly XX% excluding revenue we decreases as were of charges. in impact

million. debt. We cash included decrease flows. to fourth XXXX. our debt $XX.X approximately and of net was finished entirely shares. and XXXX compared repurchases million the XX, cash bank share sheet in balance million $XXX net or the of with of $XX $XXX million as Now The year for December a turning senior Total of This quarter million of debt debt to $XX QX XXX,XXX was consisted

in bank times of X.X million XXXX approximately used in Cash million. flow XXXX. $XX of XX, our Our costs, leverage to for in software adjusted and was X.X our operations December $XX adjusted internally times of developed from cash EBITDA agreement as $XX XXXX, compared as flow as ratio defined free to EBITDA inclusive of senior was December resulting we XX, million cash expenditures invest capital of

beginning for shares deployed we XXXX, shares, approximately representing we our to strategic acquisitions. tuck-in used During outstanding million And of the repurchase $X $XXX million the million X of year. as X.X% of

quarter our through XXXX, Directors the repurchase increased XXXX program, repurchase the authorized of authorized extension fourth of Board In share XX, an the $XXX of and million. share another by XXXX December amount

December of XX, XXXX, under to million quarter XXXX, and XX XXXX, days quarter of for for repurchases, third XX quarter the for came our of share the $XXX XXXX. DSO remained for authorization. fourth in current XX the at available As days of fourth days compared

the quarter, cash with to payment balance accordance during broader during in larger The compared the XXXX sheet the quarter, and a when period with health in a capital strong third We fourth and collections schedules. of in decrease care quarter, projects uncertainty education DSO in reflects environment. contractual entered increase working the flows, uncertain during the including, macro of cash

and provide in support remain XXXX, committed anticipated strategy. We capital a balanced terms, facility as our and to the we capital deployment shareholders quarter the on strategic executing tuck-in way fourth to restated to our deploying business, including, acquisitions. to well returning In credit capital in of amended growth additional our as flexibility favorable

Finally, turn for guidance to XXXX. let our expectations me and

to adjusted anticipate in $X.XX in $X.XX of EPS a year EBITDA of revenues For revenues XX% range of a in to the XXXX, reimbursable range range before expenses, $X.XX. a billion, billion of adjusted to XX.X% we $X.XX and full

to million. of We expect $XXX range million the be to in $XXX operations flows cash from

to be compensation. interest excluding to diluted million. million, expected share expected be of XX average analytical tools million range Capital to to inclusive develop flows cash the million, Weighted expenditures million in noncash stock $XX and be in and expected of count are XXXX, $XX net million to $XXX market-facing to approximately XX.X range free of cash cost a our $XX and for of and is products to are taxes

assume taxes, X% in state a expense XX%, the to respect you of blended tax which rate tax related of with rate expense Finally, federal X% rate tax to and of to nondeductible XX% should XX%, to incremental range comprises effective tax items. certain an the

starting growth to and XX% regard Let XX% XXXX growth, revenue. reflects with me revenue industry to the to expect XX%. of we revenue range revenue. for year The the in margins add operating full range the some of With be midpoint over will color high expect our XXXX revenue we segment, our approximately guidance Healthcare single-digit

percentage approximately low the expect In we segment, revenue growth be range we this of our operating XX%. see revenue segment, the of for to In and in and will percentage Commercial the double-digit XX% growth XXXX year expect operating in a XX%. be we to double-digit Education a expect segment in we approximately full expect for margins low margins to range to XXXX, XX%

growth corporate $XX be basis in expenses. meeting and continued quarterly in We reflecting to travel the SG&A, on expect our upper normalized in million XXXX, unallocated range a

X, generated consistent Also quarter, relates following we years, stock merit first factors, on the bases and anticipate quarter. on March promotion wage approximately The XX% retirement-eligible year our to for in the restricted annual during items XXX(k) to of expenses. that into these increases prior it January year go and and first awards expense adjusted compensation reset and an EPS match, granted of FICA effect our stock in for employees. to to increase the will in EBITDA be adjusted our XX% wage as be know full with full we Based

consider to walk these adjusted in will release The everyone. reminder, our Thanks measures. measures are reconciling closing through to we you you GAAP adjusted will to EBITDA, adjusted XXXX, As EPS, comparable items reconciliation schedules with respect net non-GAAP income, these that reconciliations. when several help that press there need a included

open to like now would call I to the questions. Operator?

