HURN Huron Consulting Group Inc

FOURTH QUARTER 2023 FINANCIAL HIGHLIGHTS

• Total revenues increased $25.5 million, or 8.1%, to $339.2 million in Q4 2023 from $313.7 million in Q4 2022.

• Net income was $2.8 million in Q4 2023 compared to $17.1 million in Q4 2022. Results for Q4 2023 include a non-cash unrealized loss of $19.4 million, net of tax, related to the company's investment in a hospital-at-home company([1]).

• Adjusted EBITDA(7), a non-GAAP measure, increased $2.3 million, or 5.9%, to $41.4 million in Q4 2023 from $39.0 million in Q4 2022.

• Diluted earnings per share was $0.15 in Q4 2023 compared to $0.85 in Q4 2022. Results for Q4 2023 include the non-cash unrealized loss related to the company's investment in a hospital-at-home company, which had an unfavorable impact of $1.00 on diluted earnings per share in Q4 2023(1).

• Adjusted diluted earnings per share(7), a non-GAAP measure, increased $0.17, or 15.2%, to $1.29 in Q4 2023 from $1.12 in Q4 2022.

FULL YEAR 2023 FINANCIAL HIGHLIGHTS AND 2024 GUIDANCE

• Total revenues increased $229.6 million, or 20.3%, to $1.36 billion for 2023 from $1.13 billion for 2022.

• Revenues within all segments increased; led by Healthcare, the company's largest segment, which increased 26.0% to $674.0 million for 2023, compared to $535.0 million for 2022.

• Net income was $62.5 million for 2023, compared to $75.6 million for 2022. Results for 2023 and 2022 include a non-cash unrealized loss of $19.4 million, net of tax, and a non-cash unrealized gain of $19.8 million, net of tax, respectively, related to the company's investment in a hospital-at-home company(1).

• Adjusted EBITDA(7), a non-GAAP measure, increased $36.5 million, or 27.9%, to $167.3 million for 2023 from $130.8 million for 2022.

• Adjusted EBITDA as a percentage of revenues(7), a non-GAAP measure, increased 70 basis points to 12.3% for 2023 from 11.6% for 2022.

• Diluted earnings per share was $3.19 for 2023, compared to $3.64 for 2022. Results for 2023 and 2022 included the non-cash unrealized loss and non-cash unrealized gain related to the company's investment in a hospital-at-home company, which had an unfavorable impact of $0.99 and a favorable impact of $0.96 on diluted earnings per share in 2023 and 2022, respectively(1).

• Adjusted diluted earnings per share(7), a non-GAAP measure, increased $1.48, or 43.1%, to $4.91 for 2023 from $3.43 for 2022.

• Net cash provided by operating activities increased $49.9 million, or 58.4%, to $135.3 million for 2023, compared to $85.4 million for 2022.

• Huron returned $123.6 million to shareholders in 2023 by repurchasing 1.5 million shares of the company's common stock.

• Huron provides full year 2024 guidance, including revenue expectations in a range of $1.46 billion to $1.54 billion.

OTHER HIGHLIGHTS

• Huron amended its credit facility to include a $275 million term loan, which increases the company's capacity for investment and return to shareholders.

• Huron released its 2023 Corporate Social Responsibility Report, which reiterates the company's commitment to shaping a more sustainable future.

• Huron was named a “Best Place to Work” by Glassdoor, one of the world's largest and most influential communities for workplace conversations. Huron secured the 32nd position out of 100 on Glassdoor’s Best Places to Work US Large list, including a 4.5 rating.

• Huron was named a “Best Place to Work for LGBTQ Equality” by the Human Rights Campaign (HRC) Foundation. Huron scored a perfect 100 on the HRC Foundation’s 2023-2024 Corporate Equality Index (CEI), which evaluates employers on corporate policies, culture and social responsibility initiatives, equal employment opportunities and benefits.

(1) In 2019, the Company invested $5 million in a hospital-at-home company as a strategic investment in a valued client relationship that annually produces meaningful implementation projects for Huron's Healthcare segment. As of December 31, 2023, the investment's carrying value was $7.4 million, reflecting a net unrealized gain of $2.4 million on the investment since inception. Huron's ownership percentage in this hospital-at-home company is less than 5%.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the fourth quarter and full year ended December 31, 2023.

