Current Report Filing (8-k)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8–K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

July 29, 2014

Date of Report (Date of earliest event reported)

 

 

Huron Consulting Group Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		000-50976		01-0666114
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification Number)

550 West Van Buren Street

Chicago, Illinois

60607

(Address of principal executive offices)

(Zip Code)

[phone]

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On July 29, 2014, Huron Consulting Group Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02 and the attached Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)		Exhibits
99.1		Press release, dated July 29, 2014

 

- 1 -

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				Huron Consulting Group Inc.
				(Registrant)
Date:    July 29, 2014				/s/ C. Mark Hussey
				C. Mark Hussey
				Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer

 

- 2 -

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press release, dated July 29, 2014

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

July 29, 2014

Huron Consulting Group Announces

Second Quarter 2014 Financial Results

 

•

Revenues increased 22.9% to $209.4 million for Q2 2014 compared to $170.4 million in Q2 2013.

 

•

Operating income increased 11.4% to $34.0 million for Q2 2014 compared to $30.5 million in Q2 2013.

 

•

Adjusted EBITDA(6), a non-GAAP measure, increased 14.9% to $42.2 million in Q2 2014 compared to $36.7 million in Q2 2013.

 

•

Diluted earnings per share from continuing operations for Q2 2014 increased 24.6% to $0.86 compared to $0.69 in Q2 2013.

 

•

Adjusted diluted earnings per share from continuing operations(6), a non-GAAP measure, increased 26.7% to $0.95 in Q2 2014 compared to $0.75 in Q2 2013.

 

•

Company raises its 2014 full year revenue guidance to a range of $805.0 million to $825.0 million. Company also raises GAAP diluted earnings per share in a range of $3.40 to $3.55, and non-GAAP adjusted diluted earnings per share(7) in a range of $3.25 to $3.40.

CHICAGO – July 29, 2014 – Huron Consulting Group Inc. (NASDAQ: HURN), a leading provider of business consulting services, today announced financial results for the second quarter ended June 30, 2014.

“Strong second quarter results capped off a solid first half of the year for the Company. Both the Huron Healthcare and Huron Legal segments, which comprise approximately 75% of the Company’s revenue, generated strong growth,” said James H. Roth, chief executive officer and president, Huron Consulting Group. “Our business continues to be driven by the complex and rapidly-changing business environment facing clients across our primary markets. We expect that these pressures on our clients will remain or increase during the coming years, and we are encouraged by our ability in all of our operating segments to continue to provide value to our clients as they address a difficult array of challenges.”

Second Quarter 2014 Results

Revenues for the second quarter of 2014 were $209.4 million, an increase of 22.9% compared to $170.4 million for the second quarter of 2013. The Company’s second quarter 2014 operating income was $34.0 million, compared to $30.5 million in the second quarter of 2013. Net income from continuing operations was $19.9 million, or $0.86 per diluted share, for the second quarter of 2014, compared to $15.8 million, or $0.69 per diluted share, for the same period last year.

Second quarter 2014 earnings before interest, taxes, depreciation and amortization (“EBITDA”)⁽⁶⁾ was $41.6 million, or 19.9% of revenues, compared to $36.1 million, or 21.2% of revenues, in the comparable quarter last year.

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In addition to using EBITDA to evaluate the Company’s financial performance, management uses certain other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

		Three Months Ended June 30,
		2014				2013
Amortization of intangible assets		$	2,912			$	1,451
Restructuring charges		$	1,034			$	596
Other gain		$	(440	)		$	—
Tax effect		$	(1,402	)		$	(819	)

Adjusted EBITDA⁽⁶⁾ was $42.2 million, or 20.1% of revenues, in the second quarter of 2014, compared to $36.7 million, or 21.5% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations⁽⁶⁾ was $22.0 million, or $0.95 per diluted share, for the second quarter of 2014 compared to $17.0 million, or $0.75 per diluted share, for the comparable period in 2013.

