HURN Huron Consulting Group Inc

THIRD QUARTER 2024 HIGHLIGHTS

• Revenues before reimbursable expenses(1) increased $11.9 million, or 3.3%, to $370.0 million in Q3 2024 from $358.2 million in Q3 2023.
• Net income increased $5.6 million, or 26.2%, to $27.1 million in Q3 2024, compared to $21.5 million in Q3 2023.
• Adjusted EBITDA(9), a non-GAAP measure, increased $6.9 million, or 14.3%, to $54.9 million in Q3 2024 from $48.0 million in Q3 2023.
• Diluted earnings per share increased $0.37, or 33.6%, to $1.47 in Q3 2024, compared to $1.10 in Q3 2023.
• Adjusted diluted earnings per share(9), a non-GAAP measure, increased $0.29, or 20.9%, to $1.68 in Q3 2024 from $1.39 in Q3 2023.
• Net cash provided by operating activities was $85.2 million in Q3 2024, compared to $68.8 million in Q3 2023.

YEAR-TO-DATE 2024 HIGHLIGHTS

• Revenues before reimbursable expenses(1) increased $74.8 million, or 7.3%, to $1.10 billion for the first nine months of 2024 from $1.02 billion for the same prior year period.
• Net income increased $23.0 million, or 38.5%, to $82.6 million for the first nine months of 2024, compared to $59.6 million for the same prior year period. Results for the first nine months of 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter in which Huron was the plaintiff.
• Adjusted EBITDA(9), a non-GAAP measure, increased $18.4 million, or 14.6%, to $144.4 million for the first nine months of 2024 from $126.0 million for the same prior year period.
• Diluted earnings per share increased $1.38, or 45.2%, to $4.43 for the first nine months of 2024, compared to $3.05 for the same prior year period. Results for the first nine months of 2024 include the litigation settlement gain related to a completed legal matter in which Huron was the plaintiff, which had a favorable $0.59 impact on diluted earnings per share for the period.
• Adjusted diluted earnings per share(9), a non-GAAP measure, increased $0.93, or 25.5%, to $4.57 for the first nine months of 2024 from $3.64 for the same prior year period.
• Huron returned $104.0 million to shareholders by repurchasing 1.1 million shares of the company's common stock in the first nine months of 2024, representing 5.8% of the company's common stock outstanding as of December 31, 2023.
• Huron narrowed the range of expected revenues before reimbursable expenses to $1.47 billion to $1.49 billion while maintaining its previous midpoint of guidance; and increased its adjusted diluted earnings per share(9) expectations to a range of $6.00 to $6.20.

_________________________________

(1) In the third quarter of 2024, the Company revised the line item descriptions of revenues to rename revenues as revenues before reimbursable expenses and to rename total revenues and reimbursable expenses as total revenues. The change in line item description had no impact on the line item totals for any period.

Global professional services firm Huron (NASDAQ: HURN) today announced financial results for the quarter ended September 30, 2024.

“Revenue growth in the third quarter of 2024 was 3%, which was achieved in light of the strong growth achieved across all three operating segments in the same period a year ago. Our Healthcare and Education segments have grown over each comparative quarter since the first quarter of 2021, and in the third quarter of 2024, our Commercial segment achieved strong sequential growth over the second quarter of 2024,” said Mark Hussey, chief executive officer and president of Huron. “We continue to execute against our margin enhancement initiatives, which produced strong third quarter and year-to-date margin percentage and earnings per share expansion.”

“Strong sales conversion across all three operating segments in the third quarter positions us well to deliver on our annual revenue and earnings guidance while laying the foundation for continued solid growth in 2025,” added Hussey.

THIRD QUARTER 2024 RESULTS

Revenues before reimbursable expenses increased $11.9 million, or 3.3%, to $370.0 million for the third quarter of 2024, compared to $358.2 million for the third quarter of 2023. The increase in revenues before reimbursable expenses was driven by an increase in demand for Education's Consulting and Managed Services and Digital capabilities, as well as continued strength in demand for Healthcare's Digital capability, reflecting the company's focus on accelerating growth in the healthcare and education industries. These increases in demand were partially offset by a decrease in demand for Commercial's Consulting and Managed Services capability.