“Driven by strong growth across all three operating segments, we achieved record revenues and expanded our operating margins for the third consecutive year. Our fourth quarter performance was consistent with our expectations, culminating in record financial performance for the full year 2023,” said Mark Hussey, chief executive officer and president of Huron. “These results are only possible because of our incredibly talented team and their commitment to making a lasting impact on our clients and our business, while supporting one another in our highly collaborative culture.”

“Our financial performance demonstrates the foundation we have established to continue delivering on our medium-term investor objectives. Our deep industry expertise and leading market positions in healthcare and education, our expanding presence in commercial industries, and our rapidly growing portfolio of digital capabilities position us well to fulfill ongoing market demand and to meet or exceed our medium-term financial objectives for low double-digit revenue growth, increased profitability margins, and higher earnings per share,” added Hussey.

FOURTH QUARTER 2023 RESULTS

Revenues increased $25.5 million, or 8.1%, to $339.2 million for the fourth quarter of 2023, compared to $313.7 million for the fourth quarter of 2022. This revenue growth reflects continued strength in demand in the Digital capability across all segments, highlighted by 19% growth of the Digital capability within the Healthcare segment; and continued growth in the Healthcare and Education segments' Consulting and Managed Services capability.

Net income was $2.8 million for the fourth quarter of 2023, compared to $17.1 million for the same quarter last year. Results for the fourth quarter of 2023 include a non-cash unrealized loss of $19.4 million, net of tax, related to the decrease in fair value of the company's investment in a hospital-at-home company(1). Diluted earnings per share was $0.15 for the fourth quarter of 2023, compared to $0.85 for the fourth quarter of 2022. The non-cash unrealized loss related to the investment had an unfavorable impact of $1.00 on diluted earnings per share in the fourth quarter of 2023.

Fourth quarter 2023 earnings before interest, taxes, depreciation and amortization ("EBITDA")(7) was $12.7 million, compared to $34.5 million in the same prior year period. Results for the fourth quarter of 2023 include a non-cash unrealized pre-tax loss of $26.3 million related to the company's strategic investment in a hospital-at-home company(1).

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

 

Three Months Ended

December 31,

 

2023

 

 

 

2022

 

Amortization of intangible assets

$

2,017

 

 

$

2,702

 

Restructuring charges

$

2,165

 

 

$

4,953

 

Other gains, net

$

(242

)

 

$

(159

)

Transaction-related expenses

$

55

 

 

$

—

 

Unrealized loss on preferred stock investment

$

26,262

 

 

$

—

 

Tax effect of adjustments

$

(8,018

)

 

$

(1,986

)

Foreign currency transaction losses (gains), net

$

440

 

 

$

(246

)

Adjusted EBITDA(7) increased $2.3 million, or 5.9%, to $41.4 million, or 12.2% of revenues, in the fourth quarter of 2023, compared to $39.0 million, or 12.4% of revenues, in the same quarter last year. Adjusted net income(7) increased $2.5 million, or 11.0%, to $25.1 million, or $1.29 per diluted share, for the fourth quarter of 2023, compared to $22.6 million, or $1.12 per diluted share, for the same quarter in 2022.

The number of revenue-generating professionals(2) increased 14.2% to 5,519 as of December 31, 2023 from 4,832 as of December 31, 2022. The utilization rate(6) of the company's Consulting capability was 76.8% during the fourth quarter 2023, compared to 80.6% during the same period last year. The utilization rate(6) for the company's Digital capability increased to 80.5% during the fourth quarter 2023, compared to 69.4% during the same period last year.

FULL YEAR 2023 RESULTS

Revenues increased $229.6 million, or 20.3%, to $1.36 billion for full year 2023, compared to $1.13 billion for full year 2022. This revenue growth was highlighted by 22.6% growth in the Consulting and Managed Services capability and 17.3% growth in the Digital capability in the aggregate across all industries; and reflects the company's focus on accelerating growth in the healthcare and education industries and growing its presence in commercial industries.