The average number of full-time billable consultants⁽¹⁾ was 1,784 in the second quarter of 2014 compared to 1,532 in the same quarter last year. Full-time billable consultant utilization rate⁽²⁾ was 77.8% during the second quarter of 2014 compared with 76.9% during the same period last year. Average billing rate per hour for full-time billable consultants⁽³⁾ was $232 for the second quarter of 2014 compared to $213 for the second quarter of 2013. The average number of full-time equivalent professionals⁽⁴⁾ totaled 1,157 in the second quarter of 2014 compared to 1,087 for the comparable period in 2013.

Year-to-Date Results

Revenues for the first six months of 2014 were $420.1 million, an increase of 25.6% compared to $334.4 million for the first half of 2013. The Company’s operating income for the first six months of 2014 was $75.8 million compared to $51.9 million in the first six months of 2013. Net income from continuing operations was $54.0 million, or $2.34 per diluted share, for the first six months of 2014 compared to $27.2 million, or $1.20 per diluted share, for the same period last year.

EBITDA⁽⁶⁾ was $90.6 million, or 21.6% of revenues, for the first half of 2014 compared to $62.9 million, or 18.8% of revenues, for the same period in 2013.

In addition to using EBITDA to evaluate the Company’s financial performance, management uses certain other non-GAAP financial measures, which exclude the effect of the following items (in thousands):

 

		Six Months Ended June 30,
		2014				2013
Amortization of intangible assets		$	5,430			$	2,907
Restructuring charges		$	1,163			$	596
Litigation and other gains		$	(440	)		$	(1,150	)
Tax effect		$	(2,461	)		$	(941	)
Net tax benefit related to “check-the-box” election		$	(10,244	)		$	—

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Adjusted EBITDA⁽⁶⁾ was $91.3 million, or 21.7% of revenues, in the first half of 2014, compared to $62.3 million, or 18.6% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations⁽⁶⁾ was $47.5 million, or $2.06 per diluted share, for the first six months of 2014 compared to $28.6 million, or $1.26 per diluted share, for the comparable period in 2013.

The average number of full-time billable consultants⁽¹⁾ increased 15.4% to 1,751 in the first half of 2014 compared to 1,517 in the same quarter last year. Full-time billable consultant utilization rate⁽²⁾ was 76.0% during the first half of 2014 compared with 77.4% during the same period last year. Average billing rate per hour for full-time billable consultants⁽³⁾ was $240 for the first six months of 2014 compared to $213 for the first six months of 2013. The average number of full-time equivalent professionals⁽⁴⁾ increased 17.4% to 1,333 in the first half of 2014 compared to 1,135 for the comparable period in 2013.

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 revenues by operating segment as a percentage of total Company revenues are as follows: Huron Healthcare (50%); Huron Legal (26%); Huron Education and Life Sciences (17%); and Huron Business Advisory (7%). Financial results by segment are included in the attached schedules and in Huron’s forthcoming Form 10-Q filing for the quarter ended June 30, 2014.

Acquisition

On May 5, 2014, Huron completed its acquisition of Vonlay, LLC, a healthcare technology consulting firm specializing in clinical, administrative and financial system implementation and optimization.

Share Repurchase Program

The Company’s Board of Directors authorized a share repurchase program pursuant to which the Company may, from time to time, repurchase up to $50 million of its common stock through February 28, 2015. In the second quarter of 2014 the Company repurchased 157,850 shares at an average price of $60.40, totaling $9.5 million. The amount and timing of the repurchases are determined by management and depend on a variety of factors, including the trading price of the Company’s common stock, general market and business conditions, and applicable legal requirements.

Outlook for 2014⁽⁷⁾

Based on currently available information, the Company raises guidance, which was previously provided on April 29, 2014, for full year 2014 revenues before reimbursable expenses in a range of $805.0 million to $825.0 million. The Company also raises EBITDA in a range of $151.7 million to $157.7 million, Adjusted EBITDA in a range of $152.5 million to $158.5 million, GAAP diluted earnings per share in a range of $3.40 to $3.55, and non-GAAP adjusted diluted earnings per share in a range of $3.25 to $3.40.

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

Second Quarter 2014 Webcast

The Company will host a webcast to discuss its financial results today, July 29, 2014, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by NASDAQ OMX and can be accessed at Huron Consulting Group’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.

