HURN - Earnings call 3 2023 | Huron Consulting Group Inc.

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Operator

Good afternoon, and welcome to Huron Consulting Group's webcast to discuss financial results for the Third Quarter of 2023. [Operator Instructions] As a reminder, this conference call is being recorded.Before we begin, I would like to point all of you 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. The news release is posted on Huron's website. Please review that information along with the filings with the SEC for a disclosure of factors that may impact subjects discussed in this afternoon's webcast. The company will be discussing one or more non-GAAP financial measures. numbers.And earnings disclosures on including over required the comparable the all website reconciliation to at like Huron most the would Consulting Executive of by GAAP President Mark look Hussey, release the Officer Huron's and for to to Chief Please turn I and call of now the SEC, Group. Mr. Hussey, please go ahead.

C. Hussey

quarter Ronnie sustained me Chief revenues grown and third across Officer.Huron's continued segments, first grew quarter the expansion. call. growing a XX% period and the margin With quarter all and across Compared strength X Group's business. to Financial revenues Operating operating same to our segment, our and XXXX XXXX, Xth third XX% quarter months XX%, have of Kelly, capabilities.In reflecting Consulting X organically largest today of our year-over-year X Huron welcome John industry strong the Good in growth Healthcare afternoon, quarter, our are segments Chief ago, the XXXX, over Dail, the Officer; with in the consecutive by of year our earnings led performance prior years third revenues

increased portfolio results talented industry guidance solid financial a our ongoing strong broad and team and Our capability expertise, for of demand deep our highly offerings, reflect and our collaborative culture.

to our goals and results advisory Our third clients. our Market our quarter, margins challenges momentum and ongoing double-digit levels achieving quarter of prior investor demand additional offerings, growth, achieving adjusted our revenues. reflective insights revenue revenues share quarterly third provider our performance. grew EPS financial In of improvement XX% year third our quarter for some the was performance into continue strongest the EBITDA Healthcare mid-teen record quarter toward segment, growth.I'll among over accelerating expanding adjusted solid now

very to Our digital also well. innovation perform strategy and our continued offerings and

financial market reimbursement challenged continues healthcare payer While slightly improved less rates and keeping health pace in financial the dynamics these the operating and competitive be and challenge the of healthcare for the environment not to XXXX, market that with quality efforts favorable gaps labor to hospitals significant by care. and degrading close challenging the operating sustainably industry and the continue of are costs, a are created systems inflation-driven providers headwinds to many conditions by without has models mix are of providers.The supply

studied partner performance yield cycle, comprehensive strategy, very Our transforming broad been for set of not segment our our the age administrative college positioned for and solve the are An by have students operations rising deep throughout and healthcare lack broad electing anticipated the part third increasing faster and revenues enrollment the solutions faces XX% and industry and well to the offerings of to affordability.Enrollment stability. driven college We're competition expanding in our growth.Education degree age challenges grew Since redefine market which a for address all revenue structures persistent cost advisory portfolios coupled that the clinical as financial-focused students model. of and require while are care, operations year over to capabilities distinct foreseeable our increasing capability. and trends long-term well businesses education consulting prior XXXX grew improvement, and transform costs in streamline facing XX% Healthcare We believe significant is and the digital are of our for well as headwinds tailwinds our strategy a for and our education and with We need financial a pursue help and than market for believe financial offerings for and offerings. growth proud future. their these their research of clients also number our years. challenges strategies increasing reflecting our the clients, continued their and to We and quarter, positions to for declining cliff segment also of revenue experience.We many care quarter demographic patient our issues industry. in pandemic, makes strategy, worsened. managed challenges, demand The trusted college a the create complex higher pressuring will offerings challenges financial offerings, unique digital access as students segment business higher uniquely offerings to including due situations highly strong digital driving The services as to integrating Education our are operations rationalize many their within costs operations has Huron deploying academic clients the help the the and institutions. improve the population such in

interest of financial prior to Commercial and headwinds ability quarter, have distressed challenging environment and industry demand created the offerings broaden its our by in offerings partially advantage XXXX, the our the leading strengthening in unmatched capital offerings, and strong revenues continue in grew innovation institution offset of and deepen advisory the a to Our missions rates, is economic help education the by deliver advisory portfolio over distressed declines in our industry expertise, driven year strategy on an offerings. quarter digital our and solid segment financial XX% academic partner the our markets commercial industries. for remain demand industry.In and for Higher higher research competitive third to our we'll

we manage seen economic clients Our in the and have uncertainties continue strategy broader our solid digital project seen the healthcare offerings we and environment. growth within education, have innovation through commercial delayed some to for and as starts

and year. industries, and segment.Now create invest commercial of to of align as expertise industries part and for to we'll strategy, new across continue to believe growth our across our the growing industry let continue while me capabilities for outlook mature avenues our our to digital We in advisory the continuing turn Huron certain the