Operator

from comes go of Thank the first Instructions] of you. Tobey. Please Our Sommer line ahead, Truist question Securities. [Operator Tobey

Tobey Sommer

the contrast in the compare start to care-related go how for the signals of sort you're out you for seeing to in the customers? would you opportunity want PI health versus those growth services and demand with other service I you. that Thank businesses, market

Mark Hussey

Hey, Tobey, Mark. it's

think in areas you to that going our that to terms operating had some digital model performance tied of increasingly, often the together. I of improvement be and of prior outside not then perhaps very Healthcare it And other been is prioritize is would the in segment. that

it would a both a segment. the say of improvement the really, main So I digital is, performance and Healthcare are drivers

John Kelly

lot pressures that the are financial into really a quite that financial perspective fourth of And some – year, end is perspective, too. Yeah, color improvement. that, are I I'll are quarter of was and that from backlog this our and last pipeline responsive the right reflected the talked just of really we performance John. that strong that now from think perspective, and add that a continued a quarter, improvement the sales third then last from of we performance the call clients quarter a at some about quarter under third offerings our in had a

continued environment. So I – like to investing I in security focus our secure on And on digital demand seen said think a at this be also more we then get see are to point strong wanting operational that's we've that haven't a from think for access including focus digital a to efficiency, engagement then we cloud-based in lot And driver XXXX. upgrade with really key with a a Mark expect slowdown to out just for consumers. really their a a data patient And clients the there, to and in of perspective, reasons, there infrastructure. and risks

Tobey Sommer

That's you. Thank helpful.

year, your laid feel out you're Given guidance goals last the your year ranges performance up this you to financial set hit Investor at do midpoint and like for your how Day? multiyear of

John Kelly

Tobey, we about five-year that goals. to able at grow I that the over What at starting Day, a in good was we expectation period XXXX XX%. we our the feel we'd be Investor top think very of growth line described compound rate – the those multiyear

on with was out be trajectory for hesitation. pace the going in start than we're as that XXXX, to see XX% we're we're we that as longer we to term in And confident able aligned faster XXXX, talked so Investor a at a our over Day. that guidance you that to continue able was that based nothing that growth what with guidance growth. about there's And look can year with in And off gives this us our

optimistic think faster fact, to opportunities Day. Investor than feel about pace continue at In a our we to about grow I what that we talked at

Mark Hussey

Yeah. new And solutions really would together go-to-market do certainly, that's a thing to the has what mean in clients really more the effective that be add brought to I to model range Tobey, certainly that operating our positive. we full are driving the of helping. I reflecting that's

a much lot increased opportunities about make that got I'd last across of then again, our that a a global gives the more think accounting from thread of enterprise plan a the a I of When everything a the view ways the look for driving we now and comment one of you just that us point do to incentive more that's margin there on model efficiency. we lot broad across have is stability that base And portfolio. gives integrated focused demand have things do and across different and no for single We've business. we really lot is today, everything. very win

our the confidence set in great to have us. objectives achieve ability So of we degree for we a

Tobey Sommer

me. for one last And

keep on toes is With see acquisition sort add to via the of the so now debt, company since it maybe foot to the the or a sort speak, to realm just like do in of opportunity its you modest and cash something digital an right front feels rapid growth going? the of momentum to generation need

John Kelly

growth we longer-term looking enable last accretive about again cash think always the our Investor do And the factors results have are at to market. our the M&A part point, I I is and going of us March talked Day and strategy. back to that your capacity think sheet to financial that that. to We're from And all balance flow strong

on remains focus our Our organic growth.

market from add the an years M&A them And will out organic that further looking to we're things growth portfolio we we we at the do like really scan the so when acquisition. when fuel the that after in feel perspective,

that's financial look filter a perspective at M&A the primary perspective. we so from And from an

Mark Hussey

And much maybe do part in of was not in later market and didn't we because a is that, the we continually while it add the comment XXXX, weren't looking. I'll We're that we cost in growth that of a working great low organic end that especially a way. with partners joining various us the up track very methodology has record have in been increasing

think more very our a on very do a we for I I So on see transformative about think but from we're you Not bit we if there's investor what something -- will won't discipline to think create that have say can we're value. returns focusing it, great careful we obviously shareholders. little objectives,

Tobey Sommer

Thank you.