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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 from continuing operations and Adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that such measures, as supplements to operating income, net income from continuing operations and diluted earnings per share from continuing operations and other GAAP measures, are useful indicators for investors. These useful indicators can help readers gain a meaningful understanding of our core operating results and future prospects. 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 Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, transform the enterprise, reduce costs, leverage technology, process and review large amounts of complex data, address regulatory changes, recover from distress and stimulate growth. Our professionals employ their expertise in finance, operations, strategy and technology to provide our clients with specialized analyses and customized advice and solutions that are tailored to address each client’s particular challenges and opportunities to deliver sustainable and measurable results. The Company provides consulting services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, leading academic institutions, Fortune 500 companies, governmental entities and law firms. Huron has worked with more than 425 health systems, hospitals, and academic medical centers; more than 400 corporate general counsel; and more than 350 universities and research institutions. 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 (the “Exchange Act”) 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” or “continues.” These forward-looking statements reflect our current expectations about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, current expectations with respect to, among other factors, utilization rates, billing rates, and the number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions continue to trend upward. These statements involve known and unknown risks, uncertainties and other factors, including, among others, those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, 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. We disclaim any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

Media Contact:

Jennifer Frost Hennagir

312-880-3260

[e-mail]

Investor Contact:

C. Mark Hussey

or

Ellen Wong

312-583-8722

[e-mail]

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HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Revenues and reimbursable expenses:
Revenues		$	209,405			$	170,407			$	420,136			$	334,443
Reimbursable expenses			21,141				18,123				40,244				33,459
Total revenues and reimbursable expenses			230,546				188,530				460,380				367,902
Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):
Direct costs			124,289				102,869				247,899				208,997
Amortization of intangible assets and software development costs			1,290				674				2,391				1,332
Reimbursable expenses			20,899				18,118				40,330				33,469
Total direct costs and reimbursable expenses			146,478				121,661				290,620				243,798
Operating expenses and other operating gains:
Selling, general and administrative expenses			43,184				30,847				80,872				63,110
Restructuring charges			1,034				596				1,163				596
Litigation and other gains			(440	)			—				(440	)			(1,150	)
Depreciation and amortization			6,267				4,877				12,323				9,656
Total operating expenses and other operating gains			50,045				36,320				93,918				72,212
Operating income			34,023				30,549				75,842				51,892
Other income (expense), net:
Interest expense, net of interest income			(1,594	)			(1,706	)			(2,965	)			(3,569	)
Other income (expense), net			169				(152	)			345				(139	)
Total other expense, net			(1,425	)			(1,858	)			(2,620	)			(3,708	)
Income from continuing operations before income tax expense			32,598				28,691				73,222				48,184
Income tax expense			12,685				12,877				19,183				21,001
Net income from continuing operations			19,913				15,814				54,039				27,183
Loss from discontinued operations, net of tax			—				(9	)			—				(41	)
Net income		$	19,913			$	15,805			$	54,039			$	27,142
Net earnings per basic share:
Net income from continuing operations		$	0.88			$	0.71			$	2.39			$	1.22
Loss from discontinued operations, net of tax			—				—				—				—
Net income		$	0.88			$	0.71			$	2.39			$	1.22
Net earnings per diluted share:
Net income from continuing operations		$	0.86			$	0.69			$	2.34			$	1.20
Loss from discontinued operations, net of tax			—				—				—				—
Net income		$	0.86			$	0.69			$	2.34			$	1.20
Weighted average shares used in calculating earnings per share:
Basic			22,645				22,351				22,617				22,246
Diluted			23,098				22,760				23,092				22,624

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HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