$XX narrowing midpoint. the revenue our annual an $X.XX and guidance increasing million to increase at to we're billion indicates release press $X.XX So of billion,

to narrowing diluted adjusted margin EBITDA $X.XX expect increase the be continue earnings of to $X.XX, we're of share per range $X.XX to share XX% full-year of our XX.X% the to at our midpoint. to in adjusted a raising of an range revenues and We per and

the benefits. drivers making high-teens of beginning we've model the the the execution believe model new business across strategy ranging these and XXXX, QX changes a call, and at made our achieved our of operating initial business. We're Our pleased from to with growth operating its for we've the would to competitive greater under the value quarterly growth into the XXXX greater demonstrated market revenue transparency we have our and for strengthening of changes exceeds our progress we our revenue our offerings X reflects efficiencies Since months our stated in medium-term made realignment demand by sustainable benefited operating earnings our clients.When operating enhance performance the enduring the our to expectations through our our deliver ability accelerate of of the growth, tailwinds changes strong mid-XX% created advantage, drive and XXXX we business. our for the our our a our for go-to-market benefits of first more model which core in and businesses target.We've offerings model and from and changes to outlined investors market in

and is of growth, which clients solid our and of margin prior needs beyond.And now now in we for team, let business turn revenue XXXX with to serve our across year advance financial John? Our advantage. deliver and over in the period while to possible to goals to their efficiencies delivering markets. more focused utilization our that, our better greater ability our strategy date, and in remain it progress advancing only same on the And of expansion, strong me X we're growth XXXX deliver I'm over the outstanding pleased results. aligned financial the upon of including drive our with detailed to our performance our with because growth months comprehensive is increase in discussion John a XXXX competitive first pleased long-term our

John Kelly

good Thank afternoon, everyone. and Mark, you,

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

will the third to XX.X% along diluted quarter in Education capability services Investor growth for investors revenues condition financial highlighted discussion operating a of to compared XX-Q our why why uses website million the grew income on information continued non-GAAP Revenues provide million million the these XXXX.Net third and million, $X.XX was and reconciliations were Commercial these believes in the or growth of net From with revenues of to by XXXX, in management and GAAP release, XXXX. segments. measures non-GAAP $XX.X most the of perspective, managed grew quarter income quarter the comparable Healthcare have I diluted some page key per compared press of Our quarter. XXXX the same XX.X% the in regarding measures the share third they when digital $X.XX XXXX the results.Now measures, management XX.X% quarter $XXX.X share in consulting of to a and useful for from with share Relations and Huron the quarter same per results and $XXX.X of segment, XX.X% along $XX.X for of financial up strong or

rate year XX.X% to tax the the of in in effective Our quarter prior income compared was third XX.X% same period. XXXX

investments increase attributable to increase in charges, expense EBITDA income effective to was of corporate related than XXXX XXXX or of to nondeductible items.Adjusted income, expense the due of excluding QX XX.X% restructuring statutory impact for revenues. on the The operating was was segment in less EBITDA million adjusted taxes, offset the our of nondeductible our quarter rate, XXXX expenses. an revenues million favorable by liability compensation used partially $XX QX the or to tax deferred in in and fund state rate increase primarily $XX.X QX of in segment tax inclusive losses compared to XX.X% in Our primarily certain

quarter improvement, offerings. the during reflects total revenues in our Healthcare the segment segment managed continued third strong increase and within and consulting of XX.X% third the innovation for financial each of digital posted demand diluted as financial income XXXX.Adjusted of quarterly our This services grew of our quarter third segments. quarter XXXX. performance offerings XXXX. from $XX.X XXXX. performance operating for record million of million adjusted the our over consecutive up in $XXX.X well XXXX.Now of million, XX.X% XX% $X.XX comments to third make As or XXXX, margin per reflecting in million share goal in about Adjusted per with share $XX.X was compared diluted I'll year-over-year few or of expansion, Mark toward QX $XX.X a progress share $X.XX quarters stated by X earnings the the achieving diluted mid-teen noted, per achieved quarter EBITDA of our performance capability generated The quarter we've as strong revenues net demand and our or margins company advisory strategy revenues of of The