Net income increased $5.6 million, or 26.2%, to $27.1 million, or 7.2% of total revenues, for the third quarter of 2024, compared to $21.5 million, or 5.9% of total revenues, for the same quarter last year. Diluted earnings per share increased $0.37, or 33.6%, to $1.47 for the third quarter of 2024, compared to $1.10 for the third quarter of 2023.

Third quarter 2024 earnings before interest, taxes, depreciation and amortization (“EBITDA”)(9) increased $8.3 million, or 19.4%, to $50.9 million, compared to $42.6 million in the same prior year period.

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 September 30,

 

 

2024

 

 

 

2023

 

Amortization of intangible assets

$

1,600

 

 

$

1,997

 

Restructuring charges

$

3,137

 

 

$

5,402

 

Other gains, net

$

(173

)

 

$

(14

)

Transaction-related expenses

$

716

 

 

$

302

 

Tax effect of adjustments

$

(1,372

)

 

$

(2,037

)

Foreign currency transaction losses (gains), net

$

267

 

 

$

(332

)

Adjusted EBITDA(9) increased $6.9 million, or 14.3%, to $54.9 million, or 14.8% of revenues before reimbursable expenses(9), in the third quarter of 2024, compared to $48.0 million, or 13.4% of revenues before reimbursable expenses(9), in the same quarter last year. Adjusted net income(9) increased $3.9 million, or 14.3%, to $31.1 million, or $1.68 per diluted share, for the third quarter of 2024, compared to $27.2 million, or $1.39 per diluted share, for the same quarter in 2023.

The number of revenue-generating professionals(2) increased 10.4% to 5,896 as of September 30, 2024 from 5,341 as of September 30, 2023. The utilization rate(8) of the company's Consulting capability was 73.6% during the third quarter of 2024, compared to 77.3% during the same period last year. The utilization rate(8) for the company's Digital capability increased to 77.2% during the third quarter of 2024, compared to 75.4% during the same period last year.

YEAR-TO-DATE 2024 RESULTS

Revenues before reimbursable expenses increased $74.8 million, or 7.3%, to $1.10 billion for the first nine months of 2024, compared to $1.02 billion for the first nine months of 2023. The increase in revenues before reimbursable expenses was driven by continued strength in demand for both our Consulting and Managed Services capability and Digital capability within Healthcare and Education, reflecting the company's focus on accelerating growth in the healthcare and education industries. These increases were partially offset by a decrease in demand for Commercial's Digital and Consulting and Managed Services capabilities.

Net income increased $23.0 million, or 38.5%, to $82.6 million, or 7.4% of total revenues, for the first nine months of 2024, compared to $59.6 million, or 5.7% of total revenues, for the same prior year period. Results for the first nine months of 2024 include an $11.1 million litigation settlement gain, net of tax, related to a completed legal matter in which Huron was the plaintiff. Diluted earnings per share increased $1.38, or 45.2%, to $4.43 for the first nine months of 2024, compared to $3.05 for the same prior year period. The litigation settlement gain recognized in the second quarter of 2024 had a favorable $0.59 impact on diluted earnings per share for the nine months ended September 30, 2024.

EBITDA(9) for the first nine months of 2024 increased $29.6 million, or 25.5%, to $146.1 million, compared to $116.5 million in the same prior year period. Results for the first nine months of 2024 include a pre-tax $15.0 million litigation settlement gain related to the completed legal matter in which Huron was the plaintiff.