		June 30, 2014				December 31, 2013
Assets
Current assets:
Cash and cash equivalents		$	9,218			$	58,131
Receivables from clients, net			136,149				123,750
Unbilled services, net			94,024				55,125
Income tax receivable			11,322				270
Deferred income taxes, net			11,931				15,498
Prepaid expenses and other current assets			15,261				19,740
Total current assets			277,905				272,514
Property and equipment, net			38,707				38,742
Other non-current assets			16,158				16,485
Intangible assets, net			29,773				21,222
Goodwill			566,998				536,637
Total assets		$	929,541			$	885,600
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	13,422			$	8,185
Accrued expenses			15,845				19,180
Accrued payroll and related benefits			62,955				97,677
Bank borrowings, current portion			26,250				25,000
Accrued consideration for business acquisitions			5,480				5,177
Income tax payable			—				2,917
Deferred revenues			16,588				15,248
Total current liabilities			140,540				173,384
Non-current liabilities:
Deferred compensation and other liabilities			10,003				5,360
Bank borrowings, net of current portion			152,500				143,750
Deferred lease incentives			14,150				12,355
Deferred income taxes, net			22,867				20,487
Total non-current liabilities			199,520				181,952
Commitments and Contingencies
Stockholders’ equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 25,558,342 and 25,246,565 shares issued at June 30, 2014 and December 31, 2013, respectively			247				245
Treasury stock, at cost, 2,066,921 and 1,993,769 shares at June 30, 2014 and December 31, 2013, respectively			(92,412	)			(88,091	)
Additional paid-in capital			452,429				443,144
Retained earnings			229,802				175,763
Accumulated other comprehensive loss			(585	)			(797	)
Total stockholders’ equity			589,481				530,264
Total liabilities and stockholders’ equity		$	929,541			$	885,600

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HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Six Months Ended June 30,
		2014				2013
Cash flows from operating activities:
Net income		$	54,039			$	27,142
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			15,071				10,988
Share-based compensation			10,273				8,832
Allowances for doubtful accounts and unbilled services			(281	)			5,375
Deferred income taxes			5,816				5,213
Changes in operating assets and liabilities, net of acquisitions:
(Increase) decrease in receivables from clients			(4,679	)			4,576
(Increase) decrease in unbilled services			(37,220	)			(33,936	)
(Increase) decrease in current income tax receivable / payable, net			(13,966	)			(9,795	)
(Increase) decrease in other assets			4,489				712
Increase (decrease) in accounts payable and accrued liabilities			10,517				2,583
Increase (decrease) in accrued payroll and related benefits			(32,764	)			(15,849	)
Increase (decrease) in deferred revenues			904				(3,120	)
Net cash provided by operating activities			12,199				2,721
Cash flows from investing activities:
Purchases of property and equipment, net			(11,433	)			(10,201	)
Net investment in life insurance policies			(797	)			(654	)
Purchases of businesses			(51,391	)			—
Capitalization of internally developed software			—				(1,058	)
Proceeds from note receivable			328				219
Net cash used in investing activities			(63,293	)			(11,694	)
Cash flows from financing activities:
Proceeds from exercise of stock options			779				30
Shares redeemed for employee tax withholdings			(3,140	)			(581	)
Tax benefit from share-based compensation			4,602				1,242
Share repurchases			(9,539	)			—
Proceeds from borrowings under credit facility			74,000				66,000
Repayments on credit facility			(64,000	)			(77,250	)
Payments for debt issue costs			(41	)			—
Payments for capital lease obligations			(42	)			—
Deferred payment for purchase of property and equipment			(471	)			(471	)
Deferred acquisition payment			—				(481	)
Net cash provided by (used in) financing activities			2,148				(11,511	)
Effect of exchange rate changes on cash			33				(70	)
Net decrease in cash and cash equivalents			(48,913	)			(20,554	)
Cash and cash equivalents at beginning of the period			58,131				25,162
Cash and cash equivalents at end of the period		$	9,218			$	4,608

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HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