Operator

you. Thank

Our the of Andrew question line comes next Blair William & Nicholas Company. of from

please, Andrew. Your question

Andrew Nicholas

was Thanks on touch if Hi. to and wanted foremost, Healthcare Good headcount afternoon. significantly for my taking it there. questions. correct pretty count up first looks head I like numbers are quarter-over-quarter my

XXXX to could hiring then more speak some some acceleration? to service concentrated, it time could curious, this performance kind And maybe, if current capture is you on that ability you the catch-up some hiring pipeline? of Just growth is demand expectations if for of and where your spend headcount to improvement

John Kelly

Sure this is Andrew, John.

asked see primarily to driver up client the you primary that's metrics healthcare area. improvement in beyond personnel performance headcount at on based we've where demand within our that managed business related our we're the hiring that we But absolutely from that the within scale First been headcount market. continuing That's the a behind the metric. just perspective about to that services in also healthcare interest that our

where If got an earlier ramped was bit that than in lighter the back norms you'll the our you up utilization as historical was quarter. fourth that and the a really area little go year recall, if to into we

So hiring business. to one the was we're our the resources. forward that step perspective current part that make now headcount the move in as certainly utilizing from we sure of in a But we're market

do to a true, lot building general look tends XXXX, say capacity you when think in be at while in of And did rule historically of we revenue. overall say I'd count would head that to that's I think thumb fluctuate line with XXXX. the I

use first So adding beyond we see we revenue to our goals. that be to in will of that you're that my heads expectation capacity hit built some then us is that and additional XXXX going

growth the So that outpace will think head the the count growth growth relationship -- I that the the likely in XXXX for headcount will likely will revenue outpace headcount be reason.

Andrew Nicholas

Makes the follow-up really know I growth that's make been really, was quarters, then sure plan. year-over-year. I And still the wanted to sense. of that so past that strong way describing sequentially my on couple it you've both the commercial, and just

the strategy capability is unpack quarter and the you next pieces if would little growth that was you in I and under a bit puts more or time it of quarter but year legacy fourth strong Was a bit, a especially touched on the business spend takes hoping could strengthening be hood the business, weaker You thinking about advisory the could on bit Just or restructuring little the in there. bit? a how more you're the helpful.

John Kelly

as starting in the towards one with Sure Andrew. I'd busy. perspective, strength very well high latter pace primary continued starting things and got financial industry growth fourth again. in but quarter. This digital restructuring really a the fourth offerings advisory commercial as say third turnaround/financial is of that commercial John that the where at areas quarter the the quarter, advisory the the say in of in very our offerings the end that from I'd a

the digital very into The and in that we growth And had surpassed busy a during that team continue tremendous of really so really year saw terms quarter. fourth -- full our revenue commercial that team was the fourth expectations the and quarter. of has

was From about the quarter fourth a steady XXXX. been growth we've that that at the for a relatively headwind as look I and And feeling and has I probably prior during good to that we for that of throughout macro steady their think and the as the in XXXX that little in think But with that XXXX strategy more business some business the towards we bit well look uncertainty year. pipeline for the say seen I'd our to add we're a of the ability of quarter. into perspective, part actually as business

Andrew Nicholas

back you. in I’ll queue. the Great. get Thank

Operator

you. Thank

of the of Benchmark. comes Our ahead, Please Bill Sutherland from go next question line Bill.

Bill Sutherland

to to follow-up was bit wanted puzzle doing the question you. of Mark. how Hi, segment you having just little wanted Innosight's only that think on John. Commercial a that Hi, Thank see -- I just case that the with in was a headwind?