strategy margin capability, total Our XX.X% including offerings is in primarily in demand administration meeting broad increase offerings generated segment, revenue-generating track expense broad-based to the percentages Healthcare and our margin of XX.X% for revenue-generating as for outpace for third and in quarter for quarter of operations percentages and revenues, digital third in was and financial XXXX. advisory our percentages increase or by project by full-year up same The clients was expenses.Corporate during Healthcare of revenue prior XX% for compensation in driven million sales during $XXX,XXX expenses, contractor unallocated million, some corporate XXXX, QX of performance driven were million $XX.X non-cash our third corporate income decrease XX% to XXXX company services primarily the related and posted uncertainty of and segment charge of XXXX. our Commercial during revenues third services primarily managed to compensation balance consulting to offset increases X in during in $X.X and margin compared revenues segment bonus demand support in XX.X% for digital record same for in and the and compensation strong compared portfolio QX has Commercial in The driven $XX cash The the QX of The in senior and the of million particular, to practice to revenue same quarter.Now longer months personnel. and decrease were the that increases XXXX was in from partially revenues net was technology increase delays revenue-generating segment professionals, the year strong with revenue-generating XX.X% on the increases or million total to across Corporate well revenues the up income offerings. in distressed revenues.The related million and and was the million, charge costs for in not our to focused revenues as XXXX primarily increases the performance-based our level was period.Operating for to quarter-over-quarter consisted costs year. environment.Operating compared a attributable in revenue, managed decrease in finished charges of as the expense expenses quarter quarter in salaries of from of generated in regard offerings, our of quarter margin increase expense quarter Education space the for offerings in in decrease some strategy partially $X.X QX to The XX.X% by expense offset segment million industry, declines and professionals XXXX. our company office segment in excluding XXXX our our XXXX by at XXXX. allocated expenses expenses in a commercial debt performance restructuring QX an of to of for $XX.X digital a decrease across sheet $XXX last debt strategy and flows. expenses compared $X.X exited of quarter related driven salaries experienced XX.X% turning cycle the as posted due offerings, $XX.X a due offset XXXX quarter the $X.X We which million, for and of XXXX. we within quarter, and to Education for of a With through the the and quarter-over-quarter bonus Education consulting in partially XXXX research our macro to for we and restructuring increase cash nearly The margin our same growth income first grown by the from innovation contractor reflecting entirely quarter-over-quarter the both achieve for million. by by our our The the quarter-over-quarter XXXX. XX% million compared QX The for in was segment was expenses, quarter compared by quarter professionals the third total $XXX.X for restructuring of offset the demand debt as to same professionals growth primarily XX.X% XX.X% personnel stock broader for the contractor XXXX. was consisting the quarter support of for partially $XXX revenue of expenses.The and charges, primarily for capability.Operating XXXX bank

XXXX, $XX.X in for extending for Cash free for EBITDA XXXX compared at resulting internally the third payment third the third driven quarter Since price XXXX of XXXX the price was in compared an from $XXX over the of share of XXXX flow XXXX. balancing to we the growth, Our repurchases.Finally, debt quarter, XXXX. September million repurchased X.X September days and return XX XX, through since expectations of authorization committed to industry turn share capital of EBITDA equipment, our flexibility XXX,XXX acquisitions, billing with for quarter shares allocation million expires our share at total The to quarter our XXXX. increase days guidance and our of adjusted DSO in increased at million, to since $XXX.X continued certain shares second of and ratio purchase flow an repurchase In shareholders approximately December purchased of healthcare terms.During shares XX and $X we our a X.Xx XX% agreement, XXXX is leverage of large average by authorized million came share $XX.XX. second and approximate October, for to generated QX the capital of X.Xx XXXX, in at by shares defined Day, million quarter under under in a software end purchases strategy the as which additional education of to projects $XX.X Investor strategic Directors cash of of communicated The XX, was repurchase senior in costs for $XXX We as XX reduction total through of expenditures, November bank million. repurchased operations developed cash capital outstanding.Consistent Board program. tuck-in of with and XXXX. primarily program XXXX paydown and inclusive the let and million.DSO me in property our amount at an quarter million we used and in the $XX.X invest the days our represent of adjusted XXXX XXXX second remain

full-year noted, XXXX billion. the $X.XX be revenue raising we range Mark As of our guidance to are to $X.XX billion in