		Three Months Ended June 30,								Percent Increase (Decrease)
Segment and Consolidated Operating Results (in thousands):		2014				2013
Huron Healthcare:
Revenues		$	100,967			$	78,946				27.9	%
Operating income		$	38,475			$	29,507				30.4	%
Segment operating income as a percentage of segment revenues			38.1	%			37.4	%
Huron Legal:
Revenues		$	53,296			$	45,089				18.2	%
Operating income		$	15,790			$	10,793				46.3	%
Segment operating income as a percentage of segment revenues			29.6	%			23.9	%
Huron Education and Life Sciences:
Revenues		$	37,747			$	37,134				1.7	%
Operating income		$	11,633			$	11,547				0.7	%
Segment operating income as a percentage of segment revenues			30.8	%			31.1	%
Huron Business Advisory:
Revenues		$	16,574			$	9,263				78.9	%
Operating income		$	5,129			$	3,952				29.8	%
Segment operating income as a percentage of segment revenues			30.9	%			42.7	%
All Other:
Revenues		$	821			$	(25	)			N/M
Operating loss		$	(520	)		$	(244	)			113.1	%
Segment operating loss as a percentage of segment revenues			N/M				N/M
Total Company:
Revenues		$	209,405			$	170,407				22.9	%
Reimbursable expenses			21,141				18,123				16.7	%
Total revenues and reimbursable expenses		$	230,546			$	188,530				22.3	%
Statement of Earnings reconciliation:
Segment operating income		$	70,507			$	55,555				26.9	%
Items not allocated at the segment level:
Other operating expenses and gains			30,217				20,129				50.1	%
Depreciation and amortization expense			6,267				4,877				28.5	%
Total operating income			34,023				30,549				11.4	%
Other expense, net			1,425				1,858				(23.3	)%
Income from continuing operations before income tax expense		$	32,598			$	28,691				13.6	%
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1):
Huron Healthcare			1,114				916				21.6	%
Huron Legal			124				145				(14.5	)%
Huron Education and Life Sciences			407				434				(6.2	)%
Huron Business Advisory			172				63				173.0	%
Total			1,817				1,558				16.6	%
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare			1,071				883
Huron Legal			129				149
Huron Education and Life Sciences			415				438
Huron Business Advisory			169				62
Total			1,784				1,532

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HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

		Three Months Ended June 30,
Other Operating Data (excluding All Other):		2014				2013
Full-time billable consultant utilization rate (2):
Huron Healthcare			81.7	%			84.7	%
Huron Legal			68.0	%			60.0	%
Huron Education and Life Sciences			71.8	%			65.8	%
Huron Business Advisory			75.3	%			82.9	%
Total			77.8	%			76.9	%
Full-time billable consultant average billing rate per hour (3):
Huron Healthcare		$	229			$	199
Huron Legal (5)		$	251			$	221
Huron Education and Life Sciences		$	225			$	223
Huron Business Advisory		$	257			$	348
Total (5)		$	232			$	213
Revenue per full-time billable consultant (in thousands):
Huron Healthcare		$	88			$	82
Huron Legal (5)		$	80			$	60
Huron Education and Life Sciences		$	75			$	70
Huron Business Advisory		$	94			$	140
Total (5)		$	85			$	79
Average number of full-time equivalents (for the period) (4):
Huron Healthcare			58				54
Huron Legal			1,048				982
Huron Education and Life Sciences			44				48
Huron Business Advisory			7				3
Total			1,157				1,087
Revenue per full-time equivalent (in thousands):
Huron Healthcare		$	115			$	116
Huron Legal (5)		$	41			$	37
Huron Education and Life Sciences		$	146			$	132
Huron Business Advisory		$	104			$	173
Total (5)		$	49			$	45

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HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