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):

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

Amortization of intangible assets

$

4,917

 

 

$

6,202

 

Restructuring charges

$

7,530

 

 

$

9,385

 

2024 litigation settlement gain (10)

$

(11,701

)

 

$

—

 

Other losses (gains), net

$

478

 

 

$

(202

)

Transaction-related expenses

$

2,316

 

 

$

302

 

Tax effect of adjustments

$

(920

)

 

$

(4,157

)

Foreign currency transaction losses (gains), net

$

(348

)

 

$

36

 

 

Adjusted EBITDA(9), which excludes the 2024 litigation settlement gain, increased $18.4 million, or 14.6%, to $144.4 million, or 13.2% of revenues before reimbursable expenses(9), for the first nine months of 2024, compared to $126.0 million, or 12.3% of revenues before reimbursable expenses(9), in the same prior year period. Adjusted net income(9) increased $14.1 million, or 19.8%, to $85.3 million, or $4.57 per diluted share, for the first nine months of 2024, compared to $71.2 million, or $3.64 per diluted share, for the same prior year period.

The number of revenue-generating professionals(2) increased 10.4% to 5,896 as of September 30, 2024 from 5,341 as of September 30, 2023. The utilization rate(8) of the company's Consulting capability was 72.5% for the first nine months of 2024, compared to 76.5% during the same period last year. The utilization rate(8) for the company's Digital capability increased to 75.4% for the first nine months of 2024, compared to 73.7% during the same period last year.

Additionally, Huron returned $104.0 million to shareholders in the first nine months of 2024 by repurchasing 1,067,545 shares of the company's common stock, representing 5.8% of the company's common stock outstanding as of December 31, 2023.

OPERATING INDUSTRIES

The company’s year-to-date 2024 revenues before reimbursable expenses by operating segment as a percentage of total company revenues before reimbursable expenses are as follows: Healthcare (50%); Education (32%); and Commercial (18%). Financial results by operating industry are included in the attached schedules and in Huron's forthcoming Quarterly Report on Form 10-Q filing for the quarter ended September 30, 2024.

OUTLOOK FOR 2024

Based on currently available information, the company is narrowing guidance for full year 2024 revenues before reimbursable expenses to a range of $1.47 billion to $1.49 billion while maintaining its previous midpoint of guidance. The company also anticipates adjusted EBITDA as a percentage of revenues before reimbursable expenses(9) in a range of 13.0% to 13.5%, and is increasing adjusted diluted earnings per share(9) guidance to a range of $6.00 to $6.20.

THIRD QUARTER 2024 WEBCAST

The company will host a webcast to discuss its financial results today, October 29, 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(9)

In evaluating the company’s financial performance and outlook, management uses EBITDA, adjusted EBITDA, adjusted EBITDA as a percentage of revenues before reimbursable expenses, 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 September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

Revenues before reimbursable expenses

$

370,049

 

 

$

358,178

 

 

$

1,097,664

 

 

$

1,022,832

 

Reimbursable expenses

 

8,040

 

 

 

9,288

 

 

 

24,827

 

 

 

25,918

 

Total revenues

 

378,089

 

 

 

367,466

 

 

 

1,122,491

 

 

 

1,048,750

 

Operating expenses:

 

 

 

 

 

 

 

Direct costs (exclusive of depreciation and amortization included below)

 

247,849

 

 

 

244,774

 

 

 

749,757

 

 

 

708,355

 

Reimbursable expenses

 

8,135

 

 

 

9,497

 

 

 

25,146

 

 

 

26,242

 

Selling, general and administrative expenses

 

70,375

 

 

 

64,361

 

 

 

214,485

 

 

 

190,857

 

Other gains, net

 

(173

)

 

 

(14

)

 

 

(14,522

)

 

 

(202

)

Restructuring charges

 

3,137

 

 

 

5,402

 

 

 

7,530

 

 

 

9,385

 

Depreciation and amortization

 

6,321

 

 

 

6,104

 

 

 

18,326

 

 

 

18,621

 

Total operating expenses

 

335,644

 

 

 

330,124

 

 

 

1,000,722

 

 

 

953,258

 

Operating income

 

42,445

 

 

 

37,342

 

 

 

121,769

 

 

 

95,492

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(6,800

)

 

 

(5,047

)

 

 

(19,894

)

 

 

(15,146

)