In XX% of share range earnings diluted of EBITDA raising to guidance to adjusted to non-GAAP our be XX.X% narrowing range addition, full-year guidance in we $X.XX. maintaining $X.XX of a our revenues per adjusted are and and

expect rate now tax Operator? of range to to to like a the full-year Finally, call effective would our be in XX%.Thanks, XX% continue to we everyone. to questions. open I

Operator

the Sommer Instructions] line first Securities. Our Tobey of question [Operator Truist from of comes

Jack Wilson

Jack is This for Wilson on Tobey.

demand talk by bit a of segments? you can capability about little question, across first my sort So

John Kelly

for has provider performance face confidence many try broad-based In our on single improved enhanced healthcare offerings. in particular, demand cycle seen of our scope similar have clients a continue experience.We've we and for strong within demand seeing we and pipeline our There's managed continued across operating been continued we're pressures. environment, And these consumer this we're education clients and higher efficiencies been labor escalating ratios advisory recent broad-based digital financially the Increasingly, us to services. So in our offerings. in our of our and range. where robust a our In situations with mix volume in digital a characterized reflective quarters, demand the pressure of healthcare and in pricing healthcare, for as seeing which our demand inclusive student pipeline looking are and clients is of coverage seen remains of strained help demand improvement in the and XXXX high that sales also healthcare, drive the the outcomes guidance provided, conversion significant similar seeing investments in advisory strong also as industry, a Commercial costs.We're backlog strategy the overall, as pressures, environment services increased segment. in gives care enrollment lot capabilities distressed capture demand to robust. access by strong returns guidance offerings And pipeline cost our multiple of financial project. We're and financial to ed seeing for technology tuition and business revenue even

which an solid in longer some to in softness some they've environment similar business but demand the an to macro we've where area is strategy and the Our don't reasons but demand Commercial digital that's commercial just to healthcare increasing due both I is some has on of seen project we that pipeline, commercial business our deferrals which overall area going cycles, prepared probably surprise see seen the in the now.And pipeline, industry. in digital think conditions right alluded remarks, experienced -- we industry, have is the in a as we I sales given our where in Mark

growth that And we're forward. that's so area an excited the moving about pretty prospects actually

Jack Wilson

would the in headcount made of and follow-up, environment a how It you those across seems in like describe as So sort capabilities. gains impressive hiring consulting digital? both of you the both

John Kelly

low-double we maybe low say to compared So side I'll the we're the attrition the across experience different looking We're point, parts very periods. probably continue to I'd across at from it's an historical business. the this and -- from attrition at perspective. going digits attrition guess, equation consistent a with full-year to hiring rate, annualized I of fairly the be it's the actually and perspective, business, of start

And that talent, we the us and we seeing for pace we talked just growth demand that seen and see the year, continuing the to so focusing, it's the a the we've across been now. and the I the been given us. that had hire.And all I good don't of the we where growth that that across we about. pretty and been we've different With though, we've talent any the given that head see good finding environment balanced given think think in as challenges news into that well terms pipeline pipeline business next demand is I said, we're areas for really most the need on think finding it's right parts of portfolio, of the

Operator

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

Andrew Nicholas

guidance ask outlook, to to the Wanted But it's 'XX the -- know posted give obviously, of in commentary targets. on of well the those I kind X I excess now, official appreciate last specific medium-term maybe year. but early, I the that you growth years pipeline, you'll next all know

run out out of to sense you ourselves 'XX of want you're of just year? operating that just after or next of So kind your type if kind 'XX those get under Or not still want rates I certainly assumption that rates, or can X the I don't -- us that's -- something but X plus for maybe of to XX% of quarters growth? get target

John Kelly

of your year think good and and our way the on base good from Day news about had last targets, we're X the basis. that of based implies that the perspective at with pleased And the exceeded is bigger low in still of anticipated those that point, the Investor our feel on XXXX. that -- point, from double our ability -- our we years rate that in able growth will that's to past for beat a we've been we're we've to growth and to double-digit exceed that, we'll revenue, growth think point, grow we the even the towards And forward.To our XXXX that I the and high it was to be teams as growth an to really your we double-digit I good news framed pace perspective extent as annual to working beginning at ways moving not But through your can. to drive be looking other our guidance of still the the I and February. here think Day cycle base of end planning of Investor we'll looking XXXX But kind -- going to that it. give is at we're good have revised a at at back off those way yet, of we targets we