Net income was $62.5 million for full year 2023, compared to $75.6 million for full year 2022. Results for full year 2023 include a non-cash unrealized loss of $19.4 million, net of tax, related to the company's investment in a hospital-at-home company; and results for full year 2022 include a non-cash unrealized gain of $19.8 million, net of tax, related to the same investment(1). Diluted earnings per share was $3.19 for full year 2023, compared to $3.64 for full year 2022. The non-cash unrealized loss related to the investment had an unfavorable impact of $0.99 on diluted earnings per share in 2023, and the non-cash unrealized gain had a favorable impact of $0.96 on diluted earnings per share in 2022.

EBITDA(7) for full year 2023 was $129.1 million, and included a non-cash unrealized pre-tax loss of $26.3 million related to the company's investment in a hospital-at-home company. EBITDA for full year 2022 was $148.7 million and included a non-cash unrealized pre-tax gain of $27.0 million, related to the same investment in a hospital-at-home company(1).

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

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

Amortization of intangible assets

$

8,219

 

 

$

11,198

 

Restructuring charges

$

11,550

 

 

$

9,909

 

Other gains, net

$

(444

)

 

$

(193

)

Transaction-related expenses

$

357

 

 

$

50

 

Unrealized loss (gain) on preferred stock investment

$

26,262

 

 

$

(26,964

)

Tax effect of adjustments

$

(12,175

)

 

$

1,590

 

Foreign currency transaction losses (gains), net

$

476

 

 

$

(655

)

Adjusted EBITDA(7) increased $36.5 million, or 27.9%, to $167.3 million, or 12.3% of revenues, for full year 2023, compared to $130.8 million, or 11.6% of revenues, for full year 2022. Adjusted net income(7) increased $25.1 million, or 35.3%, to $96.2 million, or $4.91 per diluted share, for full year 2023, compared to $71.1 million, or $3.43 per diluted share, for full year 2022.

The number of revenue-generating professionals(2) increased 14.2% to 5,519 as of December 31, 2023 from 4,832 as of December 31, 2022. The utilization rate(6) of the company's Consulting capability increased to 76.6% for full year 2023, compared to 75.2% for full year 2022. The utilization rate(6) of the company's Digital capability increased to 75.3% for full year 2023, compared to 71.0% for full year 2022.

Additionally, in 2023, Huron repurchased 1,461,815 shares of the company's common stock for $123.6 million, representing 7.4% of our common stock outstanding as of December 31, 2022.

OPERATING INDUSTRIES

The company’s year-to-date 2023 revenues by operating segment as a percentage of total company revenues are as follows: Healthcare (49%); Education (32%); and Commercial (19%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Annual Report on Form 10-K filing for the year ended December 31, 2023.

OUTLOOK FOR 2024

Based on currently available information, the company provided guidance for full year 2024 revenues before reimbursable expenses to a range of $1.46 billion to $1.54 billion. The company also anticipates adjusted EBITDA as a percentage of revenues in a range of 12.8% to 13.3% and non-GAAP adjusted diluted earnings per share in a range of $5.35 to $5.95.

2024 TERM LOAN

On February 26, 2024, Huron amended its senior secured credit facility to include a $275 million term loan in addition to the existing $600 million revolving credit facility, both of which mature on November 15, 2027. The amendment to include the term loan was led by Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and PNC Bank, National Association, and provides additional flexibility to support Huron's growth strategy and balanced approach to capital deployment. The proceeds from the term loan will be used to reduce borrowings under the company's revolving credit facility, which increases the company's capacity for investment.

Additional details regarding the term loan are included in Huron’s Current Report on Form 8-K filed with the Securities and Exchange Commission. The Form 8-K is available on Huron’s website at http://ir.huronconsultinggroup.com.

FOURTH QUARTER 2023 WEBCAST

The company will host a webcast to discuss its financial results today, February 27, 2024, at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time. The conference call is being webcast by Notified and can be accessed from Huron's website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.