Other income (expense), net

 

1,936

 

 

 

(1,000

)

 

 

5,361

 

 

 

1,781

 

Total other expense, net

 

(4,864

)

 

 

(6,047

)

 

 

(14,533

)

 

 

(13,365

)

Income before taxes

 

37,581

 

 

 

31,295

 

 

 

107,236

 

 

 

82,127

 

Income tax expense

 

10,432

 

 

 

9,779

 

 

 

24,599

 

 

 

22,480

 

Net income

$

27,149

 

 

$

21,516

 

 

$

82,637

 

 

$

59,647

 

Earnings per share:

 

 

 

 

 

 

 

Net income per basic share

$

1.53

 

 

$

1.15

 

 

$

4.61

 

 

$

3.15

 

Net income per diluted share

$

1.47

 

 

$

1.10

 

 

$

4.43

 

 

$

3.05

 

Weighted average shares used in calculating earnings per share:

 

 

 

 

 

 

 

Basic

 

17,754

 

 

 

18,770

 

 

 

17,945

 

 

 

18,941

 

Diluted

 

18,471

 

 

 

19,475

 

 

 

18,672

 

 

 

19,578

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income

$

27,149

 

 

$

21,516

 

 

$

82,637

 

 

$

59,647

 

Foreign currency translation adjustments, net of tax

 

900

 

 

 

(662

)

 

 

(103

)

 

 

(283

)

Unrealized gain (loss) on investment, net of tax

 

(443

)

 

 

(1,350

)

 

 

(8,208

)

 

 

3,076

 

Unrealized loss on cash flow hedging instruments, net of tax

 

(4,716

)

 

 

(368

)

 

 

(4,770

)

 

 

(234

)

Other comprehensive income (loss)

 

(4,259

)

 

 

(2,380

)

 

 

(13,081

)

 

 

2,559

 

Comprehensive income

$

22,890

 

 

$

19,136

 

 

$

69,556

 

 

$

62,206

 

HURON CONSULTING GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

18,497

 

 

$

12,149

 

Receivables from clients, net

 

204,894

 

 

 

162,566

 

Unbilled services, net

 

177,437

 

 

 

190,869

 

Income tax receivable

 

9,192

 

 

 

6,385

 

Prepaid expenses and other current assets

 

27,789

 

 

 

28,491

 

Total current assets

 

437,809

 

 

 

400,460

 

Property and equipment, net

 

21,682

 

 

 

23,728

 

Deferred income taxes, net

 

2,408

 

 

 

2,288

 

Long-term investments

 

64,319

 

 

 

75,414

 

Operating lease right-of-use assets

 

21,026

 

 

 

24,131

 

Other non-current assets

 

111,448

 

 

 

92,336

 

Intangible assets, net

 

22,547

 

 

 

18,074

 

Goodwill

 

647,541

 

 

 

625,711

 

Total assets

$

1,328,780

 

 

$

1,262,142

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

8,151

 

 

$

10,074

 

Accrued expenses and other current liabilities

 

26,490

 

 

 

33,087

 

Accrued payroll and related benefits

 

183,182

 

 

 

225,921

 

Current maturities of long-term debt

 

13,750

 

 

 

—

 

Current maturities of operating lease liabilities

 

11,990

 

 

 

11,032

 

Deferred revenues

 

27,703

 

 

 

22,461

 

Total current liabilities

 

271,266

 

 

 

302,575

 

Non-current liabilities:

 

 

 

Deferred compensation and other liabilities

 

44,322

 

 

 

35,665

 

Long-term debt, net of current portion

 

428,204

 

 

 

324,000

 

Operating lease liabilities, net of current portion

 

33,442

 

 

 

38,850

 

Deferred income taxes, net

 

28,774

 

 

 

28,160

 

Total non-current liabilities

 

534,742

 

 

 

426,675

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Common stock; $0.01 par value; 500,000,000 shares authorized; 20,793,202 and 21,316,441 shares issued, respectively

 

207

 

 

 

212

 

