Huron Consulting Group Announces Fourth Quarter and Full Year 2012 Financial Results

Huron Consulting Group Announces Fourth Quarter and Full Year 2012 Financial Results

  • Revenues increased 10.9% to $180.8 million for Q4 2012 compared to $163.0 million in Q4 2011, and increased 11.7% from $161.9 million in Q3 2012.
  • Operating income for Q4 2012 was $34.5 million compared to $18.6 million in Q4 2011.
  • Adjusted EBITDA(7), a non-GAAP measure, increased 46.5% to $41.0 million in Q4 2012 compared to $28.0 million in Q4 2011.
  • Diluted earnings per share from continuing operations for Q4 2012 rose to $0.83 compared to $0.35 in Q4 2011.
  • Adjusted diluted earnings per share from continuing operations(7), a non-GAAP measure, rose 76.5% to $0.90 in Q4 2012 compared to $0.51 in Q4 2011.
  • Average number of full-time billable consultants(2) rose 15.2% to 1,417 for Q4 2012. Average number of full-time equivalent professionals(5) rose 7.2% to 1,452 for Q4 2012.
  • The Company provides 2013 full year revenue guidance in a range of $655.0 million to $685.0 million.

CHICAGO--(BUSINESS WIRE)-- Huron Consulting Group Inc. (NAS: HURN) , a leading provider of business consulting services, today announced its financial results for the fourth quarter and full year ended December 31, 2012.

"Continued market demand for our services enabled us to report fourth quarter results with the highest quarterly revenues in Huron's history. The pace and depth of change in many of our core markets is dramatic, and Huron remains well positioned to help our clients as they transition through uncertain times. In particular, our Health and Education practices are thriving in an environment that reflects the pressures on hospitals and universities to reduce cost and increase quality. We expect the demand for our portfolio of services to be strong throughout 2013," said James H. Roth, chief executive officer and president, Huron Consulting Group.


Fourth Quarter 2012 Results

Revenues for the fourth quarter of 2012 were $180.8 million compared to $163.0 million for the fourth quarter of 2011. The Company's fourth quarter 2012 operating income was $34.5 million compared to $18.6 million in the fourth quarter of 2011. Net income from continuing operations was $18.6 million, or $0.83 per diluted share, for the fourth quarter of 2012 compared to $7.8 million, or $0.35 per diluted share, for the same period last year. Operating income and net income from continuing operations in the fourth quarter of 2012 and 2011 include $0.8 million and $2.5 million, respectively, of restructuring charges.

Fourth quarter 2012 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) was $40.2 million, compared to $24.8 million in the comparable quarter last year.

In evaluating the Company's financial performance, management uses non-GAAP financial measures, which exclude the effect of the following items (in thousands):

     

Three Months Ended
December 31,

2012   2011
Amortization of intangible assets $ 1,838 $ 1,896
Restatement related expenses $ ------- $ 709
Restructuring charges $ 751 $ 2,450
Tax effect $ (1,036 ) $ (1,622 )
 

Adjusted EBITDA(7) was $41.0 million, or 22.7% of revenues, in the fourth quarter of 2012 compared to $28.0 million, or 17.2% of revenues, in the comparable quarter last year. Adjusted net income from continuing operations(7) was $20.2 million, or $0.90 per diluted share, for the fourth quarter of 2012 compared to $11.2 million, or $0.51 per diluted share, for the comparable period in 2011.

The average number of full-time billable consultants(2) was 1,417 in the fourth quarter of 2012 compared to 1,230 in the same quarter last year. Full-time billable consultant utilization rate(3) was 76.4% during the fourth quarter of 2012 compared with 74.6% during the same period last year. Average billing rate per hour for full-time billable consultants(4) was $251 for the fourth quarter of 2012 compared to $260 for the fourth quarter of 2011. The average number of full-time equivalent professionals(5) was 1,452 in the fourth quarter of 2012 compared to 1,354 in the comparable period in 2011.