		Six Months Ended June 30,								Percent Increase (Decrease)
Segment and Consolidated Operating Results (in thousands):		2014				2013
Huron Healthcare:
Revenues		$	208,515			$	157,691				32.2	%
Operating income		$	89,695			$	60,668				47.8	%
Segment operating income as a percentage of segment revenues			43.0	%			38.5	%
Huron Legal:
Revenues		$	108,271			$	86,033				25.8	%
Operating income		$	28,278			$	13,731				105.9	%
Segment operating income as a percentage of segment revenues			26.1	%			16.0	%
Huron Education and Life Sciences:
Revenues		$	71,323			$	72,860				(2.1	)%
Operating income		$	18,080			$	20,899				(13.5	)%
Segment operating income as a percentage of segment revenues			25.3	%			28.7	%
Huron Business Advisory:
Revenues		$	29,956			$	17,845				67.9	%
Operating income		$	7,684			$	7,331				4.8	%
Segment operating income as a percentage of segment revenues			25.7	%			41.1	%
All Other:
Revenues		$	2,071			$	14				N/M
Operating loss		$	(978	)		$	(416	)			135.1	%
Segment operating loss as a percentage of segment revenues			N/M				N/M
Total Company:
Revenues		$	420,136			$	334,443				25.6	%
Reimbursable expenses			40,244				33,459				20.3	%
Total revenues and reimbursable expenses		$	460,380			$	367,902				25.1	%
Statement of Earnings reconciliation:
Segment operating income		$	142,759			$	102,213				39.7	%
Items not allocated at the segment level:
Other operating expenses and gains			54,594				40,665				34.3	%
Depreciation and amortization expense			12,323				9,656				27.6	%
Total operating income			75,842				51,892				46.2	%
Other expense, net			2,620				3,708				(29.3	)%
Income from continuing operations before income tax expense		$	73,222			$	48,184				52.0	%
Other Operating Data (excluding All Other):
Number of full-time billable consultants (at period end) (1):
Huron Healthcare			1,114				916				21.6	%
Huron Legal			124				145				(14.5	)%
Huron Education and Life Sciences			407				434				(6.2	)%
Huron Business Advisory			172				63				173.0	%
Total			1,817				1,558				16.6	%
Average number of full-time billable consultants (for the period) (1):
Huron Healthcare			1,028				873
Huron Legal			134				148
Huron Education and Life Sciences			424				434
Huron Business Advisory			165				62
Total			1,751				1,517

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HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA (CONTINUED)

(Unaudited)

 

		Six Months Ended June 30,
Other Operating Data (excluding All Other):		2014				2013
Full-time billable consultant utilization rate (2):
Huron Healthcare			80.4	%			85.1	%
Huron Legal			66.2	%			56.0	%
Huron Education and Life Sciences			70.0	%			67.9	%
Huron Business Advisory			72.0	%			83.8	%
Total			76.0	%			77.4	%
Full-time billable consultant average billing rate per hour (3):
Huron Healthcare		$	249			$	202
Huron Legal (5)		$	241			$	221
Huron Education and Life Sciences		$	213			$	215
Huron Business Advisory		$	248			$	339
Total (5)		$	240			$	213
Revenue per full-time billable consultant (in thousands):
Huron Healthcare		$	190			$	167
Huron Legal (5)		$	146			$	113
Huron Education and Life Sciences		$	140			$	140
Huron Business Advisory		$	173			$	276
Total (5)		$	173			$	158
Average number of full-time equivalents (for the period) (4):
Huron Healthcare			55				55
Huron Legal			1,229				1,035
Huron Education and Life Sciences			42				43
Huron Business Advisory			7				2
Total			1,333				1,135
Revenue per full-time equivalent (in thousands):
Huron Healthcare		$	243			$	219
Huron Legal (5)		$	72			$	67
Huron Education and Life Sciences		$	285			$	282
Huron Business Advisory		$	187			$	324
Total (5)		$	86			$	83

 

(1)	Consists of our full-time professionals who provide consulting services and generate revenues based on the number of hours worked.

(2)

Utilization rate for our full-time billable consultants is calculated by dividing the number of hours all of our 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.

(3)	Average billing rate per hour for our 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.

(4)

Consists of consultants who work variable schedules as needed by our clients, as well as contract reviewers and other professionals who generate revenues primarily based on number of hours worked and units produced, such as pages reviewed and data processed. Also includes full-time employees who provide software support and maintenance services to our clients.

(5)

During the second quarter of 2014, we revised the methodology we use to allocate revenue between our billable consultants and our full-time equivalents in our Huron Legal segment to better reflect the nature of the work being provided. Operating data for the three and six months ended June 30, 2014, as presented above, reflects this change. Operating data for the Huron Legal segment for the three months ended March 31, 2014 has been revised as follows: full-time billable consultant average billing rate per hour decreased from $259 to $231, revenue per full-time billable consultant decreased from $75 thousand to $67 thousand, and revenue per full-time equivalent was unchanged. The impact on our total Company results was immaterial.