Mark Hussey

Bill, good into Yes, And the their bit Innosight. macro but across that, had outlook Innosight some got little more good is a as John a strength this Mark. flat portfolio. the for of is They've of end uncertainty year. the played said

expectations growth continue ability I think, I business. terms to Innosight for so driving the of And in expanding good and have their

Bill Sutherland

mean In interested kind -- Great. on double-digit I'm growth constraints I guide. there of the are do any? the if education just based to you low in

mean I You your for place if the client -- they a system work hiring at cycle? in an of is then difference them? of might the backlog? in And really a is to implementation kind what's to starting that can you student do issue the want level the status can of that make where Is

Mark Hussey

me let Bill the we but it growth don't was jump to broad across John as new to So a in try question. I XX% rate I'd the well. there's of say everything have do. and -- I'll really beginning -- take love

just saw strong. talked we So it implementation And which the really areas. wasn't digital also certainly was the we about in equally number

really we're with and but at mean up Hiring it. working going has not able to been us. we to do keep an level to aren't issue hard here we're what growth I'm for not of say I that doing, sit

industry. And the that in of reflection the challenges so again -- a as going we are of some look on I just ahead think it's

is for and a necessarily different we the continue well tremendously that education And growth. positioned to think we ranges outlook, there's but the a good portfolio all to life the -- momentum. continues has that our things to think good but really are this we're many is was do really again clients I then just outlook. not have that did Student progress And got just the we trajectory breadth have at so cycle it of year it's I serving that leader positive And strength everything across different that market. perhaps of

John Kelly

range is exceptional And midpoint early in growth add was just I'll for we've the Yes. acknowledging look percentage and the that for for bit at the XX% double-digit little at year called education, particularly a the being the you XXXX. the probably year outlook guidance if low which Bill this about measured more

you within range the going growth be guidance the isn't But we again, certainly higher see to the probably be about based to the scenario where stronger of from team where XX% that market. just that revenue but end that on that if coming were would we think have demand education

know a for of student an a terms seeing think it's student where the cycle from growth in I back are the is been taking area. of been And has that little implementation just nice historically time limitations. the that area and HR in oftentimes we and perspective, And I the technology on bit finance of buying clients. -- that end

that of research a those some at of business large we institutions, we're seeing tools getting now But with the growing our point our we're smaller to that institutions well both some as the where cycle the clients in space. implementing now as have in

continue to in next you good believe that going we a business to that be few for we our about So, out years Huron. area the feel part that's if growth major and the of over progress look of

Bill Sutherland

a to off just they're some that's more. freezes. managing -- and and of about thinking -- I I'm one may in But not just there now a added the be you're how And projects. client with ROI. seeing and curious in some the more got just care I capital a your kind of thing if any the health IT the allocation of there talking restraint because about this essentially is then in where do of company want right base UPI terms And just those ROI. they hospitals call rapid I'm that know holdbacks cloud cases, implementations

Mark Hussey

in a of sales it beyond right really relatively demand in we Bill just seen have area that been area. We've and has major now. it's So, industry It's been the pullback. so a the force also seen ERP, care in not health amount steady

that of lot hospitals -- margin a that hurting got all health the systems are and pressures a You've happened. from really have margin

But playing pressures others investing to have address continue within that different business market. the in their angles and the have you many are to who from offense competitive they actually

relatively us continue forward. that stream going of steady So, to at believe that solid nothing demand this point, I we're would say not leads a there's see to to going

Bill Sutherland

Great. Thank you both.

Operator

ahead line comes Associates. Steinke Kevin. Barrington next the [Operator Research question of you. Instructions] go of Please Our from Thank Kevin &

Kevin Steinke

increasing normal into the what Hey, of of to and -- margin range what's and adjusted XX more of wanted you factors John making all good ask points terms EBITDA outlook? sort well John. cost as and in think some maybe implying terms in travel the for resumption into the guidance I that in and mentioned the I basis activities as XXXX about of how Mark that you're investments of afternoon baked margin to expansion XX