Full Year 2012 Results

Revenues were $626.0 million for the full year 2012 compared to $606.3 million for the full year 2011. The Company's operating income for the full year 2012 was $73.4 million compared to $55.4 million for the full year 2011. Net income from continuing operations was $36.0 million, or $1.61 per diluted share, for the full year 2012 compared to $21.5 million, or $0.99 per diluted share, for the same period last year. Operating income and net income from continuing operations for 2012 include a $13.1 million goodwill impairment charge, $4.0 million in restructuring charges and $1.8 million in restatement related expenses. Operating income and net income from continuing operations for 2011 include a $22.0 million goodwill impairment charge, $3.8 million in restructuring charges and $4.6 million in restatement related expenses.

EBITDA(7) was $95.8 million for the full year 2012 compared to $79.3 million for the same period in 2011.

In evaluating the Company's financial performance, management uses non-GAAP financial measures, which exclude the effect of the following items (in thousands):

     

Twelve Months Ended
December 31,

2012   2011
Amortization of intangible assets $ 6,987 $ 8,165
Restatement related expenses $ 1,785 $ 4,579
Restructuring charges $ 4,004 $ 3,829
Litigation settlements, net $ 1,150 $ 1,096
Goodwill impairment charge $ 13,083 $ 21,973
Tax effect $ (10,737 ) $ (15,457 )
 

Adjusted EBITDA(7) was $115.8 million, or 18.5% of revenues, for the full year 2012 compared to $110.8 million, or 18.3% of revenues, in the comparable period last year. Adjusted net income from continuing operations(7) was $52.2 million, or $2.34 per diluted share, for the full year 2012 compared to $45.7 million, or $2.11 per diluted share, for the comparable period in 2011.

The average number of full-time billable consultants(2) was 1,332 for the full year 2012 compared to 1,167 in the same period last year. Full-time billable consultant utilization rate(3) was 75.6% for the full year 2012 compared with 75.3% during the same period last year. Average billing rate per hour for full-time billable consultants(4) was $229 for the full year 2012 compared to $252 for the full year 2011. The average number of full-time equivalent professionals(5) was 1,200 for the full year 2012 compared to 1,166 in the comparable period of 2011.

Operating Segments

Huron's results reflect a portfolio of service offerings focused on helping clients address complex business challenges. The Company has three operating segments as follows: Health and Education Consulting, Legal Consulting, and Financial Consulting, representing 67.0%, 29.5% and 3.5% of full year 2012 total revenues, respectively.

Financial results by segment are included in the attached schedules and in Huron's forthcoming Form 10-K filing for the year ended December 31, 2012 ("2012 Form 10-K").

2013 Operating Segments

In the first quarter of 2013, the Company reorganized its internal financial reporting structure. Under the new structure, the Company will begin reporting information as five operating segments: Huron Healthcare; Huron Education and Life Sciences; Huron Legal; Huron Financial; and an all other category.

Beginning in 2013, the current Health and Education Consulting segment will become two separate segments: Huron Healthcare and Huron Education and Life Sciences. These practices continue to share a significant number of academic medical center clients and will continue to closely collaborate in the market. The Legal Consulting segment will now be referred to as Huron Legal and the Financial Consulting segment will now be referred to as Huron Financial. The structure of the Legal Consulting and Financial Consulting segments remains unchanged. In addition, certain immaterial practices, which were historically part of our Health and Education Consulting segment, will be combined and disclosed in an all other category. While consolidated results will not be impacted, the Company will recast historical segment information during 2013 for consistent presentation.

Outlook for 2013

Based on currently available information, the Company provided guidance for full year 2013 revenues before reimbursable expenses in a range of $655.0 million to $685.0 million. The Company also anticipates EBITDA(7) in a range of $118.5 million to $127.0 million, Adjusted EBITDA(7) in a range of $120.5 million to $129.0 million, GAAP diluted earnings per share in a range of $2.25 to $2.45, and non-GAAP adjusted diluted earnings per share(7) in a range of $2.45 to $2.65.

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

Fourth Quarter and Full Year 2012 Webcast

The Company will host a webcast to discuss its financial results today, February 20, 2013, at 5:00 p.m. Eastern Time (4:00 p.m. Central Time). The conference call is being webcast by Thomson 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.

About Huron Consulting Group

Huron Consulting Group helps clients in diverse industries improve performance, comply with complex regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. The Company teams with its clients to deliver sustainable and measurable results. Huron provides services to a wide variety of both financially sound and distressed organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses, and the law firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.