N/M – Not meaningful

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HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ⁽⁶⁾

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Revenues		$	209,405			$	170,407			$	420,136			$	334,443
Net income from continuing operations		$	19,913			$	15,814			$	54,039			$	27,183
Add back:
Income tax expense			12,685				12,877				19,183				21,001
Interest and other expenses			1,425				1,858				2,620				3,708
Depreciation and amortization			7,557				5,551				14,714				10,988
Earnings before interest, taxes, depreciation and amortization (EBITDA) (6)			41,580				36,100				90,556				62,880
Add back:
Restructuring charges			1,034				596				1,163				596
Litigation and other gains			(440	)			—				(440	)			(1,150	)
Adjusted EBITDA (6)		$	42,174			$	36,696			$	91,279			$	62,326
Adjusted EBITDA as a percentage of revenues (6)			20.1	%			21.5	%			21.7	%			18.6	%

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HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS

TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS ⁽⁶⁾

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Net income from continuing operations		$	19,913			$	15,814			$	54,039			$	27,183
Weighted average shares—diluted			23,098				22,760				23,092				22,624
Diluted earnings per share from continuing operations		$	0.86			$	0.69			$	2.34			$	1.20
Add back:
Amortization of intangible assets			2,912				1,451				5,430				2,907
Restructuring charges			1,034				596				1,163				596
Litigation and other gains			(440	)			—				(440	)			(1,150	)
Tax effect			(1,402	)			(819	)			(2,461	)			(941	)
Net tax benefit related to “check-the-box” election			—				—				(10,244	)			—
Total adjustments, net of tax			2,104				1,228				(6,552	)			1,412
Adjusted net income from continuing operations (6)		$	22,017			$	17,042			$	47,487			$	28,595
Adjusted diluted earnings per share from continuing operations (6)		$	0.95			$	0.75			$	2.06			$	1.26

 

(6)

In evaluating the Company’s financial performance, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income from continuing operations, and Adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Our management uses these non-GAAP financial measures to gain an understanding of our 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 our ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing our business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

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HURON CONSULTING GROUP INC.

RECONCILIATION OF NON-GAAP MEASURES FOR FULL YEAR 2014 OUTLOOK

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO

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

(In millions)

(Unaudited)

 

		Year Ending December 31, 2014
		Guidance Range
		Low				High
Projected revenues – GAAP		$	805.0			$	825.0
Projected net income from continuing operations – GAAP		$	79.0			$	82.5
Add back:
Income tax expense			37.0				39.5
Interest and other expenses			5.7				5.7
Depreciation and amortization			30.0				30.0
Projected earnings before interest, taxes, depreciation and amortization (EBITDA) (7)			151.7				157.7
Add back:
Restructuring charges			1.2				1.2
Other gain			(0.4	)			(0.4	)
Projected adjusted EBITDA (7)		$	152.5			$	158.5
Projected adjusted EBITDA as a percentage of projected revenues (7)			18.9	%			19.2	%

RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS ⁽⁷⁾

(In millions)

(Unaudited)

 

		Year Ending December 31, 2014
		Guidance Range
		Low				High
Projected net income from continuing operations – GAAP		$	79.0			$	82.5
Projected diluted earnings per share from continuing operations – GAAP		$	3.40			$	3.55
Add back:
Amortization of intangible assets			10.5				10.5
Restructuring charges			1.2				1.2
Other gain			(0.4	)			(0.4	)
Tax effect			(4.6	)			(4.6	)
Net tax benefit related to “check-the-box” election			(10.2	)			(10.2	)
Total adjustments, net of tax			(3.5	)			(3.5	)
Projected adjusted net income from continuing operations (7)		$	75.5			$	79.0
Projected adjusted diluted earnings per share from continuing operations (7)		$	3.25			$	3.40

 

(7)

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 from continuing operations, and Projected adjusted diluted earnings per share from continuing operations, which are non-GAAP measures. Management believes that the use of such measures, as supplements to Projected net income from continuing operations and Projected diluted earnings per share from continuing operations 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.