Treasury stock, at cost, 3,062,689 and 2,852,296 shares, respectively

 

(159,717

)

 

 

(142,136

)

Additional paid-in capital

 

174,872

 

 

 

236,962

 

Retained earnings

 

497,664

 

 

 

415,027

 

Accumulated other comprehensive income

 

9,746

 

 

 

22,827

 

Total stockholders’ equity

 

522,772

 

 

 

532,892

 

Total liabilities and stockholders’ equity

$

1,328,780

 

 

$

1,262,142

 

HURON CONSULTING GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

September 30,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net income

$

82,637

 

 

$

59,647

 

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

 

 

 

Depreciation and amortization

 

18,326

 

 

 

18,653

 

Non-cash lease expense

 

4,486

 

 

 

4,840

 

Lease-related impairment charges

 

3,513

 

 

 

5,584

 

Share-based compensation

 

33,963

 

 

 

35,398

 

Amortization of debt discount and issuance costs

 

793

 

 

 

577

 

Allowances for doubtful accounts

 

3,062

 

 

 

53

 

Deferred income taxes

 

5,037

 

 

 

890

 

Gain on sale of property and equipment

 

(101

)

 

 

(61

)

Change in fair value of contingent consideration liabilities

 

(589

)

 

 

(251

)

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

 

 

 

(Increase) decrease in receivables from clients, net

 

(44,739

)

 

 

(18,508

)

(Increase) decrease in unbilled services, net

 

13,770

 

 

 

(51,092

)

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

 

(3,114

)

 

 

(4,365

)

(Increase) decrease in other assets

 

(8,412

)

 

 

(6,243

)

Increase (decrease) in accounts payable and other liabilities

 

(6,994

)

 

 

(5,361

)

Increase (decrease) in accrued payroll and related benefits

 

(41,385

)

 

 

10,805

 

Increase (decrease) in deferred revenues

 

1,451

 

 

 

4,328

 

Net cash provided by operating activities

 

61,704

 

 

 

54,894

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(6,028

)

 

 

(5,147

)

Investments in life insurance policies

 

(2,166

)

 

 

(2,601

)

Distributions from life insurance policies

 

—

 

 

 

2,956

 

Purchases of businesses

 

(20,769

)

 

 

(1,613

)

Capitalization of internally developed software costs

 

(19,341

)

 

 

(19,610

)

Proceeds from note receivable

 

154

 

 

 

154

 

Proceeds from sale of property and equipment

 

102

 

 

 

62

 

Net cash used in investing activities

 

(48,048

)

 

 

(25,799

)

Cash flows from financing activities:

 

 

 

Proceeds from exercises of stock options

 

1,634

 

 

 

987

 

Shares redeemed for employee tax withholdings

 

(21,458

)

 

 

(10,050

)

Share repurchases

 

(104,553

)

 

 

(88,897

)

Proceeds from bank borrowings

 

682,500

 

 

 

292,000

 

Repayments of bank borrowings

 

(563,375

)

 

 

(224,000

)

Payments for debt issuance costs

 

(1,446

)

 

 

(58

)

Deferred payments on business acquisition

 

(617

)

 

 

(1,500

)

Net cash used in financing activities

 

(7,315

)

 

 

(31,518

)

Effect of exchange rate changes on cash

 

7

 

 

 

(13

)

Net increase (decrease) in cash and cash equivalents

 

6,348

 

 

 

(2,436

)

Cash and cash equivalents at beginning of the period

 

12,149

 

 

 

11,834

 

Cash and cash equivalents at end of the period

$

18,497

 

 

$

9,398

 

HURON CONSULTING GROUP INC.