Use of Non-GAAP Financial Measures (7)

In evaluating the Company's financial performance and outlook, management uses EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, adjusted net income 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 without the effect of non-cash or other one-time items and the Company's ability to generate cash flows from operations that are available for taxes, capital expenditures, and to repay debt. 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.

Statements in this press release, including the information incorporated by reference herein, 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," "meets," "could," "intends," "might," "predicts," "seeks," "would," "believes," "estimates," "plans" or "continues." These forward-looking statements reflect our current expectation about our future requirements and needs, results, levels of activity, performance, or achievements, including, without limitation, the 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 forthcoming Annual Report on Form 10-K for the year ended December 31, 2012, 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.

       
 
 
HURON CONSULTING GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2012   2011   2012   2011
Revenues and reimbursable expenses:
Revenues $ 180,765 $ 163,044 $ 625,961 $ 606,314
Reimbursable expenses   13,944     13,300     55,764     51,580  
Total revenues and reimbursable expenses 194,709 176,344 681,725 657,894

Direct costs and reimbursable expenses (exclusive of depreciation and amortization shown in operating expenses):

Direct costs 106,942 104,012 384,884 376,084
Intangible assets amortization 738 1,253 3,809 5,364
Reimbursable expenses   13,964     13,287     55,772     51,673  
Total direct costs and reimbursable expenses   121,644     118,552     444,465     433,121  
Operating expenses:
Selling, general and administrative 32,829 31,069 125,266 119,325
Restructuring charges 751 2,450 4,004 3,829
Restatement related expenses - 709 1,785 4,579
Litigation settlements, net - - 1,150 1,096
Depreciation and amortization 4,944 4,935 18,529 18,524
Goodwill impairment charges   -     -     13,083     21,973  
Total operating expenses   38,524     39,163     163,817     169,326  
Operating income 34,541 18,629 73,443 55,447
Other income (expense), net:
Interest expense, net of interest income (2,030 ) (2,390 ) (8,223 ) (12,259 )
Other income (expense), net   122     454     428     (78 )
Total other expense, net   (1,908 )   (1,936 )   (7,795 )   (12,337 )
Income from continuing operations before income tax expense 32,633 16,693 65,648 43,110
Income tax expense   13,988     8,902     29,695     21,629  
Net income from continuing operations 18,645 7,791 35,953 21,481

(Loss) income from discontinued operations (including loss on disposal of $1.9 million during the three and twelve months ended December 31, 2011), net of tax

  (43 )   (1,286 )   475     (962 )
Net income $ 18,602   $ 6,505   $ 36,428   $ 20,519  
 
Net earnings per basic share:
Net income from continuing operations $ 0.85 $ 0.36 $ 1.64 $ 1.01
Income (loss) from discontinued operations, net of tax $ -   $ (0.06 ) $ 0.02   $ (0.05 )
Net income $ 0.85   $ 0.30   $ 1.66   $ 0.96  
 
Net earnings per diluted share:
Net income from continuing operations $ 0.83 $ 0.35 $ 1.61 $ 0.99
Income (loss) from discontinued operations, net of tax $ -   $ (0.06 ) $ 0.02   $ (0.04 )
Net income $ 0.83   $ 0.29   $ 1.63   $ 0.95  
 
Weighted average shares used in calculating earnings (loss) per share:
Basic 21,976 21,620 21,905 21,324
Diluted 22,399 22,094 22,285 21,676
 
 
 

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HURON CONSULTING GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
   

December 31,
2012

December 31,
2011

Assets
Current assets:
Cash and cash equivalents $ 25,162 $ 5,080
Receivables from clients, net 97,206 107,820
Unbilled services, net 47,286 49,056
Income tax receivable 192 19,501
Deferred income taxes, net 14,751 12,531
Prepaid expenses and other current assets 15,525 14,191
Current assets of discontinued operations 250 3,345
Total current assets 200,372 211,524
Property and equipment, net 33,805 31,176
Other non-current assets 15,272 14,892
Intangible assets, net 18,879 16,867
Goodwill 519,522 512,185
Total assets $ 787,850 $ 786,644
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 8,432 $ 8,084
TWX -0.02 75.64

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