USE OF NON-GAAP FINANCIAL MEASURES(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, and adjusted diluted earnings per share, which are non-GAAP measures. Management uses these non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts). These non-GAAP financial measures are used by management in their financial and operating decision making because management believes they reflect the company's ongoing business in a manner that allows for meaningful period-to-period comparisons. Management also uses these non-GAAP financial measures when publicly providing their business outlook, for internal management purposes, and as a basis for evaluating potential acquisitions and dispositions. Management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Huron’s current operating performance and future prospects in the same manner as management does, if they so choose, and in comparing in a consistent manner Huron’s current financial results with Huron’s past financial results. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States.

Management has provided its outlook regarding adjusted EBITDA and adjusted diluted earnings per share, both of which are non-GAAP financial measures and exclude certain charges. Management has not reconciled these non-GAAP financial measures to the corresponding GAAP financial measures because guidance for the various reconciling items is not provided. Management is unable to provide guidance for these reconciling items because they cannot determine their probable significance, as certain items are outside of the company's control and cannot be reasonably predicted since these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

ABOUT HURON

Huron is a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future. By embracing diverse perspectives, encouraging new ideas and challenging the status quo, we create sustainable results for the organizations we serve. 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 results, are “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “may,” “should,” “expects,” “provides,” “anticipates,” “assumes,” “can,” “will,” “meets,” “could,” “likely,” “intends,” “might,” “predicts,” “seeks,” “would,” “believes,” “estimates,” “plans,” “continues,” “goals,” “guidance,” or “outlook” or similar expressions. These forward-looking statements reflect the company's current expectations about future requirements and needs, results, levels of activity, performance, or achievements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: failure to achieve expected utilization rates, billing rates, and the necessary number of revenue-generating professionals; inability to expand or adjust our service offerings in response to market demands; our dependence on renewal of client-based services; dependence on new business and retention of current clients and qualified personnel; failure to maintain third-party provider relationships and strategic alliances; inability to license technology to and from third parties; the impairment of goodwill; various factors related to income and other taxes; difficulties in successfully integrating the businesses we acquire and achieving expected benefits from such acquisitions; risks relating to privacy, information security, and related laws and standards; and a general downturn in market conditions. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, including, among others, those described under “Item 1A. Risk Factors” in Huron's Annual Report on Form 10-K for the year ended December 31, 2023 that may cause actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. The company disclaims any obligation to update or revise any forward-looking statements as a result of new information or future events, or for any other reason.

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues and reimbursable expenses:

 

 

 

 

 

 

 

Revenues

$

339,228

 

 

$

313,711

 

 

$

1,362,060

 

 

$

1,132,455

 

Reimbursable expenses

 

10,777

 

 

 

7,472

 

 

 

36,695

 

 

 

26,506

 

Total revenues and reimbursable expenses

 

350,005

 

 

 

321,183

 

 

 

1,398,755

 

 

 

1,158,961

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

234,342

 

 

 

216,033

 

 

 

942,697

 

 

 

785,881

 

Reimbursable expenses

 

10,524

 

 

 

7,422

 

 

 

36,766

 

 

 

26,671

 

Selling, general and administrative expenses

 

66,833

 

 

 

60,495

 

 

 

257,488

 

 

 

209,381

 

Restructuring charges

 

2,165

 

 

 

4,953

 

 

 

11,550

 

 

 

9,909

 

Depreciation and amortization

 

6,285

 

 

 

6,781

 

 

 

24,906

 

 

 

27,359

 

Total operating expenses

 

320,149

 

 

 

295,684

 

 

 

1,273,407

 

 

 

1,059,201

 

Operating income

 

29,856

 

 

 

25,499

 

 

 

125,348

 

 

 

99,760

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(4,427

)

 

 

(4,130

)

 

 

(19,573

)

 

 

(11,883

)

Other income (expense), net

 

(23,661

)

 

 

2,001

 

 

 

(21,880

)

 

 

20,700

 

Total other income (expense), net

 

(28,088

)

 

 

(2,129

)

 

 

(41,453

)

 

 

8,817

 

Income before taxes

 

1,768

 

 

 

23,370

 

 

 

83,895

 

 

 

108,577

 

Income tax expense

 

(1,064

)

 

 

6,286

 

 

 

21,416

 

 

 

33,025

 

Net income

$

2,832

 

 

$

17,084

 

 

$

62,479

 

 

$

75,552

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

0.15

 

 

$

0.88

 