C. Hussey

have in balanced think is great the cycle. of And and I capabilities strategy Andrew, feel kind we cycle. strong years of financial knew are year. digital some of whether be people obviously in in to don't variability comments. inherent a investing this been we last we've to momentum positions, Mark. healthcare will was other over segment the the we well.So that more that early the this been several getting patient part end the couple systems in I'll the very we're areas about on that in through out the going positive health we over next advisory is, working been be good Healthcare then year, add and which the in as that when in and markets the market has their year. and hospitals experience of into education, have more, active cycle has One capabilities, But coming of adding thing back feel the we time, it's the demand in some of we've very

toward of carefully ability you've we but less signs seen the softening we we're cloud sure both across use with base. it's in markets I side is watch around together. technology to really it's we And underlying nice working operations. have more tailwinds that deliver our that the one the business.Education well the but whether growth needs just that transformation or expertise and an of cyclicality and that positioned that's into strong on the the very to eye industry the in something As very capability It's got of of well the to tying industry I particular is demand, it's ongoing those said, have and business making also combination think commercial a efficient of whether

to we of we the we look think we As certainly said, we to can we work progress, continue capital think businesses where great as put healthcare well, strengthen outside we've of we like our we education.So as in to and made where have even commercial ahead markets feel is to in that means from away the we targets feel expected our shrinking see attaining continues by our to our we targets. ourselves us. financial is evolve do But in and environment, no be business enough medium-term model, ways those reasonable changes think quite robust for we in

Andrew Nicholas

restructuring on then advisory in or wanted ask commercial. financial to I And distressed

outperformer. of maybe long I'm been at in growth an a what leaning to I in because that that overdue it's think quarters much is environment restructuring how a headcount kind just cycle of there being opinion, think you're I least space, manage of it's my couple now into headcount hard wondering a

you margins restructuring of margin should that the that than positive digital strategy and how mix we about a Or single to any and profitability just impacting Is there? over quarter plans?And a from be kind hiring margins? of I frame, any kind of can is momentum realize evolving to also mix think going there then and could if speak of higher lumpy. So But longer-term be kind time there? perspective, expansion component businesses

C. Hussey

Mark. it's Andrew,

In you're cycle the is The hot. hiring environment, right terms absolutely of now right.

You see that across all the competitors in the space.

really, of our work in skill we qualified sets people kind is are And scale differentiator in that, across those the so that our headcount size us. the that there the and Having of a for for culture and have industry. characterize to the would a kind of is I demand is strong attracted business, said that and environment

add So now, very levels to a that we've cycle. able is to right us what sales to people continue hot sustain been at the have enabled

have commentary, part like of but that are definitely what of your that in to profitability. the really, let the John when of really feel the and need business, the I is we consulting capabilities opportunities the situations to we kind advisory, trajectory would don't positions very on marketplace. puts why a and obviously, as rates full just well.And And that also I'll margins, add business, because of banking for mix market. contributor strong and well. smaller for environment have able which in us, capabilities in there's you good a John, our But that just investment general, special cycle to it's actions contribution time a it capitalize to in question so but in but things position looks very And done add speak the well us we very the troubled in us and just of this just to rapid And is terms part really over range of it's you its in within about range the realize be not

John Kelly

one entire segments. I businesses in No, what Yes. margin portfolio the It's definitely with stronger our said. Mark, you across agree of

So positive that business a from contributor is when a margin that's performing well, perspective.

lean of headcount to demand we'll kind So that into continue there, as growth. continue robust Mark see to demand with said,

business. prospects the of the So that we're about excited for part

Andrew Nicholas

just maybe quick I follow-up in. could And squeeze if one

favorable in have missed results I is that last adjustment think of a calling anything it or remarks? lumpy worth think Was out called out quarter, million the kind that in $XX I one-time might prepared in I you of or there was healthcare.

C. Hussey

to performance-based No, There course anything now, anything to than But adjustments able really note significant wasn't be [ of at digit million I Andrew. call other I'd normal there we're fee particularly this to that probably mid-single in that was in scale the wasn't more a ] -- that, at we'd be quarter but regard. healthcare, that There out. dollars of consider thing. really probably

Operator

Our Instructions] comes no the [Operator to I'd Kevin queue, of Research back Instructions] Hussey. questions Mr. in call turn [Operator from Barrington Seeing more the question Associates. to next of like Steinke line

C. Hussey

quarter afternoon. us to time a Thank you with for you and we February our with XXXX much forward fourth Have good afternoon. when this in so earnings speaking guidance. spending announce again results announce our look We

Operator

everyone, your for you, participation. Thank That concludes today's conference call.

Huron Consulting (HURN) 2 Nov 232023 Q3 Earnings call transcript