SEGMENT OPERATING RESULTS AND OTHER OPERATING DATA

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Percent

Increase

(Decrease)

 

Nine Months Ended September 30,

 

Percent

Increase

(Decrease)

Segment and Consolidated Operating Results (in thousands):

 

 

2024

 

 

 

2023

 

 

 

 

2024

 

 

 

2023

 

 

Healthcare:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursable expenses

 

$

183,136

 

 

$

179,177

 

 

2.2

%

 

$

553,976

 

 

$

501,994

 

 

10.4

%

Operating income

 

$

49,651

 

 

$

46,888

 

 

5.9

%

 

$

147,591

 

 

$

128,294

 

 

15.0

%

Segment operating margin

 

 

27.1

%

 

 

26.2

%

 

 

 

 

26.6

%

 

 

25.6

%

 

 

Education:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursable expenses

 

$

121,048

 

 

$

111,043

 

 

9.0

%

 

$

355,384

 

 

$

325,884

 

 

9.1

%

Operating income

 

$

29,158

 

 

$

26,550

 

 

9.8

%

 

$

81,906

 

 

$

77,112

 

 

6.2

%

Segment operating margin

 

 

24.1

%

 

 

23.9

%

 

 

 

 

23.0

%

 

 

23.7

%

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursable expenses

 

$

65,865

 

 

$

67,958

 

 

(3.1

)%

 

$

188,304

 

 

$

194,954

 

 

(3.4

)%

Operating income

 

$

16,144

 

 

$

15,432

 

 

4.6

%

 

$

39,198

 

 

$

39,971

 

 

(1.9

)%

Segment operating margin

 

 

24.5

%

 

 

22.7

%

 

 

 

 

20.8

%

 

 

20.5

%

 

 

Total Huron:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursable expenses

 

$

370,049

 

 

$

358,178

 

 

3.3

%

 

$

1,097,664

 

 

$

1,022,832

 

 

7.3

%

Reimbursable expenses

 

 

8,040

 

 

 

9,288

 

 

(13.4

)%

 

 

24,827

 

 

 

25,918

 

 

(4.2

)%

Total revenues

 

$

378,089

 

 

$

367,466

 

 

2.9

%

 

$

1,122,491

 

 

$

1,048,750

 

 

7.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Items not allocated at the segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate expenses

 

 

46,821

 

 

 

43,100

 

 

8.6

%

 

 

143,386

 

 

 

129,765

 

 

10.5

%

Other gains, net

 

 

(173

)

 

 

(14

)

 

N/M

 

 

 

(14,522

)

 

 

(202

)

 

N/M

 

Restructuring charges

 

 

1,921

 

 

 

4,095

 

 

(53.1

)%

 

 

6,201

 

 

 

6,881

 

 

(9.9

)%

Depreciation and amortization

 

 

3,939

 

 

 

4,347

 

 

(9.4

)%

 

 

11,861

 

 

 

13,441

 

 

(11.8

)%

Operating income

 

 

42,445

 

 

 

37,342

 

 

13.7

%

 

 

121,769

 

 

 

95,492

 

 

27.5

%

Other expense, net

 

 

(4,864

)

 

 

(6,047

)

 

(19.6

)%

 

 

(14,533

)

 

 

(13,365

)

 

8.7

%

Income before taxes

 

$

37,581

 

 

$

31,295

 

 

20.1

%

 

$

107,236

 

 

$

82,127

 

 

30.6

%

Other Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

Number of revenue-generating professionals by segment (at period end) (2)(3):

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

2,442

 

 

 

1,878

 

 

30.0

%

 

 

2,442

 

 

 

1,878

 

 

30.0

%

Education

 

 

1,250

 

 

 

1,203

 

 

3.9

%

 

 

1,250

 

 

 

1,203

 

 

3.9

%

Commercial (4)

 

 

2,204

 

 

 

2,260

 

 

(2.5

)%

 

 

2,204

 

 

 

2,260

 

 

(2.5

)%

Total

 

 

5,896

 

 

 

5,341

 

 

10.4

%

 

 

5,896

 

 

 

5,341

 

 

10.4

%

Revenues before reimbursable expenses by capability:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (5)(6)

 

$

214,517

 

 

$

214,688

 

 

(0.1

)%

 

$

634,415

 

 

$

589,137

 

 

7.7

%

Digital

 

 