 

$

3.32

 

 

$

3.73

 

Net income per diluted share

$

0.15

 

 

$

0.85

 

 

$

3.19

 

 

$

3.64

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

18,510

 

 

 

19,470

 

 

 

18,832

 

 

 

20,249

 

Diluted

 

19,389

 

 

 

20,159

 

 

 

19,601

 

 

 

20,746

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

2,832

 

 

$

17,084

 

 

$

62,479

 

 

$

75,552

 

Foreign currency translation adjustments, net of tax

 

795

 

 

 

(157

)

 

 

512

 

 

 

(1,890

)

Unrealized gain (loss) on investment, net of tax

 

4,735

 

 

 

(3,428

)

 

 

7,811

 

 

 

(6,146

)

Unrealized gain (loss) on cash flow hedging instruments, net of tax

 

(3,381

)

 

 

257

 

 

 

(3,615

)

 

 

9,315

 

Other comprehensive income (loss)

 

2,149

 

 

 

(3,328

)

 

 

4,708

 

 

 

1,279

 

Comprehensive income

$

4,981

 

 

$

13,756

 

 

$

67,187

 

 

$

76,831

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

December 31, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

12,149

 

 

$

11,834

 

Receivables from clients, net

 

162,566

 

 

 

147,852

 

Unbilled services, net

 

190,869

 

 

 

141,781

 

Income tax receivable

 

6,385

 

 

 

960

 

Prepaid expenses and other current assets

 

28,491

 

 

 

26,057

 

Total current assets

 

400,460

 

 

 

328,484

 

Property and equipment, net

 

23,728

 

 

 

26,107

 

Deferred income taxes, net

 

2,288

 

 

 

1,554

 

Long-term investments

 

75,414

 

 

 

91,194

 

Operating lease right-of-use assets

 

24,131

 

 

 

30,304

 

Other non-current assets

 

92,336

 

 

 

73,039

 

Intangible assets, net

 

18,074

 

 

 

23,392

 

Goodwill

 

625,711

 

 

 

624,966

 

Total assets

$

1,262,142

 

 

$

1,199,040

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

10,074

 

 

$

14,254

 

Accrued expenses and other current liabilities

 

33,087

 

 

 

27,268

 

Accrued payroll and related benefits

 

225,921

 

 

 

171,723

 

Current maturities of operating lease liabilities

 

11,032

 

 

 

10,530

 

Deferred revenues

 

22,461

 

 

 

21,909

 

Total current liabilities

 

302,575

 

 

 

245,684

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

35,665

 

 

 

33,614

 

Long-term debt

 

324,000

 

 

 

290,000

 

Operating lease liabilities, net of current portion

 

38,850

 

 

 

45,556

 

Deferred income taxes, net

 

28,160

 

 

 

32,146

 

Total non-current liabilities

 

426,675

 

 

 

401,316

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 21,316,441 and 22,507,159 shares issued, respectively

 

212

 

 

 

223

 

Treasury stock, at cost, 2,852,296 and 2,711,712 shares, respectively

 

(142,136

)

 

 

(137,556

)

Additional paid-in capital

 

236,962

 

 

 

318,706

 

Retained earnings

 

415,027

 

 

 

352,548

 

Accumulated other comprehensive income

 

22,827

 

 

 

18,119

 

Total stockholders’ equity

 

532,892

 

 

 

552,040

 

Total liabilities and stockholders’ equity

$

1,262,142

 

 

$

1,199,040

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

$

62,479

 

 

$

75,552

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

Depreciation and amortization

 

24,938

 

 

 

27,359

 

Non-cash lease expense

 

6,321

 

 

 

6,369

 

Lease-related impairment charges

 

6,248

 

 

 

211

 

Share-based compensation

 

45,697

 

 

 

30,971

 

Amortization of debt discount and issuance costs

 

769

 

 

 

1,169

 

Allowances for doubtful accounts

 

421

 

 

 

141

 

Deferred income taxes

 

(6,182

)

 

 

18,784

 

Gain on sale of property and equipment, excluding transaction costs

 

(64

)

 

 

(1,111

)

Change in fair value of contingent consideration liabilities

 

(490

)

 