John Kelly

happy take to I'm one. Sure Kevin. John. It's that

I think drivers to the think utilization. are increased when we continued I largest margin be look at year, that positive range the going for expansion of

from in alone view point as to think opportunity our that we perspective. the year plans a for we I margin size a be XX up utilization XX that basis to

we and corporate down to bottom-line as good as level well income also we've and to the point that continue to more that's there's opportunity so opportunity. basis to probably the infrastructure then XX that drive dollars we those that another to good of about And XX operating feel and built grow scale segment

going to in factors. of I other there's investments make think a business. do the continue direction, that we the couple One,

we analytical solutions. standalone, OpEx us in but continue consulting out you'll recurring perspective this investments and both year also services of tools our managed enable sales a from some those and revenue to make to as some analytic our I build products help see think

pace. has as about talked business Digital more in our probably Digital very margins also, calls then And fast previous are And growing at we've range. been XX% in the a our

margins services in managed range. consulting upper tend blend XX% the Our to

that our you of growth improvement XX to so got the that XX basis a that that referenced. with creates of pace we of of Digital bit points But And pressure. mix faster all is little from of the anticipation that net

Mark Hussey

Kevin, our to compensation what which is out margin thing is and in which I'm part we XXXX, tied the be to And to said, first plan going for time incentive one in John change articulated. the the Hey to add well bonus that improvement. of broke made

come John the and And contribution around what many the areas. And not margins into the different around, think changed that in to so, it's really just in culture up will is said. the year. a That reflected clearly tailwind business as pricing I benefit of tightening is we some us degree that

So EBITDA margin we our think that our ability achieve gives us great guidance. in confidence to

Kevin Steinke

Okay. but sorry in the missed it the consulting the you. fourth -- in is this significant just I a there I'm I wanted an about spike utilization rate there is also on earlier, out -- Great. if the ask that improvement that utilization being and has Thank to is in quarter you XXs, called Digital kind margin the kind consulting of come a like more still looks to year. driver what but on of up, of room It does sustainable? spike this rate side? more just And site that normalize expansion to or in led

John Kelly

from from performance consulting within the across from So primary came financial you our area improvement the then and quarter really two they the saw area healthcare areas, that fourth advisory in business. came that really spike

really that's drove So it. what

more in I year. think is reality the side there The though we perspective, weren't probably is operating to it, on a the from longer-term upper reasonable consulting about it's think XXs. full the

the a full So margins remains on basis year we're opportunity to expand looking significant a that us. at for opportunity

on Digital upper-XXs global kind the the utilization during lower more And the On of the by actually metric was our team brought at and Digital was there. overall levels side, the the particularly fourth resources US the quarter. junior in

investments back half making the the of we've been And what is year. reflects the in that

that global of to and in bit the significant a onboarding, operations to was of been our a of margin XXXX, big little metric but a we've enablers headwind to number consultants expect in we in expansion XXXX. become So junior margins it

Kevin Steinke

your ability to to but, then, just increases? terms price pricing. of been forward? headwinds there's, with in compensation is wanted ability Okay. in that to about some mitigate Great. lastly factor And inflationary improve going your just I And that also know a ask I And margins

John Kelly

even in inflation began expect continue it's John the thereafter that and an some Kevin, our that successful and think to we at the pressure XXXX. passing have most we to pressure normalize And say, again. of our that rates we From with perspective, pressure XXXX, XXXX. Yeah. throughout been And saw saw we in of in XXXX residual through that I into projects. terms I'd that

feel So we good about that.

of timing in XXXX. was that to lag XXXX expecting in of we're impact. labor I I neutral more think had really just earlier and the some sometimes think in XXXX client the a that challenges be from and we between, the an But pricing perspective inflationary

If you that that's things on back at that upper-end the is range. to more look contributed we opportunity and something there's that be pricing aspect margin there feeling that look of of I we're and improvement. towards inflation of we from the think a if where we at upper-end, upside. at that able you end the working And and look even of kind I something to guide the were deliver think the for pricing, potential would get year, that a perspective beyond,

Kevin Steinke

questions thanks the on for taking congratulations And strong and Okay. Great. my results.

John Kelly

you. Thank

Mark Hussey

Kevin. you, Thank

Operator

questions Thank the queue, to more I'd in over back call turn no you. Mr. Seeing the Hussey. like to

Mark Hussey

our announce Have And this in time first spending with us good forward to afternoon. May, results. for again look we we evening. you you Thank speaking with a when quarter

Operator

for So you that conference concludes everyone call. your Thank participation. today's

Huron Consulting (HURN) 28 Feb 232022 Q4 Earnings call transcript