155,532

 

 

 

143,490

 

 

8.4

%

 

 

463,249

 

 

 

433,695

 

 

6.8

%

Total

 

$

370,049

 

 

$

358,178

 

 

3.3

%

 

$

1,097,664

 

 

$

1,022,832

 

 

7.3

%

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

 

 

 

 

 

 

 

 

 

 

 

 

Consulting and Managed Services (5)(7)

 

 

3,052

 

 

 

2,483

 

 

22.9

%

 

 

3,052

 

 

 

2,483

 

 

22.9

%

Digital

 

 

2,844

 

 

 

2,858

 

 

(0.5

)%

 

 

2,844

 

 

 

2,858

 

 

(0.5

)%

Total

 

 

5,896

 

 

 

5,341

 

 

10.4

%

 

 

5,896

 

 

 

5,341

 

 

10.4

%

Utilization rate by capability (8):

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

73.6

%

 

 

77.3

%

 

 

 

 

72.5

%

 

 

76.5

%

 

 

Digital

 

 

77.2

%

 

 

75.4

%

 

 

 

 

75.4

%

 

 

73.7

%

 

 

(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)

During the first quarter of 2024, we reclassified certain revenue-generating professionals within our Digital capability from our Healthcare and Education segments to our Commercial segment as these professionals are able to provide services across all of our industries. This reclassification did not impact the total Digital capability headcount for any period. The prior period headcount has been revised for consistent presentation.

 

(4)

The majority of our revenue-generating professionals within our Commercial segment can provide services across all of our industries, including healthcare and education, and the related costs of these professionals are allocated to each of the segments.  

(5)

During the first quarter of 2024, we reclassified one of the offerings within Education's Consulting capability to Education's Managed Services capability. Revenues before reimbursable expenses generated by this offering during the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023 were $2.8 million, $2.2 million, $2.4 million, and $2.7 million, respectively, and during the years ended December 31, 2022 and 2023 were $15.0 million and $10.1 million, respectively. The number of revenue-generating professionals within this offering as of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023 were 54, 24, 24, 24 and 23, respectively.

 

This reclassification did not impact the aggregate revenues before reimbursable expenses or headcount reported for the Education Consulting and Managed Services capability for any period, and the prior period Education Managed Services capability revenues before reimbursable expenses and headcount in the following footnotes have been revised for consistent presentation.

 

(6)

Managed Services capability revenues before reimbursable expenses within our Healthcare segment was $19.3 million and $16.7 million for the three months ended September 30, 2024 and 2023, respectively; and $53.5 million and $53.8 million for the nine months ended September 30, 2024 and 2023, respectively.

 

Managed Services capability revenues before reimbursable expenses within our Education segment was $6.6 million and $7.4 million for the three months ended September 30, 2024 and 2023, respectively; and $20.8 million and $22.0 million for the nine months ended September 30, 2024 and 2023, respectively.

 

(7)

The number of Managed Services revenue-generating professionals within our Healthcare segment was 1,223 and 757 as of September 30, 2024 and 2023, respectively.

 

The number of Managed Services revenue-generating professionals within our Education segment was 122 and 129 as of September 30, 2024 and 2023, respectively.

 

(8)

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 working 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 (9)

(In thousands)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues before reimbursable expenses

$

370,049

 

 

$

358,178

 

 

$

1,097,664

 

 

$

1,022,832

 

Reimbursable expenses

 

8,040

 

 

 

9,288

 

 

 

24,827

 

 

 

25,918

 

Total revenues

$

378,089

 

 

$

367,466

 

 

$

1,122,491

 

 

$

1,048,750

 

Net income

$

27,149

 

 

$

21,516

 

 

$

82,637

 

 

$

59,647

 

Net income as a percentage of total revenues

 

7.2

%

 

 

5.9

%

 

 

7.4

%

 

 

5.7

%

Add back:

 

 

 

 

 

 

 

Income tax expense

 

10,432

 

 

 

9,779

 

 

 

24,599

 

 

 

22,480

 