 

(359

)

Change in fair value of preferred stock investment

 

26,262

 

 

 

(26,964

)

Other, net

 

—

 

 

 

6

 

Changes in operating assets and liabilities, net of acquisitions and divestiture:

 

 

 

(Increase) decrease in receivables from clients, net

 

(15,046

)

 

 

(25,847

)

(Increase) decrease in unbilled services, net

 

(49,051

)

 

 

(51,359

)

(Increase) decrease in current income tax receivable / payable, net

 

(5,139

)

 

 

7,673

 

(Increase) decrease in other assets

 

(6,535

)

 

 

2,532

 

Increase (decrease) in accounts payable and other liabilities

 

(6,948

)

 

 

(13,466

)

Increase (decrease) in accrued payroll and related benefits

 

51,022

 

 

 

32,770

 

Increase (decrease) in deferred revenues

 

560

 

 

 

969

 

Net cash provided by operating activities

 

135,262

 

 

 

85,400

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(9,444

)

 

 

(12,547

)

Investment in life insurance policies

 

(3,074

)

 

 

(872

)

Distributions from life insurance policies

 

2,956

 

 

 

3,377

 

Purchases of businesses

 

(1,613

)

 

 

(3,448

)

Capitalization of internally developed software costs

 

(25,742

)

 

 

(11,752

)

Proceeds from note receivable

 

154

 

 

 

154

 

Proceeds from sale of property and equipment

 

111

 

 

 

4,753

 

Divestiture of business

 

—

 

 

 

207

 

Net cash used in investing activities

 

(36,652

)

 

 

(20,128

)

Cash flows from financing activities:

 

 

 

Proceeds from exercises of stock options

 

2,524

 

 

 

1,421

 

Shares redeemed for employee tax withholdings

 

(10,536

)

 

 

(7,795

)

Share repurchases

 

(122,757

)

 

 

(120,393

)

Proceeds from bank borrowings

 

354,000

 

 

 

314,000

 

Repayments of bank borrowings

 

(320,000

)

 

 

(256,780

)

Payments for debt issuance costs

 

(58

)

 

 

(2,686

)

Deferred payments on business acquisition

 

(1,500

)

 

 

(1,875

)

Net cash used in financing activities

 

(98,327

)

 

 

(74,108

)

Effect of exchange rate changes on cash

 

32

 

 

 

(111

)

Net increase (decrease) in cash and cash equivalents

 

315

 

 

 

(8,947

)

Cash and cash equivalents at beginning of the period

 

11,834

 

 

 

20,781

 

Cash and cash equivalents at end of the period

$

12,149

 

 

$

11,834

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Percent

Increase

(Decrease)

 

Twelve Months Ended

December 31,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

171,995

 

 

$

153,330

 

 

12.2

%

 

$

673,989

 

 

$

534,999

 

 

26.0

%

Operating income

 

$

44,606

 

 

$

39,786

 

 

12.1

%

 

$

172,900

 

 

$

131,227

 

 

31.8

%

Segment operating margin

 

 

25.9

%

 

 

25.9

%

 

 

 

 

25.7

%

 

 

24.5

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

103,779

 

 

$

96,601

 

 

7.4

%

 

$

429,663

 

 

$

359,835

 

 

19.4

%

Operating income

 

$

21,986

 

 

$

20,076

 

 

9.5

%

 

$

99,098

 

 

$

78,924

 

 

25.6

%

Segment operating margin

 

 

21.2

%

 

 

20.8

%

 

 

 

 

23.1

%

 

 

21.9

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

63,454

 

 

$

63,780

 

 

(0.5

)%

 

$

258,408

 

 

$

237,621

 

 

8.7

%

Operating income

 

$

14,231

 

 

$

11,743

 

 

21.2

%

 

$

54,202

 

 

$

50,025

 

 

8.3

%

Segment operating margin

 

 

22.4

%

 

 

18.4

%

 

 

 

 

21.0

%

 

 

21.1

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

339,228

 

 

$

313,711

 

 

8.1

%

 

$

1,362,060

 

 

$

1,132,455

 

 

20.3

%

Reimbursable expenses

 

 

10,777

 

 

 

7,472

 

 

44.2

%

 

 

36,695

 

 

 

26,506

 

 

38.4

%

Total revenues and reimbursable expenses

 

$

350,005

 

 

$

321,183

 

 

9.0

%

 

$

1,398,755

 

 

$

1,158,961

 

 

20.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

80,823

 

 

$

71,605

 

 

12.9

%

 

$

326,200

 

 

$

260,176

 

 

25.4

%

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

 

 

45,199

 

 

 

40,083

 

 

12.8

%

 

 

174,762

 

 

 

136,459

 

 

28.1

%

Restructuring charges

 

 

1,323

 

 

 

923

 

 

43.3

%

 

 

8,204

 

 

 

3,686

 

 

122.6

%

Depreciation and amortization

 

 

4,445

 

 

 

5,100

 

 

(12.8

)%

 

 

17,886

 

 

 

20,271

 

 

(11.8

)%

Total operating income

 

 

29,856

 

 

 

25,499

 

 

17.1

%

 

 

125,348

 

 

 

99,760

 

 

25.6

%

Other income (expense), net

 

 

(28,088

)

 

 

(2,129

)

 

N/M

 

 

 

(41,453

)

 

 

8,817

 

 

N/M

 

Income before taxes

 

$

1,768

 

 

$

23,370

 

 

(92.4

)%

 

$

83,895

 

 

$

108,577

 

 

(22.7

)%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (2):

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

2,270

 

 

 

1,890

 

 

20.1

%

 

 

2,270

 

 

 

1,890

 

 

20.1

%

Education

 

 

1,788

 

 

 

1,579

 

 

13.2

%

 

 

1,788

 

 

 

1,579

 

 

13.2

%

Commercial (3)

 

 

1,461

 

 

 

1,363

 

 

7.2

%

 

 

1,461

 

 

 

1,363

 

 

7.2

%

Total

 

 

5,519

 

 

 

4,832

 

 

14.2

%

 

 

5,519

 

 

 

4,832

 

 

14.2

%

Revenue by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (4)

 

$

192,883

 

 

$

183,638

 

 

5.0

%

 

$

782,020

 

 

$

637,994

 

 

22.6

%

Digital

 

 

146,345

 

 

 

130,073

 

 

12.5

%

 

 

580,040

 

 

 

494,461

 

 

17.3

%

Total

 

$

339,228

 

 

$

313,711

 

 

8.1

%

 

$

1,362,060

 

 

$

1,132,455

 

 

20.3

%

Number of revenue-generating professionals by capability (at period end)(2):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (5)

 

 

2,648

 

 

 

2,294

 

 

15.4

%

 

 

2,648

 

 

 

2,294

 

 

15.4

%

Digital

 

 

2,871

 

 

 

2,538

 

 

13.1

%

 

 

2,871

 

 

 

2,538

 

 

13.1

%

Total

 

 

5,519

 

 

 

4,832

 

 

14.2

%

 

 

5,519

 

 

 

4,832

 

 

14.2

%

Utilization rate by capability (6):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

76.8

%

 

 

80.6

%

 

 

 

 

76.6

%

 

 

75.2

%

 

 

Digital

 

 

80.5

%

 

 

69.4

%

 

 

 

 

75.3

%

 

 

71.0

%

 

 

____________________

 

 

 

(2)

 

Consists of our full-time consultants who generate revenues based on the number of hours worked; full-time equivalents, which consists of coaches and their support staff within the culture and organizational excellence solution, consultants who work variable schedules as needed by clients, and full-time employees who provide software support and maintenance services to clients; and our Healthcare managed services employees who provide revenue cycle billing, collections insurance verification and change integrity services to clients.

 

 

 

(3)

 

The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education.

 

 

 

(4)

 

Managed Services capability revenues within our Healthcare segment was $16.3 million and $20.1 million for the three months ended December 31, 2023 and 2022, respectively; and $70.1 million and $67.6 million for the year ended December 31, 2023 and 2022, respectively.

 

 

 

 

 

Managed Services capability revenues within our Education segment was $4.9 million and $4.4 million for the three months ended December 31, 2023 and 2022, respectively; and $19.5 million and $15.7 million for the year ended December 31, 2023 and 2022, respectively.