Interest expense, net of interest income

 

6,800

 

 

 

5,047

 

 

 

19,894

 

 

 

15,146

 

Depreciation and amortization

 

6,542

 

 

 

6,300

 

 

 

18,967

 

 

 

19,183

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) (9)

 

50,923

 

 

 

42,642

 

 

 

146,097

 

 

 

116,456

 

Add back:

 

 

 

 

 

 

 

Restructuring charges

 

3,137

 

 

 

5,402

 

 

 

7,530

 

 

 

9,385

 

2024 litigation settlement gain (10)

 

—

 

 

 

—

 

 

 

(11,701

)

 

 

—

 

Other losses (gains), net

 

(173

)

 

 

(14

)

 

 

478

 

 

 

(202

)

Transaction-related expenses

 

716

 

 

 

302

 

 

 

2,316

 

 

 

302

 

Foreign currency transaction losses (gains), net

 

267

 

 

 

(332

)

 

 

(348

)

 

 

36

 

Adjusted EBITDA (9)

$

54,870

 

 

$

48,000

 

 

$

144,372

 

 

$

125,977

 

Adjusted EBITDA as a percentage of revenues before reimbursable expenses (9)

 

14.8

%

 

 

13.4

%

 

 

13.2

%

 

 

12.3

%

HURON CONSULTING GROUP INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (9)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income

$

27,149

 

 

$

21,516

 

 

$

82,637

 

 

$

59,647

 

Weighted average shares - diluted

 

18,471

 

 

 

19,475

 

 

 

18,672

 

 

 

19,578

 

Diluted earnings per share

$

1.47

 

 

$

1.10

 

 

$

4.43

 

 

$

3.05

 

Add back:

 

 

 

 

 

 

 

Amortization of intangible assets

 

1,600

 

 

 

1,997

 

 

 

4,917

 

 

 

6,202

 

Restructuring charges

 

3,137

 

 

 

5,402

 

 

 

7,530

 

 

 

9,385

 

2024 litigation settlement gain (10)

 

—

 

 

 

—

 

 

 

(11,701

)

 

 

—

 

Other losses (gains), net

 

(173

)

 

 

(14

)

 

 

478

 

 

 

(202

)

Transaction-related expenses

 

716

 

 

 

302

 

 

 

2,316

 

 

 

302

 

Tax effect of adjustments

 

(1,372

)

 

 

(2,037

)

 

 

(920

)

 

 

(4,157

)

Total adjustments, net of tax

 

3,908

 

 

 

5,650

 

 

 

2,620

 

 

 

11,530

 

Adjusted net income (9)

$

31,057

 

 

$

27,166

 

 

$

85,257

 

 

$

71,177

 

Adjusted weighted average shares - diluted

 

18,471

 

 

 

19,475

 

 

 

18,672

 

 

 

19,578

 

Adjusted diluted earnings per share (9)

$

1.68

 

 

$

1.39

 

 

$

4.57

 

 

$

3.64

 

(9)

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 before reimbursable expenses, 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.

 

(10)

The non-GAAP financial measures for the nine months ended September 30, 2024 include an adjustment for the 2024 litigation settlement gain. In the second quarter of 2024, the company settled a litigation matter in which Huron was the plaintiff for $15.0 million, on a pre-tax basis. This $15.0 million settlement gain was recorded as a component of other gains, net on the consolidated statement of operations. The company has excluded from the non-GAAP measures $11.7 million, which is the value of the settlement gain that exceeds the third-party legal costs incurred during 2024 specific to this litigation matter, as this net gain is not indicative of the ongoing performance of Huron's business. Of the $3.3 million third-party legal costs incurred for this matter in 2024, $2.7 million was incurred in the first quarter and $0.6 million was incurred in the second quarter. Third-party legal expenses are recorded as a component of selling, general and administrative expenses on the statement of operations. Third-party legal costs incurred for this litigation matter during the three and nine months ended September 30, 2023 were $1.2 million and $2.2 million, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029303264/en/

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