 

 

 

(5)

 

The number of Managed Services revenue-generating professionals within our Healthcare segment was 924 and 715 as of December 31, 2023 and 2022, respectively.

 

 

 

 

 

The number of Managed Services revenue-generating professionals within our Education segment was 103 and 106 as of December 31, 2023 and 2022, respectively.

 

 

 

(6)

 

Utilization rate is calculated by dividing the number of hours our billable consultants worked on client assignments during a period by the total available working hours for these billable consultants during the same period. Available hours are determined by the standard hours worked by each billable consultant, adjusted for part-time hours, and U.S. standard work weeks. Available working hours exclude local country holidays and vacation days. Utilization rates are presented for our revenue-generating professionals who primarily bill on an hourly basis. We have not presented utilization rates for our Managed Services professionals as most of the revenues generated by these employees are not billed on an hourly basis.

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME

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

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues

$

339,228

 

 

$

313,711

 

 

$

1,362,060

 

 

$

1,132,455

 

Net income

$

2,832

 

 

$

17,084

 

 

$

62,479

 

 

$

75,552

 

Add back:

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(1,064

)

 

 

6,286

 

 

 

21,416

 

 

 

33,025

 

Interest expense, net of interest income

 

4,427

 

 

 

4,130

 

 

 

19,573

 

 

 

11,883

 

Depreciation and amortization

 

6,489

 

 

 

6,995

 

 

 

25,672

 

 

 

28,233

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (7)

 

12,684

 

 

 

34,495

 

 

 

129,140

 

 

 

148,693

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

2,165

 

 

 

4,953

 

 

 

11,550

 

 

 

9,909

 

Other gains, net

 

(242

)

 

 

(159

)

 

 

(444

)

 

 

(193

)

Transaction-related expenses

 

55

 

 

 

—

 

 

 

357

 

 

 

50

 

Unrealized loss (gain) on preferred stock investment

 

26,262

 

 

 

—

 

 

 

26,262

 

 

 

(26,964

)

Foreign currency transaction losses (gains), net

 

440

 

 

 

(246

)

 

 

476

 

 

 

(655

)

Adjusted EBITDA (7)

$

41,364

 

 

$

39,043

 

 

$

167,341

 

 

$

130,840

 

Adjusted EBITDA as a percentage of revenues (7)

 

12.2

%

 

 

12.4

%

 

 

12.3

%

 

 

11.6

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (7)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

2,832

 

 

$

17,084

 

 

$

62,479

 

 

$

75,552

 

Weighted average shares - diluted

 

19,389

 

 

 

20,159

 

 

 

19,601

 

 

 

20,746

 

Diluted earnings per share

$

0.15

 

 

$

0.85

 

 

$

3.19

 

 

$

3.64

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,017

 

 

 

2,702

 

 

 

8,219

 

 

 

11,198

 

Restructuring charges

 

2,165

 

 

 

4,953

 

 

 

11,550

 

 

 

9,909

 

Other gains, net

 

(242

)

 

 

(159

)

 

 

(444

)

 

 

(193

)

Transaction-related expenses

 

55

 

 

 

—

 

 

 

357

 

 

 

50

 

Unrealized loss (gain) on preferred stock investment

 

26,262

 

 

 

—

 

 

 

26,262

 

 

 

(26,964

)

Tax effect of adjustments

 

(8,018

)

 

 

(1,986

)

 

 

(12,175

)

 

 

1,590

 

Total adjustments, net of tax 

 

22,239

 

 

 

5,510

 

 

 

33,769

 

 

 

(4,410

)

Adjusted net income (7)

$

25,071

 

 

$

22,594

 

 

$

96,248

 

 

$

71,142

 

Adjusted weighted average shares - diluted

 

19,389

 

 

 

20,159

 

 

 

19,601

 

 

 

20,746

 

Adjusted diluted earnings per share (7)

$

1.29

 

 

$

1.12

 

 

$

4.91

 

 

$

3.43

 

(7)

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227454000/en/

MEDIA CONTACT Allie Bovis abovis@hcg.com INVESTOR CONTACT John D. Kelly investor@hcg.com